IV. Applicable Drinking Water Quality Regulation

As discussed in D.99-06-054, the Public Utilities Commission has jurisdiction to regulate the service of water utilities with respect to the health and safety of that service (D.99-06-054, mimeo., p. 50). The standard for measuring utility compliance is expressed under the standards of service related to water quality in General Order 103. It provides:

"A compliance by a utility with the regulations of the State Department of Health Services, on a particular subject matter shall constitute a compliance with such of these rules as relate to the subject matter except as otherwise ordered by the Commission." (General Order 103, pp. 11-12.)

This is the compliance standard to which the Commission holds utilities because it aptly encompasses SDWA laws and regulations developed by DHS as well as Commission orders. Moreover, it explicitly recognizes that this Commission has concurrent jurisdiction with the State Department of Health Services over the quality of drinking water provided by regulated water utilities.

A jurisdictional structure that preserves the authority of both DHS and the Commission over the quality of water provided by residents and businesses by private water companies is consistent with the original intent of the 1911 Act giving the Commission authority over water issues. It remains crucial to the effective regulation of public utilities. The expertise of the Commission, however, has always centered around the creation of financial and regulatory incentives that foster and support socially desired behavior from firms that operate in a marketplace characterized by limited competition. Thus, it is clearly reasonable that the Legislature continue to marshal the expertise of the Commission as well as the health-science expertise of DHS to support a public interest as critical as the quality of drinking water.

We, therefore, concluded in the Interim Opinion, D.99-06-054, as modified by D.99-09-073, that we have independent and concurrent jurisdiction to pursue all issues outlined in this proceeding based upon an analysis of the California Constitution, Article XII, §§ 2, 3 and 5 and Pub. Util. Code §§ 451, 454, 701, 761, 768 and 770. In addition, we concluded that under § 1759, the existence of pending civil suits on subjects related to matters being considered herein does not prevent us from exercising our jurisdiction to pursue this investigation.

We also described in great detail the history of this Commission's policies and our implementation of rules, requirements and guidelines governing drinking water quality, such as General Orders 96 and 103 and individual case law. We described our active partnership with DHS in assessing the public health risk in contaminated or polluted water, providing detailed memoranda of understanding, specific mandated guidelines and case-by-case decision-making. (D.99-06-054, at pp. 12-35.) As stated in the OII:

"In furtherance of the Commission's policies and requirements embodied in General Order 103, the Commission has established additional policies, requirements, and water quality and water treatment standards, and guidelines governing the operations and practices of water utilities subject to this Commission's jurisdiction."

As mentioned above, a central feature of General Order 103 is its incorporation of the water quality standards developed by DHS.

Thus, this final opinion focuses on resolving the two broad issues of adequacy of drinking water quality standards and compliance by regulated utilities with these standards by answering the specific questions asked throughout this proceeding regarding these issues.

As invited, DHS provided an overview of existing state and federal water quality regulation, including procedures for setting standards, testing requirements, follow-up procedures for tests exceeding standards, citation criteria and enforcement mechanisms. The following DHS summary is undisputed.

A. Agency Responsibilities

Under the Federal Safe Drinking Water Act (SDWA) enacted by Congress in 1974 and amended in 1986 and 1996, the federal government has preempted states in the regulation of public water systems. Pursuant to the federal SDWA, the U. S. Environmental Protection Agency (EPA) is mandated to adopt national drinking water regulations to ensure that public drinking water supplies are potable. In 1975, EPA adopted the National Interim Primary Drinking Water Regulations to replace the then-existing Public Health Service Drinking Water Standards of 1962. Since 1975, EPA has adopted a broad range of drinking water standards, monitoring regulations, and reporting requirements to protect the quality of drinking water. Current regulations govern: contaminants to be monitored by utilities; sample frequency, collection and analytical methods; standards to define "safe" levels; treatment requirements if "safe" levels are exceeded; and requirements for utilities reporting to the state and notifying customers of detected contaminants.

The federal SDWA permits states to assume the responsibility to implement the provisions of the SDWA. This authority, known as "primacy," requires that states enact laws consistent with the federal SDWA and adopt regulations that are at least as stringent as those adopted by EPA. EPA is responsible for ensuring that each state meets the primacy requirements mandated in the SDWA.

The California Legislature has the responsibility to incorporate required mandates from the federal SDWA into California's Safe Drinking Water statutes. In addition, the Legislature addresses public concerns on specific water quality issues in California by passing legislation establishing requirements extending beyond the federal SDWA, such as public health goal requirements and the mandate for primary and secondary maximum contaminant levels (MCLs) for specific chemical contaminants such as Methyl Tertiary Butyl Ether (MTBE).⁴

DHS has the responsibility to adopt and enforce regulations to implement the mandates in the California SDWA. Under this mandate, DHS has regulatory oversight in this area of approximately 8,700 water systems, including those investor-owned water systems regulated by this Commission. This oversight responsibility includes issuing operating permits, conducting inspections, carrying out general monitoring and surveillance activities, and conducting water quality evaluations. DHS may take enforcement action, including imposing fines against a water system for noncompliance with drinking water regulations. The California SDWA authorizes DHS to delegate the responsibility for regulating water systems with less than 200 service connections to local county health officers by means of local primacy delegation agreements. There are 34 such agreements in place at this time.

The county health agencies (also known as Local Primacy Agencies, LPAs) have the same administrative authority as DHS to cite and fine noncomplying water systems. LPAs may conduct office hearings where they hear the testimony of an alleged noncomplying company. The LPAs have an advantage over DHS when dealing with some noncommunity water systems, such as restaurants, because they also issue permits to such facilities for other purposes, such as to serve food. If such a facilities is noncooperative regarding water system problems, the LPA has the authority to close down the facility. As a last resort, the LPAs may utilize the County District Attorney to initiate court actions against recalcitrant water systems.

B. Setting Maximum Contaminant Levels

Regarding water sources that have "no contaminants," the definition of "contaminants" is important. There are many drinking water sources that meet drinking water standards and need no treatment before delivery to the public. However, no drinking water source could meet the definition of "pure" water, that is a collection of molecules each of which has two hydrogen and one oxygen atoms. In fact, there could be a health risk associated with drinking "pure" water. Its ingestion could disrupt the normal physiologic (homeostatic) mechanisms that keep the body's electrolytes in balance. However, like other substances, this would depend on the quantity ingested.

The protection of public health by establishing water quality criteria and monitoring to ensure those criteria are met is actually a matter of minimizing health risks rather than eliminating risk entirely, because it is not possible to totally eliminate risk due to practical, technical, and financial constraints.

The development of MCLs involves several steps. First, the Office of Environmental Health Hazard Assessment (OEHHA)⁵ conducts a risk assessment to evaluate the human health risks associated with exposure to the contaminant in drinking water. Health risks are determined by evaluating epidemiologic studies of people exposed to high levels of a particular chemical (such data are rarely available except in an occupational setting) or by evaluating the results of toxicological studies on laboratory animals. The results of these studies are used to describe the dose-effect relationship, which can be represented graphically by dose-effect curves. For carcinogenic effects, the experimental dose-effect curve is usually sigmoidal, or S-shaped. As a matter of health protective prudence and convention, OEHHA assumes the dose-effect curve to be linear from high to low doses, with zero risk at zero exposure. This assumption tends to overestimate the risks at low doses, affording additional health protection when risk management decisions are made based on carcinogenic risk assessments.

For noncarcinogenic chemicals, levels are established that are expected to pose no health risk. Usually there is a large margin of safety that is incorporated, although there are exceptions, such as with nitrate and lead. At low exposure levels, nitrate poses a danger, specifically to infants, in the form of methemoglobinemia, and lead exposure may pose neurological risks to persons of all ages. Therefore, the MCLs for nitrate and lead are set just below the level of risk to health.

Any exposure to carcinogenic chemicals is assumed to pose a calculable risk of cancer. Therefore, MCLs for these contaminants are set at a level expected to pose an insignificant cancer risk. Often by convention, this is a level that corresponds to a lifetime cancer risk of up to one excess case of cancer per million people exposed by drinking two liters of water per day for 70 years. However, the risk level for some carcinogenic chemicals may be set as high as one excess case of cancer per 10,000 people exposed by drinking two liters of water per day for 70 years. The one excess case of cancer risk arising from ingestion of each carcinogenic chemical in drinking water is a risk in excess, or in addition to, cancers that would normally occur in the population (250,000 to 300,000 per million people per lifetime).

This perception of risk has been used by DHS since the mid-1980s. At that time DHS began adopting MCLs for a number of chemical contaminants related to pollution from industrial and agricultural activities. As noted supra, after moving OEHHA to the newly formed California EPA, the legislature formalized this process by requiring that OEHHA adopt Public Health Goals (PHGs) for every contaminant for which DHS is developing an MCL.

Even though MCLs for chemical contaminants are established at levels that are not expected to pose a danger to the public, there may be theoretical, calculable risks due to ingestion of water with contaminants at or below the MCL. For carcinogens, for example, the general methodology of risk assessment assumes that there is risk associated with any exposure, with zero risk expected to occur at zero exposure. So in some cases, a chemical might be at a level corresponding to a theoretical cancer risk of up to one excess case per 10 million or 100 million people per lifetime, lower than the de minimis level, but calculable nonetheless. Thus, even though the theoretical carcinogenic risk estimates are "up to" one excess case of cancer per a given population, the risk may be zero when contaminant levels are below the MCL.

After obtaining the risk assessment, it is necessary to determine whether commercially available laboratories can detect the contaminant and at what levels. DHS evaluates the treatment options available to public water systems affected by a contaminant, if any, and estimates treatment costs. DHS also reviews available occurrence and exposure data related to the number of systems and drinking water sources affected. If treatment is feasible to meet the PHG in terms of technology and costs, then DHS proposes the PHG as the MCL. If a contaminant cannot be detected in drinking water at the level of the PHG or its equivalent risk assessment, then the detectable level would be proposed as the MCL. If treatment is not feasible, after considering the predicted theoretical illnesses that would be prevented, a less stringent MCL might be proposed.

The proposal for an MCL and background documentation undergo the standard rulemaking procedure required by the Administrative Procedure Act which governs many state agency proceedings. In this proceeding, DHS provided the regulatory package for perchloroethylene (tetrachloroethylene), one of the chemicals identified by parties in this proceeding as named in pending lawsuits, as an example of the documentation of the administrative process of setting a standard.

Public input is actively sought via the solicitation of public comment during rulemaking, as required by state and federal law. In addition to contacting one's elected officials regarding proposed regulation, the public can influence the policy making process by employing the state's initiative process to make law. This was done fourteen years ago when Proposition 65, the Safe Drinking Water Act and Toxic enforcement Act of 1986, was passed by the voters.

The federal process for establishing MCLs is similar to that of DHS, according to DHS, and the verified statement of Dr. Elizabeth L. Anderson, former director of EPA risk assessment. Federal law requires the federal EPA to review MCLs at least every three years. (42 USCA 300 g-l (3A) and (a).)

C. Action Levels

Action Levels (ALs) except as they relate to lead and copper, are nonenforceable health guidance levels for chemicals lacking MCLs.⁶ Contaminants are identified and ALs are derived in the following manner. A contaminant may be detected as a result of a utility's analytical method run for other chemicals, such as a volatile organic scan, and, pursuant to DHS policy, the utility reports the finding to DHS. A contaminant may be found in a drinking water source because of some indication that it may be present. For example, perchlorate⁷ was found in drinking water wells because of sampling that resulted from learning about the movement of perchlorate in ground water from a Superfund site nearby. Other contaminants needing ALs may result from hazardous waste cleanup activities, industrial contamination, pesticide use, fuel spills or other activities that might contaminate drinking water supplies. The use of an AL ends if an MCL is adopted for that contaminant.

Generally, there are health risks associated with any chemical, whether or not an AL or MCL has been established. Risk is determined by the chemical toxicity and exposure. It is the quantity of contaminant to which someone has been exposed and the period of time during which exposure has occurred that determines the extent of risk. Thus, a low enough level of a contaminant is not necessarily poisonous. It is because of concerns about health risks that ALs are established in order to identify a level that is considered to pose an insignificant risk. ALs allow DHS to advise drinking water systems and the public about the significance of contaminant exposures in drinking water far in advance of the development of an MCL, which takes considerable time to promulgate.

D. Public Health Goals

OEHHA is mandated by statute (Health and Safety Code Section 116365) to adopt a PHG for each contaminant for which an MCL may be established. PHGs may be the same as the later established MCLs, or they may be more or less restrictive than MCLs, depending upon the outcome of OEHHA's review of available scientific information.

For acutely toxic substances (noncarcinogenic effects), PHGs are at a level at which no known or anticipated adverse effects on health will occur, with an adequate margin of safety. This would usually correspond to the "no observable adverse effect level" (NOAEL) divided by what are called Uncertainty Factors to take into account the quality of the data and its applicability to humans. For example, each component that supplies data to the risk assessment provides uncertainty. Hence, uncertainties are associated with extrapolating from high dose, short-term exposures to low dose, long-term environmental exposures, extrapolating from laboratory animals to humans, taking into account more sensitive members of the population, such as children, and taking into account the quality of available data.

For carcinogens or other substances that can cause chronic disease, PHGs are set at a level that OEHHA has determined does not pose any significant risk to health. For noncancer effects, this would be done as described above for other toxic substances. For cancer, this corresponds to a risk of up to one excess case of cancer per million people per 70-year lifetime, the so-called "de minimis" level. To date, approximately 50 contaminants have been reviewed and PHGs adopted.

DHS has identified several contaminants for review to determine whether or not the MCLs should be revised in response to the PHG. Two of those chemicals, chromium (total and the contribution of chromium VI) and trichloroethylene, are among the contaminants listed as allegedly causing a health hazard in pending litigation.

As to the federal MCLs, EPA is reviewing arsenic and radionuclides (including radon), so these federal MCLs may change within the next few years.

E. Testing for Known Contaminants

There is no requirement that utilities test for contaminants with ALs unless the contaminants are on the list of "unregulated contaminants" for which DHS requires monitoring because often the contamination is site-specific. However, when a contaminant is associated with certain industrial activities, widespread sampling may be advised, as with perchlorate, when public water systems were advised in 1997 of findings around aerospace facilities. Often, when it needs to obtain information on the occurrence of a particular contaminant, DHS will add the contaminant to the list of unregulated chemicals for which monitoring is required through the regulatory adoption process.

DHS requires water utilities to test for any contaminant for which it has established a drinking water standard and any contaminant that is on the list of "unregulated" chemicals. Testing for certain contaminants may not be required if DHS determines that a utility's drinking water source is not "vulnerable" to a specific contaminant.⁸

After a regulation containing new standards or monitoring requirements is adopted, DHS provides written notice to the utilities informing them of the new requirements and what they must do to comply. DHS frequently conducts training for utilities to assist them in meeting new requirements, especially if the requirements are complex. DHS also makes special presentations at water industry conferences and meetings, such as conferences held by the California-Nevada Section of the American Water Works Association, Association of California Water Agencies and CWA.

DHS maintains a water quality monitoring database for all public water systems under its direct authority that can be compiled in a number of different report formats. In the 34 counties where DHS has delegated the authority to regulate, the county oversees the regulation of water utilities serving less than 200 service connections and maintains the water quality monitoring data. DHS recently compiled a report on the most recent sampling results from the water sources of regulated water utilities. In this proceeding, DHS used that report to verify the number of sources within each system that had a positive finding based upon testing for all inorganic and organic chemicals, radionuclides with MCLs and other chemical constituents.

A large percentage of water utilities, roughly 75%, have their chemical and radionuclide data reported electronically to DHS by the laboratory conducting the analyses. The remaining water utilities report water quality data to DHS by hard copy. Depending on the arrangements made, the utility receives a copy of the monitoring data from the laboratory. DHS requires utilities to review their data and make arrangements with their contract laboratories to be notified immediately if any sample finding exceeds a standard. Depending on the standard or the follow-up monitoring required, different timeframes are specified for contacting DHS.

Regulations adopted by DHS specify how utilities are to proceed when contaminants are found, the requirements differing based upon the level of detection. All regulated utilities are expected to be familiar with the regulations. DHS also certifies water treatment operators pursuant to state law.⁹ Depending on the level of certification, operators are required to know applicable drinking water law, including the responsibility of a regulated water utility when contaminants are discovered. DHS requires that each operator pass a test for his or her specific grade level before a certification may be granted.

F. Detection of New Contaminants

DHS learns of water contamination in several ways. The regulated utility is required to notify DHS within 48 hours after a contaminant in excess of an MCL is detected and within 24 hours when the level of contamination is 10 times greater than the MCL.¹⁰ DHS requires utilities to submit certain monitoring data monthly. DHS field engineers routinely review these reports to determine if changes have occurred in water quality. Utilities are also advised to report to DHS when a contaminant is found for which there is no drinking water standard. DHS reports that utilities have been very responsive to this advisory. DHS may then determine if appropriate and adequate action was taken when contamination was discovered.

In many cases, a laboratory or utility may not "know" that there is a new contaminant in drinking water if it cannot detect it. DHS reports that the one overriding impediment limiting utility actions in addressing various contaminants has been the lack of knowledge as to the chemical contaminants that could be affecting their water sources.

In other cases, a utility might analyze a sample for a contaminant to verify its absence, but may detect it anyway, such as occurred with perchlorate in Colorado River water. Or a utility might monitor for a chemical based on information that is becoming available, as was the recent experience with the gasoline additive MTBE and its contamination of ground water and surface water sources. In many cases, a new contaminant is found when a utility is conducting routine monitoring for regulated contaminants. The analytical methods used to monitor for regulated contaminants are generally broad spectrum methods that can detect a large number of chemicals.

A utility would not likely know that a contaminant is present if its concentration is lower than the detection level. However, a laboratory may be able to detect a chemical lower than the detection level for purposes of reporting (DLR), which is the level at which findings are required to be reported to DHS. This would require further investigation by the utility or laboratory to determine whether the contaminant was actually present in the sample. In any case, if a contaminant cannot be detected by the analytical equipment, its presence in a sample would not be known.

In that regard, the detection history of perchlorate is of some interest. A private laboratory developed a detection method which identified evidence of perchlorate at 35 ppb, a level lower than the prevailing analytical method established by the federal EPA. However, DHS chose not to use this method because it was not sensitive enough, and it was a proprietary method. DHS developed a new method with a detection level of 4 ppb. DHS does not know if perchlorate could have previously been seen below 35 ppb using the private laboratory's method.

There may be clues to suggest the presence of contamination for some chemicals. For example, solid rocket propellant testing or ammonium perchlorate manufacture can suggest the presence of perchlorate in ground water. Similarly, leaking underground fuel tanks suggest the presence of components of gasoline, dry cleaners suggest perchloroethylene, and Air Force bases suggest trichloroethylene. To the extent that possible contaminating activities are present, certain potential contaminants may also be present.

Aerojet points out that the Anderson Report chronicles various EPA-conducted nation-wide surveys of public water supplies, beginning with the Community Water Supply Survey (1969 USPHS) and the Safe Drinking Water Act of 1974 (SDWA). These surveys were initiated in anticipation of the need to identify previous unknown agents that might pose public health risks.¹¹ The data in these surveys have contributed to the determination of which contaminants should be regulated by federal agencies, as well as by state agencies that are statutorily required to act in concert with federal requirements. In addition, California has its own list of unregulated contaminants that must be monitored in drinking water every 5 years, as well as other chemicals that must be monitored if the system is vulnerable to contamination.

Despite the many sources of information, however, it is unlikely that a utility would know that a new chemical was present, unless the utility had reason to suspect that contamination occurred based on local information or general scientific information. It is also unlikely that commercial analytical laboratories would develop new tests for chemicals that are not known to be of concern to drinking water utilities or to be present in drinking water. In particular, there would be no market for such analyses since no utilities would be requesting them.

G. Follow-Up After Detection of Contamination

When the level of an organic chemical exceeds 10 times the MCL and this is confirmed by a sample taken within 48 hours of receiving the results from the initial sample, the source is taken out of service, with customer notification. An exceedance less than 10 times the MCL requires customer notification and increased frequency of sampling. The 10-times-the-MCL threshold follows the convention in risk assessment for noncarcinogens that includes uncertainty factors that are in units of 10, and for carcinogens that includes 10-fold expressions of risk, such as one excess case of cancer per million, one per hundred thousand, or one per ten thousand. This threshold provides a second tier to the MCL to address contamination that significantly exceeds the MCL and which could potentially reduce the "safety cushion" built in by the risk assessment.

If contamination of the water exceeds the MCL but is less than 10-fold, the water may continue to be served while the utility conducts customer notification and increased monitoring, attempts to identify the source of contamination, takes corrective action, and installs treatment to come into compliance with the MCL. At a 10-fold exceedance, DHS requires that the source be taken out of service while corrective action proceeds. This regulatory practice protects the public against relatively higher levels of exposure.

In the opinion of DHS, it is highly unlikely that any member of the public would become ill or physically injured by ingesting water contaminated at 10 times the MCL for a limited time. The concern for noncarcinogens is that the margin of safety provided by the MCL would be eroded, something that is important even for short-term exposures. For carcinogens, the theoretical cancer risk over a lifetime would be increased, but this increase would require long-term exposures. For short-term exposures, even the theoretical risk would not be significant. The exception to this discussion is the MCL for nitrate. At levels lower than 10 times the MCL for nitrate, infants are at risk of methemoglobinemia, and the required public notification when the MCL is exceeded includes information specific for exposure to infants.

H. Customer Notification

For ground water sources, whenever an MCL or an AL is exceeded, DHS requires the utility to notify local government officials (city council, county board of supervisors), whether or not a well is taken out of service.

DHS requires customer notification when an MCL is exceeded and strongly recommends such notice when an AL is exceeded.

If exceedances are temporary, the notification may indicate the temporary nature of the exposure, particularly if corrective actions are being taken and are anticipated to be completed by a certain date. Such notification would be followed by a subsequent notice when corrective actions have been completed, or one that indicates they have not been completed and exceedances are continuing as before. At a minimum, DHS requires that public notification be continued on a quarterly basis for any MCL violation as long as the water being served exceeds the MCL.

The existing guidelines and regulations adequately protect the public by minimizing exposures to drinking water contaminants, either by limiting exposure or by providing notification when water continues to be served so that an informed public can decide whether or not it wants to use or ingest the water during the time the exceedance occurs. The required notification to local government agencies also allows for other forums and means of addressing local concerns.

Presently, there is no 10-fold rule for exceeding ALs. However, DHS recommends public notification when the AL is exceeded and it may recommend source removal at very high levels in excess of the AL. The recommendation for public notification and the fact that DHS will provide public notification if needed usually prompts utilities to seek alternative sources or treat the water, if treatment options are available.

I. Temporary Excursions Above Standards

Temporary excursions above the MCL do not necessarily constitute noncompliance with the MCL for a contaminant set by DHS. Each class of chemicals has its own compliance determination. Temporary excursions generally trigger confirmation, follow-up, and notification if a violation is determined to have occurred.

Also, in DHS' opinion, all excursions or exceedances of the MCL or AL do not constitute a danger to the public health. In most cases, an exceedance of an MCL or AL would constitute a theoretical diminution of the protection of the public health that is provided by the MCL or AL. In particular, the safety factor would have been reduced. The reason such exceedances are considered not to pose a danger is that the risk assessments used to evaluate the human health risks associated with exposure to contaminants in drinking water are very conservative or health protective, as explained above. Risk assessments establish levels for noncarcinogenic contaminants that are expected to pose no health risk. Included in these established levels are considerations to take into account uncertainties up to a factor of 10,000. As a result, exceeding such a level, does not pose a health risk, but rather, a diminution of the margin of safety that the risk assessment and standard setting practice affords.

Even though risk management adjustments occur in the development of MCLs for chemical contaminants, DHS nonetheless generally establishes MCLs at levels that do not pose a danger to the public. For example, OEHHA's PHG for trichloroethylene is 0.0008 mg/L, which corresponds to a risk of up to one excess case of cancer per million people per lifetime, or from zero to one case of cancer, in addition to the 250,000-300,000 that might be expected to occur in the million people exposed for a 70-year lifetime. The MCL for trichloroethylene is 0.005 mg/L, six times higher than the PHG. This means that for exposures at the MCL, theoretically, there would be from zero to 6 additional cases among the 250,000-300,000 cancer cases expected to occur in the million people over a lifetime. At 10 times the MCL, this would be from zero to 60 cases among the 250,000-300,000 cases expected. This is still a relatively small, and theoretical, number.

J. Enforcement of Standards

In the case of an MCL, violations are determined differently for different chemicals. For radionuclides, it is on the basis of an average of four quarterly samples. For inorganic chemicals, except nitrate, it is on the basis of a single sample or the average of a single and its confirmation sample collected within 14 days. For nitrate, it is on the basis of the average of the initial sample and a confirmation collected within 48 hours. For organic chemicals, it is on the basis of the average of the initial sample, confirmation samples if collected (within seven days), and either samples collected monthly for six months for larger systems or additional samples collected quarterly over a one year period for smaller systems.

DHS considers water systems to be in noncompliance with standards, rules, regulations or orders when they either do not conduct some action in the timeframe provided by law, or they do not meet timelines established in DHS citations or orders for taking some specific action. For example, when a new rule such as the Surface Water Treatment Rule became effective, water systems were given a period of time to come into compliance. Most water systems were issued a Compliance Order that established specific dates by which they were to meet certain goals. If a water system does not meet those goals, DHS issues a citation with or without fines. If a water system does not sample its supply according to the regulations, DHS issues a citation specifying when it must complete such sampling. The district offices of DHS and the LPAs track the monitoring requirements for their water systems to try and assure that samples are taken as mandated by law.

If a regulated utility does not comply with water quality requirements, DHS may take the following enforcement action based upon the severity of the circumstances: issuing an informal letter regarding the violation, issuing a formal citation or a compliance order, revoking the water permit, imposing a service connection moratorium, mandating public notification or initiating litigation in Superior Court.

When noticed by DHS of noncompliance, most water systems, especially large water systems, are generally responsive to initiating corrective measures. Due to their limited resources, there is more of a noncompliance problem with smaller water systems with fewer than 1,000 service connections. At times, it may be necessary for DHS to impose a fine on a water system to get its cooperation. Only rarely is it necessary to take a water system to court to get its cooperation.

K. Discussion

We asked the parties to address policy and compliance issues in this proceeding: whether existing drinking water standards adequately protect public health, whether exceedances above maximum contaminant levels protect public health, what remedies for noncompliance are appropriate and whether regulated utilities comply with existing standards. No party commenting on the DHS representation of existing regulation disputed it. DHS provided the national and statewide framework of drinking water quality regulation. This framework includes federal, state and local agencies authorized to monitor and correct drinking water quality. Minimal standards for specific contaminants determined to be dangerous to public health are set by the federal government. DHS may and sometimes does establish more stringent standards for our state. Further, DHS individualizes regulation of public water systems through the permit process based upon site specific problems, such as water sources and location of facilities. DHS and numerous other state, federal and local agencies continually and regularly monitor the quality of drinking water to assure that it meets mandated requirements.

DHS sets mandatory drinking water standards by considering the health risk assessment of a given contaminant and an analysis of the cost and feasibility of current treatment methods. The process and procedure for setting standards allows any interested party and public to participate in the process. The decision rendered by DHS discusses and considers each party's recommendations and all input into the standard-setting process. This process, the caliber of experts who contribute testimony and the ability of the public to participate resembles rulemaking proceedings conducted by this Commission. The consideration of the feasibility and cost of treatment are matters of foremost importance to the Commission, as to DHS, when engaging in such a process.

The basis of selecting the actual maximum level of health risk (such as one excess case of cancer based upon a 70-year exposure in one million) is also a reasonable one, balancing all interests involved, the public at large, the ratepayer and the company. Thus, while minds may differ somewhat on the outcome of this process, we find little reason to believe the outcome of a Commission standard-setting process would yield substantially different results than those of DHS. In fact, no party requests that the Commission engage in such a process for the standards that currently exist. All parties commenting on this issue agree that the current mandatory standards, testing, reporting follow-up for temporary exceedances and enforcement requirements protect the public health, and they offer no changes or additions to this body of regulation.

The potentially responsible parties participating as Aerojet-General offer a witness to confirm the DHS representations. However, in the existing record Dr. Anderson, former director of EPA Risk Assessments, substantiates the margins of safety surrounding each contaminant and the function of this safety cushion during periods of temporary exceedances.

While no party disputed the adequacy of existing DHS regulation, Aerojet-General recommends that regulated utilities should be under a Commission obligation to monitor and maintain "unregulated" chemicals in drinking water at or below levels that present "unacceptable" public health risks. We decline to institute a mandate to maintain unregulated chemicals below "unacceptable" levels. To do so, the Commission would need to perform the identical steps DHS performs to set this level of "unacceptable public health risk" at a time when DHS would also be in the process of performing the same task. DHS has indicated that setting advisory levels for unregulated chemicals is the precursor to setting a mandatory maximum contamination level and that advisory levels are set based upon the same one in a million risk level as MCLs. It would be a waste of state resources for this Commission to perform the same tasks, and DHS would likely be further toward completion of the MCL process at the time the Commission began its process.

DHS reports that it has begun assessing the risk of the two new contaminants we targeted in this proceeding, MTBE and perchlorate. Since the institution of this proceeding these contaminants have attracted statewide and national concern. With respect to perchlorate, DHS has begun the process of establishing mandatory regulation by setting "voluntary" advisory levels for this contaminant. The risk assessment on perchlorate is ongoing. As noted above, (footnote 4), in May, 2000, DHS established primary and secondary MCLs for MTBE, a fact of which we take official notice.

In our interim decision, D.99-06-054, we made it clear that we would not interfere with the regulatory process of establishing MCLs for drinking water contaminants. We said:

"[W]e do not intend to reduce MCLs Action Levels or similar standards which are terms of art in the lexicon of SDWA law and regulation. Drinking water standards, including established MCLs, are minimum water quality requirements and we cannot and shall not tamper with those requirements. We do not intend to duplicate the processes employed by DHS and EPA to develop those standards." (D.99-06-054, mimeo. at page 45.)

We trust that this extensive discussion of the process by which MCLs and ALs are established to protect the public health make it clear why it would not be productive to duplicate this process.

Aerojet-General argues that water utilities can be held liable for serving water that meets all standards, regulations or other requirements imposed by DHS. Citizens and SoCal disagree. Whether regulated utilities may incur such civil liability is not germane to this proceeding.

DHS requirements are geared to provoke correction of any water quality exceedance of contaminants known to be hazardous to public health rather than automatically punish for the occurrence of any such incident. This approach is reasonable since it recognizes that not all contaminants that pose a health risk are always known, technology is not always capable of detecting their presence in drinking water or eradicating them, and their presence in drinking water is not always within the control of the distributor. On the other hand, limits of contamination are set that virtually assure no significant health risk should they be exceeded.

Since there is no dispute over the adequacy of existing regulation including temporary exceedances of standards, there is no need for evidentiary hearings on these issues. Nor do we believe a special panel of experts to advise this Commission on contaminants or their health effects is needed at this time, given the state and nationwide processes, procedures and advisory groups that exist. Instead, we prefer to rely on our staff to explore ways to become more involved in these forums and address in a future rulemaking proceeding the possibility of requiring that our regulated utilities do likewise.