Report to the Governor: An Assessment of the Capacity Development Program

August 6, 2002

Table of Contents

Executive Summary
Glossary of Terms
1.0 Introduction
2.0 Capacity Development Provisions in the Safe Drinking Water Act
2.1 New Systems Provision
2.2 DWSRF Applicants
2.3 Existing Systems Provision
3.0 Assessment of Capacity Development Strategy
3.1 Objectives
3.2 Accomplishments
4.0 Improving the Capabilities of Public Water Systems in New York
5.0 Challenges Remain for New York's Public Water Systems
5.1 Long-term Challenges
5.2 A New Challenge

Executive Summary

In the 1996 Amendments to the Federal Safe Drinking Water Act (SDWA) Congress mandated that states develop capacity development strategies to enhance the ability of public water systems to provide safe drinking water. These strategies are aimed at helping water systems acquire and/or maintain the technical, managerial, and financial abilities needed to properly operate, manage and finance their systems. With the assistance of a stakeholder group of State agencies, public water suppliers, technical assistance providers, local government representatives, and environmental groups, the New York State Department of Health issued their Capacity Development Strategy Report on August 6, 2000.

Each State's strategy had to include provisions for new systems, for systems applying for funding within the Drinking Water State Revolving Fund (DWSRF) program, and for existing systems. Under this program, new and existing water systems are to be evaluated for their technical, managerial, and financial capabilities.

The 1996 SDWA Amendments also require that each State submit a report to the Governor assessing the efficacy of its Capacity Development Strategy and document the progress made towards improving the technical, managerial, and financial capabilities of its public water systems. This report satisfies the statutory requirements of the SDWA and assures that New York will not be penalized twenty percent of the DWSRF capitalization grant for failure to comply.

The report is divided into five sections.

  • Section 1 provides a general introduction to the SDWA and the capacity development program.
  • Section 2 describes the three capacity development provisions through which a public water system's technical, managerial, and financial capabilities will be evaluated. The new system provision requires all new community water systems and all new nontransient noncommunity water systems that begin operation after October 1, 1999 to demonstrate adequate capacity. The Drinking Water State Revolving Fund provision prohibits states from providing Drinking Water State Revolving Fund assistance to public water systems that lack adequate capacity. The existing system provision is intended to provide direct assistance to existing public water systems to help them acquire and maintain the necessary capacity.
  • Section 3 provides an assessment of New York's Capacity Development Strategy. There were six objectives identified in the Capacity Development Strategy: identify and prioritize those public water systems that need assistance with their technical, managerial, and/or financial capacity; provide direct assistance to public water systems in need; identify and attempt to overcome a prioritized number of barriers to capacity development; begin to establish a baseline measure of capacity for public water systems; utilize other available resources in New York State to assist public water systems with their technical, managerial, and/or financial capacity; and continue to involve the public in the capacity development of public water systems. In addition to the objectives, the activities that were undertaken to address them are discussed.
  • Section 4 details the progress made in assisting public water systems improve their technical, managerial, and financial capabilities. The successes are measured through existing programs and new initiatives that assist public water systems acquire, maintain, and build upon their technical, managerial, and financial capabilities.
  • Section 5 describes the challenges that exist to public water systems in their efforts to develop their technical, managerial, and financial capacities.

Glossary of Terms

Community water system (CWS) is a public water system with at least five service connections used by year-round residents or regularly serves at least 25 year-round residents.

Drinking Water State Revolving Loan Fund (DWSRF) was created in 1996 as a result of New York State's enactment of Chapter 413 of the Laws of 1996 (Clean Water/Clean Air Bond Act) and passage of the 1996 Amendments to the Safe Drinking Water Act by the U.S. Congress.

New York State Department of Health (Department) is the agency responsible for administering the drinking water program in the state.

Noncommunity water system (NCWS) is a public water system that provides water to people in places other than their residences.

Nontransient noncommunity water system (NTNCWS) is a public water system that does not serve a resident population but serves at least 25 of the same persons, four hours or more per day, for four or more days per week, for 26 or more weeks.

Public water system (PWS) is a community, noncommunity, or nontransient noncommunity water system that provides piped water to the public for human consumption. The system must have at least five service connections or regularly serve an average of at least 25 individuals daily at least 60 days out of the year.

Safe Drinking Water Act (SDWA) is the federal law passed by the U.S. Congress in 1974 and amended in 1986 and 1996, which authorizes the United States Environmental Protection Agency and the States to oversee public water systems and set standards for drinking water to protect public health.

Significant noncomplier (SNC) is a public water system that persistently violates drinking water standards specifically defined in USEPA policy.

United States Environmental Protection Agency (USEPA) is the federal agency responsible for overseeing the state drinking water programs.

1.0 Introduction

The objective of the 1996 Safe Drinking Water Act Amendments (Amendments) is to ensure that public water systems provide safe drinking water to the public. The Amendments seek to prevent compliance problems and associated health risks by ensuring that public water systems have the capability to produce safe drinking water now and in the future. To achieve these goals, the Amendments include provisions for several prevention programs – one of which is the capacity development program.

Water system capacity is the ability to plan for, achieve, and maintain compliance with all applicable drinking water standards. There are three components to capacity: technical, managerial, and financial. Technical capacity refers to a water system's ability to operate and maintain its infrastructure. Managerial capacity refers to the expertise of the water system's personnel to administer the system's overall operations. Financial capacity refers to the financial resources and fiscal management that support the cost of operating the water system. Adequate capability in all three areas is necessary for the successful operation of a public water system.

Capacity development is the process by which water systems acquire, maintain, and build upon their technical, managerial, and financial capabilities to enable them to consistently provide safe drinking water to their customers in a reliable and cost-effective manner. The capacity development program provides a framework for state agencies, local governments, stakeholder groups or organizations, water systems and the public to ensure that drinking water systems acquire and maintain the technical, managerial and financial capacity needed to achieve compliance with applicable State and Federal drinking water regulations.

The purpose of this report is to provide an assessment of the capacity development program in New York and the statewide strategy for assisting public water systems in need. The report highlights the progress made toward improving the technical, managerial, and financial capabilities of public water systems in New York as a result of the New York State Department of Health's capacity development program.

2.0 Capacity Development Provisions in the Safe Drinking Water Act

The Amendments included three capacity development provisions.

  1. All new community water systems and all new non-transient non-community water systems that begin operation after October 1, 1999 must first demonstrate that they possess adequate capacity.
  2. States are prohibited from providing Drinking Water State Revolving Fund (DWSRF) assistance to public water systems that lack adequate capacity, unless that assistance is directly related to improving the system's technical, managerial or financial capacity.
  3. States must develop and implement a strategy to assist existing public water systems acquire and maintain the necessary capacity.

2.1 New Systems Provision

Section 1420(a) of the Amendments, the new systems provision, applies to all new community water systems (CWSs) and all new non-transient non-community water systems (NTNCWSs) that begin operations after October 1, 1999. New York State had to demonstrate to the United States Environmental Protection Agency (USEPA) that it had the legal authority to ensure that all new CWSs and all new NTNCWSs had the technical, managerial, and financial capacity to comply with all applicable State and Federal drinking water regulations. On February 26, 1999 the USEPA determined that New York State met the guidance and statutory requirements under Section 1420(a). On October 1, 1999 New York State began implementing the new systems provision of the Amendments.

To date, the New York State Department of Health (Department) has submitted to the USEPA two New System Capacity Development Program Annual Progress Reports. In those reports, the Department documented that the evaluation of new systems is ongoing and addresses the required capacity determinations for new water systems.

2.2 DWSRF Applicants

Section 1452(a)(3) of the Amendments applies to those public water systems that seek assistance from the DWSRF. Under this provision, states are prohibited from providing DWSRF assistance to a public water system that lacks the technical, managerial, and financial capability to ensure compliance with the Amendments or that is in significant noncompliance with applicable State and Federal drinking water regulations. However, states are allowed to provide DWSRF assistance to such a public water system if the use of the assistance will assure compliance, or if the owner or operator of the system agrees to undertake feasible and appropriate changes to acquire and maintain the system's technical, managerial, and financial capabilities over the long term.

New York State's capacity development review criteria for DWSRF applicants are described in each year's Intended Use Plan. An annual summary of the results of capacity assessments conducted on those systems seeking funding under the DWSRF is included in the Intended Use Plan.

2.3 Existing Systems Provision

Section 1420(c)(2) of the Amendments requires that New York State develop and implement a capacity development strategy to assist public water systems acquire and maintain technical, managerial, and financial capacity. With the assistance of a stakeholders group of state agencies, public water suppliers, technical assistance providers, local government representatives, and environmental groups in 1999 and 2000, the Department developed a comprehensive Capacity Development Strategy to assist public water systems. The Strategy considered identifying and prioritizing public water systems most in need of improving their technical, managerial, and financial capabilities; identifying the institutional, regulatory, financial, tax, or legal factors that encourage or impair capacity development at the Federal, State, or local level; describing how the State will use the authority and resources of the Amendments to assist public water systems in need; establishing a baseline measure of public water system capacity and a means to measure improvements in capacity of public water systems; and identifying those persons that have an interest in capacity development. The Department submitted a Capacity Development Program Strategy Report: Improving the Technical, Managerial and Financial Capabilities of Public Water Systems in New York in August 2000. On September 29, 2000 the USEPA determined that the New York State capacity development strategy met the guidance and statutory requirements under Section 1420(c) of the Amendments.

The Department submitted to the USEPA its initial Capacity Development Program Implementation Report on December 18, 2001. The Implementation Report documented that the Department is implementing a fully functioning existing water system plan according to its capacity development strategy. The Implementation Report must be annually submitted to the USEPA.

3.0 Assessment of Capacity Development Strategy

3.1 Objectives

In the Capacity Development Program Strategy Report, the Department identified and indicated that it would undertake the following activities:

  • identify and prioritize those public water systems that need assistance with their technical, managerial, and/or financial capacity;
  • provide direct assistance to public water systems in need;
  • identify and attempt to overcome a prioritized number of barriers to capacity development;
  • begin to establish a baseline measure of capacity for public water systems;
  • utilize other available resources in New York State to assist public water systems with their technical, managerial, and/or financial capacity; and
  • continue to involve the public in the capacity development of public water systems.

3.2 Accomplishments

The Department conducted a number of activities to begin implementation of its capacity development program.

  • Local health department staff were requested to identify public water systems in need and to provide a list of those public water systems to the Department's capacity development coordinator. Local health department staff provided, and continue to update, lists of systems in need and the capacity development coordinator prioritizes this list along with follow-up action.
  • Department staff, in conjunction with the local health department staff, provide direct technical assistance to systems in need through ongoing sanitary surveys, comprehensive performance evaluations, source water assessments, and direct technical advice. In addition, prior to taking enforcement action on a public water system that persistently fails to comply with drinking water regulations, the Department engages in activities designed to assist the troubled system come into compliance. These activities include engineering support, training, and establishing compliance schedules.
  • There were 165 factors identified in the Capacity Development Program Strategy Report that impair capacity development in New York State. Since it was not feasible to address each barrier, a prioritized number of barriers (three) were selected to be addressed.

First, the lack of formal coordination among funding organizations was identified as an institutional barrier to improving the capacity of water systems. Monthly meetings of those State and Federal agencies that provide funding for drinking water infrastructure projects were initiated. The initial meeting of what became the Water and Sewer Infrastructure Committee was held on May 2, 2001. The Water and Sewer Infrastructure Committee subsequently evolved into a co-funding initiative that was recommended by the State's Quality Communities Initiative (see Section 4.0 of this report for additional details).

Second, a lack of knowledge at the community level regarding capacity development issues, community water systems and how the capacity development of a water system ties into a community's overall well being was identified as an institutional barrier to capacity development. The Water and Sewer Infrastructure Committee developed a joint training presentation and workshop on community infrastructure issues and the availability of resources to address those issues. The initial joint training session was held at a regional meeting of elected officials on September 28, 2001 and training sessions have been and continue to be conducted at various regional Local Government Days and annual conventions where local officials convene around the State.

Third, the lack of up-front money for water project engineering and planning purposes was identified as a financial barrier to capacity development. A short-term financing program was instituted through the DWSRF to address this barrier. The short-term financing program provides short-term interest free financing of up to three years in duration to recipients that are developing projects eligible for long-term DWSRF financing.

  • Local health department staff reviewed public water systems identified to be in need against the capacity development evaluation criteria and provided this data to the Department's capacity development coordinator. The evaluation criteria along with compliance information, sanitary survey information, and/or comprehensive performance evaluation information are used to establish the baseline measure of capacity for public water systems. The Department will continue to work with the local health departments, gathering new and additional information about the performance of public water systems, to compare and measure improvements in system capacity.
  • Various other government agencies within the State, as well as other organizations that partner with the Department on water supply issues, have programs, services, tools, and other available resources that can be used to assist public water systems acquire, maintain, and build upon their technical, managerial, and financial capabilities. In addition to the Department of Health, the New York State Department of State, New York State Environmental Facilities Corporation, New York State Public Service Commission, New York State Department of Environmental Conservation, New York Association of Towns, New York Conference of Mayors, New York State Association of Regional Councils, New York Rural Water Association, New York Section of the American Water Works Association, Northeast Rural Community Assistance Program, Tug Hill Commission, and United States Department of Agriculture Rural Development provide education and training to water system owners, operators, and managers; direct technical, managerial, and/or financial assistance to public water systems; direct community assistance, training and education to elected officials; and funding in the form of grants and loans to eligible systems in need.
  • The statewide capacity development strategy is promoted through the education and training of water system owners, managers and operators, government officials, other water system professionals, and consumers about the principles and goals of the program. This public outreach includes attending and participating in formal and informal meetings, making speaking engagements, and offering training or presentations to groups and individuals with an interest in the capacity development of public water systems. In addition, the Department posts relevant capacity development information on the Department's web site.

4.0 Improving the Capabilities of Public Water Systems in New York

The Department's Capacity Development Program is improving the operations of public water systems throughout the State, thus protecting the public health of all New Yorkers. Below is a summary of a number of specific achievements made towards implementing a successful capacity development program.

  • The Department is a partner in the New York Water and Sewer Co-funding Initiative. The Co-funding Initiative was recommended in the Capacity Development Program Strategy Report and addresses key recommendations in Lt. Governor Donohue's Quality Communities Interagency Task Force Report. This initiative brings together those State and Federal Agencies that provide funding for drinking water and sewer projects to ensure optimum funding potential and assistance to New York's communities.
  • The Department has instituted a short-term financing program within its successful DWSRF program. The short-term financing program provides short-term interest free financing of up to three years in duration to recipients that are developing projects eligible for long-term DWSRF financing.
  • The Department discourages the formation of new public water systems that lack technical, managerial, and/or financial capacity through a process of criteria and regulations. Within the past year, the Department reviewed 19 new systems, with 16 systems receiving approval to proceed with system development.
  • The Department determined that, within the past year, 81 applicants possessed adequate technical, managerial, and financial capacity to receive DWSRF assistance and that 6 applicants lacked capacity and were ineligible to receive DWSRF assistance. In addition, the Department provided DWSRF assistance to 2 applicants that were in significant noncompliance with applicable State and Federal drinking water regulations, helping them achieve compliance by improving their capabilities. The Department also processed 11 applicants that were in significant noncompliance with applicable State and Federal drinking water regulations for future DWSRF assistance.
  • The Department provided technical, managerial, and financial assistance directly to public water systems in need to help them achieve and maintain compliance with applicable State and Federal drinking water regulations. Under this initiative, during the past year, the Department provided direct technical assistance to 9 public water systems.
  • The Department's Small Water Systems Program provided guidance to communities in considering project alternatives, calculating alternative project costs, preparing budgets for selected projects and reviewing existing operation and maintenance practices. During the past year, more than fifty communities were assisted through the Small Water Systems Program.
  • The Department has prepared and intends to issue a Request for Proposals for a contract to provide on-site "circuit rider" training and other direct technical assistance to mobile home parks and other small public water systems not currently served by such a program.
  • The Department's Comprehensive Performance Evaluation Program reviews and evaluates the capabilities of existing drinking water treatment facilities to determine if the treatment facility and its public water system meet current standards and performance goals. During the past year, the Department completed 17 comprehensive performance evaluations that included a detailed evaluation report, recommendations, and follow-up meetings with the community.
  • The Department amended its Operator Certification regulation in 2001 to ensure that the approximately 6,150 water system operators are properly certified and have sufficient technical and managerial training and experience to operate their public water systems.
  • The Department's Sanitary Survey Program provides for complete and detailed assessments of public water system physical plants, maintenance and operations, and administrative abilities. One of the goals of this ongoing program is to review and evaluate the capabilities of existing facilities to determine if they can assure compliance with current and future drinking water standards and regulations. More than 5,500 sanitary surveys were completed during the past year.
  • The Department takes enforcement actions against public water systems that persistently fail to comply with State and Federal drinking water regulations and demonstrate a lack of capacity. Prior to taking enforcement action against a public water system that persistently fails to comply with State and Federal drinking water regulations, the Department engages in activities designed to assist the troubled system come into compliance. These activities include engineering support, training, and establishing compliance schedules.
  • The 2002-03 State Budget includes $6 million to assist local health departments enhance their drinking water programs. The new staff that local health departments have added are assisting New York's public water supplies improve their technical, managerial, and financial capabilities.

5.0 Challenges Remain for New York's Public Water Systems

There are many factors that impair the capacity development of public water systems. In the Department's first year of implementing the statewide capacity development strategy, some of these barriers have been overcome (see section 3.2). In subsequent years, the Department will continue to meet the challenges faced by New York's public water systems and assure the safety of the State's public drinking water. The Department and its partners, including public water systems, will need to be ever vigilant in maintaining the necessary technical, managerial and financial capabilities of public water systems, especially at smaller systems. Sufficient technical assistance, owner and operator training, and financial assistance, particularly for economically distressed communities, must continue to be made available.

5.1 Long-term Challenges

Many public water systems, particularly small systems, have difficulty in understanding and complying with ever more comprehensive drinking water regulations. The Department has taken the lead in developing and implementing training programs to assist small public water system owners and operators to understand current and future drinking water rules and regulations. In addition, the Department uses the DWSRF to ease the economic impact on public water systems that must comply with new drinking water rules and regulations.

For most public water systems in New York, there is no mandated review of the rate that a system charges its customers and no means to enforce an appropriate rate structure. A public water system that is unable to raise the necessary revenues to support its operating expenses, places a risk on its ability to produce safe drinking water. Legislation, regulations, and/or incentives that will encourage public water systems to review their water rates periodically and adjust them as necessary need to be considered.

5.2 A New Challenge

The security of public water systems is a challenge that is now a high priority for the Department and water suppliers. The Department is currently focusing its resources in an effort to increase the level of security preparedness at public water systems. These efforts include training of water system personnel, developing guidance on conducting vulnerability assessments and preparing emergency response plans, notifying systems of potential and real threats, developing response protocols, and providing financial assistance to systems.