Rural Water Projects

This testimony discusses legislation pending before Congress that would authorize the Bureau of Reclamation as the designated source of funding for the Fort Peck Reservation Rural Water Project. In the past, legislation has tasked the Bureau with specific rural water projects. However, the Bureau's backlog of authorized but unbuilt projects, the significant constraints on available funding, and concerns that passage of such legislation would further erode the Bureau's basic responsibilities prompted a GAO review of selected rural water projects, including the Fort Peck Project. This testimony draws on the findings of a May 1998 GAO report (GAO/RCED-98-204R) on the characteristics of three proposed projects and the criteria that specific federal programs apply when considering applicants for assistance.

GAO noted that: (1) both USDA and EPA have programs under which rural communities that meet specific criteria may receive grants or loans for the construction of rural water projects, but BOR has no established program for funding rural water projects and therefore has no eligibility criteria; (2) instead, BOR has undertaken such projects when tasked by Congress; (3) both USDA and EPA require, among other things, that recipients demonstrate the ability to repay the loans provided to them; (4) despite its lack of eligibility criteria, BOR, which has concentrated its activities in 17 western states, does have a long-standing policy on full reimbursement for its contributions to local projects; (5) the characteristics of the Fort Peck project do not meet some of the criteria for participation in either USDA's or EPA's program, nor BOR's long-standing reimbursement policy; (6) specifically, the project relies on grants rather than loans and thus does not meet the criteria for economic feasibility and repayment; (7) officials of the three agencies agreed that the project would meet real needs in the communities; and (8) however, they expressed concerns about project construction costs and noted that the project envisions the federal government's funding a higher percentage of the project than is allowed under agencies' policies.