Water Resources
Four Federal Agencies Provide Funding for Rural Water Supply and Wastewater Projects Gao ID: GAO-07-1094 September 7, 2007funds for constructing and upgrading water supply and wastewater treatment facilities. As a result, they typically rely on federal grants and loans, primarily from the Rural Utilities Service (RUS), Economic Development Administration (EDA), Bureau of Reclamation (Reclamation), and the U.S. Army Corps of Engineers (Corps), to fund these projects. Concern has been raised about potential overlap between the projects these agencies fund. For fiscal years 2004 through 2006 GAO determined the (1) amount of funding these agencies obligated for rural water projects and (2) extent to which each agency's eligibility criteria and the projects they fund differed. GAO analyzed each agency's financial data and reviewed applicable statutes, regulations, and policies.
From fiscal years 2004 through 2006, RUS, EDA, Reclamation, and the Corps obligated nearly $4.7 billion to about 3,100 rural water supply and wastewater projects. RUS obligated the majority of these funds--about $4.2 billion--to about 2,800 projects. Of this $4.2 billion, RUS loans accounted for about $2.7 billion, and RUS grants accounted for about $1.5 billion. EDA, Reclamation, and the Corps, combined, obligated a total of about $500 million in grants to rural communities for about 300 water projects. RUS, EDA, Reclamation, and the Corps fund similar rural water supply and wastewater projects, but they have varied eligibility criteria that limit funding to certain communities based on population size, economic need, or geographic location. RUS, EDA, and the Corps provide funding for both water supply and wastewater projects, while Reclamation provides funding only for water supply projects. Eligible water projects can include constructing or upgrading distribution lines, treatment plants, and pumping stations. RUS and EDA have formal nationwide programs with standardized eligibility criteria and processes under which communities compete for funding. In contrast, Reclamation and the Corps fund water projects in defined geographic locations under explicit congressional authorizations. In 2006 the Congress passed the Rural Water Supply Act, directing Reclamation to develop a rural water supply program with standard eligibility criteria. The Corps continues to fund rural water supply and wastewater projects under specific congressional authorizations, many of which are pilot programs. The Congress required the Corps to evaluate the effectiveness of these various pilot programs and recommend whether they should be implemented on a national basis. The Corps has only completed some of the required evaluations and, in most cases, has not made the recommendations that the Congress requested about whether or not the projects carried out under these pilot programs should be implemented on a national basis.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-1094, Water Resources: Four Federal Agencies Provide Funding for Rural Water Supply and Wastewater Projects
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Report to the Honorable Gordon Smith, U.S. Senate:
United States Government Accountability Office:
GAO:
September 2007:
Water Resources:
Four Federal Agencies Provide Funding for Rural Water Supply and
Wastewater Projects:
Water Resources:
GAO-07-1094:
GAO Highlights:
Highlights of GAO-07-1094, a report to the Honorable Gordon Smith, U.S.
Senate.
Why GAO Did This Study:
Rural areas generally lack adequate funds for constructing and
upgrading water supply and wastewater treatment facilities. As a
result, they typically rely on federal grants and loans, primarily from
the Rural Utilities Service (RUS), Economic Development Administration
(EDA), Bureau of Reclamation (Reclamation), and the U.S. Army Corps of
Engineers (Corps), to fund these projects. Concern has been raised
about potential overlap between the projects these agencies fund. For
fiscal years 2004 through 2006 GAO determined the (1) amount of funding
these agencies obligated for rural water projects and (2) extent to
which each agency‘s eligibility criteria and the projects they fund
differed.
GAO analyzed each agency‘s financial data and reviewed applicable
statutes, regulations, and policies.
What GAO Found:
From fiscal years 2004 through 2006, RUS, EDA, Reclamation, and the
Corps obligated nearly $4.7 billion to about 3,100 rural water supply
and wastewater projects. RUS obligated the majority of these
funds––about $4.2 billion––to about 2,800 projects. Of this $4.2
billion, RUS loans accounted for about $2.7 billion, and RUS grants
accounted for about $1.5 billion. EDA, Reclamation, and the Corps,
combined, obligated a total of about $500 million in grants to rural
communities for about 300 water projects.
Figure: Percentage of Rural Water Supply and Wastewater Projects and
Funds Obligated by RUS, EDA, Reclamation, and the Corps, Fiscal Years
2004 through 2006:
[See PDF for image]
Source: GAO.
Note: Numbers may not add to 100 percent due to rounding.
[End of figure]
RUS, EDA, Reclamation, and the Corps fund similar rural water supply
and wastewater projects, but they have varied eligibility criteria that
limit funding to certain communities based on population size, economic
need, or geographic location. RUS, EDA, and the Corps provide funding
for both water supply and wastewater projects, while Reclamation
provides funding only for water supply projects. Eligible water
projects can include constructing or upgrading distribution lines,
treatment plants, and pumping stations. RUS and EDA have formal
nationwide programs with standardized eligibility criteria and
processes under which communities compete for funding. In contrast,
Reclamation and the Corps fund water projects in defined geographic
locations under explicit congressional authorizations. In 2006 the
Congress passed the Rural Water Supply Act, directing Reclamation to
develop a rural water supply program with standard eligibility
criteria. The Corps continues to fund rural water supply and wastewater
projects under specific congressional authorizations, many of which are
pilot programs. The Congress required the Corps to evaluate the
effectiveness of these various pilot programs and recommend whether
they should be implemented on a national basis. The Corps has only
completed some of the required evaluations and, in most cases, has not
made the recommendations that the Congress requested about whether or
not the projects carried out under these pilot programs should be
implemented on a national basis.
What GAO Recommends:
GAO recommends actions to ensure that the Congress has adequate
information to determine whether rural water supply and wastewater
projects that the Corps funds merit continued funding or duplicate
other agency efforts.
In its comments on a draft of this report, the Department of Defense
concurred with GAO‘s findings and recommendation. The Departments of
Agriculture, Commerce, and the Interior also agreed with GAO‘s
findings.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1094].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Anu K. Mittal at (202)
512-3841or mittala@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Four Agencies Obligated about $5 Billion for Rural Water Supply and
Wastewater Projects during Fiscal Years 2004 through 2006:
Agencies Fund Similar Rural Water Supply and Wastewater Projects, but
their Eligibility Criteria Vary:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Agency Overhead Cost Information, Fiscal Years 2004
through 2006:
RUS and EDA:
Reclamation:
Corps:
Appendix III: Comments from the Department of Defense:
Appendix IV: Comments from the Department of the Interior:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Number of Projects and Obligations for Rural Water Supply and
Wastewater Projects for Four Federal Agencies for Fiscal Years 2004
through 2006:
Table 2: Type of Rural Water Projects, Funding Mechanisms, and
Eligibility Criteria of Four Federal Agencies:
Table 3: Number of RUS Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
Table 4: Number of EDA Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
Table 5: Number of Reclamation Funded Rural Water Supply Projects by
State, Fiscal Years 2004 through 2006:
Table 6: Number of Corps Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
Table 7: Agencies' Definitions of Rural Area:
Table 8: Rural Water Supply and Wastewater Projects Selected for GAO
Site Visits:
Table 9: Total Obligations, Indirect Obligations, and FTEs for
Reclamation's 11 Rural Water Supply Projects, Fiscal Years 2004 through
2006:
Figures:
Figure 1: RUS Funded Rural Water Supply and Wastewater Projects, Fiscal
Years 2004 through 2006:
Figure 2: EDA Funded Rural Water Supply and Wastewater Projects, Fiscal
Years 2004 through 2006:
Figure 3: Reclamation Funded Rural Water Supply Projects, Fiscal Years
2004 through 2006:
Figure 4: Corps Funded Rural Water Supply and Wastewater Projects,
Fiscal Years 2004 through 2006:
Figure 5: Location of the Mni Wiconi Project, South Dakota:
Abbreviations:
Corps: U.S. Army Corps of Engineers:
EDA: Economic Development Administration:
EPA: Environmental Protection Agency:
FTE: full-time equivalent G&A General and Administrative:
OMB: Office of Management and Budget:
Reclamation: Bureau of Reclamation:
RUS: Rural Utilities Service:
United States Government Accountability Office:
Washington, DC 20548:
September 7, 2007:
The Honorable Gordon Smith:
United States Senate:
Dear Senator Smith:
More than 90 percent of public water supply systems and 70 percent of
wastewater systems throughout the United States serve communities with
populations of fewer than 10,000, usually in rural areas.[Footnote 1]
The Environmental Protection Agency (EPA) estimates that these water
supply and wastewater systems will require about $64 billion in
upgrades to meet federal water quality standards. However, rural areas
typically lack adequate funds for constructing and upgrading water
supply and wastewater treatment facilities. Urban areas can take
advantage of economies of scale by spreading the costs of projects
among larger populations, which rural areas cannot. According to EPA,
the per-household cost for water supply and wastewater projects in
these areas is almost four times more than the per-household cost of
similar projects in more urban areas. As a result, communities in rural
areas often have to rely on federal grants and loans to help finance
their water supply and wastewater projects.
As we reported in 2005,[Footnote 2] while several federal agencies
provide funding for rural water supply and wastewater projects, these
projects are primarily funded by the U.S. Department of Agriculture's
Rural Utilities Service (RUS),[Footnote 3] the Department of Commerce's
Economic Development Administration (EDA), the Department of the
Interior's Bureau of Reclamation (Reclamation), and the U.S. Army Corps
of Engineers:
(Corps).[Footnote 4] Historically, RUS has provided grants and loans to
construct or improve water supply and wastewater facilities in rural
areas. Similarly, EDA has provided grants to economically distressed
communities, including those in rural areas, to revitalize, expand, and
upgrade their physical infrastructure, which includes water supply and
wastewater facilities. In contrast, Reclamation has traditionally
funded large water infrastructure projects to irrigate the arid western
states, while the Corps has primarily funded water-related
infrastructure for inland navigation and flood control purposes. More
recently, the Congress has directed Reclamation and the Corps to
provide funding for water supply and wastewater treatment projects,
including some in rural areas, raising concerns about potential overlap
between these projects and those traditionally funded by RUS and EDA.
In this context, you asked us to determine (1) for fiscal years 2004
through 2006, how much federal funding RUS, EDA, Reclamation, and the
Corps obligated for rural water supply and wastewater projects and (2)
to what extent each agency's eligibility criteria and the projects they
fund differ. In addition, you asked us to determine, to the extent
possible, the total overhead costs and number of personnel needed to
manage rural water supply and wastewater projects at each agency during
fiscal years 2004 through 2006. This information is included in an
appendix to this report.
To determine the amount of funding RUS, EDA, Reclamation, and the Corps
provided, we collected and analyzed each agency's obligations for rural
water supply and wastewater projects during fiscal years 2004 through
2006. To determine the extent to which each agency's eligibility
criteria and the projects they fund differ, we reviewed and analyzed
applicable statutes, agency regulations, policy guidance, and project
specific data submitted by each agency to us. In addition, we selected
a nonprobability sample of 16 rural water supply and wastewater
projects, including at least one project funded by each of the four
agencies, and interviewed both local officials from the communities
sponsoring these projects and federal agency officials responsible for
managing the funding of these projects. To the extent possible, we also
analyzed the amount of overhead costs and number of personnel necessary
to support these projects at each agency. A more detailed description
of our scope and methodology is presented in appendix I. We performed
our work from September 2006 through August 2007 in accordance with
generally accepted auditing standards.
Results in Brief:
RUS, EDA, Reclamation, and the Corps obligated nearly $4.7 billion for
about 3,100 rural water supply and wastewater projects from fiscal
years 2004 through 2006. RUS obligated nearly 90 percent of these
funds--about $4.2 billion--for about 2,800 projects. Of the $4.2
billion, RUS loans accounted for about $2.7 billion, and RUS grants
accounted for about $1.5 billion. In contrast, EDA, Reclamation, and
the Corps together provided a total of about $500 million in grants to
rural communities for about 300 projects. While RUS provided the
majority of the funding and supported the largest number of projects,
Reclamation provided the most funding per project. For example, the
average RUS grant was approximately $680,000 per project, while the
average Reclamation grant was nearly $22 million per project. EDA and
Corps grants averaged about $1 million and $800,000 per project,
respectively.
RUS, EDA, Reclamation, and the Corps fund similar rural water supply
and wastewater projects, but their varying eligibility criteria can
restrict funding to specific communities based on population size,
economic need, or geographic location. Specifically, RUS, EDA, and the
Corps provide funding for both water supply and wastewater projects,
while Reclamation only provides funding for water supply projects.
Water supply and wastewater projects funded by these agencies primarily
include the construction or upgrading of distribution lines, treatment
plants, and pumping stations. RUS and EDA have established formal
nationwide programs with standardized eligibility criteria and
processes under which communities compete for funding. For example,
RUS' criteria requires projects to be located in a city or town with a
population of 10,000 or less, while EDA's criteria requires projects to
be located in economically distressed communities, regardless of the
size of the population served, and the projects must save or create
jobs. In contrast, Reclamation and the Corps have not historically had
rural water supply and wastewater programs; rather, they have provided
funding to specific projects in defined geographic locations under
explicit congressional authorizations. For example, the Mni Wiconi
Project Act of 1988, as amended, directs Reclamation to provide funding
to three Indian tribes and seven counties for a water supply project in
South Dakota. Similarly, a section of the Water Resources Development
Act of 1999, as amended, directs the Corps to provide funding to water
supply and wastewater projects in Idaho, Montana, rural Nevada, New
Mexico, and rural Utah. More recently, the Congress passed the Rural
Water Supply Act of 2006, directing Reclamation to develop a rural
water supply program with standard eligibility criteria within 1 year
and to assess within 2 years how the rural water projects that
Reclamation funds will complement those projects being funded by other
federal agencies. However, the Corps continues to fund rural water
supply and wastewater projects under specific congressional
authorizations, many of which are pilot programs. We found that, during
fiscal years 2004 through 2006, the Corps completed more than 100 rural
water supply and wastewater projects under various pilot programs. The
Corps was required to evaluate the effectiveness of the projects funded
under these various pilot programs and recommend to the Congress
whether they should be implemented on a national basis. The Corps has
completed most of the evaluations required under the various pilot
programs, but, in most cases, the Corps either did not make a
recommendation or concluded that it had not completed enough projects
to make meaningful recommendations. In the absence of these evaluations
and recommendations, the Congress does not have information on whether,
collectively, the projects carried out under the Corps' pilot programs
merit continued funding, duplicate other agency efforts, or should be
implemented on a national basis. We are recommending that the Corps
provide the Congress a comprehensive report on the water supply and
wastewater projects it has funded and determine whether or not these
programs should continue to be funded by the Corps. In commenting on a
draft of this report, the Department of Defense concurred with our
findings and recommendation. The Department of the Interior also agreed
with our findings and the Departments of Agriculture and Commerce
provided technical comments, which we have incorporated throughout the
report, as appropriate.
Background:
RUS, EDA, Reclamation, and the Corps each have distinct missions and
fund rural water supply and wastewater projects under separate programs
and congressional authorizations. Furthermore, each agency has its own
definition of what constitutes a rural area and a unique organizational
structure to implement its programs. Specifically,
* RUS administers the U.S. Department of Agriculture's rural utilities
programs throughout the country, which are aimed at expanding
electricity, telecommunications, and water and waste disposal services.
RUS provides assistance for water supply and wastewater projects
through its Water and Environmental Program and defines rural areas for
this program as incorporated cities and towns with a population of
10,000 or fewer and unincorporated areas, regardless of population. RUS
manages this program through its headquarters in Washington, D.C., and
47 state offices, each supported by area and local offices.
* EDA provides development assistance to areas experiencing substantial
economic distress regardless of whether or not they are rural or urban.
EDA primarily provides assistance for water supply and wastewater
projects in distressed areas through its Public Works and Development
Facilities Program and uses a U.S. Census Bureau definition for rural
areas that is based on metropolitan statistical areas.[Footnote 5] EDA
manages this program through its headquarters in Washington, D.C., six
regional offices, and multiple field personnel.
* Reclamation was established to implement the Reclamation Act of 1902,
which authorized the construction of water projects to provide water
for irrigation in the arid western states. Reclamation generally
manages numerous municipal and industrial projects as part of larger,
multipurpose projects that provide irrigation, flood control, power,
and recreational opportunities in 17 western states, unless otherwise
directed by the Congress.[Footnote 6] Reclamation provides assistance
for water supply projects through individual project authorizations and
defines a rural area as a community, or group of communities, each of
which has a population of not more than 50,000 inhabitants.[Footnote 7]
Reclamation manages these projects through its headquarters in
Washington, D.C., and Denver, Colorado, five regional offices, and
multiple field offices in the western United States.
* The Corps' Civil Works programs investigate, develop, and maintain
water and related environmental resources throughout the country to
meet the agency's navigation, flood control, and ecosystem restoration
missions. In addition, the Civil Works programs also provide disaster
response, as well as engineering and technical services. The Corps
provides assistance for water supply and wastewater projects through
authorizations for either a project in a specific location, or for a
program in a defined geographic area, and does not have a definition
for rural areas.[Footnote 8] The Corps administers its programs and
projects through its Headquarters in Washington, D.C., eight regional
divisions, and 38 district offices.
These agencies rely on several sources of funding--including annual
appropriations from the general fund and from dedicated funding
sources, such as trust funds--to provide financial support for these
projects and programs.
Four Agencies Obligated about $5 Billion for Rural Water Supply and
Wastewater Projects during Fiscal Years 2004 through 2006:
RUS, EDA, Reclamation, and the Corps obligated $4.7 billion to 3,104
rural water supply and wastewater projects from fiscal years 2004
through 2006.[Footnote 9] Of these obligations, RUS obligated nearly
$4.2 billion (or about 90 percent) of the funding--about $1.5 billion
in grants and about $2.7 billion in loans[Footnote 10]--to about 2,800
projects. EDA, Reclamation, and the Corps provided a combined $500
million in grants to rural communities for about 300 water supply and
wastewater projects. Table 1 shows the number of projects and the
amount of obligations for rural water supply and wastewater projects by
agency for fiscal years 2004 through 2006. Figures 1 through 4 show the
location of these rural water supply and wastewater projects by agency
during fiscal years 2004 through 2006.
Table 1: Number of Projects and Obligations for Rural Water Supply and
Wastewater Projects for Four Federal Agencies for Fiscal Years 2004
through 2006:
Dollars in thousands.
Agency: RUS;
Number of projects: 2,802;
Total obligations: $4,154,651;
Grants: Number: 2,117[A];
Grants: Obligations: $1,439,681;
Grants: Average: $680;
Loans: Number 2,287[A];
Loans: Obligations: $2,714,971;
Loans: Average: $1,187.
Agency: EDA;
Number of projects: 142;
Total obligations: 153,505;
Grants: Number: 153,505;
Grants: Obligations: 142;
Grants: Average: 1,081;
Loans: Number [B];
Loans: Obligations: [B];
Loans: Average: [B].
Agency: Reclamation;
Number of projects: 11;
Total obligations: 240,185;
Grants: Number: 11;
Grants: Obligations: 240,185;
Grants: Average: 21,835;
Loans: Number [B];
Loans: Obligations: [B];
Loans: Average: .
Agency: Corps;
Number of projects: 149;
Total obligations: 118,519;
Grants: Number: 149;
Grants: Obligations: 118,519;
Grants: Average: 795;
Loans: Number [B];
Loans: Obligations: [B];
Loans: Average: [B].
Total;
Number of Projects: 3,104;
Total obligations: $4,666,860;
Grants: Number: 2,419;
Grants: Obligations: $1,951,890;
Grants: Average: $807;
Loans: Number: 2,287;
Loans: Obligations: $2,714,971;
Loans: Average: $1,187.
Sources: GAO analysis of RUS, EDA, Reclamation, and Corps data.
[A] The total number of grants and loans does not equal the total
number of projects because, in some cases, projects received a
combination of both grants and loans.
[B] Data not applicable.
[End of figure]
Figure 1: RUS Funded Rural Water Supply and Wastewater Projects, Fiscal
Years 2004 through 2006:
[See PDF for image]
Source: GAO analysis of RUS data.
[End of figure]
Figure 2: EDA Funded Rural Water Supply and Wastewater Projects, Fiscal
Years 2004 through 2006:
[See PDF for image]
Source: GAO analysis of EDA data.
[End of figure]
Figure 3: Reclamation Funded Rural Water Supply Projects, Fiscal Years
2004 through 2006:
[See PDF for image]
Source: GAO analysis of Reclamation data.
[End of figure]
Figure 4: Corps Funded Rural Water Supply and Wastewater Projects,
Fiscal Years 2004 through 2006:
[See PDF for image]
Source: GAO analysis of Corps data.
[End of figure]
RUS provided the majority of the funding to the largest number of
projects, while Reclamation provided the largest amount of funding per
project. As table 1 shows, the average RUS grant was approximately
$680,000 per project, while the average Reclamation grant was about $22
million per project. EDA and Corps grants averaged about $1 million and
$800,000 per project, respectively. The average Reclamation grant
amount was significantly larger than the grant amounts provided by the
other agencies because Reclamation provided funding to a relatively
small number of large regional water supply projects that span multiple
communities. For example, during fiscal years 2004 through 2006,
Reclamation obligated nearly $87 million of the about $459 million
estimated total cost for the Mni Wiconi project. This project will
provide potable water to about 51,000 people in rural communities
spanning seven counties and three Indian Reservations. The Mni Wiconi
project covers approximately 12,500 square miles of the state of South
Dakota or roughly 16 percent of the state's total land area. Figure 5
shows the location of the Mni Wiconi project area.
Figure 5: Location of the Mni Wiconi Project, South Dakota:
[See PDF for image]
Source: GAO and Reclamation.
[End of figure]
In contrast, the other three agencies primarily provided funding to
relatively smaller scale projects located in single communities. For
example, Penns Grove, New Jersey, a community with a population of
about 5,000, received an $800,000 EDA grant to upgrade a wastewater
treatment plant with an estimated total project cost of $1.16 million.
Similarly, according to Corps officials, Monticello, Kentucky, a
community with a population of about 6,000, received about $312,500
from the Corps for two sewer line extensions with total project costs
of about $435,000. This community also received about $1 million from
RUS for water and sewer line upgrades with an estimated total project
cost of about $1.4 million.
Agencies Fund Similar Rural Water Supply and Wastewater Projects, but
their Eligibility Criteria Vary:
While the types of projects RUS, EDA, Reclamation, and the Corps fund
are similar, varying agency eligibility criteria can limit funding to
certain communities based on their population size, economic need, or
geographic location. Specifically, RUS and EDA have established
nationwide programs with standardized eligibility criteria and
processes under which communities compete for funding. In contrast,
Reclamation and the Corps have historically provided funding to
congressionally authorized projects in certain geographic locations,
without standardized eligibility criteria. Table 2 shows the types of
projects each agency funds, the funding mechanisms they use, and their
eligibility criteria.
Table 2: Type of Rural Water Projects, Funding Mechanisms, and
Eligibility Criteria of Four Federal Agencies:
Federal agency: RUS;
Type of project: Water supply: X;
Type of project: Waste-water: X;
Funding mechanism: Grant: X;
Funding mechanism: Loan: X;
Eligibility criteria: Project must meet standardized national criteria:
X;
Eligibility criteria: Project must serve a city or town with a
population of 10,000 or less[A]: X;
Eligibility criteria: Project area is geographically restricted by
statute: [Empty];
Eligibility criteria: Project area must be economically distressed:
[Empty];
Eligibility criteria: Project must provide economic development in the
region: [Empty].
Federal agency: EDA;
Type of project: Water supply: X;
Type of project: Waste-water: X;
Funding mechanism: Grant: X;
Funding mechanism: Loan: [Empty];
Eligibility criteria: Project must meet standardized national criteria:
X;
Eligibility criteria: Project must serve a city or town with a
population of 10,000 or less[A]: [Empty];
Eligibility criteria: Project area is geographically restricted by
statute: [Empty];
Eligibility criteria: Project area must be economically distressed:
X[B];
Eligibility criteria: Project must provide economic development in the
region: X[C].
Federal agency: Corps;
Type of project: Water supply: X;
Type of project: Waste-water: X;
Funding mechanism: Grant: X[D];
Funding mechanism: Loan: [Empty];
Eligibility criteria: Project must meet standardized national criteria:
[Empty];
Eligibility criteria: Project must serve a city or town with a
population of 10,000 or less[A]: [Empty];
Eligibility criteria: Project area is geographically restricted by
statute: X;
Eligibility criteria: Project area must be economically distressed:
[Empty];
Eligibility criteria: Project must provide economic development in the
region: [Empty].
Federal agency: Reclamation;
Type of project: Water supply: X;
Type of project: Waste-water: [Empty];
Funding mechanism: Grant: X;
Funding mechanism: Loan: [Empty];
Eligibility criteria: Project must meet standardized national criteria:
[Empty];
Eligibility criteria: Project must serve a city or town with a
population of 10,000 or less[A]: [Empty];
Eligibility criteria: Project area is geographically restricted by
statute: X;
Eligibility criteria: Project area must be economically distressed:
[Empty];
Eligibility criteria: Project must provide economic development in the
region: [Empty].
Sources: GAO analysis of RUS, EDA, Reclamation, and Corps regulations
and program guidance.
[A] Project may also serve an unincorporated rural area, regardless of
the area's population.
[B] EDA defines an area as economically distressed if it meets one of
the following three conditions: (1) an unemployment rate that is at
least 1 percent greater than the national average, (2) a per capita
income that is 80 percent or less of the national average, or (3) has
experienced or is about to experience a special need arising from
changes in economic conditions.
[C] Economic development consists of the creation or retention of
higher skilled, higher wage jobs and/or the attraction of private
capital investment.
[D] In some cases, projects are funded through reimbursable payments
from the Corps for project costs already accrued.
[End of table]
RUS, EDA, Reclamation, and the Corps Fund Similar Rural Water Supply
and Wastewater Projects:
The rural water projects that RUS, EDA, Reclamation, and the Corps fund
are similar, and all four agencies use similar funding mechanisms.
While Reclamation primarily provides funding for water supply projects,
RUS, EDA, and the Corps fund both water supply and wastewater projects.
These projects primarily include the construction or upgrading of water
or wastewater distribution lines, treatment plants, and pumping
stations. For example, all four agencies funded water line expansions
or upgrades in either residential or commercial areas. RUS, EDA, and
the Corps also funded sewer line extensions into either residential or
commercial areas.
RUS and EDA Have Nationwide Water Supply and Wastewater Programs with
Standard Eligibility Criteria:
RUS and EDA have established nationwide programs with standardized
eligibility criteria and processes under which communities compete for
funding. Specifically, RUS' eligibility criteria require projects to be
located in a city or town with a population of less than 10,000 or an
unincorporated rural area, regardless of the area's population. EDA's
eligibility criteria require projects to be located in economically
distressed communities, regardless of the size of the community served,
and the project must also create or retain jobs.
RUS Only Provides Funding for Water Supply and Wastewater Projects
Located in Rural Areas:
RUS' eligibility criteria require water supply or wastewater projects
to serve rural areas. A project must be located in a city or town with
a population of less than 10,000 or in an unincorporated rural area
regardless of the population. For example, St. Gabriel, Louisiana, with
a population of about 6,600, received RUS funding to expand sewer lines
to connect residents to a wastewater treatment plant. Similarly, Laurel
County Water District No. 2, which provides potable water to about
17,000 residents who live in unincorporated rural areas of southeastern
Kentucky between the cities of London, Kentucky, and Corbin, Kentucky,
received RUS funding to upgrade a water treatment plant to accommodate
potential growth opportunities in the area. Table 3 provides the number
of RUS funded rural water supply and wastewater projects by state for
fiscal years 2004 through 2006.
Table 3: Number of RUS Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
State: Alabama;
Number of rural water supply projects: 38;
Number of rural wastewater projects: 16;
Number of combined rural water supply and wastewater projects: 0;
Total: 54.
State: Alaska;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 6;
Total: 9.
State: Arizona;
Number of rural water supply projects: 18;
Number of rural wastewater projects: 6;
Number of combined rural water supply and wastewater projects: 0;
Total: 24.
State: Arkansas;
Number of rural water supply projects: 93;
Number of rural wastewater projects: 23;
Number of combined rural water supply and wastewater projects: 7;
Total: 123.
State: California;
Number of rural water supply projects: 47;
Number of rural wastewater projects: 31;
Number of combined rural water supply and wastewater projects: 2;
Total: 80.
State: Colorado;
Number of rural water supply projects: 15;
Number of rural wastewater projects: 4;
Number of combined rural water supply and wastewater projects: 2;
Total: 21.
State: Connecticut;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 7;
Number of combined rural water supply and wastewater projects: 0;
Total: 9.
State: Delaware;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 5;
Number of combined rural water supply and wastewater projects: 0;
Total: 9.
State: Florida;
Number of rural water supply projects: 13;
Number of rural wastewater projects: 10;
Number of combined rural water supply and wastewater projects: 6;
Total: 29.
State: Georgia;
Number of rural water supply projects: 12;
Number of rural wastewater projects: 8;
Number of combined rural water supply and wastewater projects: 0;
Total: 20.
State: Hawaii;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 3.
State: Idaho;
Number of rural water supply projects: 30;
Number of rural wastewater projects: 20;
Number of combined rural water supply and wastewater projects: 4;
Total: 54.
State: Illinois;
Number of rural water supply projects: 84;
Number of rural wastewater projects: 18;
Number of combined rural water supply and wastewater projects: 4;
Total: 106.
State: Indiana;
Number of rural water supply projects: 17;
Number of rural wastewater projects: 31;
Number of combined rural water supply and wastewater projects: 2;
Total: 50.
State: Iowa;
Number of rural water supply projects: 39;
Number of rural wastewater projects: 35;
Number of combined rural water supply and wastewater projects: 0;
Total: 74.
State: Kansas;
Number of rural water supply projects: 28;
Number of rural wastewater projects: 17;
Number of combined rural water supply and wastewater projects: 1;
Total: 46.
State: Kentucky;
Number of rural water supply projects: 76;
Number of rural wastewater projects: 28;
Number of combined rural water supply and wastewater projects: 3;
Total: 107.
State: Louisiana;
Number of rural water supply projects: 65;
Number of rural wastewater projects: 19;
Number of combined rural water supply and wastewater projects: 0;
Total: 84.
State: Maine;
Number of rural water supply projects: 30;
Number of rural wastewater projects: 35;
Number of combined rural water supply and wastewater projects: 2;
Total: 67.
State: Maryland;
Number of rural water supply projects: 14;
Number of rural wastewater projects: 14;
Number of combined rural water supply and wastewater projects: 2;
Total: 30.
State: Massachusetts;
Number of rural water supply projects: 18;
Number of rural wastewater projects: 11;
Number of combined rural water supply and wastewater projects: 0;
Total: 29.
State: Michigan;
Number of rural water supply projects: 42;
Number of rural wastewater projects: 53;
Number of combined rural water supply and wastewater projects: 0;
Total: 95.
State: Minnesota;
Number of rural water supply projects: 16;
Number of rural wastewater projects: 34;
Number of combined rural water supply and wastewater projects: 10;
Total: 60.
State: Mississippi;
Number of rural water supply projects: 99;
Number of rural wastewater projects: 15;
Number of combined rural water supply and wastewater projects: 6;
Total: 120.
State: Missouri;
Number of rural water supply projects: 56;
Number of rural wastewater projects: 57;
Number of combined rural water supply and wastewater projects: 4;
Total: 117.
State: Montana;
Number of rural water supply projects: 22;
Number of rural wastewater projects: 12;
Number of combined rural water supply and wastewater projects: 0;
Total: 34.
State: Nebraska;
Number of rural water supply projects: 34;
Number of rural wastewater projects: 14;
Number of combined rural water supply and wastewater projects: 1;
Total: 49.
State: Nevada;
Number of rural water supply projects: 13;
Number of rural wastewater projects: 11;
Number of combined rural water supply and wastewater projects: 0;
Total: 24.
State: New Hampshire;
Number of rural water supply projects: 9;
Number of rural wastewater projects: 6;
Number of combined rural water supply and wastewater projects: 4;
Total: 19.
State: New Jersey;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 21;
Number of combined rural water supply and wastewater projects: 2;
Total: 27.
State: New Mexico;
Number of rural water supply projects: 47;
Number of rural wastewater projects: 17;
Number of combined rural water supply and wastewater projects: 3;
Total: 67.
State: New York;
Number of rural water supply projects: 93;
Number of rural wastewater projects: 41;
Number of combined rural water supply and wastewater projects: 0;
Total: 134.
State: North Carolina;
Number of rural water supply projects: 40;
Number of rural wastewater projects: 23;
Number of combined rural water supply and wastewater projects: 5;
Total: 68.
State: North Dakota;
Number of rural water supply projects: 31;
Number of rural wastewater projects: 5;
Number of combined rural water supply and wastewater projects: 4;
Total: 40.
State: Ohio;
Number of rural water supply projects: 19;
Number of rural wastewater projects: 46;
Number of combined rural water supply and wastewater projects: 1;
Total: 66.
State: Oklahoma;
Number of rural water supply projects: 29;
Number of rural wastewater projects: 24;
Number of combined rural water supply and wastewater projects: 2;
Total: 55.
State: Oregon;
Number of rural water supply projects: 16;
Number of rural wastewater projects: 15;
Number of combined rural water supply and wastewater projects: 2;
Total: 33.
State: Pennsylvania;
Number of rural water supply projects: 10;
Number of rural wastewater projects: 48;
Number of combined rural water supply and wastewater projects: 2;
Total: 60.
State: Rhode Island;
Number of rural water supply projects: 10;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 1;
Total: 14.
State: South Carolina;
Number of rural water supply projects: 33;
Number of rural wastewater projects: 10;
Number of combined rural water supply and wastewater projects: 7;
Total: 50.
State: South Dakota;
Number of rural water supply projects: 34;
Number of rural wastewater projects: 17;
Number of combined rural water supply and wastewater projects: 6;
Total: 57.
State: Tennessee;
Number of rural water supply projects: 90;
Number of rural wastewater projects: 24;
Number of combined rural water supply and wastewater projects: 9;
Total: 123.
State: Texas;
Number of rural water supply projects: 116;
Number of rural wastewater projects: 43;
Number of combined rural water supply and wastewater projects: 12;
Total: 171.
State: Utah;
Number of rural water supply projects: 21;
Number of rural wastewater projects: 4;
Number of combined rural water supply and wastewater projects: 1;
Total: 26.
State: Vermont;
Number of rural water supply projects: 13;
Number of rural wastewater projects: 11;
Number of combined rural water supply and wastewater projects: 2;
Total: 26.
State: Virginia;
Number of rural water supply projects: 27;
Number of rural wastewater projects: 28;
Number of combined rural water supply and wastewater projects: 4;
Total: 59.
State: Washington;
Number of rural water supply projects: 28;
Number of rural wastewater projects: 13;
Number of combined rural water supply and wastewater projects: 5;
Total: 46.
State: West Virginia;
Number of rural water supply projects: 54;
Number of rural wastewater projects: 16;
Number of combined rural water supply and wastewater projects: 2;
Total: 72.
State: Wisconsin;
Number of rural water supply projects: 23;
Number of rural wastewater projects: 27;
Number of combined rural water supply and wastewater projects: 1;
Total: 51.
State: Wyoming;
Number of rural water supply projects: 7;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 1;
Total: 11.
State: Total;
Number of rural water supply projects: 1,683;
Number of rural wastewater projects: 981;
Number of combined rural water supply and wastewater projects: 138;
Total: 2,802.
Source: GAO analysis of RUS data.
[End of table]
To apply for RUS funding for a water supply or wastewater project, a
community must submit a formal application. Once the formal application
is submitted, communities then compete for funding with other projects
throughout the state. In general, RUS officials in the state office
rank each proposed project according to the project's ability to
alleviate a public health issue, the community's median household
income, and other factors. As applications are reviewed and ranked on a
rolling basis, RUS officials in the state office generally decide which
projects will receive funding until all funds are obligated for the
fiscal year.
RUS provides both grants and loans for eligible projects, and
communities must meet certain requirements depending upon the type of
assistance they are requesting. For example, RUS grants can be used to
finance up to 75 percent of a project's cost based on a number of
factors including a community's financial need and median household
income. Alternatively, to receive a loan, the community must certify in
writing, and RUS must determine, that the community is unable to
finance the proposed project from their own resources or through
commercial credit at reasonable rates and terms. For projects also
funded through RUS loans, RUS requires the community to charge user
fees that, at a minimum, cover the costs of operating and maintaining
the water system while also meeting the required principal and interest
payments on the loan. For example, RUS provided the Wood Creek Water
District, located in Laurel County, Kentucky, a $1 million grant and a
$7.98 million loan for a major water treatment plant expansion. A Wood
Creek official told us that the water district had attempted to obtain
a loan from a commercial lender; however, the loan would have had an
interest rate of 7 percent and a term of 20 years, which would have
rendered the project financially unfeasible. According to RUS, Wood
Creek was able to receive a loan with an interest rate of 4.3 percent
and a term of 40 years, thereby significantly reducing the annual loan
payments. RUS also required Wood Creek to slightly increase its user
fees to support the operation and maintenance of the water system and
cover the loan repayment.
EDA Provides Funding to Projects in Areas Experiencing Economic
Distress:
EDA's eligibility criteria require water supply or wastewater projects
to be located in an economically distressed area, regardless of the
area's population size. EDA defines an area as economically distressed
if it meets one of the following three conditions: the area has (1) an
unemployment rate that is at least 1 percent greater than the national
average, (2) a per capita income that is 80 percent or less of the
national average, or (3) has experienced or is about to experience a
special need arising from changes in economic conditions. The project
must also create or retain long-term private sector jobs and/or attract
private capital investment. For example, Assumption Parish Waterworks
District No.1 in Napoleonville, Louisiana, received EDA funding to
upgrade water service to two sugarcane mills. The community qualified
for the funding because Assumption Parish met EDA's criteria for
unemployment and per capita income. The water supply project allowed
the sugarcane mills to maintain and expand their operations, saving 200
existing jobs, creating 17 new jobs, and attracting $12.5 million in
private investment. Table 4 provides the number of EDA funded rural
water supply and wastewater projects by state for fiscal years 2004
through 2006.
Table 4: Number of EDA Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
State: Alabama;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 4;
Total: 9.
State: Alaska;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 1;
Total: 1.
State: Arkansas;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 3;
Total: 4.
State: California;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 3.
State: Colorado;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Florida;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Georgia;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 4;
Number of combined rural water supply and wastewater projects: 2;
Total: 6.
State: Idaho;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 2.
State: Illinois;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 4.
State: Indiana;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 1;
Total: 4.
State: Iowa;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 3.
State: Kansas;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 1;
Total: 1.
State: Kentucky;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 4;
Total: 8.
State: Louisiana;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 1;
Total: 4.
State: Maine;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Michigan;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 3.
State: Minnesota;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 1;
Total: 4.
State: Mississippi;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 4.
State: Missouri;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 1;
Total: 2.
State: Montana;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: Nebraska;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 4.
State: Nevada;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: New Jersey;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: New Mexico;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 1;
Total: 1.
State: New York;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 1;
Total: 3.
State: North Carolina;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 4;
Number of combined rural water supply and wastewater projects: 1;
Total: 9.
State: North Dakota;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 1;
Total: 1.
State: Ohio;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 3;
Total: 4.
State: Oklahoma;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 3.
State: Oregon;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Pennsylvania;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 1;
Total: 5.
State: South Carolina;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 1;
Total: 6.
State: South Dakota;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: Tennessee;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 6;
Number of combined rural water supply and wastewater projects: 0;
Total: 8.
State: Texas;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 3;
Total: 5.
State: Utah;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 2.
State: Vermont;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Virginia;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: Washington;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: West Virginia;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 5;
Total: 9.
State: Wisconsin;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 4;
Total: 4.
State: Total;
Number of rural water supply projects: 48;
Number of rural wastewater projects: 44;
Number of combined rural water supply and wastewater projects: 50;
Total: 142.
Source: GAO analysis of EDA data.
[End of table]
To apply for EDA funding for a water supply or wastewater project, the
community must submit a preapplication to an EDA Regional Office. If
the proposed project is found eligible, the community must then submit
a formal application to an EDA Regional Office. The Regional Office
then prioritizes and makes funding decisions that are forwarded to EDA
headquarters for approval. These decisions are based upon, among other
things, how the project promotes innovative, entrepreneurial, or long-
term economic development efforts. EDA applications are reviewed on a
rolling basis, and funding decisions are made until all of the funds
for the fiscal year are obligated.
EDA provides grants for eligible projects that may finance 50 to 100
percent of a project's total costs based on a number of factors
including an area's level of economic distress. For example, the London-
Laurel County Industrial Development Authority located in Laurel
County, Kentucky, qualified for an EDA grant because the county has a
per capita income of $14,165, which is 66 percent of the national
average. Because Laurel County's per capita income was between 60 to 70
percent of the national average, EDA's grant could fund no more than 60
percent of the project's total cost. The project received a $950,000
grant, which covered 50 percent of the $1.9 million total project cost
to construct water and sewer line extensions for an industrial park.
The new occupants of this industrial park were expecting to create 425
new jobs and provide $20.9 million in private investment.
Reclamation and the Corps Provide Congressionally Directed Funding for
Specific Projects, without Standard Eligibility Criteria:
Reclamation and the Corps have not historically had rural water supply
and wastewater programs; rather they have provided funding to specific
projects or programs in certain geographic locations under explicit
congressional authorizations. Although the Corps continues to provide
assistance to projects under specific congressional authorizations,
many of which are pilot programs, the Rural Water Supply Act of
2006[Footnote 11] directed Reclamation to establish a rural water
supply program with standardized eligibility criteria.
Reclamation Funds Specific Congressionally Authorized Projects and Is
Also Establishing a Rural Water Supply Program:
Reclamation provides grants to individual rural water supply projects
in eligible communities for which the Congress has specifically
authorized and appropriated funds. These grants finance varying amounts
of a project's total costs depending upon the specific authorization.
According to a program assessment conducted by the Office of Management
and Budget (OMB), the Congress has chosen Reclamation to fill a void
for projects that are larger and more complex than other rural water
projects and which do not meet the criteria of other rural water
programs. For example, the Mni Wiconi Project Act of 1988, as amended,
directs Reclamation to provide funding to three Indian tribes and seven
counties for a rural water supply project in South Dakota that
encompasses 16 percent of state's total land area. For the Mni Wiconi
project, Reclamation grants provide funding for 100 percent of the
project costs on Indian lands and 80 percent of the project costs on
non-Indian lands. Table 5 provides the number of Reclamation funded
rural water supply projects by state for fiscal years 2004 through
2006.
Table 5: Number of Reclamation Funded Rural Water Supply Projects by
State, Fiscal Years 2004 through 2006:
Dollars in thousands.
Montana;
Number of rural water supply projects: 2;
Funds obligated: $33,197.
Nebraska;
Number of rural water supply projects: 1;
Funds obligated: 213.
New Mexico;
Number of rural water supply projects: 3;
Funds obligated: 2,053.
North Dakota;
Number of rural water supply projects: 1;
Funds obligated: 35,510.
South Dakota;
Number of rural water supply projects: 4[A];
Funds obligated: 169,212.
Total;
Number of rural water supply projects: 11;
Funds obligated: $240,185.
Source: GAO analysis of Reclamation data.
[A] One of the four rural water supply projects located in South Dakota
is also located in portions of southwestern Minnesota and northwestern
Iowa.
[End of table]
While rural water supply projects are outside of Reclamation's
traditional mission, according to Reclamation officials, the agency
became involved in such projects because individual communities or
groups of communities proposed projects directly to the Congress. In
response, the Congress created specific authorizations for these rural
water supply projects, and Reclamation was designated responsibility
for funding and overseeing the construction of the projects. Because
Reclamation is responding to Congressional direction in implementing
these projects, it has not established eligibility criteria for
communities or prioritized these projects for funding. In a May 11,
2005 testimony, the Commissioner of the Bureau of Reclamation indicated
that the agency would like more authority to plan and oversee the
development and construction of rural water supply projects.
In 2006, the Congress passed the Rural Water Supply Act directing
Reclamation to develop a rural water supply program. Within 1 year,
Reclamation was required to develop standardized criteria to determine
eligibility requirements for rural communities and prioritize funding
requests under this program. Further, the act directed Reclamation to
assess within 2 years how the rural water supply projects funded by
Reclamation will complement those being funded by other federal
agencies. Reclamation is now beginning to address these requirements,
including: (1) developing programmatic criteria to determine
eligibility for participation and (2) assessing the status of
authorized rural water supply projects and other federal programs that
address rural water supply issues. According to a Reclamation official,
the agency plans to complete these requirements by August 2008 and
December 2008, respectively. Reclamation officials also said the
development of a rural water supply program will, among other things,
allow Reclamation to be directly involved in the planning, design, and
prioritization of rural water supply projects and provide
recommendations to the Congress regarding which projects should be
funded for construction. Projects recommended for funding by
Reclamation must still receive a specific congressional authorization
for design and construction.
The Corps Funds Congressionally Authorized Projects, Usually through
Pilot Programs:
The Corps funds rural water supply and wastewater projects under
specific congressional authorizations, many of which are pilot
programs, and makes funding available to specific communities or
programs in certain geographic areas. For example, a section of the
Water Resources Development Act of 1999, as amended, authorized a pilot
program that directed the Corps to provide funding to water supply and
wastewater projects to communities in Idaho, Montana, rural Nevada, New
Mexico, and rural Utah. When directed to fund these types of projects,
the Corps provides either grants or reimbursements for project costs
incurred by the community. To receive reimbursements, a community
submits invoices received from its contractors to the Corps, and the
Corps generally reimburses the community up to 75 percent of project
costs. Table 6 provides the number of Corps funded rural water supply
and wastewater projects by state for fiscal years 2004 through 2006.
Table 6: Number of Corps Funded Rural Water Supply and Wastewater
Projects by State, Fiscal Years 2004 through 2006:
State: Arkansas;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: California;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 1;
Number of combined rural water supply and wastewater projects: 1;
Total: 5.
State: Idaho;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 5;
Number of combined rural water supply and wastewater projects: 0;
Total: 7.
State: Kentucky;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 14;
Number of combined rural water supply and wastewater projects: 0;
Total: 14.
State: Louisiana;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 2;
Total: 2.
State: Michigan;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 6;
Number of combined rural water supply and wastewater projects: 0;
Total: 6.
State: Minnesota;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 6;
Number of combined rural water supply and wastewater projects: 0;
Total: 9.
State: Mississippi;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 8;
Number of combined rural water supply and wastewater projects: 2;
Total: 12.
State: Montana;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 0;
Total: 4.
State: Nevada;
Number of rural water supply projects: 4;
Number of rural wastewater projects: 12;
Number of combined rural water supply and wastewater projects: 0;
Total: 16.
State: New Mexico;
Number of rural water supply projects: 3;
Number of rural wastewater projects: 5;
Number of combined rural water supply and wastewater projects: 2;
Total: 10.
State: New York;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 3;
Number of combined rural water supply and wastewater projects: 0;
Total: 3.
State: North Carolina;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 0;
Total: 2.
State: Ohio;
Number of rural water supply projects: 7;
Number of rural wastewater projects: 10;
Number of combined rural water supply and wastewater projects: 1;
Total: 18.
State: Pennsylvania;
Number of rural water supply projects: 6;
Number of rural wastewater projects: 8;
Number of combined rural water supply and wastewater projects: 4;
Total: 18.
State: Tennessee;
Number of rural water supply projects: 1;
Number of rural wastewater projects: 0;
Number of combined rural water supply and wastewater projects: 0;
Total: 1.
State: Utah;
Number of rural water supply projects: 5;
Number of rural wastewater projects: 4;
Number of combined rural water supply and wastewater projects: 1;
Total: 10.
State: West Virginia;
Number of rural water supply projects: 0;
Number of rural wastewater projects: 7;
Number of combined rural water supply and wastewater projects: 0;
Total: 7.
State: Wisconsin;
Number of rural water supply projects: 2;
Number of rural wastewater projects: 2;
Number of combined rural water supply and wastewater projects: 0;
Total: 4.
State: Total;
Number of rural water supply projects: 41;
Number of rural wastewater projects: 95;
Number of combined rural water supply and wastewater projects: 13;
Total: 149.
Source: GAO analysis of Corps data.
[End of table]
Even though the Corps provides congressionally directed funding to
specific geographic areas through these pilot programs, eligibility
criteria and the degree to which projects compete for funding can
differ between programs. For example, the Corps' Southern and Eastern
Kentucky Environmental Improvement Program is available only to
communities located in 29 counties in southeastern Kentucky. The
program requires these communities to submit formal applications, which
are prioritized and ranked annually against all received applications.
The Corps, in conjunction with a nonprofit organization, selects
projects for funding based on certain factors such as economic need.
For example, the Wood Creek Water District submitted a formal
application and received approximately $500,000 in reimbursements--
about 72 percent of the total project costs--to extend sewer service to
a school and 154 households who live near the school. In contrast, the
Corps' Rural Utah Program is available to communities in 24 counties
and part of another county that the Congress designated as rural. This
program requires communities in these counties to submit a request
letter that includes, among other things, a brief project description
and an estimate of total project costs. Request letters are considered
for funding on a rolling basis by Corps officials, and no other formal
eligibility criteria exist. For example, Park City, Utah, submitted a
letter that provided a project description and the estimated total cost
for the project. According to a Corps official, the Corps evaluated the
letter and provided approximately $300,000 in reimbursements--or about
60 percent of the total project costs--for the replacement of water and
sewer lines in Park City's Old Town area.
While the Corps funds projects carried out under these pilot programs
as directed by the Congress, it does not request funds for them as part
of its annual budget process because, according to Corps officials,
these types of projects fall outside the Corps' primary mission of
navigation, flood control, and ecosystem restoration. This position was
reiterated in a May 11, 2007, policy document released by OMB, which
stated that funding of such local water supply and wastewater projects
is outside of the Corps' mission, costs taxpayers hundreds of millions
of dollars, and diverts funds from more meritorious Corps Civil Works
projects.
When the Congress authorized the Corps to fund these various pilot
programs, it also required the agency to evaluate the effectiveness of
several of them and recommend to the Congress whether these pilot
programs should be implemented on a national basis. The Corps has
completed 9 of the 12 required evaluations. Of the completed
evaluations, only four made recommendations--all in favor of the
establishment of a national program. The other five evaluations either
did not make the required recommendation or stated that the agency had
not yet funded enough projects to effectively evaluate the program.
However, we found that between fiscal years 2004 and 2006, the Corps
provided funding to over 100 rural water supply and wastewater projects
under pilot programs, and it is unclear why the Corps has still not
completed all of the evaluations required by the Congress. In the
absence of the outstanding evaluations and recommendations, the
Congress does not have information on whether, collectively, the
projects carried out under the Corps' pilot programs merit continued
funding, duplicate other agency efforts, or should be implemented on a
national basis.
Conclusions:
The Congress has determined that RUS, EDA, and now Reclamation should
provide funding for rural water projects as part of their overall
missions and target federal assistance to certain communities based on
their population size, economic need, or geographic location. However,
for the Corps, the Congress has not yet determined whether funding of
rural water supply projects should permanently be included within the
agency's water portfolio. To help inform congressional decision making
on this issue, the Corps was required to evaluate its various water
supply and wastewater pilot programs and recommend to the Congress
whether these programs should be continued. However, the Corps has not
consistently provided the information required by the Congress even
though it has completed over 100 rural water projects under various
pilot programs. As a result, the Congress does not have the information
it needs to determine whether the Corps' projects meet a previously
unmet rural water need or duplicate the efforts of other agencies. Such
information is important for making decisions on how to allocate
limited federal resources in a time when the nation continues to face
long-term fiscal challenges.
Recommendation for Executive Action:
To ensure that the Congress has the information it needs to determine
whether the Corps should continue to fund rural water supply and
wastewater projects, we recommend that the Secretary of Defense direct
the Commanding General and the Chief of Engineers of the U.S. Army
Corps of Engineers to provide a comprehensive report on the water
supply and wastewater projects that the Corps has funded under its
pilot programs and determine whether these pilot programs duplicate
other agency efforts and should be discontinued, or whether these pilot
programs address an unmet need and should be expanded and made
permanent at a national level.
Agency Comments and Our Evaluation:
We provided the Departments of Agriculture, Commerce, Defense, and the
Interior with a draft of this report for review and comment. The
Department of Defense concurred with GAO's findings and recommendation,
and its written comments are included in appendix III. The Department
of the Interior also agreed with GAO's findings, and its written
comments are included in appendix IV. The Departments of Agriculture
and Commerce provided us with technical comments, which we have
incorporated throughout the report, as appropriate.
We will send copies of this report to interested congressional
committees; the Secretaries of Agriculture, Commerce, Defense, and the
Interior; and other interested parties. We will also make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff has any questions about this report, please
contact me at (202) 512-3841, or Mittala@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix V.
Sincerely yours,
Signed by:
Anu K. Mittal:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
To determine how much federal funding the U.S. Department of
Agriculture's Rural Utilities Service (RUS), the Department of
Commerce's Economic Development Administration (EDA), the Department of
the Interior's Bureau of Reclamation (Reclamation), and the U.S. Army
Corps of Engineers (Corps) obligated for rural water supply and
wastewater projects for fiscal years 2004 through 2006, we collected
and analyzed obligation and project location data submitted by each
agency. We determined that the data were sufficiently reliable for the
purposes of this report. To identify water supply and wastewater
projects that were located in rural areas, we applied the definition of
rural used by RUS, EDA, and Reclamation to the geographic location each
agency provided for its water supply and wastewater projects.[Footnote
12] Because the Corps does not have a definition for rural areas, we
asked the Corps to use the U.S. Census Bureau's density-based urban and
rural classification system to identify projects that it funds in rural
areas. This classification system divides geographical areas into urban
areas, urban clusters, and nonurban areas and clusters. Using this
information, we determined that Corps funded water supply and
wastewater projects were in rural areas if they were located in: (1)
any nonurban areas or clusters, (2) urban clusters with a population of
less than 20,000, and (3) areas of Nevada and Utah that the Congress
specifically defined as rural in the Water Resources Development Act of
1999, as amended. Table 7 provides the definition of rural area used by
each agency for water supply and wastewater projects.
Table 7: Agencies' Definitions of Rural Area:
Agency: RUS;
Definition of rural area: Rural areas include incorporated cities and
towns with a population of 10,000 or fewer and unincorporated areas,
regardless of population.
Agency: EDA;
Definition of rural area: Rural areas include areas the U.S. Census
Bureau designates as rural that are within or outside of a metropolitan
statistical area.[A].
Agency: Reclamation;
Definition of rural area: Rural areas include a community, or group of
communities, each of which has a population of not more than 50,000
inhabitants.[B].
Agency: Corps;
Definition of rural area: The Corps does not define rural areas.[C].
Sources: RUS, EDA, Reclamation, and the Corps.
[A] Metropolitan statistical areas are based on county-level data with
central cities of at least 50,000 residents and surrounding contiguous
counties that are metropolitan in character and economically tied to
the core counties. Rural areas may be within or outside such areas.
[B] Reclamation's definition of a rural area was established by Pub. L.
No. 109-451 (Dec. 22, 2006).
[C] Corps officials agreed to use the U.S. Census Bureau's density-
based urban and rural classification system to determine which Corps
projects were in rural areas. Using this approach, we determined for
purposes of this report, rural areas for Corps projects include all
nonurbanized areas and urban clusters with populations of less than
20,000, as well as areas in Nevada and Utah that the Congress
specifically defined as rural for Corps projects.
[End of table]
To determine the extent to which each RUS, EDA, Reclamation, and the
Corps eligibility criteria and the projects they fund differed, we
reviewed and analyzed applicable statutes, agency regulations, and
policy guidance. In addition, we used a nonprobability sample to select
16 rural water supply and wastewater projects, including at least one
project funded by each of the four agencies, and conducted site visits
to each of the selected projects. These projects were selected based
upon project type (water supply or wastewater), geographic location,
type of assistance (loan, grant, or a combination of these) and the
federal agency funding the project. During the site visits, we
interviewed local officials from the communities receiving funding and
federal agency officials responsible for managing the funding of those
projects. We also collected and analyzed project-specific documentation
such as applications and letters of intent. Table 8 lists the 16
projects we selected for site visits and the type of project, location,
type of assistance, and funding agency(ies) for each project.
Table 8: Rural Water Supply and Wastewater Projects Selected for GAO
Site Visits:
Project name: Ascension Parish Environmental Infrastructure;
Project type: Water supply and wastewater;
Project location: Ascension Parish, La;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: Assumption Parish Water Works District No. 1 Water System
Improvements;
Project type: Water supply;
Project location: Assumption Parish, La;
Type of assistance[A]: Grant;
Funding agency[B]: EDA.
Project name: Bluffdale Water Storage;
Project type: Water supply;
Project location: Bluffdale City, Utah;
Type of assistance[A]: Loan;
Funding agency[B]: RUS.
Project name: Jamestown Water Treatment Plant Upgrade;
Project type: Water supply;
Project location: Jamestown, Ky;
Type of assistance[A]: Grant;
Loan and grant;
Funding agency[B]: EDA;
RUS.
Project name: Laurel County Water District No. 2, Water Treatment Plant
Expansion;
Project type: Water supply;
Project location: Laurel County, Ky;
Type of assistance[A]: Loan and grant;
Funding agency[B]: RUS.
Project name: London-Laurel County Industrial Development Authority No.
2 Water and Sewer Line Extensions;
Project type: Water supply and wastewater;
Project location: London, Ky;
Type of assistance[A]: Grant;
Funding agency[B]: EDA.
Project name: Wood Creek Water District Water Treatment Plant
Expansion;
Project type: Water supply;
Project location: London, Ky;
Type of assistance[A]: Grant;
Loan and grant;
Funding agency[B]: EDA;
RUS.
Project name: Wood Creek Water District Sewer Line Extension;
Project type: Wastewater;
Project location: London, Ky;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: College St. Sewer Line Extension;
Project type: Wastewater;
Project location: Monticello, Ky;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: Downtown Water and Sewer Line Replacement;
Project type: Water supply and wastewater;
Project location: Monticello, Ky;
Type of assistance[A]: Loan and grant;
Funding agency[B]: RUS.
Project name: Webster St. Sewer Line Extension;
Project type: Wastewater;
Project location: Monticello, Ky;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: Park City Municipal Corporation Prospect Avenue Water and
Sewer Line Replacement Project;
Project type: Water supply and wastewater;
Project location: Park City, Utah;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: Penns Grove Wastewater Treatment Plant Upgrade;
Project type: Wastewater;
Project location: Penns Grove, N.J;
Type of assistance[A]: Grant;
Funding agency[B]: EDA.
Project name: Snyderville Basin Water Supply Master Plan;
Project type: Water supply;
Project location: Park City, Utah;
Type of assistance[A]: Grant;
Funding agency[B]: Corps.
Project name: Mni Wiconi Rural Water Supply Project;
Project type: Water supply;
Project location: S. Dak;
Type of assistance[A]: Grant;
Funding agency[B]: Reclamation.
Project name: St. Gabriel Wastewater Treatment Sewer Line Extension;
Project type: Wastewater;
Project location: St. Gabriel, La;
Type of assistance[A]: Loan and grant;
Funding agency[B]: RUS.
Source: GAO.
[A] In some cases, Corps projects are funded through reimbursable
payments from the Corps for project costs already accrued.
[B] In some instances, rural communities may be eligible to receive
funding from multiple agencies. As a result, RUS and EDA signed a
memorandum of understanding regarding projects that qualify for both
EDA and RUS funding. For example, if EDA decides to provide a grant to
a RUS funded project, EDA transfers those funds to RUS which then
administers and distributes them.
[End of table]
To determine the overhead costs and number of personnel needed to
support rural water supply and wastewater projects, we collected and
analyzed agency policy guidance and interviewed agency officials to
determine the extent to which RUS, EDA, Reclamation, and the Corps
tracks these data for rural water supply and wastewater projects. We
also requested these data from each agency to the extent they could
provide them to us.
We conducted our work from September 2006 through August 2007 in
accordance with generally accepted auditing standards.
[End of section]
Appendix II: Agency Overhead Cost Information, Fiscal Years 2004
through 2006:
The U.S. Department of Agriculture's Rural Utilities Service (RUS), the
Department of Commerce's Economic Development Administration (EDA), the
Department of the Interior's Bureau of Reclamation (Reclamation), and
the U.S. Army Corps of Engineers (Corps) each calculate their overhead
costs, commonly referred to as general and administrative (G&A)
costs,[Footnote 13] and the number of personnel needed to manage rural
water supply and wastewater projects, referred to as full-time
equivalents (FTE),[Footnote 14] differently. This appendix describes
how each agency calculates these costs for rural water supply and
wastewater projects.
RUS and EDA:
RUS and EDA each receive separate appropriations to fund their
agencywide G&A costs. These agencies do not track these costs or FTEs
on a project-by-project basis. Therefore, we were unable to calculate
each agencies total G&A costs and total FTEs by rural water supply and
wastewater project.
Reclamation:
Reclamation divides water supply project costs into two categories,
direct costs and indirect costs.[Footnote 15] According to Reclamation,
if all activities are correctly and consistently charged, then all
activities assigned to indirect costs can be considered overhead costs
for a project. Although a standard formula is used to determine
indirect cost rates, which are applied as a percentage of labor,
Reclamation officials stated that the rates may vary by area office and
region depending primarily on the amount of costs that can be charged
directly to a project. Furthermore, according to documentation provided
by Reclamation officials, these indirect cost rates were updated each
fiscal year. As can be seen in table 9, Reclamation provided the
following indirect costs and FTE estimates for the 11 rural water
projects for which Reclamation obligated funds for fiscal years 2004
through 2006.
Table 9: Total Obligations, Indirect Obligations, and FTEs for
Reclamation's 11 Rural Water Supply Projects, Fiscal Years 2004 through
2006:
Dollars in thousands.
Fiscal year: 2004;
Total obligations: $77,237;
Indirect obligations[A]: $1,194;
Percentage of indirect obligations: 1.5%;
FTEs: 27.
Fiscal year: 2005;
Total obligations: $81,077;
Indirect obligations[A]: $1,253;
Percentage of indirect obligations: 1.5%;
FTEs: 26.
Fiscal year: 2006;
Total obligations: $81,871;
Indirect obligations[A]: $1,147;
Percentage of indirect obligations: 1.4%;
FTEs: 25.
Source: GAO analysis of Reclamation data.
[A] Indirect obligations is the term used by Reclamation to indicate
obligations made for indirect project costs.
[End of figure]
Corps:
The Corps' G&A costs for its headquarters and divisions are funded
through a general expenses appropriation. G&A costs at the district
level are distributed to projects and programs through the use of
predetermined rates established by the district Commander at the
beginning of each fiscal year and are automatically distributed to
specific projects or programs based on the direct labor charged to the
projects or programs.
There are two types of overhead costs charged by the districts, general
and administrative overhead and departmental overhead. General and
administrative overhead includes administrative and support costs
incurred in the day-to-day operations of a district. Departmental
overhead includes costs incurred within technical divisions at the
district headquarters that are not attributable to a specific project
or program. While a standard formula is used to determine overhead
rates, these rates may vary by district depending on a variety of
factors including, geographic location--an office in a high cost area
will cost more to operate than a similar office in a rural area, and
composition of the workforce--an office staffed by senior-level
employees will cost more to operate than an office staffed by junior-
level employees.
The Corps G&A costs and FTE data for its water supply and wastewater
projects are calculated at the program level and cover projects in both
rural and urban areas. The Corps could not readily provide these data
for obligations on a rural water supply and wastewater project basis.
[End of section]
Appendix III: Comments from the Department of Defense:
Department Of The Army:
Office Of The Assistant Secretary:
Civil Works:
108 Army Pentagon:
Washington Dc 20310-0108:
August 20, 2007:
Ms. Anu Mittal:
Acting Director, Natural Resources and Environment:
U.S. General Accountability Office:
441 G Street, N.W.:
Washington, D.C. 20548:
Dear Ms. Mittal:
This is the Department of Defense (DOD) response to the GAO draft
report 07- 1094, "Water Resources: Four Federal Agencies Provide
Funding for Rural Water Supply and Wastewater Projects," dated July 23,
2007, (GAO Code 360754)."
The Department of Defense concurs with the GAO recommendation that the
Corps provide a report on the water supply and wastewater projects that
the Corps has funded under its pilot programs and prepare a
recommendation on whether these programs should be discontinued, or
whether these pilot programs address an unmet need and should be
expanded and made permanent at a national level (see enclosure).
Very truly yours,
Signed by:
John Paul Woodley, Jr.:
Assistant Secretary of the Army:
(Civil Works):
Enclosure:
GAO Draft Report Dated July 23, 2007:
GAO-07-1094 (GAO Code 360754):
"Water Resources: Four Federal Agencies Provide Funding For Rural Water
Supply And Wastewater Projects":
Department Of Defense Comments:
To The GAO Recommendation:
Recommendation: The GAO recommends that Secretary of Defense direct the
Commanding General and the Chief of Engineers of the U.S. Army Corps of
Engineers to provide a comprehensive report on the water supply and
wastewater projects that the Corps has funded under its pilot programs
and determine whether these pilot programs duplicate other agency
efforts and should be discontinued, or whether these programs address
an unmet need and should be expanded and made permanent at a national
level. (p. 22/GAO Draft Report)
DOD Response: Concur. The Secretary of Defense will direct the
Commanding General and the Chief of Engineers of the U.S. Army Corps of
Engineers to prepare the report on the Corps water supply and
wastewater projects by 15 February 2008. The report will determine
which, if any, of these projects are considered pilot programs and
include a recommendation on whether they should be continued.
[End of section]
Appendix IV: Comments from the Department of the Interior:
United States Department of the Interior:
Office Of The Secretary:
Washington, D.C. 20240:
August 21, 2007:
Ms. Anu K. Mittal:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G Street, NW:
Washington, D.C. 20548:
Dear Ms. Mittal:
The Department of the Interior and the Bureau of Reclamation would like
to thank you for the opportunity to review the Government
Accountability Office's (GAO) draft report titled Water Resources: Four
Federal Agencies Provide Funding for Rural Water Supply and Wastewater
Projects, (Report No. GAO-07-1094).
GAO provided us a copy of their Statement of Facts to discuss at the
official exit conference. Because GAO sufficiently addressed our
concerns in the draft audit report, we have no further comment.
If you have any questions or require additional information, please
contact Elizabeth Cordova-Harrison, Director, Management Services
Office, Bureau of Reclamation, at 303-445-2783.
Sincerely,
Signed by:
Kameran L. Onley:
Assistant Deputy Secretary:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Anu K. Mittal, (202) 512-3841, mittala@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Ed Zadjura, Assistant
Director; Patrick Bernard; Diana Goody; John Mingus; Lynn Musser;
Alison O'Neill; Matthew Reinhart; and Barbara R. Timmerman made
significant contributions to this report.
[End of section]
Footnotes:
[1] The federal government has not established a formal or consistent
definition of what constitutes a rural area, but federal agencies
usually define rural areas by population thresholds that range from
fewer than 2,500 to fewer than 50,000.
[2] GAO, Freshwater Programs: Federal Agencies' Funding in the United
States and Abroad, GAO-05-253 (Washington, D.C.: Mar. 11, 2005).
[3] The Rural Utilities Service is one of several subagencies within
Agriculture's Rural Development agency.
[4] For the purposes of this report, federal funding includes grants
and loans. The Department of Housing and Urban Development and EPA also
provide substantial funding for water supply and wastewater projects in
rural areas. However, these agencies do not provide funding directly to
rural communities for water supply and wastewater projects, but rather
they provide funding to state governments that administer the funds and
set funding priorities. Therefore, these agencies are not included in
this report.
[5] Metropolitan statistical areas are based on county-level data with
central cities of at least 50,000 residents and surrounding contiguous
counties that are metropolitan in character and economically tied to
the core counties. Rural areas may be within or outside such areas.
[6] The Reclamation states include Arizona, California, Colorado,
Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota,
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming.
[7] Reclamation's definition of a rural area was established by Pub. L.
No. 109-451, enacted December 22, 2006.
[8] Corps officials agreed to use the U.S. Census Bureau's density-
based urban and rural classification system to determine which Corps
projects were in rural areas. Using this approach, we determined for
purposes of this report, rural areas for Corps' projects include all
nonurbanized areas and urban clusters with populations of less than
20,000, as well as certain areas in Nevada and Utah that the Congress
defined as rural for specific Corps projects.
[9] Obligations represent amounts for orders placed, contracts awarded,
services received, and similar transactions during a given period that
will require payments during the same or a future period. Obligations
differ from expenditures in that an expenditure is the issuance of a
check, disbursement of cash, or electronic transfer of funds made to
liquidate an obligation. Because, in some circumstances, expenditures
made during a specific fiscal year may fulfill an obligation during
prior years, obligations provide the best estimate of what an agency
plans to spend during a fiscal year.
[10] Since a high level of repayment is expected on these loans, the
ultimate cost to the federal government for these loans is
significantly less than the amount of the loans provided. Accordingly,
$2.7 billion is higher than the actual cost to the federal government.
[11] Pub. L. No. 109-451 (Dec. 22, 2006).
[12] The federal government has not established a formal or consistent
definition of what constitutes a "rural" area. The term "rural" is
defined differently by the Congress and each federal agency according
to agency guidelines and individual project or program authorizations.
Depending on the agency, rural areas may be defined as ranging from
less than 2,500 to less than 50,000 persons.
[13] G&A costs typically cover items such as office supplies,
buildings, equipment, and personnel expenses.
[14] An FTE reflects the total number of regular straight-time hours
(i.e., not including overtime or holiday hours) worked by employees
divided by the number of compensable hours applicable to each fiscal
year. Annual leave, sick leave, and compensatory time off and other
approved leave categories are considered to be "hours worked" for
purposes of defining FTE employment.
[15] Direct costs include all costs that can be specifically and
readily identified with an output such as a vehicle being used solely
by an employee on a specific project. Indirect costs include costs that
are jointly or commonly used to produce two or more outputs and
typically include overhead costs such as a secretary whose job is to
provide support to an area office in which there are a variety of
projects and programs.
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