Fragmentation and Overlap in EPA and USDA Programs Can Result in Potential Duplication of Community Efforts to Apply for Funding

Drinking water and wastewater infrastructure funding is fragmented  among the three programs we reviewed—EPA’s Drinking Water and  Clean Water SRF programs and USDA’s RUS program. For the 54  projects we reviewed in the five states we visited, this overlap did not  result in duplicate funding or funding for the same activities on the same  project. In the five states we visited— Colorado, Montana, North Carolina, Pennsylvania, and South Dakota—42  of the 54 projects we reviewed received funding from the SRF or RUS  programs, in addition to other sources. Our  analysis of these projects showed the programs did not pay for the same  activities with their funding, and according to state and community  officials, the joint funding for a community’s project was beneficial and  warranted. Program overlap among the state SRF and RUS programs can result in  potential duplication of communities’ efforts to prepare funding  applications and related documents, including preliminary engineering  reports and environmental analyses, according to our analysis of project  documents and interviews with engineers and community officials in the  five states we visited. They stated  that these reports contain similar information but with different formats  and levels of detail. Federal and State Actions Have Not Fully Facilitated Coordination for Funding Communities’ Projects

Our review of five states and local communities in those states showed  that EPA and USDA have taken some actions to coordinate their  programs and funding at the federal and state level to help meet the  water infrastructure needs of rural communities, but not others specified  in the 1997 memorandum. Agencies Have Taken Some Actions to Encourage Coordination at the State and Community Level but Not Others

Recognizing the importance of coordinating the SRF and RUS programs  at the state level, EPA and USDA agencies have taken some actions at  the federal level to encourage coordination between the state-level  programs and communities but not other actions specified in the 1997  memorandum. Cooperate to remove policy and regulatory barriers. Cooperate on project funding. In addition, EPA and USDA have taken action at the  federal level to help the states coordinate better and make programs  more efficient for communities applying for funding. The actions that EPA and USDA have taken to date, such as providing  guidance in the 1997 memorandum, have helped states and state-level  federal agencies to coordinate generally but have not facilitated better  coordination at the state level in more specific ways. Cooperate in preparing environmental analyses documents and other  common federal requirements. For example, in Montana, these programs coordinated to  develop uniform application materials and preliminary engineering report  requirements that are accepted by all federal and state water and  wastewater infrastructure programs in the state. Specifically, recent actions by EPA and USDA, such as their efforts to  inform state officials and communities about the programs and funding  opportunities by participating in conferences and workshops, conducting  Webinars, and sponsoring training, as well as creating a working group to  examine the possibility of developing guidelines to assist states in  developing uniform preliminary engineering reports to meet requirements  for federal and state programs, are encouraging and will help  communities. Without uniform documents, rural communities face a  continuing burden and additional costs when applying for federal funds to  improve their water and wastewater infrastructure. Recommendations for Executive Action

To improve coordination and to reduce the potential for inefficiencies and  duplication of effort, we recommend that the Secretary of Agriculture and  the Administrator of EPA take the following three actions:    ensure the timely completion of the interagency effort to develop  guidelines to assist states in developing their own uniform preliminary  engineering reports to meet federal and state requirements;   work together and with state and community officials to develop  guidelines to assist states in developing uniform environmental  analyses that could be used, to the extent appropriate, to meet state  and federal requirements for water and wastewater infrastructure  projects; and    work together and with state and community officials through  conferences and workshops, Webinars, and sponsored training to  reemphasize the importance of coordinating in all four key areas in  the 1997 memorandum. EPA neither  agreed nor disagreed with our first two recommendations but concurred  with the third. USDA neither agreed nor disagreed with any of our  recommendations. EPA concurred with our third recommendation, that the agencies work  together and with state and community officials in all four key areas of the  1997 memorandum, while USDA neither agreed nor disagreed with the  recommendation. GAO staff who made major contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report examine (1) the potential for fragmentation,  overlap, and duplication between the Environmental Protection Agency’s  (EPA) Drinking Water and Clean Water State Revolving Fund (SRF)  programs and the U.S. Department of Agriculture’s (USDA) Rural Utilities  Service (RUS) Water and Wastewater Disposal program, both of which  address water and wastewater infrastructure needs in rural communities,  and (2) the extent to which these programs coordinate with each other at  the federal and state level to help meet the water infrastructure needs of  rural communities. Further, we collected and analyzed application materials—preliminary  engineering reports and environmental analyses—from communities if the  community had a project that was jointly funded by both the SRF and  RUS programs or had applied to both programs for the same project. Appendix II: Drinking Water and Clean Water State Revolving Fund Program Funds Provided to Communities with Populations of 10,000 or Less

Table 6 provides information on the percentages and amounts of funding  provided, by state, through EPA’s Drinking Water and Clean Water SRF  programs to communities with populations of 10,000 or less.
Why GAO Did This Study

Many rural communities with populations of 10,000 or less face challenges in financing the costs of replacing or upgrading aging and obsolete drinking water and wastewater infrastructure. EPA and USDA oversee the three largest federally funded drinking water and wastewater funding programs for these communities. In response to Pub. L. No. 111-139, which directs GAO to identify and report on duplicative goals or activities in the federal government, this report examines the (1) potential for fragmentation, overlap, and duplication between EPA and USDA drinking water and wastewater infrastructure programs and (2) extent to which these agencies coordinate at the federal and state level to fund community water infrastructure projects. GAO analyzed relevant laws and regulations and program data and documents. GAO also visited five states based on high rural funding needs and geographic location (Colorado, Montana, North Carolina, Pennsylvania, and South Dakota) to meet with federal, state, and community officials and visit projects. GAO recommends that EPA and USDA complete guidelines to help states develop uniform preliminary engineering reports, develop guidelines to help states develop uniform environmental analyses, and reemphasize the importance of statelevel coordination. EPA neither agreed nor disagreed with GAO's first two recommendations and concurred with the third. USDA neither agreed nor disagreed with the recommendations.

What GAO Found

Funding for rural water and wastewater infrastructure is fragmented across the three federal programs GAO reviewed, leading to program overlap and possible duplication of effort when communities apply for funding from these programs. The three federal water and wastewater infrastructure programs--the Environmental Protection Agency's (EPA) Drinking Water and Clean Water State Revolving Fund (SRF) programs and the U.S. Department of Agriculture's (USDA) Rural Utilities Service (RUS) Water and Waste Disposal program--have, in part, an overlapping purpose to fund projects in rural communities with populations of 10,000 or less. For the 54 projects GAO reviewed in the five states it visited, this overlap did not result in duplicate funding, that is funding for the same activities on the same projects. However, GAO identified the potential for communities to complete duplicate funding applications and related documents when applying for funding from both agencies. In particular, some communities have to prepare preliminary engineering reports and environmental analyses for each program. GAO's analysis showed--and community officials and their consulting engineers confirmed--that these reports usually contain similar information but have different formats and levels of detail. Completing separate engineering reports and environmental analyses is duplicative and can result in delays and increased costs to communities applying to both programs.
EPA and USDA have taken some actions to coordinate their programs and funding at the federal and state levels to help meet the water infrastructure needs of rural communities, but GAO's review in five states showed that their efforts have not facilitated better coordination at the state level in more specific ways. EPA and USDA signed a joint memorandum in 1997 encouraging state-level programs and communities to coordinate in four key areas: program planning; policy and regulatory barriers; project funding; and environmental analyses and other common federal requirements. As of July 2012, EPA and USDA had taken action at the federal level to help the states coordinate better and make programs more efficient for communities applying for funding. For example, EPA and USDA had formed a working group to draft uniform guidelines for preliminary engineering report requirements, but this effort is not yet complete. However, the agencies have not taken action to help states develop uniform environmental analysis requirements, as called for in the 1997 memorandum. Without uniform requirements, communities face a continuing burden and cost of applying for federal and state funds to improve rural water and wastewater infrastructure. Coordination in the four key areas varied across the five states GAO visited. For example, state and federal officials in Montana created a drinking water and wastewater working group to coordinate project funding and to resolve regulatory barriers such as different funding cycles between the programs. In addition, state and federal officials in Pennsylvania coordinated to develop uniform environmental analysis requirements. However, in North Carolina and Colorado, state-level programs did not coordinate well initially about project funding, which resulted in the state-level programs planning to pay for the same projects. The programs were able to avoid paying for the same projects, but state-level RUS programs have or expect to deobligate almost $20 million committed to these projects and return the funding to USDA. Further delays in coordinating programs could prevent funds from reaching needy communities.

What GAO Recommends

GAO recommends that EPA and USDA complete guidelines to help states develop uniform preliminary engineering reports, develop guidelines to help states develop uniform environmental analyses, and reemphasize the importance of state-level coordination. EPA neither agreed nor disagreed with GAOs first two recommendations and concurred with the third. USDA neither agreed nor disagreed with the recommendations.