Environmental Quality

Drinking Water

Rule R309-800: Capacity Development Program

Effective Date: 05/22/2023

Admin. Code Reference: R309-800

Rule Type: Current Rule

R309. Environmental Quality, Drinking Water.

R309-800. Capacity Development Program.

R309-800-1. Authority.

(1) Under authority granted in Subsection 19-4-104(1)(a)(v), the Drinking Water Board adopts this rule implementing the capacity development program for new community and non-transient non-community systems and existing community, non-transient non-community, and transient non-community systems and governing the allotment of federal funds to public water systems to assist them to comply with the Safe Drinking Water Act (SDWA).

R309-800-2. Purpose.

(1) The SDWA makes certain federal funds available to states, through the Drinking Water State Revolving Fund Financial Assistance Program to provide assistance to eligible public water systems as part of a capacity development strategy developed and implemented in accordance with 42 U.S.C. 1420(c) to ensure all new public water systems will be able to comply with the SDWA, to enhance existing public water systems' capability to comply with the SDWA, and determine which public water systems applying for financial assistance are eligible to use the State Revolving Funds.

(2) The purpose of the Capacity Development Program for new and existing systems is to enhance and ensure system technical, managerial, and financial capacity and encourage water systems to develop and implement an asset management program. The Program's goals are:

(a) to promote long-term compliance with federal drinking water regulations;

(b) to promote the public health protection objectives of the SDWA; and

(c) to promote and encourage water systems to implement best practices and other activities associated with an asset management program.

R309-800-3. Definitions.

"Asset Management Plan" A written plan developed by a water system to implement asset management or an asset management program within the system. The asset management plan describes the five core asset management components at Subsection R309-800-5(3) and provides an outline the water system can use to make appropriate improvements.

"Asset Management Program" The practice of managing infrastructure assets to maximize the efficiency and life expectancy of operating these assets while delivering the desired service levels.

"Capacity Development" means the technical, managerial, and financial capabilities of the water system to plan for, achieve, and maintain compliance with applicable drinking water standards.

"Community Water System" An existing system providing water for human consumption and other domestic uses through pipes or other constructed conveyances, which has at least 15 service connections or serves an average of at least 25 individuals at least 60 days out of the year.

"New Water System" means a system that will become a community water system or non-transient, non-community water system on or after October 1, 1999.

"Non-Transient Non-Community Water System" (NTNCWS) An existing public water system, that is not a community water system, that regularly serves at least 25 of the same nonresident persons per day for more than six months per year. Examples of such systems are those serving the same individuals such as industrial workers, school children, or church members using a separate system.

"Required Reserve" Funds set aside to meet requirements set forth in a loan or bond covenant or indenture.

"Transient Non-community Water System" An existing public water system, that is not a community water system, that regularly serves at least 25 of the same people over 6 months per year. Examples of such systems include commercial or not-for-profit establishments that have their own water supply such as restaurants, roadside stops, campgrounds, and hotels.

Additional definitions are provided in Rule R309-110.

R309-800-4. General.

(1) Capacity development criteria constitute a standard applied in the following situations:

(a) when reviewing new or proposed water system applications, including newly discovered water systems previously unknown to the Division that are providing drinking water to the public;

(b) when reviewing applications for financial assistance; or

(c) when assessing capacity of all water systems that are rated unapproved or are in significant noncompliance with SDWA requirements or State drinking water rules as determined by the state's Improvement Priority System or the Environmental Protection Agency's (EPA) Enforcement Targeting Tool.

These criteria may be used as a guideline for other water systems. Water systems may refer to the State's Existing System Capacity Development Strategy, available on the Division's website, for additional information on capacity development and assessments.

(2) Capacity Development Criteria:

(a) Technical Capacity.

(i) Finished water shall meet all drinking water standards as required by Utah State Rules.

(ii) Personnel shall operate the system in accordance with the operations and maintenance manual.

(iii) Water systems shall provide proof of sufficient water rights or valid water purchase contracts.

(iv) Water systems shall meet source, storage, and distribution requirements as per Utah State Rules.

(v) Existing systems rated unapproved or with a history of significant noncompliance, as determined by the state or the EPA, shall agree to undertake appropriate action to resolve noncompliance or become an approved system.

(b) Managerial Capacity.

(i) The system owner and any management or ownership changes shall be clearly identified to the Executive Secretary of the Drinking Water Board.

(ii) The system shall meet all certification requirements defined in Rules R309-300 and R309-305.

(iii) The system shall implement a program to effectively manage all system records, such as distribution system histories, maps, asset inventory, and compliance information.

(iv) The system shall develop and maintain an operating plan that includes system operator names and certification levels, facility operation and maintenance manuals, routine maintenance procedures, water quality monitoring plan and violations response procedures, training plan, and emergency response plan.

(i) Revenues shall be greater than expenses.

(ii) A Certified Public Accountant must prepare a financial statement or perform an audit if otherwise required of the water system, at least every three years.

(iii) The water system shall devise and implement a managerial budget and accounting process in accordance with generally accepted principals.

(iv) The operating ratio, calculated as the operating revenue divided by operating expenses excluding depreciation and required reserves, shall be greater than 1.0.

(v) The coverage ratio, calculated as the total revenues minus operating expenses excluding depreciation and required reserves divided by annual debt service, shall be greater than 1.0.

(vi) Customers shall be metered or the water system shall take action to install meters.

(vii) The water system shall create and fund an emergency accountor a replacement reserve account.

(d) Asset Management.

(i) Existing systems are encouraged to develop and implement an asset management plan that addresses the technical, managerial, and financial aspects of the five core components of asset management defined in Subsection R309-800-5(3).

(ii) Retail water suppliers seeking financial assistance through Utah's State Revolving Fund must commit to develop and implement an asset management program as referenced in Section R309-700-5.

(iii) Retail water suppliers seeking financial assistance through the federal State Revolving Fund must commit to develop and implement an asset management program as referenced in Section R309-705-5.

Capacity Development Worksheets are required for all systems seeking financial assistance from the Drinking Water State Revolving Fund Program.

R309-800-5. Implementing an Asset Management Program.

(1) Water systems are encouraged to develop and implement an asset management program. An asset management program provides the following benefits to water systems:

(a) Prolong asset life.

(b) Reducing overall costs for operations, maintenance, and capital expenditures.

(d) Meeting customer demands with a focus on system sustainability.

(e) Meeting service expectations and regulatory requirements.

(f) Improving responses to emergencies.

(g) Improving asset safety and security.

(h) Budgeting focused on critical activities for sustained performance.

(i) Setting rates based on sound operational and financial planning.

(2) An effective asset management program includes detailed asset inventories, operation and maintenance tasks and long-range financial planning. These items should be captured in an asset management plan, which can be tailored to fit individual water system size and complexity.

(3) The asset management plan shall address the following five core components:

(a) The current state of the utility's assets.

(i) Prepare an asset inventory.

(ii) Develop a system map.

(iii) Develop a method to assess and prioritize assets based on condition.

(iv) Assess the asset's remaining useful life.

(v) Determine asset value and replacement cost.

(b) The utility's required sustainable level of service.

(i) Analyze current customer demand and satisfaction.

(ii) Analyze anticipated customer demand and satisfaction.

(iii) Understand current regulatory requirements.

(iv) Communicate system performance goals with the public.

(v) Identify standard levels of services and track system performance.

(i) Conduct a failure analysis on all assets.

(ii) Determine probability of failure.

(iii) Analyze risk and consequences of failure.

(iv) Prioritize system assets based on importance to system operation.

(v) Develop specific response plans based on potential asset failure.

(d) Minimum infrastructure life-cycle costs.

(i) Implement an appropriate maintenance schedule, including costs for all assets.

(ii) Identify life-cycle costs for all assets.

(iii) Develop a capital improvement plan and an operations and maintenance strategy.

(iv) Identify and compare the cost of rehabilitation versus replacement.

(v) Determine the related costs of responding to asset failure.

(e) Long-term budgeting strategy.

(i) Regularly review system budget.

(ii) Establish and fund a capital facilities account.

(iii) Implement a rate structure to ensure financial sustainability.

(iv) Explore asset renewal and replacement financing.

(v) Identify financial assistance resources based on asset condition and importance.

(4) All water systems subject to this rule shall complete the following:

(a) Prepare and asset management plan as described in Subsection R309-800-5(3).

(b) System's governing body shall formally adopt the asset management plan.

(5) In addition to the requirements in Subsection R309-800-5(4), water systems applying for financial assistance from either the federal or state Drinking Water State Revolving Fund Financial Assistance Program must also submit their asset management plan to the Division for review or request sufficient funds to create an asset management plan. Asset management plans prepared using financial assistance from the Drinking Water Board shall be submitted to the Division for review.

R309-800-6. Requirements for New Community and New Non-transient, Non-community Water Systems.

(1) Each proposed, new water system must demonstrate that it has adequate technical, managerial, and financial capacity before it may provide water for human consumption. These water systems shall submit the following for Capacity Assessment Review.

(a) Project Notification form, available on the Division's website.

(b) A business plan, which includes a facilities plan, management plan, financial plan, and an asset management plan.

(i) Facilities plan. The facilities plan shall describe the scope of the water services to be provided and shall include the following.

(A) A description of the nature and extent of the area to be served and provisions for extending the water supply system to include additional area. The description shall include population and land use projections and forecasts of water usage.

(B) An assessment of current and expected drinking water compliance based on monitoring data from the proposed water source.

(C) A description of the alternatives considered, including interconnections with other existing water systems, and the reasons for selecting the method of providing water service. This description shall include the technical, managerial, financial, and operational reasons for the selected method.

(D) An engineering description of the facilities to be constructed, including construction and future phases, and plans for expansion. This description shall include an estimate of the full cost of any required construction, operation, and maintenance.

(ii) Management plan. The management plan shall describe what is needed to provide for effective management and operation of the system, and shall include the following:

(A) Documentation that the water system has the legal right and authority to take the measures necessary for the construction, operation, and maintenance of the system. The documentation shall include evidence of ownership.

(B) An operating plan that describes the tasks to be performed in managing and operating the system. The operating plan shall consist of administrative and management organization charts, plans for staffing the system with certified operators, and provisions for an operations and maintenance manual.

(C) Documentation of credentials of management and operations personnel, cooperative agreements, or service contracts including demonstration of compliance with Rule R309-300 water system operator certification rule.

(iii) Financial plan. The financial plan shall describe the water system's expected revenues, cash flow, and issuance and repayment of debt for meeting the costs of construction, and the estimated costs of operation and maintenance for at least five years from the date the water system expects to begin operation.

(iv) Asset Management Plan. The asset management plan shall include all the elements described in Subsection R309-800-5(3).

(c) After the information required in this section has been submitted by the water system and is deemed complete, the Division shall conduct a Capacity Assessment Review. The water system shall be notified in writing whether or not the new system has demonstrated adequate capacity. No new community or non-transient, non-community system will be approved if it lacks adequate capacity.

(d) Water systems constructed without approval shall be subject to points as specified in Rule R309-400, and administrative or civil penalties and fines.

R309-800-7. Minimum Capacity Required for Financial Assistance Under Rules R309-700 and R309-705.

(1) Applicants for financial assistance shall complete an application form, available on the Division website. The application shall include project information and water system financial information. This information will be used to determine project and water system eligibility, establish project priority ranking, and provide a basis for determining financial assistance parameters.

(2) Financial assistance under the Rule R309-705. Financial Assistance: Federal Drinking Water State Revolving Fund Loan Program. Applicants for financial assistance from the Federal Drinking Water State Revolving Loan Program are required to complete and submit Capacity Development worksheets to the Executive Secretary. Financial assistance shall not be available to a water system that lacks the technical, managerial, or financial capability to maintain SDWA compliance, or is in significant noncompliance with Rules R309-200 through R309-225 or Rules R309-500 through R309-550, unless:

(a) The use of the financial assistance will ensure compliance with SDWA and Utah rules; or

(b) The owner of the system agrees to undertake feasible and appropriate changes in operation to ensure technical, managerial, and financial capacity to maintain long-term compliance with SDWA.

(3) Financial assistance under Rule R309-700. Financial Assistance: State Drinking Water State Revolving Fund Loan Program. The Executive Secretary may require an applicant for a loan from the state Revolving Loan Program to complete and submit Capacity Development worksheets for review before considering whether a project is eligible for financial assistance. The decision will be based on available water system information obtained through sanitary surveys, site visits, monitoring and reporting data, or other valid means. If, after review of available information, the Executive Secretary determines that a Capacity Development Assessment is necessary, the applicant must complete and submit the Capacity Development worksheets to the Division. Otherwise, a Capacity Development Assessment is not required.

KEY: drinking water, funding, regionalization, capacity development

Date of Last Change: May 22, 2023

Notice of Continuation: February 10, 2025

Authorizing, and Implemented or Interpreted Law: 19-4-104