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STATEMENT OF ALVIN M. PESACHOWITZ

STATEMENT OF ALVIN M. PESACHOWITZ
CHIEF INFORMATION OFFICER
U.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
U.S. HOUSE OF REPRESENTATIVES


October 7, 1998

Mr. Chairman and Members of the Committee:

I am Alvin M. Pesachowitz, Chief Information Officer of the Environmental Protection Agency (EPA). It is an honor for me to be here today at this hearing on the impact of the Year 2000 (Y2K) technology problem in the water resources area. We are pleased that the Committee is highlighting the urgency of this problem and the need for attention from the highest levels of government and the private sector. EPA welcomes your interest and involvement in this critical issue.

Before addressing specific drinking water and wastewater treatment Y2K issues, I would like to characterize EPA's progress toward internal Agency Y2K compliance, as well as our efforts to engage a wide variety of public and private organizations in our common goal of Y2K readiness.

As a first step, a Y2K Project Team was formed to oversee all EPA Y2K responsibilities including: 1) promoting awareness throughout the Agency; 2) coordinating Agencywide assessment and system repair; 3) providing internal guidance and technical expertise; 4) monitoring the status of Y2K problem resolution; 5) coordinating a systematic environmental sector outreach effort; and, 6) providing staff support for EPA's participation in the President's Council on Year 2000 Conversion, chaired by John Koskinen.

Second, the Agency began to develop specific outreach strategies for key environmental constituents and stakeholders. Targeted outreach strategies have been developed for air, water, waste, chemicals, pulp and paper, manufacturing/metals, regulatory compliance, and enforcement.

Finally, under my direction as the Agency's Chief Information Officer, we have created a Senior Management Council, consisting of executives from each of EPA's program offices and Regional Offices. The Council ensures that EPA's ability to fulfill its environmental mission is not impacted by the Year 2000 "bug," that policy issues and cross-cutting issues related to Year 2000 are examined as management priorities, and that an effective system of outreach to affected constituencies is in place so that environmental service delivery is not disrupted on January 1, 2000.

EPA has implemented a management strategy to assure Agency systems and equipment are technically compliant. That strategy includes assessment, repair, verification, and certification steps. The Agency has evaluated all mission-critical systems for vulnerability and has established system-specific compliance schedules for all vulnerable systems. Forty-six of our fifty-eight mission-critical systems are now compliant, pending verification by an independent source. All five of the Agency's water-related, mission-critical systems are now compliant. These include: the Safe Drinking Water Information System (SDWIS), the Storage and Retrieval of Water Quality Information (STORET) System, the State Revolving Fund (SRF), the Needs Survey (NEEDS), and the Permit Compliance System (PCS). In addition, as part of the Government-wide data exchange with States, we have documented six external water data exchanges which will soon be addressed. EPA is on schedule to reach compliance on the balance of its mission-critical systems by the Government-wide due date of March 31, 1999. In fact, the Subcommittee on Government Management, Information, and Technology of the House Committee on Government Reform and Oversight recently recognized EPA's progress by assigning a grade of "B" for our Y2K compliance efforts for this past quarter, and we remain in OMB's top tier ranking of agencies' progress.

We are also undergoing a significant effort to conduct detailed assessments of our non mission-critical systems, central and local infrastructure, and buildings and facilities. Detailed action plans, organized by OMB's implementation phases, are being developed. Progress reports indicate that 85% of the non mission-critical systems in Headquarters have been assesssed, and 30% are compliant. One-hundred percent of the non mission-critical systems in our Regional Offices have also been assessed, and 30% are compliant. Aggressive steps are underway to repair, replace, or retire assets not yet in compliance.

Sector Outreach

As a regulatory agency, EPA's primary constituents for its core business activities are our co-regulators in the fifty States. This audience represents a primary partner for us in assuring we are able to regulate and monitor the quality of the nation's regulatory programs. The States are crucial to EPA's ability to perform its regulatory functions as well as key players in the delivery of local environmental services and in protecting environmental quality. We have recently begun to broaden outreach activities to include more directly EPA's Regional Offices and specific State entities involved in managing environmental programs.

At the same time, EPA has embraced the challenge to ensure a broader focus on awareness and preparedness in private sector activities whose action or inaction could affect protection of public health or the environment. In addition to focusing internally on the EPA systems critical to our Federal mission, the Agency is actively managing a series of outreach efforts with important stakeholders and constituencies.

The goal of our outreach effort is to: 1) promote nationwide awareness in the environmental community; 2) encourage coordinated assessment and sector-wide planning; 3) point stakeholders to technical assistance and guidance in readying and repairing their systems and equipment; and, 4) encourage stakeholders to develop contingency plans, as appropriate.

EPA's internal environmental sector representatives for air, water, waste, chemicals, pulp and paper, manufacturing/metals, and regulatory compliance and enforcement have developed detailed sector outreach plans. These plans have been posted to EPA's Internet Site http://www.epa.gov/year2000 so that they are available to the public and members of the regulated community. Each plan clearly identifies constituent organizations/key stakeholders, defines specific awareness-raising events and opportunities as well as plans to promote awareness and encourage assessment. EPA continues to address events along sector lines, conduct focused stakeholder meetings, and provide information for use in memoranda, articles, and speeches.

Now let me turn specifically to the subject of Y2K conversion in the water and wastewater areas. EPA is working hard with our nation's public and private utilities to assure that the nation's drinking water supplies and wastewater treatment capabilities are not impaired as we reach the Year 2000. As the agency chiefly responsible for the quality of our nation's water and the safety of our drinking water, EPA has the lead for the drinking water and wastewater utility sector under the President's Council for Year 2000 Conversion.

Under our mandate to protect the public health and the environment, EPA sets water quality criteria and provides assistance and technical support to States, tribes, and local governments. States generally issue permits and monitor compliance, and the nation depends on our local drinking water and wastewater utilities to take the steps to maintain the quality of our drinking water supplies and to clean our wastewater.

EPA is working with the municipal and private utilities to help them address this problem, implement plans to assess and repair problems when found, make contingency plans, and keep their customers and the Federal, State, and local governments informed of progress. As a Federal regulatory agency operating within our mission and means, EPA has as its role to strongly and actively encourage and complement these efforts to the best of our ability.

Now I would like to provide a brief overview of the problem and the potential impact of the "Millennium Bug" on drinking water and wastewater treatment plants. I will then discuss our findings about the state of Y2K readiness and the outreach efforts to facilitate awareness of the problem, to encourage plant managers to actively work to fix it, and to provide access to information and support, as necessary. I will also identify some potential problems that are beyond the utilities' control but could impact utility operation. I will also address contingency planning.

You will be hearing directly from members of the drinking water and wastewater utility industry as well as trade and professional association representatives, so I will not go into great detail describing them and their operations. However, I think it is important for you to have a picture of the somewhat diverse "community" that treats and safeguards our nation's water to better understand the potential impacts of the Year 2000 technology problem and to have a context in which to talk about our efforts at EPA.

Characterization of the Problem

As I have said, the drinking water and wastewater utilities are a diverse community. First, to characterize them: they are owned by local governments and private companies; they range in size from small--serving communities anywhere from 25 to 3300 people--to large--which serve populations of over 100,000. They are designed to serve communities ranging in size from trailer parks to large cities.

With respect to their operations, drinking water and wastewater utilities deal with the specific water quality problems in their localities. Their methods of treatment vary. As you might guess, the treatment systems also vary greatly in their degree of automation and sophistication, with the larger plants being heavily automated while some of the smaller plants have little, if any, computerized equipment. However, many plants, both large and small, have individual pieces of equipment that have embedded computer chips. Larger plants depend on computerized control systems that run plant operations based on information received from sensing and monitoring instruments. These systems are known as Supervisory Control and Data Acquisition, or SCADA systems. It is critical that steps be taken to ensure that this equipment continues to operate properly on and after January 1, 2000.

Fact Finding and Outreach Efforts

EPA's approach to understanding the nature and extent of the Y2K problem has been through numerous and continuing contacts with trade and professional associations and utilities. A list of the trade and professional associations with which we have consulted is attached. We have also made a number of site visits to gain a better understanding of the types of problems that the utilities must solve, their Year 2000 readiness, and the contingency plans they have made. Based on these discussions and site visits, we believe that most of the large drinking water and wastewater plants are aware of the problem and are actively taking steps toward corrective action.

We continue to be concerned, however, about the readiness and the level of awareness of the small and medium-sized plants. Although they are generally less automated than the larger plants--and some of the smaller plants may have little, if any, computerized systems or equipment--without examination and assessment, it is hard to predict whether these plants are prepared. Plant managers have said that much of the equipment in these medium and small plants contains embedded chips that are not date sensitive, but rather are sensing devices. Nevertheless, we are encouraging all plants regardless of size to assess, correct, test and validate, implement, and plan for contingencies.

EPA has held two water utility stakeholders meetings with representatives from some of the largest national drinking water- and wastewater-related trade and professional associations, such as the American Water Works Association (AWWA), the Association of Metropolitan Sewerage Agencies (AMSA), the Association of State Drinking Water Administrators (ASDWA), the American Society of Civil Engineers (ASCE), and the Water and Wastewater Equipment Manufacturers Association (WWEMA).

During our discussions, several of the associations said they had surveyed their members. They were careful to state that the surveys did not represent a statistical sampling, but rather, served as "indicators" of Y2K readiness activities. Their representatives will undoubtedly be sharing the survey results with you. Although these surveys might not provide a precise picture of the state of readiness, they do indicate that the larger plants are dealing with the problem. We are very appreciative of the efforts of AWWA, AMWA, AMSA, and the National Association of Water Companies (NAWC) in this regard.

Since a common thread for many of these plants is the equipment used, the Water and Wastewater Equipment Manufacturers Association (WWEMA) has stated that based on its own survey, equipment built since the early 1990's is Y2K compliant, equipment from the late 1980's to early 1990's needs to be tested, and equipment installed prior to the late 1980's may need to be replaced.

As part of EPA's initial outreach efforts to the drinking water and wastewater utilities, we have prepared an informational fact sheet, attached to this testimony, to be provided to States, tribes, local governments, EPA Regional Offices, and to the regulated entities through trade associations as conference handouts and for inclusion in letters to their membership. Our fact sheet summarizes the Y2K problem and the six-step approach we recommend. These steps are: awareness, assessment, correction, testing and validation, implementation, and contingency planning.

We are also preparing an article for submission to trade association publications and other appropriate journals and newsletters. This article provides further details on the six-step approach as well as a checklist for plant managers to use to assess and repair problems. We have already established an EPA Water Sector Y2K web page with linkages to related sites, including those of trade and professional associations.

We will also encourage utilities to conduct their own outreach by communicating with their customers to reassure them that this issue is receiving the kind of attention necessary to ensure that utility customers will experience "business as usual" on January 1, 2000. We will continue to work with trade and professional associations, our Regional Offices, States, tribes, and other Federal agencies to increase awareness and offer assistance, especially to smaller systems which may not have the resources to help themselves. EPA staff members are available to speak at conventions and meetings on this important issue.

External Factors

Let me now address some external factors beyond the control of these utilities. Most significantly, these are the electric and telecommunications utilities and our transportation system. Most drinking water and wastewater treatment systems cannot operate without an outside source of electricity. Wastewater treatment utilities have some ability to generate electric power themselves and to be able to operate in an emergency for a short period of time. Most drinking water plants do not. Therefore, should the country experience electricity failures, some of our drinking water utilities may not be able to operate and will need to depend on their storage reserves or on other facilities' water supplies. We should remember that these facilities have had short-term outages during natural disasters such as hurricanes, floods, and ice storms. In most instances, good planning has resulted in quick recovery.

In addition, suppliers to the treatment systems, such as chemical companies supplying chlorine and fluoride, could be subject to their own Year 2000 problems or transportation problems, resulting in lack of supplies needed for water treatment. We are encouraging drinking water and wastewater utilities to meet with external suppliers such as the power utilities, telecommunications utilities, and chemical and other material suppliers to ensure that their contingency plans address the potential inability of these entities to deliver needed materials and services.

Contingency Planning

Given the status indications I discussed previously and the early Y2K test results which have been generally positive, we are guardedly optimistic that our drinking water and wastewater utilities will have few, if any, problems on January 1, 2000. However, contingency plans are still necessary. We are continuing to focus our efforts on medium and small plants to ensure continued progress and contingency planning.

EPA has listed contingency planning as one of the steps in our six-step approach. Contingency plans should address not only interruption of operations due to a Year 2000 failure in the treatment system, but also interruption of operations due to a failure external to the treatment system, such as a power failure.

In speaking with representatives from utilities and trade associations, we have learned that contingency planning relies on manual operation of these plants. Most drinking water and wastewater treatment plants can be operated without SCADA or automation and, in fact, are operated in the manual mode from time-to-time. In addition, most large drinking water systems have two to five days storage capacity and have been designed, in some cases, to supply water by gravity while major repairs are underway. Some of our drinking water plants have the advantage of being able to share water supplies with other local drinking water utilities. They regularly buy and sell drinking water among themselves and can provide back-up for one another should circumstances warrant. In the unlikely event that water being produced does not meet health standards, "boil water" notices for microbial problems can be issued or residents can be advised to use alternate drinking water sources to avoid microbial or other contaminants, such as nitrates.

Even though manual operation is feasible and provides a means of operation in the event of computer or equipment failure, I believe this raises another concern -- that of the availability of the workforce needed to sustain manual operations for any significant length of time and the ability of the utility to afford a higher payroll. This is another consideration that we recommend be addressed in contingency plans.

Permit Violations

With respect to legal implications of plant failure as a result of permit and drinking water standards violations, EPA's major focus is on preventing failure rather than preparing to take enforcement actions. However, general guidance indicates that violations resulting from failure to achieve Year 2000 compliance will not be given a blanket waiver. Year 2000 violations will be evaluated on a case-by-case basis to determine the most appropriate enforcement response. EPA expects all water and wastewater facilities to be in compliance with environmental regulations before, during, and after the Year 2000.

Recommendations

With respect to your call for recommendations as to how the Committee can be most helpful in this area, we offer the following suggestions. First, your support would be welcome for bipartisan legislation now pending in the Congress which extends limited safeguards for industry in matters of liability, confidentiality, and antitrust when companies make good faith efforts to share Y2K information with their competitors and customers about their products and processes. Second, your encouragement of other infrastructure-related sectors, including utilities and telecommunications, to move swiftly toward Y2K compliance could also be decisive. These sectors can greatly enhance the ability of the drinking water and wastewater service areas to be ready on January 1, 2000.

Summary

In closing, I would like to say that the drinking water and wastewater utilities are making good progress in their efforts to identify and fix potential Y2K problems. We continue to reach out to these utilities to ensure that their diverse entities -- large and small -- have identified these problems and have access to important and useful guidance and information. I would also like to commend the trade and professional associations for bringing this issue to the attention of their members, providing information and assistance, conducting surveys, and generally supporting Federal, State, and local government efforts to ensure that this problem is addressed.

Thank you for the opportunity to discuss this important issue today. I would be happy to answer any questions you may have.

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