This water infrastructure in  the District of Columbia, like in many older cities, is aging and will require  substantial funding over the next several years for replacement or  rehabilitation. WASA Has Reduced Lead in Drinking Water But Faces Many Other Challenges to its Water and Wastewater Infrastructure

A June 17, 2004, administrative order for compliance on consent between  EPA and WASA required WASA to take a number of corrective actions  that, by necessity, enhanced its coordination with EPA and the D.C.  Department of Health. Most importantly, with the introduction of orthophosphate to  the drinking water supply, WASA met, and has continued to meet, federal  standards for lead in drinking water. WASA’s most recent report on lead  levels in D.C. drinking water was delivered to EPA in January 2008. To resolve its lead problem in the long-term, however, WASA decided that  it needed to undertake a program to replace the public portions of all its  customers’ lead service lines (roughly 35,000 lines) by 2016. Perhaps the most important complication facing WASA’s lead service line  replacement program is that ownership of lead service lines in the District  of Columbia is shared—WASA owns the portion from the water main to  the property line, and homeowners own the portion from the property line  to the home. WASA established a program to encourage homeowners to replace their  portion of lead service lines. Through the length of WASA’s lead  service line replacement program, beginning in fiscal year 2003 and  running through the first quarter of fiscal year 2008, of the 14,260 lead  service lines replaced in public space, only 2,128 homeowners replaced  the private portion of their lead service line. A study presented at the 2006 American Water Works Annual Conference  summarizing the experience of partial lead service line replacement by the  Greater Cincinnati Water Works found that partial replacements of lead  lines resulted in much higher lead levels in the water for up to 1 month  after replacement, even though the system was optimized for corrosion  control. In light of these problems, WASA is now considering whether its current  lead line replacement program should be restructured, particularly given  its high cost and the competing demands on its budget. WASA has estimated the cost of this effort to  reach $2.2 billion dollars. WASA’s Water Infrastructure Problems Mirror the Challenges Water Utilities Face Nationwide

WASA’s challenges are mirrored across the country, where projected  needs for investment in drinking water and wastewater infrastructure  range from $485 billion to nearly $1.2 trillion over 20 years. For example, in August 2002, based on a nationwide survey of large  drinking water and wastewater utilities, we reported that more than one- third of the utilities had 20 percent or more of their pipelines nearing the  end of their useful life. The adequacy of the available funding, in  particular, has been a key determinant of how well utility infrastructure  has been maintained. However, according to our nationwide survey, a  significant percentage of the utilities serving populations of 10,000 or  more—29 percent of the drinking water utilities and 41 percent of the  wastewater utilities—were not generating enough revenue from user  charges and other local sources to cover their full cost of service. Our survey also raised questions about whether utility managers have  enough information about their capital assets to effectively plan their  future investment needs. Comprehensive Asset Management Can Be an Effective Tool for Managing Infrastructure and Optimizing Investments When Resources Are Constrained

Growing infrastructure needs, combined with local pressure to keep user  rates low, make it imperative that utilities manage their resources as cost  effectively as possible. Our 2004 report identified a number of asset management practices that  could help water utilities better manage their infrastructure and target  their investments to achieve the maximum benefit. Whether the problem is replacing lead service lines, as is the case for  WASA, meeting new regulatory requirements, or paying the price for years  of deferred maintenance, many utilities are facing huge investments to add  new capital assets and replace others that are reaching the end of their  useful life.
Why GAO Did This Study

The discovery in 2004 of lead contamination in the District of Columbia's drinking water resulted in an administrative order between the Environmental Protection Agency (EPA) and the District's Water and Sewer Authority (WASA), requiring WASA to take a number of corrective actions. WASA also took additional, longer-term measures, most notably a roughly $400 million program to replace what may be 35,000 lead service lines in public space within its service area. As in WASA's case, water utilities nationwide are under increasing pressure to make significant investments to upgrade aging and deteriorating infrastructures, improve security, serve a growing population, and meet new regulatory requirements. In this context, GAO's testimony presents observations on (1) WASA's efforts to address lead contamination in light of its other pressing water infrastructure needs, and (2) the extent to which WASA's challenges are indicative of those facing water utilities nationwide. To address these issues, GAO relied primarily on its 2005 and 2006 reports on lead contamination in drinking water, as well as other recent GAO reports examining the nation's water infrastructure needs and strategies to address these needs.

What GAO Found

With the introduction of orthophosphate to its drinking water WASA has consistently tested below the federal action level for lead. However, WASA is reevaluating its roughly $400 million, longer-term solution for replacement of what may be 35,000 lead service lines within its jurisdiction. In addition to the program's high cost, a key problem WASA faces is that, by law, it may only replace the portion of the service line that it owns; replacing the portion on private property is at the homeowner's discretion. Accordingly, WASA has been encouraging homeowners to participate in the program by replacing their own portion of the lead lines. Despite these efforts, however, homeowner replacement of lead service lines remains limited. Of the 14,260 lead service lines WASA replaced through the first quarter of fiscal year 2008, there were only 2,128 instances in which the homeowner participated in private side replacement. Many questions remain about the benefits of partial lead service line replacement. In fact, some research to date suggests that partial service line replacement results in (1) short-term spikes in lead levels immediately after partial replacement and (2) little long-term reduction in lead levels. WASA's dilemma over this program is taking place within the context of its other staggering infrastructure needs. Most notably, WASA is undertaking a $2.2 billion effort to meet the terms of a consent decree with EPA requiring the utility to control its sewer overflow problems. WASA's challenges in addressing its lead contamination problems and other infrastructure demands are mirrored across the country, where infrastructure needs are estimated to range from $485 billion to nearly $1.2 trillion nationwide over the next 20 years. In particular, many utilities have had difficulty in raising funds to repair, replace, or upgrade aging capital assets; comply with regulatory requirements; and expand capacity to meet increased demand. For example, based on a nationwide survey of several thousand drinking water and wastewater utilities, GAO reported in 2002 that 29 percent of the drinking water utilities and 41 percent of the wastewater utilities were not generating enough revenue from user rates and other local sources to cover their full cost of service. GAO also found that about one-third of the utilities (1) deferred maintenance because of insufficient funding, (2) had 20 percent or more of their pipelines nearing the end of their useful life, and (3) lacked basic plans for managing their capital assets. Other GAO work suggests that the nation's water utilities could more effectively manage their infrastructure at a time when huge investments are needed. In 2004, for example, GAO cited "comprehensive asset management" as one approach that could help utilities better identify and manage their infrastructure needs. While by no means a panacea to their fundamental fiscal challenges, water utilities can use comprehensive asset management to minimize the total cost of designing, acquiring, operating, maintaining, replacing, and disposing of capital assets over their useful lives, while achieving desired service levels.