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. 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—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. 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. 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. 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 directed  Reclamation to establish a rural water supply program with standardized  eligibility criteria. In 2006, the Congress passed the Rural Water Supply Act directing  Reclamation to develop a rural water supply program. 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. 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. 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.
Why GAO Did This Study

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. 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.