Water submetering: a regulatory overview

National Multi Housing Council (NMHC)

January 1/1997
Eileen Lee

Prior to undertaking a submetering project, multifamily property owners should review applicable state regulations which could result in their taking on additional compliance responsibilities and liabilities.

Overview:

Under the “Safe Drinking Water Act” (SDWA; P.L. 104-182), as originally enacted in 1974, any business which sells water or bills separately for water it provides, falls under the definition of a public water system (PWS) or consecutive water system or supplier, regardless of whether it does so for profit, and is subject to the Act.

Currently, EPA gives states flexibility in the determination of whether or not a state considers apartment communities to be consecutive water systems. In some states, property owners who submeter water and pass the cost of the water on to their residents may be construed as “selling” water and thus are considered as “water suppliers” subject to regulation under SDWA. Prior to undertaking a submetering project, multifamily property owners should review applicable state regulations which could result in their taking on additional compliance responsibilities and liabilities.

In March 1997, NMHC/NAA met with the U.S. Environmental Protection Agency (EPA) to discuss the apparent contradictions between EPA’s policy statement on submetering/allocation provided to the House Commerce Committee during the 1996 SDWA reauthorization hearings and actions initiated by several states under the authority delegated to them by the EPA under the SDWA.

One year later, EPA’s Office of Water issued a memorandum to its 10 regional offices, directing that this information be shared with the states within each region. The memorandum states “(I)f an apartment building or similar residential community that submeters wants to avoid PWS classification, it would either need to remove the complex’s master meter and allow the local water utility to bill residents directly or include water usage as part of the monthly rent or fees.” The memorandum goes on to say that “an apartment complex that submeters and is considered a PWS . . . may be afforded certain monitoring modifications if it is considered a “consecutive” water system. . . . States have the flexibility to modify the monitoring requirements to the extent that the interconnection of the systems justifies treating them as a single system. . . . Because we support the practice of submetering to encourage water conservation and to provide an equitable method of distributing costs, we believe that it is appropriate for States to use this flexibility consistent with their assessment of the need for these “consecutive” systems to conduct additional monitoring to protect the public health of their customers.”

Submetering as a tool to encourage water conservation was not envisioned at the time of the passage of the original SDWA. In light of this, the state of Florida has defined the term “sale” so that a property owner who submeters the water distributed on his property and subsequently receives payment for this service is not considered to have “sold” water. This regulatory definition is a useful model for other states considering revising regulations to facilitate the adoption of water submetering by property owners.

In some areas, water submetering is actually mandatory in new construction. Several states have required that multifamily property owners who submeter water be treated as a utility and comply with additional regulatory and financial demands.

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