THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY MUSTO, M. WHITE, TARTAGLIONE, O'PAKE, RAFFERTY, STOUT AND COSTA, OCTOBER 8, 2010

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, OCTOBER 8, 2010  

AN ACT

Requiring water and wastewater systems to develop and implement

asset management plans and document progress toward full-cost

pricing; authorizing the Environmental Quality Board to adopt

regulations; providing for duties of the Department of

Environmental Protection and the Pennsylvania Public Utility

Commission; establishing contracting and bidding requirements

for municipalities and municipal authorities; imposing

penalties; and making related repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101.  Short title.

This act shall be known and may be cited as the Water and

Wastewater Infrastructure Sustainability Act.

Section 102.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Asset."  The principle structures, machinery and equipment

essential to effectively operate a water or wastewater system.

The term includes treatment plants, pumps, lift stations, pipes,

hydrants, wells, reservoirs and tanks.

"Asset management."  The combination of best management,

financial, economic, engineering and other practices applied to

physical assets with the objective of providing the required

level of service in the most cost-effective manner.

"Asset management plan."  A written document that describes

the asset management program of a water or wastewater system.

"Bottled water system."  A public water system which provides

water for bottling in sealed bottles or other sealed containers.

The term includes, but is not limited to, the sources of water

and treatment, storage, bottling, manufacturing and distribution

facilities. The term does not include a public water system

which provides only a source of water supply for a bottled

water.

"Bulk water hauling system."  A public water system which

provides water piped into a carrier vehicle and withdrawn by a

similar means into the user's storage facility or vessel. The

term includes, but is not limited to, the sources of water

treatment, storage or distribution facilities. The term does not

include a public water system which provides only a source of

water supply for a bulk water hauling system.

"Capability enhancement program."  The Department of

Environmental Protection's technical, managerial and financial

outreach assistance program implementing the capability

development program provisions of section 1420 of the Safe

Drinking Water Act (Public Law 93-523, 42 U.S.C. § 300g-9).

"Commission."  The Pennsylvania Public Utility Commission.

"Committee."  The Water and Wastewater Infrastructure

Advisory Committee established under section 301(a)(3).

"Community water system."  A public water system which serves

at least 15 service connections used by year-round residents or

regularly serves at least 25 year-round residents.

"Customer."  A person who pays for the services provided by

water and wastewater systems.

"Customer assistance program."  A plan or program sponsored

by a water or wastewater system for the purpose of assuring

service to low-income households.

"Department."  The Department of Environmental Protection of

the Commonwealth.

"Environmental Quality Board."  The board established under

section 1920-A of the act of April 9, 1929 (P.L.177, No.175),

known as The Administrative Code of 1929.

"Federal poverty guidelines."  The poverty measure based on

family size and household income issued annually by the United

States Department of Health and Human Services as published in

the Federal Register.

"Full-cost pricing."  The establishment of user charges

which, in combination with any other available resources,

provide the revenues necessary to recover a water or wastewater

system's cost of providing service and that enables it to:

(1)  Comply with all applicable laws and regulations.

(2)  Promote economic efficiency.

(3)  Ensure provision of high quality and affordable

services to the public.

(4)  Promote efficient use of the system by customers.

(5)  Implement its asset management plan.

"Household income."  The combined gross income of all

residents 18 years of age or older in a household.

"Industrial waste."  Any liquid, gaseous, radioactive, solid

or other substance, not sewage, resulting from any manufacturing

or industry or from any establishment, and mine drainage,

refuse, silt, coal mine solids, rock, debris, dirt and clay from

coal mines, coal collieries, breakers or other coal processing

operations. The term shall include all such substances whether

or not generally characterized as waste.

"Industrial wastewater treatment system."  Any system that

treats industrial waste or pollution, as those terms are defined

in section 1 of the act of June 22, 1937 (P.L.1987, No.394),

known as The Clean Streams Law.

"Municipal authority."  A public authority established under

53 Pa.C.S. Ch. 56 (relating to municipal authorities) or the

former act of May 2, 1945 (P.L.382, No.164), known as the

Municipality Authorities Act of 1945, which supplies water or

provides wastewater treatment services.

"Municipality."  A county, city, borough, town or township.

"Noncommunity water system."  A public water system which is

not a community water system.

"Nontransient noncommunity water system."  A noncommunity

water system that regularly serves at least 25 of the same

persons more than six months per year.

"Person."  Any individual, partnership, association, company,

corporation, municipality, municipal authority, political

subdivision or any agency of Federal or State Government. The

term shall include the officers, employees and agents of any

partnership, association, company, corporation, municipality,

municipal authority, political subdivision or any agency of

Federal or State Government.

"Public water system."  A system which provides water to the

public for human consumption which has at least 15 service

connections or regularly serves an average of at least 25

individuals daily at least 60 days per year. The term includes

collection, treatment, storage and distribution facilities

whether or not they are under the control of the operator of the

system and used in connection with the system. Water for human

consumption includes water that is used for drinking, bathing

and showering, cooking, dishwashing or maintaining oral hygiene.

"Retail water facility."  A public water system which

provides water for bottling without the use of a water vending

machine by dispensing unit servings of water in containers

whether or not the containers are provided by the customers.

"Revenue."  All funds received by a water or wastewater

system.

"Secretary."  The Secretary of Environmental Protection of

the Commonwealth.

"Transient noncommunity water system."  A water system which

is not a community, nontransient noncommunity, bottled or vended

water system, nor a retail water facility or a bulk water

hauling system.

"User charges."  Amounts charged to customers of a water or

wastewater system for system services.

"Vended water system."  A water system which provides water

for bottling through the use of one or more water vending

machines.

"Wastewater."  A substance that contains the waste products

or excrement or other discharge from the bodies of human beings

or other noxious or deleterious substances that is harmful or

inimical to the public health, to animal or aquatic life or to

the use of water for domestic water supply or for recreation, or

which constitutes pollution under the act of June 22, 1937

(P.L.1987, No.394), known as The Clean Streams Law.

"Wastewater system."  Any structure or system that has the

primary purpose of collecting, conveying or treating wastewater

and from which effluent in excess of 2,000 gallons per day is

discharged into waters of this Commonwealth. The term does not

include an industrial wastewater treatment system or a system

whose entire service area is regulated by the Pennsylvania

Public Utility Commission.

"Water system."  A public water system that is not:

(1)  Regulated by the Pennsylvania Public Utility

Commission.

(2)  A nontransient noncommunity water system.

(3)  A transient noncommunity water system.

(4)  A bottled water system.

(5)  A vended water system.

(6)  A retail water facility.

(7)  A bulk water hauling system.

CHAPTER 3

POWERS AND DUTIES

Section 301.  Powers and duties of department.

(a)  Powers and duties.--The department shall have the power

and duty to:

(1)  Cooperate with and seek assistance from the

commission in accordance with sections 502 and 503.

(2)  Provide technical, managerial and financial

capability assistance to water and wastewater systems to

implement the asset management and full-cost pricing

requirements of sections 501 and 502.

(3)  Create a Water and Wastewater Infrastructure

Advisory Committee to advise the department in developing

regulations and guidelines to implement the provisions of

this act. The committee shall provide written comments and

recommendations to the department on regulatory proposals and

departmental guidelines related to water and wastewater

infrastructure. Within 60 days of the effective date of this

act, the secretary shall appoint 17 members to the committee

who represent all aspects of water and wastewater treatment.

Members of the committee shall include representatives of

providers, consumers, suppliers and the public. Members of

the committee shall elect a chairman annually by majority

vote. Members of the committee shall serve without

compensation other than reimbursement for actual and

necessary expenses incurred in the performance of their

duties, in accordance with Commonwealth policy or

regulations.

(4)  Review and take action on asset management plans

under section 501.

(5)  Inspect water and wastewater systems to evaluate the

development and implementation of asset management plans

required under section 501.

(6)  Review financial reports submitted under section 502

to determine whether water and wastewater systems have moved

toward full-cost pricing.

(7)  Issue orders or include conditions in permits issued

to water and wastewater systems necessary to ensure

compliance with sections 501 and 502.

(8)  Charge water and wastewater systems fees, in

accordance with regulations adopted by the Environmental

Quality Board, in an amount sufficient to fund the necessary

staff to undertake the review of asset management plans and

financial reports and provide technical, financial and

managerial assistance to water and wastewater systems and

administration and oversight of this act. Fees assessed under

this chapter and civil penalties collected under Chapter 9

shall be paid into The Clean Water Fund, established under

section 8 of the act of June 22, 1937 (P.L.1987, No.394),

known as The Clean Streams Law, and shall be used for

implementation and administration of this act, including

review of asset management plans, training programs for water

and wastewater system boards and the Asset Management

Assistance Provider Program.

(9)  Establish optional training programs designed to

provide training and information to members of water and

wastewater system boards.

(10)  Create an Asset Management Assistance Provider

Program in which the department may accredit a person

providing assistance in the development of an asset

management planning process, either on a program basis or on

a system-specific basis, as an asset management assistance

provider. The department may approve the materials to be used

by the person, the person's qualifications and the

methodology used by the person for the development of an

asset management planning process and resultant reports in

accordance with such specifications or guidelines the

department may develop in consultation with the committee.

The department may audit, examine, inspect and review the

operations of asset management assistance providers,

including staff hired by the provider to provide asset

management plan development, and review services and any

materials or mechanisms to be used by the provider to provide

these services in accordance with the department's

guidelines.

(11)  Provide assistance to water and wastewater systems

to support compliance with the requirements of this act. To

the extent practicable, the department will use technical,

financial and managerial assistance approaches and tools set

forth in the capability enhancement program for drinking

water systems funded and established under section 1420 of

the Safe Drinking Water Act (Public Law 93-523, 42 U.S.C. §

300g-9).

(b)  Other laws.--Nothing in this act shall be construed to

abrogate the authority of the department under any other law

administered by the department.

Section 302.  Powers and duties of Environmental Quality Board.

The Environmental Quality Board shall have the power and duty

to adopt such rules, regulations and fees of the department to

implement the requirements of this act that are subject to the

jurisdiction of the department, including relevant provisions of

sections 501 and 502.

Section 303.  Powers and duties of commission.

(a)  Powers and duties.--The commission shall have the power

and duty to:

(1)  Cooperate with the department in accordance with

sections 502 and 503.

(2)  At the request of the department, review financial

reports submitted under section 502 and make recommendations

to the department for resubmittal of reports that do not meet

the requirements established under this act.

(b)  Other laws.--Nothing in this act shall be construed to

abrogate the authority of the commission under 66 Pa.C.S.

(relating to public utilities).

CHAPTER 5

ASSET MANAGEMENT AND FULL-COST PRICING

Section 501.  Asset management.

(a)  General rule.--Each water and wastewater system subject

to this act shall develop and maintain an asset management plan.

Each plan shall be submitted to the department for review and

approval upon request of the department. The review and approval

by the department shall be done in accordance with a phased

schedule to be set forth in regulations adopted by the

Environmental Quality Board under this act. Revisions of any

plan may be required at any time by order of the department, as

directed by regulations adopted by the Environmental Quality

Board, if there is information indicating that the asset

management plan does not adequately satisfy the objectives of

this act. An initial asset management plan shall not be required

to be submitted until the Environmental Quality Board has

adopted initial regulations under this act. The following apply:

(1)  A copy of the asset management plan shall be filed

in the water or wastewater system's office and, if

applicable, posted on the water or wastewater system's

Internet website.

(2)  Nothing in this act shall be construed to abrogate

the provisions of the act of November 29, 2006 (P.L.1435,

No.156), known as the Public Utility Confidential Security

Information Disclosure Protection Act.

(b)  Content of asset management plans.--

(1)  Asset management plans shall conform to the

requirements established in regulations adopted under this

act.

(2)  Asset management plans shall include:

(i)  An inventory of existing assets.

(ii)  An assessment of the condition of existing

assets and the identification of the risk and impact of

asset failure.

(iii)  An assessment of the anticipated useful life

of assets based on the assessment in subparagraph (ii).

(iv)  Identification of needed operation,

maintenance, repair, improvement, expansion,

rehabilitation and replacement of existing assets. This

identification shall be prioritized to identify the most

critical needs and shall include a schedule to reflect

the point in time that improvements are most cost

effective.

(v)  A schedule of costs to operate, maintain,

improve, expand, repair, rehabilitate and replace assets

for each of the following ten years.

(vi)  Identification of sources and amounts of funds

to finance the operation, maintenance, repair,

improvement, expansion, rehabilitation and replacement of

assets, including debt service, and to provide for

emergencies for each of the following ten years.

(c)  Department review.--The department shall review asset

management plans for technical adequacy and consistency with the

financial reports submitted under section 502(b). The department

shall approve the plan or require resubmittal within 120 days of

the submission of a complete asset management plan.

(d)  Use of revenues.--Revenues from user charges shall only

be used for operation, maintenance, capital expenses and other

costs directly related to the provision of water or wastewater

treatment service by the water or wastewater system that

receives the revenues.

(e)  Action by department.--If the department determines,

after review of a financial report, that the water or wastewater

system has failed to implement the requirements of this act, the

department may take appropriate actions, including any or all of

the following:

(1)  Require that an asset management plan that meets the

requirements of this section be submitted within 60 days.

(2)  Provide assistance in the development and

implementation of the asset management plan.

(3)  Issue an order requiring the development,

implementation or revision of an asset management plan.

(4)  Initiate enforcement action as outlined in Chapter

9.

Section 502.  Full-cost pricing.

(a)  General rule.--Each water and wastewater system shall

make every effort to move toward the implementation of full-cost

pricing.

(b)  Financial reports.--

(1)  Each water and wastewater system shall submit

annually to the department a financial report, including

sufficient detail to demonstrate compliance with any

regulations adopted by the Environmental Quality Board under

this act. A copy of the financial report shall also be

submitted to the Department of Community and Economic

Development.

(2)  The financial report shall consist of two parts as

follows:

(i)  Part I of the financial report shall consist of

a compilation, review or audit of the books, accounts and

records, conducted by a certified public accountant. The

compilation, review or audit shall include an

identification of the revenues from user charges and how

those revenues were used, including implementation of the

asset management plan required under section 501 in

accordance with section 501(d).

(ii)  Part II of the financial report shall consist

of a budget for the next fiscal year. The budget shall

contain sufficient detail to demonstrate how revenues

from user charges will provide the required level of

service to the public, including implementation of the

asset management plan required under section 501, within

limits of affordability to be established in regulations.

If regulations are not adopted by the time of the initial

submission required under this subparagraph, the limit of

affordability to be applied is 1.2% to 1.5% of the median

household income. The initial Part II financial report is

not required until such time as the initial asset

management plan is required.

(3)  The financial reports required under this act shall

be submitted according to one of the following schedules:

(i)  A water or wastewater system whose fiscal year

ends December 31 shall submit the report on or before May

1 of the following calendar year.

(ii)  A water or wastewater system whose fiscal year

does not end on December 31 shall file the report within

120 days after the end of its fiscal year.

(4)  A copy of the financial report shall be filed in the

water or wastewater system's office and, if applicable,

posted on the water or wastewater system's Internet website.

(c)  Customer assistance program.--Water and wastewater

systems shall offer a customer assistance program to reduce the

financial burden of user charges on customers with household

incomes 150% or less of the Federal poverty level according to

Federal poverty guidelines. A customer assistance program may

not conflict with other laws of the Commonwealth which control

user charges.

(d)  Departmental action.--If the department determines that

the water or wastewater system is not moving toward the goal of

implementing full-cost pricing, the department may:

(1)  Require that a corrected financial report that meets

the requirements of this section be submitted within 60 days

after issuance of an order.

(2)  Confer with the commission to recommend a schedule

of user charge adjustments to achieve the goal or the

customer assistance program requirements of subsection (c).

Section 503.  Acquisition of small water and wastewater systems.

(a)  Petition and determination.--The department may petition

the commission to request that it order a capable public utility

as the term is defined in 66 Pa.C.S. § 529(m) (relating to power

of commission to order acquisition of small water and sewer

utilities) to acquire a water or wastewater system that

regularly serves no more than 1,200 customer connections and

that is owned by a municipal authority or a municipality. The

commission may issue the requested order if the commission,

after notice and an opportunity to be heard by the owner of the

water or wastewater system, determines all of the following:

(1)  The water or wastewater system is in violation of

any applicable statutory or regulatory standards, including,

but not limited to, the act of June 22, 1937 (P.L.1987,

No.394), known as The Clean Streams Law, the act of January

24, 1966 (1965 P.L.1535, No.537), known as the Pennsylvania

Sewage Facilities Act and the act of May 1, 1984 (P.L.206,

No.43), known as the Pennsylvania Safe Drinking Water Act, 

and the regulations adopted thereunder, which affect the

safety or adequacy of the service provided by the water or

wastewater system.

(2)  The water or wastewater system has failed to comply,

within a reasonable period of time, with any order of the

department concerning the safety of the system or adequacy of

service, including, but not limited to, the availability of

water, the potability of water, the palatability of water,

the availability of wastewater collection, interceptor or

treatment capacity or the provision of water at adequate

volume and pressure.

(3)  The small water or wastewater system cannot

reasonably be expected to furnish and maintain adequate and

safe service and facilities in the future.

(4)  Alternatives to acquisition as set forth in 66

Pa.C.S. § 529(b) have been considered and have been

determined by the commission to be impractical or not

economically feasible.

(5)  The acquiring capable public utility is financially,

managerially and technically capable of acquiring and

operating the small water or wastewater system in compliance

with applicable statutory and regulatory standards.

(6)  The rates charged by the acquiring capable public

utility to its preacquisition customers will not increase

unreasonably because of the acquisition.

(b)  Factors.--In making the determination pursuant to

subsection (a), the commission shall consider the factors set

forth in 66 Pa.C.S. § 529(c).

(c)  Order.--Subsequent to the determination under subsection

(a), the commission may issue an order for the acquisition of

the small water or wastewater system by a capable public

utility. The order shall provide for the extension of the

service area of the acquiring capable public utility.

(d)  Acquisition price.--The price for the acquisition of the

small water or wastewater system shall be determined by

agreement between the owner of the small water or wastewater

system and the acquiring capable public utility, subject to a

determination by the commission that the price is reasonable,

considering the value of assets as well as liabilities. If the

owner of the small water or wastewater system and the acquiring

capable public utility are unable to agree on the acquisition

price or the commission disapproves the acquisition price on

which they have agreed, the commission shall issue an order

directing the acquiring capable public utility to acquire the

small water or wastewater system by following the procedure

prescribed for exercising the power of eminent domain pursuant

to 26 Pa.C.S. (relating to eminent domain), without regard to

any restrictions in 26 Pa.C.S. or otherwise regarding the use of

such procedures against property owned by a municipal authority

or municipality.

(e)  Procedure.--The provisions and procedures set forth in

66 Pa.C.S. § 529(f), (g), (h), (i), (j), (k) and (l) shall apply

to any proceeding initiated by the commission against a small

water or wastewater system under this section.

CHAPTER 7

CONTRACTS AND BIDDING

Section 701.  Competition in award of contracts.

(a)  Exceptions to competitive bid requirement.--

Notwithstanding any provision of law to the contrary, the use of

competitive bidding is not required for:

(1)  Construction, reconstruction, repair or other work

made by a municipality or municipal authority for water and

wastewater projects where the project amount is below the

bidding requirement threshold in subsection (b) if:

(i)  procurement is made through solicitation of

written proposals from three qualified contractors if

available in the market area;

(ii)  it is practicable to obtain the quotations; and

(iii)  procurement is made through issuance of a

contract.

(2)  The purchase of supplies and materials by a

municipality or municipal authority for water and wastewater

needs where the amount is below the bidding requirement

threshold set forth in subsection (b) if:

(i)  procurement is made through solicitation of

proposals from three qualified vendors if available in

the market area;

(ii)  it is practicable to obtain the quotations; and

(iii)  procurement is made through issuance of a

contract.

(3)  The purchase of pollutant reduction credits by a

municipality or municipal authority from a State-approved

public exchange, where the credits are used to meet legal

requirements for wastewater systems under a credit program

administered by the department if:

(i)  public notice is made prior to the purchase; and

(ii)  the governing body of the municipality or

municipal authority has made a finding that the purchase

is in the best interests of the public and the customers

of the wastewater system.

(b)  Competitive bid threshold.--If a water and wastewater

project is $100,000, or a higher amount in future years based

upon any increase in the Consumer Price Index as compared to the

Consumer Price Index on the effective date of this subsection,

as published annually in the Pennsylvania Bulletin by the

department, it shall be competitively bid.

Section 702.  Use of multiple-factor and comprehensive bidding

and contracting.

(a)  Procedures.--Notwithstanding any provision of law to the

contrary, where the use of competitive bidding by a municipality

or municipal authority is required by law for the erection,

construction and alteration of any water or wastewater system,

the following procedures may be used when the governing body of

the municipality or municipal authority has made a finding that

the procedures are in the best interests of the public and the

customers of the water or wastewater system:

(1)  The architect, engineer or other person may prepare

specifications that contain all of the requirements for the

project, including performance-based criteria or multiple-

decision criteria to the extent that those criteria are

necessary to address the particular complexities of the

project, in addition to the lowest price.

(2)  The person authorized to enter into contracts for

the erection, construction or alteration of the water or

wastewater system may receive bids responsive to the

specifications, and may award contracts, only as necessary to

reflect the complexity of the project, considering the

qualifications, financial strength and past performance of

the contractor, the initial design and construction costs and

the long-term operating and replacement costs.

(b)  Single contract.--Notwithstanding any contrary provision

of law, any municipality or municipal authority may procure

through a single contract the construction, the design and

construction or the design, construction and operation of water

and wastewater projects.

CHAPTER 9

ENFORCEMENT

Section 901.  Violations.

(a)  Civil penalty.--

(1)  In addition to proceeding under any other remedy

available at law or in equity for a violation of this act,

any rule or regulation of the department under this act or

any term or condition relating to this act in any permit

issued by the department, the department may assess a civil

penalty upon a person for the violation.

(2)  A civil penalty may only be assessed after the

department has issued an order relating to the violation and

the person fails to comply within 60 days of the issuance of

the order.

(3)  A civil penalty may be assessed whether or not the

violation was willful or negligent.

(4)  When the department assesses a civil penalty, it

shall inform the person of the amount of the penalty. The

person charged with the penalty must pay the penalty in full

within 30 days or, if the person wishes to contest either the

amount of the penalty or the fact of the violation, the

person shall, within the 30-day period, file an appeal of the

action with the Environmental Hearing Board. Failure to

appeal within 30 days shall result in a waiver of all legal

rights to contest the violation or the amount of the penalty.

(5)  The maximum civil penalty which may be assessed

pursuant to this section is $1,000 per day for each

violation. Each violation for each separate day and each

violation of any provision of this act, any rule or

regulation under this act, any order to the department or any

term and condition relating to this act in the permit shall

constitute a separate and distinct offense under this

section.

(b)  Other remedies.--The penalties and remedies prescribed

by this act shall be deemed concurrent, and the existence of or

exercise of any remedy shall not prevent the department from

exercising any other remedy under this act, at law or in equity.

(c)  Funding.--Any person who fails to make payments of

penalties in full within the appointed time will be ineligible

for any funding of State moneys for the purpose of water or

wastewater infrastructure construction until such time as the

penalty is paid in full.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101.  Repeals.

(1)  The General Assembly declares that the repeals under

paragraph (2) are necessary to effectuate the purposes of

this act.

(2)  Repeals are as follows:

(i)  Section 4.1 of the act of November 18, 1968

(P.L.1052, No.322), known as the Water and Wastewater

Systems Operators' Certification Act, is repealed.

(ii)  Section 6(b) of the act of March 16, 1992

(P.L.10, No.5), known as the Small Water Systems

Assistance Act, is repealed.

(iii)  53 Pa.C.S. § 5612(b) (relating to money of

authority), is repealed insofar as it relates to water

and wastewater systems.

Section 2102.  Effective date.

This act shall take effect in 30 days.