Despite budget shortfalls (until recently) and stalled water projects up and down the state, California has left $455 million of federal money on the table and the feds aren’t happy about it.

The U.S. Environmental Protection Agency (EPA) sent a letter of noncompliance (pdf) to the California Department of Public Health (CDPH) last week, saying it had failed to administer funds from the Safe Drinking Water State Revolving Fund.

“States are required to make timely loans or grants using all available drinking water funds to eligible water systems for necessary projects, and California has failed to meet this standard,” the EPA wrote. As of October 2012, California had not allocated $455 million available to it, the largest untouched amount by any state participating in the program. California has spent 63% of available funds, compared to the national average of 81%.

The EPA also said the department’s record keeping was poor, and couldn’t even keep track of revenues flowing back into the fund from earlier loan repayments. Those repayments add an additional $260 million in untouched loan capacity to the fund.

The federal agency thought California’s behavior was rather bizarre considering that studies indicate that it needs to spend $39 billion on capital improvements on water systems through 2026 to provide safe drinking water to its residents. The fund pays for improvements to stressed water treatment systems, e.g. contaminated wells, often in rural areas.

More than half of all Californians drink water contaminated in some measure by arsenic, nitrates and other things no one wants to consume, according to the State Water Resources Control Board. But they rely on water treatment systems to dilute or reduce the contaminants to safe levels.  

EPA Regional Administrator Jared Blumenfeld told the Los Angeles Times that a big part of the problem was California’s insistence on spending the money on medium and large projects, rather than small, but critical, projects that are shovel ready. “It’s not like there is a lack of projects,” he said.

Public Health Department Director Ron Chapman responded that the state “has made significant progress in resolving these challenges and getting more money to local communities to improve their drinking water.” He promised to comply with the order.

The EPA gave the state 60 days to come up with a plan.

–Ken Broder

To Learn More:

EPA: Calif Failed to Spend $455M on Water Projects (by Gosia Wozniacka, Associated Press)

California Not Complying with Water Act, EPA Says (by Matt Weiser, Sacramento Bee)

California Hasn't Spent Safe-Drinking-Water Funds, EPA Says (by Bettina Boxall, Los Angeles Times)

Safe Drinking Water State Revolving Fund (California Department of Public Health) 

CDPH Notice of Noncompliance (U.S. Environmental Protection Agency) (pdf)