[Federal Register Volume 68, Number 246 (Tuesday, December 23, 2003)]
[Notices]
[Pages 74233-74235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31588]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-7601-7]
Applicability of the Safe Drinking Water Act to Submetered
Properties Docket: OW-2003-0065
AGENCY: Environmental Protection Agency.
ACTION: Notice.
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SUMMARY: The Environmental Protection Agency (EPA) finalized a
memorandum that outlined its revised policy regarding regulatory
requirements under the Safe Drinking Water Act (SDWA) for submetered
properties. The revised policy is shown in the SUPPLEMENTARY
INFORMATION section of this notice, in its final memorandum form. Under
SDWA section 1411, the national primary drinking water regulations
apply to public water systems (PWS) that have their own water source,
treat, or ``sell'' water. EPA staff and program managers have
previously issued memoranda stating that any building or property owner
who meets the definition of a PWS and receives water from a regulated
public water system, but bills tenants separately for this water, is
``selling'' the water and therefore is independently subject to SDWA's
drinking water requirements. As a way to promote full cost and
conservation pricing to achieve water conservation, the EPA is changing
its interpretation of section 1411 as it applies to submetered
properties. EPA believes that the addition of a submeter should not in
any way change the quality of water provided to customers on these
properties.
In general, the scope of this policy is not intended to extend
where the property in question has a large distribution system, serves
a large population or serves a mixed (commercial/residential)
population (e.g., many military installations/facilities or large
mobile home parks).
DATES: EPA's revised policy, as described in the section I.A.
memorandum, effective December 16, 2003.
ADDRESSES: Related documents, including EPA's response to public
comments on the subject policy, can be accessed at the Water Docket in
the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution
Ave., NW., Washington, DC. For more information, see section I..B.1 of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For more information please contact
Ronald Bergman by phone at 202-564-3823, or by e-mail at
[email protected].
SUPPLEMENTARY INFORMATION:
I. General Information
A. Final Revised Policy
Today, EPA is publishing a memorandum revising current policy
regarding regulatory requirements under the Safe Drinking Water Act
(SDWA) of submetered properties. The memorandum changes EPA's
interpretation of section 1411 as it applies in the specific context of
submetering and direct billing of tenants. EPA published a proposed
memo in the Federal Register on August 28, 2003 (68 FR 51777) and
solicited public comments for 60 days. Comments were received from a
variety of stakeholders, including State, county, and local
governments, apartment building owners and associations, utility
companies, and housing associations. Generally, commenters strongly
supported the proposed policy and agreed that submetering promotes
water conservation.
Memorandum
Subject: Applicability of the Safe Drinking Water Act to Submetered
Properties.
From: G. Tracy Mehan III, Assistant Administrator.
To: Regional Administrators, Regions I-X.
The purpose of this memorandum is to announce EPA's revised policy
concerning the applicability of the Safe Drinking Water Act (SDWA) to
submetered properties. Submetering, as applied in this policy, means a
billing process by which a property owner (or association of property
owners, in the case of co-ops or condominiums) bills tenants based on
metered total water use; the property owner is then responsible for
payment of a water bill from a public water system. Under the revised
policy, a property owner who installs submeters to track usage of water
by tenants on his or her property will not be subject to SDWA
regulations solely as a result of taking the administrative act of
submetering and billing. Property owners must receive all of their
water from a regulated public water system to qualify under the terms
[[Page 74234]]
of this policy revision for submetered properties.
EPA proposed the revised policy in the Federal Register on August
28, 2003 (68 FR 51777) and requested public comment. In response, the
Agency received strong support for the revised policy on submetering
from a variety of stakeholders. In light of this response, and because
a key objective of the Agency is to promote water efficiency and
conservation, EPA has decided to change the policy for submetering.
Throughout the country, submetering of apartment buildings has been
found to be an effective but little-used tool to support water
conservation. Water conservation is an integral part of watershed
protection, particularly in arid and drought-stricken areas. In
addition to helping reduce the risk of water shortages, water
conservation also provides other important benefits. Water conservation
helps ensure in-stream flows, thereby providing protection for
ecosystems, which can become out of balance when demands stress water
resources. Water conservation also helps reduce stress on water supply
and wastewater infrastructure making them less prone to failure.
Further, the use of submeters to measure water consumption is a
necessary pre-requisite to achieving full-cost and conservation
pricing.
Background
Section 1401 of SDWA defines a public water system (PWS) as a
system that provides water through pipes or other constructed
conveyances to the public for human consumption, if the system has at
least 15 service connections or regularly serves at least 25 people.
Under SDWA section 1411, the SDWA national primary drinking water
regulations apply to PWSs that have their own water source, treat, or
``sell'' water. EPA staff and program managers had issued several
memoranda stating that any building or property owner who met the
definition of a PWS and received water from a regulated public water
system without adding further treatment, but billed tenants separately
for this water, would be considered to be ``selling'' the water and,
therefore, would be independently subject to SDWA's drinking water
requirements. Today's memorandum reflects a change in EPA's
interpretation of section 1411 as it applies in the specific context of
submetering.
The EPA memoranda referenced above were based on a single statement
in the 1974 legislative history for the SDWA in which Congress
explained its intent in enacting section 1411. In that legislative
history, the Committee report stated that it ``intends to exempt
businesses which merely store and distribute water provided by others,
unless that business sells water as a separate item or bills separately
for water it provides.'' \1\ Under EPA's previous interpretation, an
owner of an apartment building or similar property who is exempt under
section 1411 but merely installed a submeter and billed the tenants for
the water, or simply began billing tenants (even without a submeter),
would then be considered to be operating a fully regulated public water
system, even though there had been no other change relevant to the
delivery or potential health concerns associated with the water. This
application of the legislative history has been cited as a
discouragement to submetering and, as a result, to water conservation
measures.
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\1\ H. Rept. 93-1185 (93rd Cong., 2nd Session), reprinted in A
Legislative History of the Safe Drinking Water Act, Committee Print
Serial 97-9 (1982) at 549.
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After further review, we no longer believe that Congress originally
intended the statute to be applied in this manner, or that it should
continue to be the Agency's interpretation for the following reasons:
[sbull] The legislative history from 1974 does not specifically
address the submetering of apartment buildings or similar properties
for water conservation purposes. Rather, the legislative history was
one Committee's attempt to explain broadly what the term ``selling''
water in section 1411 might mean. The statute itself does not define
the term ``selling'' or suggest an interpretation that any billing of
water would automatically trigger full SDWA regulation.
[sbull] Some owners of apartment buildings and other multifamily
housing expressed concern that, under EPA's previous policy, the
installation of submeters subjected them to the full regulatory
requirements of the Safe Drinking Water Act (SDWA), comparable to the
requirements imposed on water utilities.
[sbull] In 1996, a Congressional committee expressed its concern
that this application of SDWA might discourage the practice of
submetering, as owners of a multifamily housing property (e.g.,
apartment buildings and/or complexes) would become subject to national
primary drinking water regulations if they billed separately for water.
Congress asked that EPA review its guidance on this matter to prevent
unnecessary requirements that do not further public health protection
and that might inhibit water conservation efforts.\2\ In response, EPA
agreed to reconsider the matter and issue further guidance.\3\
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\2\ H. Rept. 104-632 at 55 (1996).
\3\ H. Rept. 104-632 (104th Cong., 2d Sess.) at 55 and 134
(1996).
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[sbull] EPA's approach in previous memoranda may have created a
disincentive to water conservation, which can undermine water quality
over the long term.
[sbull] Simply applying the concept of ``sell'' to every billing
transaction is not appropriate.
Revised Policy
Consistent with Congressional requests to reconsider this matter,
the Agency now believes that certain property owners, who had not
previously been (or would not be) subject to SDWA's national primary
drinking water regulations, and who install submeters to accurately
track usage of water by tenants on his or her property, should not be
subject to regulations solely as a result of taking the action to
submeter and bill.
The addition of a submeter should not in any way change the quality
of water provided to customers on the property. A PWS that provides
water to a property maintains responsibility for providing public
notification under 40 CFR 141.201(c) (or approved State equivalent) to
consumers. In addition, the PWS must make ``good faith'' efforts to
provide the tenants with the annual Consumer Confidence Reports under
40 CFR 141.155(b). A submetered property would still be considered a
PWS under SDWA section 1401, hence States and EPA would retain the
ability to take corrective action under SDWA's emergency powers
authority (section 1431) if public health risks arise.
Scope of Revised Policy
EPA received numerous comments asking that the revised policy be
expanded beyond apartment buildings. EPA agrees that submetering to
achieve water conservation may be appropriate for other property types,
which share similar characteristics to an apartment building, and
likewise should not be considered as ``selling'' under SDWA section
1411, simply because a submeter is installed and the property owner
begins direct billing for the water. This description is the basis for
the definition of submetering. Determinations of whether billing for
water is a ``sale'' for purposes of section 1411, and whether systems
are `` submetering'' as that term is used in this policy, should be
made by the Primacy Agency.
[[Page 74235]]
In making a determination, the Primacy Agency should consider if
the property has certain characteristics, such as a limited
distribution system with no known backflow or cross connection issues;
the majority of its plumbing is within a structure instead of
underground; and property ownership is a single/individual (or
association of property owners, in the case of co-ops or condominiums).
Of course, for any system to be excluded under section 1411, it must
receive all of its water from a regulated public water system.
In general, the scope of this policy is not intended to extend
where the property in question has a large distribution system, serves
a large population or serves a mixed (commercial/residential)
population (e.g., many military installations/facilities or large
mobile home parks).
Although EPA is not requiring that submetered systems be regulated,
each State has the flexibility to determine whether, and how, to best
track properties that submeter. For example, in Alabama, the State
defines a submetered property as a ``segmented public water system''
and requires that it have access to a certified operator. Texas
requires that submetered properties allow access to the property by the
public water system that provides it with water, register with the
Texas Commission on Environmental Quality, and follow regulations for
submetering.
While submetering and billing for water usage may positively induce
water conservation actions, States may still want to take other steps
to ensure that property owners and others convert to water efficient
fixtures and appliances. For example, Texas requires that apartment
buildings have water-efficient plumbing fixtures and appliances as a
condition of approval of a submetered billing system.
Ratio Utility Billing Systems (RUBS) and Hybrid Billing Systems (HWH)
Several commenters raised the issue of ratio utility billing
systems (RUBS) \4\ and other allocation billing systems. Some
commenters suggested that EPA should include this type of billing in
the revised policy because it would have no negative effect on water
quality. Other commenters encouraged EPA to exclude RUBS, stating that
RUBS may not result in water conservation, and may, in fact, reduce
incentives to install submeters and charge on the basis of actual water
usage. Water savings, if any, from RUBS and hot water hybrid billing
systems (HWH) are uncertain. At this time, EPA believes that RUBS or
other allocation billing systems do not meet the definition of
submetering, as used in this policy, and do not encourage water
conservation. Therefore, a property using these billing systems is not
addressed by this policy. Primacy Agencies will need to determine
whether such properties are ``selling'' water within the meaning of
SDWA section 1411.
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\4\ A ratio utility billing system (RUBS) or an allocation
formula, divides a property's water bill among its residents based
on a ratio of floor space, number of occupants, or some other
quantitative measure. With RUBS, a price signal based on actual use
is not sent to the tenant as with submetering, and the amount of
water saved by these systems is unclear. A hot water hybrid (HWH)
billing system is a combination of submetering and allocation where
hot water is submetered and a formula is applied to estimate the
resident's total water use based on the volume of hot water metered.
HWH systems provide more of a price signal than RUBS but less than
that for submetering.
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This memorandum clarifies EPA's policy change and reconfirms our
strong interest in advocating water conservation. Any previous EPA
statements or policy memoranda on this issue are superceded by this
memorandum.
B. How Can I Get Copies of This Document and Other Related Information?
1. Docket. EPA has established an official public docket for this
action under Docket ID No. OW-2003-0065. The official public docket
consists of the documents specifically referenced in this action, any
public comments received, and other information related to this action.
Although a part of the official docket, the public docket does not
include Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. The official public docket
is the collection of materials that is available for public viewing at
the Water Docket in the EPA Docket Center, (EPA/DC) EPA West, Room
B102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket
Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
Water Docket is (202) 566-2426.
2. Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/. An electronic version of the
public docket is available through EPA's electronic public docket and
comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to view public comments, access the index listing
of the contents of the official public docket, and to access those
documents in the public docket that are available electronically.
Although not all docket materials may be available electronically, you
may still access any of the publicly available docket materials through
the docket facility identified in section I.B.1. Once in the system,
select ``search,'' then key in the appropriate docket identification
number.
Dated: December 17, 2003.
G. Tracy Mehan III,
Assistant Administrator, Office of Water.
[FR Doc. 03-31588 Filed 12-22-03; 8:45 am]
BILLING CODE 6560-50-P