National Drinking Water Clearinghouse
West Virginia University
PO Box 6893
Morgantown, WV

States Implement Capacity Development Plans

by Mark Kemp-Rye
On Tap Editor


The 1996 Safe Drinking Water Act (SDWA) Amendments contained dozens of new and improved regulations. For those working with water systems, it’s been easy to get lost in all the requirements. But, one component of the SDWA—capacity development—has, many would say, the potential to be the most far-reaching of any of the act’s many features.

Capacity Development: A Brief Refresher
Basically, capacity development asks a water system if it has the ability to provide the public with safe drinking water now and in the future. Capacity development is divided into three components: technical, managerial, and financial.

The 1996 U.S. Environmental Protection Agency (EPA) document Guidance on Implementing the Capacity Development Provisions of the Safe Drinking Water Act Amendments of 1996 defines water system capacity development as:… the process of water systems acquiring and maintaining adequate technical, managerial, and financial capabilities to enable them to consistently provide safe drinking water. The SDWA’s capacity development provisions provide a framework for states and water systems to work together to ensure that systems acquire and maintain the technical, managerial, and financial capacity needed to meet the Act’s public health protection objectives.

Technical capacity refers to such things as source water adequacy, infrastructure sufficiency, and technical knowledge and the ability to implement it. Managerial capacity is concerned with ownership accountability, staffing and organization, and external linkages. Financial capacity is about revenue sufficiency, creditworthiness, and fiscal management and controls. For a system to have adequate capacity, it must show that it meets requirements in these three areas.

A state’s overall capacity development program is actually made up of two major parts: the new systems program and the existing systems strategy. The new systems program requires that states have the legal authority (or other means) to ensure that all new community and nontransient, noncommunity water systems beginning operation after October 1, 1999, must demonstrate technical, managerial, and financial capacity with respect to all national primary drinking water regulations in effect, or likely to be in effect, on the date of operation. For new systems, states often require a financial audit, an engineering report, documentation that a certified operator will run the system, and a business plan. The existing systems strategy requires states to have measures in place that assist all existing public water systems in acquiring and maintaining technical, managerial, and financial capacity necessary in order to comply with SDWA regulations.

“Capacity development is a state effort to help drinking water systems improve their finances, management, infrastructure, and operations so they can provide safe drinking water consistently, reliably, and cost-effectively,” says Jenny Bielanski, operator certification and capacity development coordinator with the EPA’s Office of Ground Water and Drinking Water. “While retaining the best of the previous act, the (1996) amendments create a new and strong focus on preventing contamination and noncompliance. They also greatly increase state flexibility, provide badly needed financial support, and create a new ethic of public awareness and participation.”

Small Systems: Where it all Began
It’s fair to say that capacity development was prompted by the experience of many small systems. Peter Shanaghan, formerly EPA small systems coordinator and now chief of staff with EPA’s Office of Ground Water and Drinking Water, notes this in a 1998 AWWA Journal article: “By the late 1980s and early 1990s, it was clear that small systems were having difficulty keeping up with the rapidly expanding SDWA-mandated regulations. There was also growing recognition of a significant need to repair and replace basic infrastructure, apart from any regulatory mandates.

“A few states were implementing ‘viability’ initiatives, which sought to promote small system compliance and otherwise address small system problems by ensuring that systems had the underlying technical, managerial, and financial capacity,” he continues. “These programs showed great promise, and the concept of small system viability emerged as a major consideration in early discussions about SDWA reauthorization.”

“Capacity development can also be thought of as a tapestry that weaves together all existing state drinking water program activities into a focused effort to help troubled small systems,” says Bielanski. “Because the overwhelming majority of public water systems are classified as small, it then follows that capacity development activities will likely have their greatest effect on small systems and particularly on those small water systems that are currently out of compliance or may likely be in the future.”

SDWA architects also realized that merely mandating more and more requirements wasn’t the most effective way to achieve the results they envisioned. There had to be a carrot to accompany the stick. The drinking water state revolving fund (DWSRF)—modeled after the established clean water state revolving fund—was developed to help fund these new mandates.Under the DWSRF, EPA provides grants to states, which, in turn, provide loans and other assistance to qualifying communities. The communities repay the loans at low interest rates, hence the term “revolving.” Each state is given considerable leeway in determining the design of its program and directing funds to its most pressing compliance and public health protection needs. Since the first loans were issued in 1997, Congress has appropriated more than $4 billion toward this program.

“From a small systems perspective, the major components of the tapestry are the DWSRF, capacity development, source water protection, operator certification, consumer confidence, and variances and exemptions,” Bielanski explains. “These provisions are closely interrelated: Capacity development, source water protection, and operator certification are directly linked to the DWSRF. A state may set aside funds from its DWSRF to develop and implement a program that addresses these three provisions.”

What are states doing?

All 50 states and Puerto Rico are successfully implementing capacity development programs. However, the states must document ongoing implementation of their programs on a yearly basis or face a 20 percent DWSRF withholding.

To accommodate capacity development concepts, states may develop and implement a number of different programs. EPA has approved such programs as:
• helping the owners of water systems prepare business plans that identify financial needs for the coming years;
• training system operators on how to detect leaks that may pose a risk to contamination of treated water;
• assisting water systems to set appropriate rates; and
• educating communities about sources of financial assistance.

“States can take advantage of DWSRF set-asides to prepare a capacity
development strategy that is focused on a specific group of systems, such as significant noncompliers, or directed broadly towards systems that are out of compliance or will soon be out of compliance,” says Bielanski. “States can use capacity development to efficiently target the technical, financial, and managerial needs of many small systems and then directly address those needs through specific activities that help systems enter and remain in compliance.”

If All Goes Well
If capacity development works as envisioned, water systems—particularly small systems—will be better prepared to adapt to whatever the future holds. By promoting and rewarding self-sufficiency, capacity development provides an opportunity for systems to control their own destinies.

That’s not to say that it will be smooth sailing from here on out. “Small systems, now more than ever, are facing tremendous challenges in providing safe and affordable drinking water,” says Shanaghan. “The SDWA’s capacity development provisions provide the framework within which systems, states, the public, and other stakeholders can work together to meet these challenges.”

For More Information
For information about the capacity development program in your state, contact the agency primarily responsible for developing and administering the program. If you aren’t sure which agency this is, call the National Drinking Water Clearinghouse at (304) 293-4191 and ask to speak with a technical assistance specialist.

The reports State Programs to Ensure Demonstration of Technical, Managerial, and Financial Capacity of New Water Systems and State Strategies to Assist Public Water Systems in Acquiring and Maintaining Technical, Managerial and Financial Capacity are available from EPA. Write to Jenny Bielanski, EPA/OGWDW (4606M), 1200 Pennsylvania Ave. NW, Ariel Rios Building, Washington DC, 20460 or e-mail or call the EPA Safe Drinking Water Hotline at (800) 426-4791. Mention document number EPA 816-R-01-018. The document may also be downloaded from the EPA Web site at

Capacity development articles were featured in the NDWC newsletters Water Sense and On Tap. The article “Capacity Development Hits Its Stride” appeared in the fall 1998 issue of Water Sense. The summer 1997 issue of On Tap had several articles about capacity development. To order either of these newsletters, call (304) 293-4191 or e-mail