Chapter 3745-87 New Community or Non-Transient Non-Community Public Water Systems

3745-87-01 Asset management definitions.

Except as otherwise noted, the definitions in rule 3745-81-01 of the Administrative Code shall apply to this chapter.

(A)

(1) "Asset" means a component of a facility with an independent physical and functional identity and age as defined by the water system. This includes items of substantial value and critical to the delivery of potable water.

(2) "Asset management program" means the development of a program that demonstrates the managerial, technical, and financial capability of a public water system, by the implementation of the tracking documents, programs or systems that will assist with the management and replacement of infrastructure assets to achieve metrics at the least cost and risk to the water system.

(B) [Reserved.]

(C)

(1) "Capability screening" means an evaluation of the technical, managerial, and financial capability of a public water system.

(2) "Capital improvement plan" or "CIP" means a financial plan based on a three to five-year planning period for all individual capital improvement projects.

(3) "Capital improvement project" means a unique construction project that aims to install, repair, rehabilitate, replace, or expand existing infrastructure, not including regularly incurred operation and maintenance costs.

(4) "Critical infrastructure" means assets, systems and networks, whether physical or virtual, that are vital for a public water system to operate, or whose inoperability would have a debilitating effect on the ability of the water system to operate as intended or would create a public health risk.

(5) "Criticality" means an asset prioritization measure used to determine assets on which to focus, based on potential consequences of failure, and is used to determine higher priority assets for risk management activity.

(D) [Reserved.]

(E) [Reserved.]

(F) [Reserved.]

(G) [Reserved.]

(H) [Reserved.]

(I) [Reserved.]

(J) [Reserved.]

(K) [Reserved.]

(L) [Reserved.]

(M) "Metric" means a qualitative or quantitative measure of actual performance against a standard or other target.

(N)

(1) "Non-publicly owned" means public water systems not owned by a governmental entity.

(2) "Non-revenue water" means the distributed volume of water that is not reflected in customer billings.

(O) "Operating ratio" means a ratio comparing the system's operating expenses divided by its operating revenue (or net sales).

(P)

(1) "Pro-forma" means projected or estimated financial statement that attempts to present a reasonably accurate idea of what a water system's financial situation would be if the present trends continue or certain assumptions hold true.

(2) "Publicly owned" means public water systems owned by a governmental entity.

(Q) [Reserved.]

(R) "Reserve funds" means funds used for addressing expense situations of a capital nature that were not expected nor anticipated.

(S) "Succession planning" means the process for identifying and developing new or current personnel who can replace personnel when vacancies occur

(T) [Reserved.]

(U) "Useful life" means the average amount of time in years, that a new system component is estimated to function when installed.

(V) "Vertical asset" means an asset within a building or facility often comprised of multiple components, also known as an above-ground asset. In the context of the water industry, this typically refers to assets within pump stations, treatment plants, and may include other facilities, such as storage facilities.

(W) [Reserved.]

Replaces: 3745-87-01

Effective: 11/8/2018
Five Year Review (FYR) Dates: 11/08/2023
Promulgated Under: 119.03
Statutory Authority: 6109.04
Rule Amplifies: 6109.24
Prior Effective Dates: 10/01/1999

3745-87-02 Applicability and general requirements.

In order to ensure the long-term viability of public water systems, all public water systems shall demonstrate the managerial, technical, and financial capability of the public water system to comply with this chapter and rules adopted thereunder. Demonstration of capability shall be made through a written description of an asset management program that is acceptable to the director.

(A) A public water system shall submit a written description of the public water system's asset management program description and supporting documents in accordance with the following:

(1) New public water systems shall submit an outline describing what the asset management program will entail prior to operation. Thereafter, the public water system shall submit a written description and supporting documents upon request of the director in accordance with rule 3745-87-04 of the Administrative Code and in accordance with any schedule prescribed by the director.

(2) For existing public water systems other than those receiving a loan, the director may require public water systems to make the asset management program available for review based on enforcement proceedings, compliance history including violations and deficiencies identified as part of the sanitary survey or limited scope site visits, or on the results of a capability screening. A written description of the asset management program meeting all of the requirements of this rule, shall be submitted in accordance with a schedule prescribed by the director.

(B) Public water systems applying for a water supply revolving loan account (WSRLA) loan shall demonstrate an acceptable asset management program prior to receiving a WSRLA loan. The asset management program shall address any deficiencies noted in a capability screening.

(C) A written description of an asset management program and all supporting documents provided to the director by a public water system that demonstrates the asset management program shall be treated as an infrastructure and security record and be exempt from the public record provisions of Chapter 149.43 and 149.433 of the Revised Code and is not subject to mandatory release or disclosure under that section.

Replaces: 3745-87-02

Effective: 11/8/2018
Five Year Review (FYR) Dates: 11/08/2023
Promulgated Under: 119.03
Statutory Authority: 6109.04
Rule Amplifies: 6109.24
Prior Effective Dates: 10/01/1999

3745-87-03 Contents of an asset management program.

(A) In order to demonstrate adequate managerial capacity, personnel commitments that are needed to provide for effective management, operation and financials of the public water system shall be proven with documentation. The asset management program shall include, but is not limited to, the following:

(1) Demonstration of ownership accountability, which includes the legal authority to take the measures necessary for construction, operation, and maintenance of the system, including maintaining staffing skills, resources, and prioritizing continuous improvements of the water system.

(2) Demonstration that the owner has committed to proper operation and management of the public water system in accordance with Agency 3745. of the Administrative Code, as applicable.

(3) Demonstration to ensure continued, proper operation of the public water system through succession planning, such as having a continuity plan in place for critical personnel.

(4) The owner or operator of the public water system shall include at least the following information in the asset management program:

(a) A brief, non-technical description of the water system, including major components, source type, number of service connections, and number and type of customers.

(b) An operating plan defining the tasks to be performed in managing and operating the public water system, which shall consist of at least the following:

(i) A high-level table of organization that identifies critical personnel including the operator, manager and supervisor responsible for operations, maintenance, treatment, and distribution. The table shall include clearly defined job classifications/titles and the individuals within those job classifications/titles. The table shall include differentiation between a property owner and business owner or lessee, if applicable.

(ii) If cited with significant deficiencies, the director may require fiscal and managerial training for water systems governing bodies and responsible management, and documentation of governing bodies and employees attending appropriate water system fiscal and management training.

(iii) An operation and maintenance program as described in paragraph (B)(4) of this rule.

(c) Demonstration of the owner's ability to address violations of applicable portions of the Revised Code and the Administrative Code. The demonstration shall include an explanation of how the water system will establish and maintain effective communications and relationships between the water systems management, its customers, professional service providers and any applicable regulatory agencies.

(d) An inventory of external contacts and resources necessary for proper operation of the system, including a description of how the contacts and resources will be effectively utilized.

(e) Description of internal contracting and purchasing procedures to accomplish routine and emergency repairs and replacements.

(f) Supporting documentation on the following, if applicable:

(i) Security.

(ii) Use of system equipment.

(iii) Billing practices and revenue collections.

(iv) Purchasing authority.

(B) In order to demonstrate adequate technical capacity, the asset management program shall include, but is not limited to, the following:

(1) Schematic of water source, treatment, storage and distribution.

(2) Inventory of assets, including the following:

(a) Asset name.

(b) Known purchase or installation date, or estimated age of asset if different.

(c) Status of asset (e.g. in use, available for use, needs repaired, etc.) as identified by the water system.

(d) Locations of assets, including up-to-date maps.

(3) Evaluation of assets, including the following:

(a) Condition (e.g. excellent, good, fair, poor, needs replacement).

(b) History of maintenance and repair.

(c) Estimated remaining useful life based upon condition and performance

(d) A prioritization of assets based on criticality and condition assessment.

(4) Operation and maintenance programs.

(a) Standard operating procedures for daily operation of the facility.

(b) Maintenance schedules or supporting documentation of the maintenance performed for each of the following as applicable:

(i) Wells, all raw-water reservoirs and intakes.

(ii) Pump stations.

(iii) Electrical equipment and controls.

(iv) Water treatment facilities.

(v) Water storage tanks and/or hydropneumatic tanks.

(vi) Distribution system components, including hydrants and valves.

(vii) Auxiliary power.

(c) Demonstration of an adequate maintenance log.

(5) Emergency preparedness and contingency planning program.

(a) Community public water systems shall prepare a written contingency plan meeting the requirements of Chapter 3745-85 of the Administrative Code.

(b) Non-community public water systems shall prepare a written contingency plan in accordance with paragraphs (B), (C)(1), (C)(2), (C)(4), (D)(3), (D)(4)(c), (D)(4)(d), (D)(4)(e), (D)(4)(g), (D)(4)(h), (D)(4)(i), (D)(4)(j), (D)(12), (D)(13), (D)(14), (G)(1) and (G)(2) of rule 3745-85-01 of the Administrative Code.

(6) Source water protection.

(a) The public water system shall review the source water assessment annually and every five years shall evaluate the assessment to determine if revisions are necessary.

If revisions are deemed necessary, the public water system shall request, in writing, a consultation with Ohio EPA on any suggested revisions. If Ohio EPA determines that re-assessment is necessary, the re-assessment shall be conducted by Ohio EPA or under guidance provided by Ohio EPA.

(b) Community and non-transient non-community public water systems that have an endorsed drinking water source protection plan, shall review the protection plan as stated in the plan and revise the plan as necessary.

(c) Community and non-transient non-community public water systems that have an endorsed drinking water source protection plan that does not include a review schedule, shall review the protection plan every three years and revise it as necessary.

(d) Public water systems that have a drinking water source protection checklist that has been submitted and accepted by Ohio EPA, the water system shall review and update the checklist every five years.

(e) A revised drinking water source protection plan or checklist shall be submitted to Ohio EPA within sixty days of making the revisions.

(7) Approved capacity projections, including.

(a) Written approved capacities of small public water systems using only ground water (such as factories, mobile home parks, office buildings, restaurants, condominiums, and the like) will be established in accordance with Ohio EPA's "Guidelines for Design of Small Public Water Systems". Written approved capacity projections for all other water systems shall meet the requirements of Ohio EPA's "Planning and Design Criteria for Establishing Approved Capacity for: 1) Surface Water And Ground Water Supply Sources, 2) Drinking Water Treatment Plants (WTPs), and 3) Source/WTP Systems".

(b) Identification of infrastructure needed to meet written approved capacity projections.

(8) Criteria and timelines for infrastructure rehabilitation and replacement.

(a) Identification of, and a schedule for needed repair, rehabilitation, replacement and expansion of existing assets and prioritized to address the most critical needs.

(b) Identification of funds that will be collected or set aside for repair, rehabilitation, replacement or expansion of existing assets.

(9) Capital improvement plan (CIP).

(a) A CIP shall include annual projections for a three to five-year planning period with detailed expenditures in each of those time frames.

(b) The projects should be listed by the year in which they are planned and include, at a minimum, the following information:

(i) Description of the project.

(ii) Need for, and benefits of, the project.

(iii) Estimate of project cost, including engineering design and construction.

(iv) Funding sources.

(c) A description and estimated cost of significant projected projects for the next five to twenty years.

(C) In order to demonstrate adequate financial capacity, water systems shall include a long-term funding strategy to support asset management plan implementation, including, but not limited to, the identification of sources and amounts of funds to finance the needed repair, rehabilitation, replacement or expansion of assets, including debt service.

(1) New publicly owned public water systems shall include a five year pro forma statement of the next five years of operation, which includes the following:

(a) An income statement, balance sheet, and statement of cash flow pertaining to the water operating fund.

(b) An amortization schedule of all water system debt including terms of all outstanding debt.

(c) Capitalization terms of long term debt anticipated to be incurred in the next five years of operation.

(d) The current water rate ordinance in effect including any planned periodic increases of the rate, as applicable.

(e) Documentation of triennial water rate evaluation, as applicable.

(f) Documentation of all customers being billed for water usage, as applicable.

(g) Any existing information demonstrating bond or credit rating.

(2) Existing publicly-owned public water systems shall include all of the following:

(a) All the items listed in paragraph (C)(1) of this rule.

(b) The most recent five years of annual financial reports, as required by section 117.38 of the Revised Code, or substantively equivalent documents which describe the performance of the owner and the water system.

(3) New non-publicly owned public water systems shall include all of the following:

(a) A demonstration of the cost of the water treatment components and the conveyance system including capitalization terms or lump sum debt retirement option if selected.

(b) A demonstration of an adequate budget and revenue sources to support the annual operation and maintenance costs of the system for the next five years of operation including the following:

(i) Cost of required level certified operator coverage.

(ii) Capitalization terms of anticipated long-term debt incurred in the next five years of operation.

(4) Existing non-publicly owned public water systems shall include all of the following:

(a) All the items shown in paragraph (C)(1) of this rule.

(b) Type of business organization and historical origination date; including the legal document establishing the corporate structure.

(c) The most recent five years of annual financial statement documentation which describe all assets, liabilities, income, expenditures, balances and equity of the water system.

[Comment: "Guidelines for Design of Small Public Water Systems (2015)" can be found at http://epa.ohio.gov/ddagw/ Engineering#176079933-standards-policies-guidance-and-white-papers and "Planning and Design Criteria for Establishing Approved Capacity for: 1) Surface Water And Ground Water Supply Sources, 2) Drinking Water Treatment Plants (WTPs), and 3) Source/WTP Systems (March 2010)" can be found at http://epa.ohio.gov/ddagw/ Engineering#176079935-approved-capacity]

Effective: 11/8/2018
Five Year Review (FYR) Dates: 11/08/2023
Promulgated Under: 119.03
Statutory Authority: 6109.04
Rule Amplifies: 6109.24

3745-87-04 Evaluation criteria.

(A) The written description of the asset management program and all supporting documents shall be available for inspections by representatives of the director.

(B) The director may request a public water system to submit a written description of the public water system's asset management program. The public water system shall submit the written description within thirty days of the request.

(C) If a public water system's written desccription of the asset management program does not comply with the requirements of this chapter, the director may require the owner or operator to revise and resubmit the written description of the asset management program.

(D) The director may only grant acceptance of the asset management program at the time of review if the program meets the requirements set forth in this chapter.

Effective: 11/8/2018
Five Year Review (FYR) Dates: 11/08/2023
Promulgated Under: 119.03
Statutory Authority: 6109.04
Rule Amplifies: 6109.24

3745-87-05 Long-term implementation.

(A) The water system shall annually review and update the asset management program.

(B) Metrics shall be kept onsite and available for review at the discretion of the director.

Metrics shall be reviewed and documented annually by the public water system, unless otherwise required by the director. The following operational metrics will be required for the specified system type:

(1) Community public water systems.

(a) Operating ratio.

(b) Operating cost to produce water per service connection.

(c) Breaks per ten miles of distribution pipe.

(d) Non-revenue water (percentage loss).

(e) Maintenance tasks per year (planned vs. unplanned) on vertical assets.

(f) One additional customer service metric to be tracked shall be determined by the water system.

(2) Noncommunity public water systems.

(a) Documentation of instances where system pressure was not maintained in accordance with Chapter 3745-83 of the Administrative Code.

(b) Repair, rehabilitation or replacement tasks per year (emergency versus planned).

(c) Reserve funds.

(d) Number of days unable to serve water.

Effective: 11/8/2018
Five Year Review (FYR) Dates: 11/08/2023
Promulgated Under: 119.03
Statutory Authority: 6109.04
Rule Amplifies: 6109.24