Results of groundwater denitrification experiments using a USB reactor, with ethanol as the carbon source, indicate that it can efficiently treat affected water. However, this type of reactor was found to be strongly affected by the hardness of the water as a result of changes in the mineral fraction of the granules. During a period when water containing between 150 and 380 mg/l (average of 244 mg/l) of hardness (as CaCO3) was used, floating sludge and biomass washout occurred as a result of a low granule mineral content, 10-15% of TSS, and a gradual increase in granule size, accompanied by poor settling characteristics. When water of higher hardness was used, 380-450 mg/l as CaCO3, high biomass concentrations of 30-40 g/(1 sludge blanket) were maintained in the reactor. This high concentration resulted from the development of granules having good settling characteristics and containing about 25% minerals (CaCO3) with very low SVI values (between 15 and 30). Under these conditions the USB reactors exhibited stable operation with volumetric loading rates of up to 4 kgN/m(3*)day, corresponding to a retention time of 8 min.