Accessible Version

WATER 

INFRASTRUCTURE

EPA and USDA Are 

Helping Small Water 

Utilities with Asset 

Management;

Opportunities Exist to 

Better Track Results

Report to Congressional Requesters

January 2016

GAO-16-237

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-237, a report to 

congressional requesters

January 2016

WATER INFRASTRUCTURE

EPA and USDA Are Helping Small Water Utilities with 

Asset Management; Opportunities Exist to Better 

Track Results 

Why GAO Did This Study

Recent catastrophic breaks in water 

mains and sewer discharges during 

storms are indicators of the nation’s old 

and deteriorating water and 

wastewater infrastructure. EPA 

estimates that small water utilities—

those serving fewer than 10,000 

people--may need about $143 billion 

for drinking water and wastewater 

infrastructure repairs and replacement 

over 20 years. EPA and USDA provide 

the three largest sources of federal 

funding for water infrastructure. In a 

March 2004 report, GAO found that 

water utilities may benefit from 

implementing asset management—a 

tool used across a variety of sectors to 

manage physical assets, such as 

roads and buildings.

GAO was asked to review water 

utilities’ use of asset management. 

This report examines (1) what is known 

about the use of asset management 

among the nation’s water utilities—

particularly small water utilities—

including benefits and challenges and

(2) steps EPA and USDA are taking to 

help small water utilities implement 

asset management. GAO selected a 

nongeneralizable sample of 25 water 

utilities in 10 states based on largest 

infrastructure needs and interviewed 

EPA, USDA, state, and water utility 

officials. 

What GAO Recommends

GAO recommends that EPA consider 

collecting information about utilities’ 

use of asset management through its 

needs assessment surveys, and that 

EPA and USDA compile the benefits of 

asset management into one document. 

EPA and USDA generally agreed with 

GAO’s findings and recommendations.

What GAO Found

The small water utilities GAO reviewed in 10 selected states are implementing 

some asset management practices, although state officials said that large water 

utilities are more likely to implement asset management than small utilities. The 

asset management practices these small utilities used include identifying key 

assets, such as pipelines, treatment plants, and other facilities, and assessing 

their life-cycle costs. For example, officials from 23 of the 25 small water utilities 

GAO reviewed said they had maps that identify the location of at least some of 

their assets. However, of the 25 small water utilities, officials from 9 said they 

knew the cost of rehabilitation versus replacement for all of their assets. Officials 

from the Environmental Protection Agency (EPA), U.S. Department of Agriculture 

(USDA), and the 10 selected states identified benefits and challenges for small 

water utilities using asset management. The benefits that EPA, USDA, and state 

officials identified include cost savings and more efficient long-term planning. The

key challenges these officials identified include the availability of funding to cover 

start-up and maintenance costs, the availability of human resources, information 

on how to implement asset management practices, and political support from 

elected officials to begin an asset management program or increase user rates. 

EPA and USDA are taking steps to help water utilities implement asset 

management by providing funding, free or low-cost tools such as software, oneon-one technical assistance, and classroom training for small water utilities that 

plan to implement asset management practices. EPA and USDA collect feedback 

from training participants, but do not collect information that will help track the 

results of the agencies’ training efforts (e.g., whether utilities participating in such 

training implemented asset management practices). GAO identified in a March 

2004 guide that evaluating training programs is key to ensuring training is 

effective in contributing to the accomplishment of agency goals and objectives. 

EPA officials told GAO that they had considered collecting nationwide data on 

water utilities’ use of asset management but did not have the resources to pursue 

it. Leveraging existing data collection methods may be a cost-effective way for 

the agencies to collect this information. EPA conducts periodic needs 

assessment surveys of water utilities and has included questions about asset 

management use in the wastewater survey, but not in the drinking water survey. 

EPA officials said they did not receive enough responses to questions in the 

wastewater survey, and they have not considered including them in the drinking 

water survey. By continuing to include questions on wastewater utilities and 

considering questions about drinking water utilities’ use of asset management in 

the surveys, EPA could have better assurance that it has information on the 

effectiveness of its training efforts with USDA. In addition, EPA and USDA 

officials told GAO that the agencies share anecdotal data on the benefits of asset 

management through technical assistance, but had not considered compiling 

such information into one document to encourage water utilities to adopt it. EPA 

and USDA are not required to compile such information, but doing so could 

provide information on benefits, including cost savings, and costs to water utilities 

that have not received training and could help encourage them to adopt asset 

management practices. View GAO-16-237. For more information, 

contact J. Alfredo Gómez at (202) 512-3841 or 

gomezj@gao.gov.
Letter 1

Page i GAO-16-237 Water Infrastructure

Background 9

Small Water Utilities in Selected States Are Implementing Some Asset 

Management Practices, and EPA, USDA, and State Officials Have 

Identified Benefits and Challenges 15

EPA and USDA Are Taking Steps to Help Small Utilities 

Implement Asset Management but Do Not Collect Information 

on Asset Management to Track Its Use or Compile Information 

on Costs and Benefits 24

Conclusions 36

Recommendations for Executive Action 37

Agency Comments and Our Evaluation 37

Appendix I: Requirements and Incentives for Asset Management 40

Appendix II: Objectives, Scope, and Methodology 42

Appendix III: Federal Funding for Asset Management 50

Appendix IV: Comments from the Environmental Protection Agency 53

Appendix V: GAO Contact and Staff Acknowledgments 56

GAO Contact 56

Staff Acknowledgments 56

Appendix VI: Accessible Data 57

Agency Comment Letter 57

Related GAO Products 61

Tables

Table 1: Reported Drinking Water and Clean Water SRF Asset 

Management Requirements and Incentives for the States We 

Reviewed 41

Table 2: Water Utilities Interviewed in the 10 States, by Population 

Served and Ownership 46

Table 3: Description of the Water Utilities Interviewed in Maine and 

New Mexico 47

Contents
Figure

Page ii GAO-16-237 Water Infrastructure

Figure 1: EPA’s Asset Management Framework and Component 

Practices 10

Abbreviations

CBO Congressional Budget Office

CUPSS Check Up Program for Small Systems

EFC Environmental Finance Center

EPA Environmental Protection Agency

GIS geographic information system

ISO International Organization for Standardization

OMB Office of Management and Budget

PAS Publicly Available Specification

SDWA Safe Drinking Water Act

SRF State Revolving Fund

USDA U.S. Department of Agriculture

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-16-237 Water Infrastructure

441 G St. N.W.

Washington, DC 20548

January 26, 2016

The Honorable Ken Calvert

Chairman

Subcommittee on Interior, Environment, and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Betty McCollum

Ranking Member

Subcommittee on Interior, Environment, and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Mike Simpson

House of Representatives

Recent catastrophic breaks in water mains and sewer backups and 

discharges during storms are indicators of the nation’s old and 

deteriorating water and wastewater infrastructure. The American Society 

of Civil Engineers estimated in a 2013 report that there were more than 1 

million miles of drinking water mains and 700,000 to 800,000 miles of 

public sewer in the country, much of which was in poor condition.1

Drinking water and wastewater infrastructure that is old and deteriorating is at a 

higher risk of failure. Such infrastructure failures can disrupt the availability of 

drinking water and impede emergency response, such as fire-control efforts, 

or jeopardize public health by releasing sewage into surface waters and 

drinking water sources. Emergency repairs of such infrastructure can 

pose significant financial costs to communities. A water utilities’ 

management professional estimated that emergency repairs can cost 

three to four times more than regular repairs—for example, if the cost to 

repair 1 mile of pipe is $550,000, the cost to repair this same pipe in an 

emergency could range from $1.7 million to $2.2 million.

 

1American Society of Civil Engineers, 2013 Report Card for America’s Infrastructure (Reston, 

VA: American Society of Civil Engineers, 2013). 

Letter
According to the Environmental Protection Agency’s (EPA) most recent 

estimates, more than $655 billion may be needed to repair and replace 

drinking water and wastewater infrastructure nationwide over the next 20 

years.

Page 2 GAO-16-237 Water Infrastructure

2 Large water utilities—those serving populations of 100,000 or 

more—account for more of the projected infrastructure repair and 

replacement needs. EPA estimates that large water utilities may need an 

estimated $145 billion to repair and replace drinking water infrastructure 

and an estimated $219 billion for wastewater infrastructure (for a total of 

$364 billion). However, the majority of water utilities are small—serving 

populations of 10,000 or less,3and EPA estimates that small water utilities 

may need an estimated $110 billion for drinking water infrastructure and $33

billion for wastewater infrastructure (for a total of $143 billion).

Across the country, there are about 52,000 drinking water and 16,000 

wastewater utilities. These water utilities4are generally subject to 

requirements under the Safe Drinking Water Act and Clean Water Act, 

respectively.5 EPA and states regulate water utilities’ compliance with these 

provisions, but the water utilities and the communities they serve are responsible 

for managing and funding the infrastructure needed to implement 

requirements, including the costs of repairs and replacement. 

Communities can fund construction, repair, and replacement of 

 

2EPA‘s most recent water infrastructure needs assessments estimated that funding needs for 

drinking water infrastructure totaled $384.2 billion (as of 2011) and for wastewater infrastructure 

totaled $271 billion (as of 2012). EPA conducts a separate survey and assessment for 

each type of infrastructure, drinking water and wastewater, on separate 4-year schedules. 

These cost estimates reflect the 20-year projected drinking water and wastewater 

infrastructure costs starting with the year that each survey was conducted. See EPA, 

Drinking Water Infrastructure Needs Survey and Assessment: Fifth Report to Congress, 

EPA 816-R-13-006 (Washington, D.C.: April 2013) and EPA, Clean Watersheds Needs 

Survey 2012: Report to Congress, EPA-832-R-15005 (Washington, D.C.: Jan. 2016). 

Throughout this report, all dollar figures, such as these costs, are expressed in nominal 

dollars, unadjusted for inflation.

3EPA uses the term “small” to refer to water utilities serving populations of 10,000 or less, 

and the U.S. Department of Agriculture uses “rural.” Throughout this report, we use the 

term “small” to refer to these water utilities. 

4We use the term “water utilities” to refer to both drinking water and wastewater utilities.

5The Safe Drinking Water Act applies to certain public water systems. Safe Drinking Water Act, 

Pub. L. No. 93-523, 88 Stat. 1660 (1974)(codified as amended at 42 U.S.C. §§ 300f–300j-26 

(2015)). The Clean Water Act applies to all wastewater treatment. The Federal Water 

Pollution Control Act Amendments of 1972, Pub. L. No. 92-500, 86 Stat. 816, codified as 

amended at 33 U.S.C. §§ 1251-1387 (2015) (commonly referred to as the Clean Water 

Act).
infrastructure through such options as cash, municipal bonds, grants, and 

loans. The costs, including the repayment of loans, are funded through 

the rates communities pay on their water bills.

The federal government provides significant funding to assist water 

utilities. The three largest federally funded drinking water and wastewater 

infrastructure assistance programs are EPA’s Drinking Water State 

Revolving Fund (SRF) program

Page 3 GAO-16-237 Water Infrastructure

6

and Clean Water SRF program,7and the 

Department of Agriculture’s (USDA) Water and Waste Disposal program.8

Through the Clean Water and Drinking Water SRF programs, EPA provides 

annual grants to state-level SRF programs. States use the SRF funds to, 

among other things, make loans to local communities and utilities for 

various water infrastructure projects, such as upgrading and replacing 

drinking water filtration and treatment plants and water mains, and 

constructing, repairing, and replacing sewage treatment plants and sewer 

pipelines. Communities of any size can apply for assistance through the 

SRF programs. In fiscal year 2015, EPA provided an estimated $1.6 

billion for the Drinking Water SRF and $1.4 billion for the Clean Water 

SRF. USDA’s Rural Utilities Service administers the Water and Waste 

Disposal program, which provides subsidized loans and grants for both 

drinking water and wastewater infrastructure projects in small 

communities. In fiscal year 2015, USDA made an estimated $1.7 billion 

available through the Water and Waste Disposal program. Small water 

utilities generally rely more on federal assistance to fund repairs and 

replacements to infrastructure than large water utilities, according to a 

2012 Congressional Research Service report.9

In a March 2004 report, we found that water utilities may benefit from 

implementing asset management practices to better identify and manage their 

 

6EPA’s Drinking Water SRF program was created under the Safe Drinking Water Act 

Amendments of 1996. Pub. L. No. 104-182, § 130, 110 Stat. 1613, 1662–1672 (codified 

as amended at 42 U.S.C. § 300j-12 (2015)).

7EPA’s Clean Water SRF program was created under the Water Quality Act of 1987. Pub. L. No. 

100-4, § 212, 101 Stat. 7, 21-28 (codified as amended at 33 U.S.C. §§ 1381–1388 

(2015)). The Water Quality Act of 1987 amended the Clean Water Act. 

8USDA’s Water and Waste Disposal program was created under the Consolidated Farmers Home 

Administration Act of 1961, Amendments. Pub. L. No. 89-240, § 1, 79 Stat. 931, 931-932 

(codified as amended at 7 U.S.C. § 1926 (2015)).

9Congressional Research Service, Water Infrastructure Needs and Investment: Review and 

Analysis of Key Issues. RL31116, (Washington, D.C.: Dec. 28, 2012). 
infrastructure needs.

Page 4 GAO-16-237 Water Infrastructure

10 Asset management is a widely recognized tool used 

across a variety of sectors to manage physical assets, such as highways, 

machinery, and buildings; in the case of water and wastewater 

infrastructure, key assets are pipelines, tanks, pumps, and other facilities. 

According to international asset management standards, asset 

management is a framework for providing the best level of service to 

customers at the lowest appropriate cost.11 For example, in our March 2004 

report, we found that, by implementing asset management, a large utility in 

California found that increasing preventive maintenance on its tanks 

would be more cost-effective than replacing them, saving the utility 

approximately $12 million. Federal law does not require water utilities to 

implement asset management, but federal law does require 

implementation of asset management in at least one other area. 

Specifically, federal law requires states to develop and implement an 

asset management plan for pavement and bridge assets that are part of 

the National Highway System.12 Asset management is used by some states to 

manage real property and highways, by private organizations such as electric 

companies, and internationally in many sectors. Appendix I provides information 

about requirements and incentives for asset management.

In our March 2004 report, we found, among other things, that EPA had no 

central repository to facilitate information sharing on asset management 

within and across its drinking water and wastewater programs, which 

would help avoid duplication of effort. As a result, we recommended that 

EPA better coordinate its initiatives to promote asset management, 

explore asset management tools developed by other federal agencies, 

strengthen efforts to educate water utilities on how implementing asset 

management can help them comply with regulations, and establish a 

repository of information about asset management on the agency’s 

website. EPA agreed with our recommendations and implemented them 

by, among other things, holding workshops and coordinating initiatives to 

provide asset management information. In a previous report, issued in 

August 2002, we surveyed water utilities serving populations larger than 

 

10GAO, Water Infrastructure: Comprehensive Asset Management Has Potential to Help Utilities 

Better Identify Needs and Plan Future Investments, GAO-04-461 (Washington, D.C.: Mar. 19, 

2004). 

11The International Organization for Standardization (ISO) published a general international 

standard on the use of asset management. 

1223 U.S.C. 119(e)(1) (2015).
10,000 on how these water utilities manage existing assets and plan for 

future improvements. We found that more than a quarter of the large 

water utilities we surveyed did not have asset management plans as 

recommended by water utility associations but had identified future 

infrastructure needs.

Page 5 GAO-16-237 Water Infrastructure

13 We did not survey small water utilities, and we did not 

make recommendations in that report. (See the “Related GAO Products” list 

for GAO’s most recent reports related to asset management.)

In 2011, EPA and USDA signed a memorandum of agreement that stated 

that small water utilities face unique challenges in providing affordable 

drinking water and wastewater services. It noted that these systems face 

declining populations, lack financial resources and have not engaged in 

long-term planning activities, among other challenges.14 By signing this 

memorandum of agreement, EPA and USDA agreed to collaborate in 

promoting ways that small water utilities can better manage their 

infrastructure needs and emphasized the use of asset management to 

ensure long-term technical, managerial, and financial capacity.15

In this context, you asked us to review water utilities’ use of asset 

management to identify and fund capital improvements in response to 

rising infrastructure costs. Our objectives were to examine (1) what is 

known about the use of asset management among the nation’s water 

utilities—particularly small water utilities—including benefits and 

challenges, if any, for water utilities implementing asset management and

(2) steps, if any, that EPA and USDA are taking to help small water 

utilities implement asset management.

 

13GAO, Water Infrastructure: Information on Financing, Capital Planning, and Privatization, 

GAO-02-764 (Washington, D.C.: Aug. 16, 2002) 

14EPA and USDA, Memorandum of Agreement Between the United States Environmental 

Protection Agency and the United States Department of Agriculture-Rural Development Rural 

Utilities Service, Promoting Sustainable Rural Water and Wastewater Systems, 

(Washington, D.C.: June 2011). 

15An EPA request for grant applications provides definitions for technical, managerial, and 

financial capacity. Technical capacity refers to the physical infrastructure of the water utility 

and the ability of personnel to adequately operate and maintain the system and to apply 

the necessary technical knowledge (for example, knowledge necessary for certification) to 

comply with the law and regulations. Managerial capacity refers to the management 

structure and practices of the utility, for example, ownership accountability, staffing, and 

communication with customers and regulators. Financial capacity refers to the financial 

resources of the utility, such as having sufficient revenue, setting user rates, and operation 

budget and planning. 
To examine what is known about water utilities’ use of asset 

management, we interviewed EPA and USDA staff in the agencies’ 

headquarters about the data they collect from water utilities, including 

data EPA collects in national assessments of water utilities’ infrastructure

needs that it conducts every 4 years. In addition, we interviewed state 

officials responsible for managing EPA’s Drinking Water and Clean Water 

SRF programs as well as officials in USDA’s state offices in a 

nonprobability sample of 10 states. To select these states, we used 

EPA’s most recent needs assessment data (i.e., 2011 for drinking water 

infrastructure and 2008 for wastewater infrastructure)

Page 6 GAO-16-237 Water Infrastructure

16 to identify the state 

in each of EPA’s 10 regions with the highest percentage of small water utility 

needs. These states were: Arizona, Arkansas, Delaware, Idaho, Iowa, 

Minnesota, Mississippi, New York, Vermont, and Wyoming. We reviewed 

relevant documentation and information from EPA staff responsible for 

maintaining the data to assess the reliability of both data sets and 

determined that they were sufficiently reliable for the purpose of selecting 

states and utilities for our review. Because our sample of states and 

utilities was nongeneralizable, responses from the officials we interviewed 

cannot be generalized to other states and their water utilities, but they 

illustrate some of the uses of asset management practices among small 

water utilities in states with the greatest infrastructure needs. We also 

interviewed representatives of national water and wastewater 

associations to identify potential sources of data on asset management. 

From these interviews, we identified one report and one on-going study. 

The report by McGraw-Hill Construction was published in 2013 and

surveyed 451 persons representing water utilities on their use of asset 

management.17 We reviewed the scope and methodology of this report and 

determined that it was sufficient for our purpose of describing qualitative 

 

16At the time of our state selection, EPA had not released its 2012 report. Therefore, we used data 

associated with the EPA’s 2008 Clean Watersheds Needs Survey. EPA, Clean Watersheds 

Needs Survey 2008: Report to Congress, EPA-832-R-10-002 (Washington, D.C.: May 

2010). 

17McGraw-Hill Construction, Water Infrastructure Asset Management: Adopting Best Practices to 

Enable Better Investments: Smart Market Report, (Bedford, MA: 2013). The McGraw-Hill 

Construction study was conducted in partnership with CH2M, a company that, among 

other things, provides asset management consulting services. McGraw-Hill Construction 

provides data, analytics, news, and intelligence for North America. The report described 

the results of a survey of 451 water utilities in the United States and Canada and the 

extent to which they had adopted 14 asset management practices. The study also 

included information from confidential interviews with water utilities on their experiences in 

implementing asset management.
information to corroborate information we obtained from our interviews about 

large utilities’ use of asset management because the study authors 

included asset management practices that were similar to those identified 

by EPA. In 2015, the American Water Works Association surveyed 

officials with 545 water utilities about their use of asset management 

practices for the purposes of identifying additional resources the 

organization could provide to better assist water utilities wanting to start 

or advance an asset management program. The results of the survey 

were published in a report in December 2015.

Page 7 GAO-16-237 Water Infrastructure

18

To examine the extent of asset management use in our sample of 10 states, we 

used EPA’s 2008 Asset Management: A Best Practices Guide—a federallydeveloped asset management framework for water utilities.19 The components 

and practices of the framework formed the basis of our interview questions. 

We used the practices in the framework to interview officials in a 

nongeneralizable, random sample of small utilities in the sample of 10 

states. To select small water utilities in these 10 states, we used EPA’s 

Safe Drinking Water Information System and a database of water utilities 

included in EPA’s 2008 Clean Watersheds Needs Survey to randomly 

generate a nongeneralizable sample of two drinking water and two 

wastewater utilities in each of these states for a total of 40 small water 

utilities. Of these 40 small water utilities, we conducted interviews with 

officials from at least one drinking water utility and one wastewater utility 

in 9 of the 10 states, for a total of 25 water utility interviews.20 The water 

utilities we contacted in Mississippi declined to participate or did not 

respond to our interview requests. We also visited Maine and New 

Mexico to conduct more in-depth interviews on water utilities’ use of asset 

management. We selected these states based on recommendations from 

EPA and USDA officials, representatives of national water and 

wastewater associations, and technical assistance providers.21 On these 

 

18American Water Works Association, 2015 Establishing the Level of Progress in Utility Asset 

Management Survey Results,” (Denver, CO: Dec. 2015).

19Environmental Protection Agency, Asset Management: A Best Practices Guide, EPA 816-

F-08-014 (Washington, D.C.: April 2008). Hereafter, we refer to this document as “EPA’s 

2008 best practices guide.” 

20Not all of the small water utilities we contacted responded to our request for an interview. 

21The technical assistance providers we met with were nongovernmental organizations that 

provided a range of services to help small communities with regulatory, managerial, and financial 

needs related to their water utilities, such as training, assistance with completing loan 

applications, or studies of water rates. 
visits, we met with state SRF program and USDA officials, representatives of 

large and small water utilities, and technical assistance providers. To 

examine any benefits and challenges for small water utilities in 

implementing asset management, we analyzed the content of our 

interviews with state SRF program and USDA officials in the 10 selected

states and in-person visits to Maine and New Mexico.

To examine steps EPA and USDA have taken to help small water utilities 

implement asset management, we reviewed EPA and USDA guidance, 

reports, training materials, and software tools and interviewed EPA and 

USDA officials. In addition, we interviewed technical assistance providers 

funded by EPA and USDA to conduct training sessions that included 

asset management. These technical assistance providers were the EPAfunded Environmental Finance Centers with the University of New 

Mexico, Wichita State University, Cleveland State University, and 

University of North Carolina at Chapel Hill and the national offices and 

local affiliates in Maine and New Mexico of the Rural Community 

Assistance Partnership and National Rural Water Association. We 

compared the information we collected about the steps EPA and USDA 

have taken with key practices related to federal agencies’ training efforts 

and collection and dissemination of information that we identified in 

previous reports.

Page 8 GAO-16-237 Water Infrastructure

22 Appendix II contains a more detailed description of our 

objectives, scope, and methodology.

We conducted this performance audit from January 2015 to January 2016 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives.

 

22GAO, Human Capital: Selected Agencies’ Experiences and Lessons Learned in Designing 

Training and Development Programs, GAO-04-291 (Washington, D.C.: Jan. 30, 2004); 

Human Capital: A Guide for Strategic Training and Development Efforts in the Federal 

Government, GAO-04-546G (Washington, D.C.: March 2004); Managing for Results: 

Enhancing Agency Use of Performance Information for Management Decision Making, 

GAO-05-927 (Washington, D.C.: Sept. 9, 2005); Program Evaluation: Strategies for 

Assessing How Information Dissemination Contributes to Agency Goals, GAO-02-923 

(Washington, D.C.: Sept. 30, 2002). 
This section provides background information on (1) asset management 

for water utilities, (2) federal funding for asset management, (3) water 

utilities’ structures, and (4) EPA’s infrastructure needs assessments.

To assist water utilities in adopting asset management, in 2003, EPA 

developed an asset management framework for water utilities.

Page 9 GAO-16-237 Water Infrastructure

23 In 2008, 

EPA incorporated this framework into a best practices guide for water utilities 

based on similar frameworks used by water utilities in Australia and New 

Zealand.24 EPA’s asset management framework instructs water utilities to (1) 

assess the current state of their assets, (2) determine the level of service they 

need to provide to customers, (3) identify those assets that are most 

critical to their operations, (4) incorporate life-cycle costs, and (5) develop 

a strategy for the long-term funding of the repair and replacement of their 

assets. As shown in figure 1, EPA’s 2008 best practices guide describes 

the five components in EPA’s asset management framework, which are 

characterized by a range of practices. According to EPA’s best practices 

guide, these practices can be implemented at varying levels of 

sophistication, depending on the size and needs of the utility. For 

example, a small water utility with few assets can document its inventory 

of assets on paper, although a large water utility with many assets may 

use a software program.

 

23There are other frameworks and standards for asset management. In 2006, the Water 

Environment Research Foundation, with funding from EPA and the Water Research 

Foundation, developed the Sustainable Infrastructure Management Program Learning 

Environment in 2006 for use by water utilities. Standards include the Publicly Available 

Specification (PAS) 55, developed in 2004 by the UK-based Institute of Asset 

Management and British Standards Institution, and the ISO 55000 series, developed by 

the International Organization for Standardization in 2014. The International Organization 

for Standardization developed the ISO 55000 series from the PAS 55 and introduced the 

ISO 55000 series as an international standard in January 2015. Both the PAS 55 and ISO 

55000 series are designed for multiple sectors. 

24EPA, Asset Management: A Best Practices Guide, EPA 816-F-08-014 (Washington, D.C.: 

April 2008). 

Background

Asset Management for 

Water Utilities
Figure 1: EPA’s Asset Management Framework and Component Practices

Page 10 GAO-16-237 Water Infrastructure

Together, according to EPA’s 2008 best practices guide, these practices 

make up a water utility’s asset management program and are to be 

documented in the water utility’s asset management plan. The asset 

management plan serves as a written record that the water utility can use 

much like a budget or strategic planning document to communicate plans, 
progress, and future goals and also communicate user rate adjustments 

and recommended infrastructure investments. According to an EPA fact 

sheet on building an asset management team,

Page 11 GAO-16-237 Water Infrastructure

25 asset management requires 

water utility staff who can promote and articulate the benefits of asset 

management.26 The fact sheet further states that a successful asset management 

program requires resources, including time and money, to implement, as 

well as the support of political leaders who have the authority and 

willingness to commit public resources and personnel.

We and others have cited examples of cost savings resulting from asset 

management. In our March 2004 report,27 in addition to the water utility in 

California that saved $12 million, we found that a water utility in Massachusetts 

used asset management and saved $20,000 in oil purchase and disposal costs for 

its pumps and decreased the hours spent on preventive maintenance by 25 

percent from the hours recommended by the equipment manufacturer. In 

addition, a 2007 study of asset management by the U.S. Conference of 

Mayors also found that public water utilities in cities had experienced 

savings in capital costs and operations and maintenance as a result of 

asset management.28 Further, a 2008 EPA fact sheet about asset management 

for local officials stated that implementing asset management may require some 

up-front costs but could result in cost savings for water utilities.29

In their 2011 Memorandum of Agreement, EPA and USDA agreed to collaborate 

in promoting ways that small water utilities could better manage their 

infrastructure needs and highlighted the use of asset management to ensure longterm technical, managerial, and financial capacity. The agencies also 

agreed to coordinate agency activities and financial assistance in areas 

that would increase the technical, managerial, and financial capacity for 

 

25In 2008, EPA issued a series of three fact sheets on the topics of best practices for implementing 

asset management, building an asset management team, and information about asset management 

for local officials. 

26Environmental Protection Agency, Building an Asset Management Team, EPA 816-F08-016 (Washington, D.C.: April 2008).

27GAO-04-461.

28U.S. Conference of Mayors, National City Water Survey 2007: The Status of Asset 

Management Programs in Public Water and Sewer Infrastructure in America’s Major Cities

(Washington, D.C.: September 2007).

29Environmental Protection Agency, Asset Management for Local Officials, EPA 816-F-08-015 

(Washington, D.C.: April 2008). 
small water utilities. The memorandum stated that EPA and USDA would 

encourage communities to implement system-wide planning, including 

asset management, and that the two agencies would share and distribute 

resources to water utilities and provide training and information. In this 

same memorandum, EPA and USDA stated that both agencies supported 

increasing the technical, managerial, and financial capacity of water 

utilities nationwide.

EPA and USDA funding for asset management activities falls under 

various larger programmatic budget categories. EPA funds asset 

management in the following three categories: (1) grants to provide 

training and technical assistance to water utilities to improve financial and 

managerial capacity; (2) grants to selected public, private universities or 

colleges, and nonprofit organizations to provide technical assistance to 

communities on a range of EPA priorities, including improving financial 

capacity; and (3) drinking water SRF grants to states, a portion of which 

may be used for increasing water utilities’ technical, managerial, and 

financial capacity. USDA primarily funds asset management activities 

through two programs: (1) the Water & Waste Disposal Technical 

Assistance & Training Grants program, which provides grants to nonprofit 

organizations in the 50 states for managerial technical assistance, and (2) 

the Circuit Rider program, which provides training and technical 

assistance through contracted staff called circuit riders,

Page 12 GAO-16-237 Water Infrastructure

30 in each of the 50 

states to provide technical assistance to small water utilities on day-to-day 

operational, managerial, and financial issues. Appendix III provides more 

details about EPA and USDA funding for asset management.

Small communities share some common characteristics in how they 

manage (govern and staff) their water utilities, according to EPA’s 2011 

report on the characteristics of small water utilities.31 The report, and EPA, 

have made several observations about small water utilities and the small 

communities they serve. Namely, publicly-owned water utilities are 

 

30The name of USDA’s Circuit Rider program reflects the delivery of the technical 

assistance—that is, staff with expertise in operating water utilities travel to provide 

targeted assistance to water utilities. 

31Environmental Protection Agency, National Characteristics of Drinking Water Systems 

Serving 10,000 or Fewer People, EPA 816-R-10-022 (Washington, D.C.: July 2011).

Federal Funding for Asset 

Management

Water Utilities’ Structures
typically municipalities, townships, counties, or other public entities. 

These entities can be governed by boards, mayors, managers, or city or 

town councils.

Page 13 GAO-16-237 Water Infrastructure

32 Privately-owned water utilities are typically governed by 

corporate entities, homeowner associations, or sole proprietors. For both 

publicly- and privately-owned water utilities, the governing bodies are 

responsible for ensuring the water utility complies with state and federal 

laws and regulations; setting and approving annual budgets; hiring staff; 

and in many cases, setting and adjusting the rates that users pay. EPA’s 

2011 report also states that small water utilities are typically staffed with 

an operator (or superintendent), managers, and administrative staff that 

may work part-time. In some cases, a publicly-owned water utility may 

hire a private company to operate and maintain its facility.

EPA estimates the nation’s drinking water and wastewater utilities’ capital 

infrastructure needs over the next 20 years by administering to states two 

needs assessment surveys: the Drinking Water Infrastructure Needs 

Survey and Assessment and Clean Watersheds Needs Survey every 4 

years.33 In completing the questionnaire for the drinking water needs 

assessment survey, utilities report infrastructure needs to EPA and for the 

clean water needs assessment survey states report these infrastructure 

needs to EPA. EPA then uses the data from the drinking water needs 

assessment survey to determine each state’s grant allocation for its 

Drinking Water SRF program. According to EPA officials, the agency 

does not use the clean water needs assessment survey to determine 

each state’s allocation of Clean Water SRF program funds, but it reports 

the data to Congress and the public.

 

32According to a 2002 Congressional Budget Office (CBO) report on drinking water and 

wastewater infrastructure financing, 50 percent of all drinking water utilities that serve the 

public are privately-owned, and about 20 percent of wastewater utilities that serve the 

public are privately-owned.

33The methods that EPA uses to collect information about drinking water and wastewater utilities’

needs differs by needs assessment and water utility size. To identify 20-year needs for 

drinking water utilities for the 2011 needs assessment survey, for example, EPA 

administered a questionnaire to all large water utilities and a sample of medium-sized 

water utilities in each state. EPA used data from the 2007 survey to estimate needs for 

small water utilities. To identify 20-year needs for wastewater utilities for the 2008 and 

2012 needs assessment surveys, for example, states collect needs data from wastewater 

utilities and submit detailed information and supporting documents to EPA. The 2008 and 

2012 Clean Watersheds Needs Surveys did not include information about the 

infrastructure needs of privately-owned wastewater utilities.

EPA Infrastructure Needs 

Assessments
EPA works with states and the Office of Management and Budget (OMB) 

to produce the surveys.

Page 14 GAO-16-237 Water Infrastructure

34 The questionnaires for both needs assessment 

surveys ask about water utilities’ infrastructure needs, including those assets 

that are in need of replacement or rehabilitation. EPA officials said that 

they accept certain documents as support for the states’ cost information, 

including SRF loan applications, capital improvement plans,35 and asset 

management plans. To support their reported infrastructure needs, some 

water utilities submitted documentation that showed the use of asset 

management practices, according to the results of the 2011 drinking 

water needs assessment survey, and other utilities’ supporting 

documentation illustrated continuing gaps in knowledge about the 

condition and remaining useful life of their infrastructure.36 The results of 

the 2008 clean water needs assessment survey also highlighted water utilities’ 

use of asset management and featured examples of states that used asset 

management practices to determine the costs of projects submitted to 

EPA.37

 

34EPA’s needs assessment surveys are subject to federal law regarding the collection of 

information. Under the Paperwork Reduction Act of 1980, a federal agency must, among 

other things, submit for the approval of the OMB any proposal to collect the same 

information from 10 or more members of the public. The federal agency seeking approval 

must describe the information the agency seeks to collect from the public, the reason the 

information is needed, and estimates of the burden—the time, effort, and cost—imposed 

on the public to provide the information. 

35According to EPA’s website, a capital improvement plan assesses which projects (including asset 

improvements, repairs, replacements and such) need to be completed in the future. 

36EPA, Drinking Water Infrastructure Needs Survey and Assessment: Fifth Report to Congress.

37EPA, Clean Watersheds Needs Survey 2008: Report to Congress. EPA’s 2012 Clean Watersheds 

Needs Survey did not make statements about asset management. 
The small water utilities we interviewed in our sample of 10 states are 

implementing some asset management practices, and the state SRF 

officials we interviewed in these states said that large water utilities are 

more likely to implement asset management practices than small water 

utilities. EPA, state SRF, and USDA officials in our review identified 

benefits that could result from water utilities’ use of asset management 

practices, as well as challenges water utilities face in implementing them.

Page 15 GAO-16-237 Water Infrastructure

Officials we interviewed from small water utilities in the selected states 

said that they are implementing some asset management practices, and 

state SRF program officials in these selected states indicated that large 

utilities are generally more likely to implement asset management. 

Officials we interviewed at the 25 small water utilities we selected for our 

review generally told us they were implementing some of the asset 

management practices EPA identified in its 2008 asset management best 

practices guide, but we found differences in the extent to which these 

small water utility officials were implementing these practices. We discuss 

what we found using EPA’s framework, which consists of the five 

components and a written asset management plan.

· Current state of assets. EPA’s 2008 best practices guide states that 

water utilities, in assessing the current state of their assets, should 

know what assets they own, what condition they are in, and their 

remaining useful life—that is, how much longer the water utility 

expects their assets to last. EPA recommends that water utilities (1) 

compile this information into an asset inventory that lists each asset’s 

age, condition, service history, and remaining useful life and (2) 

develop maps that identify the location of these assets. Officials we 

interviewed from 8 of 25 of the small water utilities we reviewed in the 

selected states told us they had an inventory listing all of their assets, 

and 19 of 25 told us they had an inventory that listed at least some of 

their assets. Of the 8 small water utilities that had complete asset 

inventories, 2 of 8 included information on each asset’s physical 

condition, and 3 of 8 included an estimate of each asset’s remaining 

Small Water Utilities in 

Selected States Are 

Implementing Some 

Asset Management 

Practices, and EPA, 

USDA, and State 

Officials Have 

Identified Benefits and 

Challenges

Small Water Utilities in 

Selected States Are 

Implementing Some Asset 

Management Practices
useful life, according to the officials we interviewed with these utilities. 

These officials described various types of inventories, ranging from a 

list of assets included on insurance documents to a software program 

that included information about the assets’ age, condition, service 

history, and remaining useful life. Officials at almost all (23 of 25) of 

the small water utilities in the selected states told us they had maps 

that identify the location of at least some of their assets. These 

officials described a range in the types of maps used by their water 

utilities, including one official who described using maps dating back 

to the 1980s, but others described using maps generated with a 

geographic information system (GIS) to locate a water utility’s 

assets.

Page 16 GAO-16-237 Water Infrastructure

38

· Level of service. EPA’s 2008 best practices guide states that water utility 

operators need to know the level of service they will provide—that is, (1) 

what customers and stakeholders demand, (2) what regulators require, and 

(3) what operators need to know about the actual performance and 

capabilities of the water utility itself. According to EPA’s 2008 guide, 

water utilities should also set performance goals related to these three 

facets of service. Officials at (1) 11 of 25 of the small water utilities in 

the selected states told us they had performance goals related to 

customer demand, (2) 19 of 25 said they had performance goals 

related to meeting EPA and state regulations, and (3) 17 of 25 said 

they had performance goals related to the actual performance of the 

system. For example, at a small water utility, an official responsible for 

managing the community’s water utilities described setting goals to 

control the loss of treated drinking water from leaky distribution pipes 

and the loss of untreated wastewater through leaks in the sewer 

system. According to EPA’s website, leaks in sewer systems can 

result in sewage overflows, increasing the quantity of water requiring 

treatment—which, in turn, can increase a wastewater utility’s costs 

and present public health and environmental risks. The official told us 

that the water utility compares the amount of water that the drinking 

water utility produces to the amount of water used by customers, as 

indicated by their individual water meters, to ensure that no more than 

20 percent of the water is lost through leaky distribution pipes. 

Additionally, this official described comparing drinking water 

 

38GIS are systems of computer software, hardware, and data used to capture, store, manipulate, 

analyze, and graphically present a potentially wide array of geospatial data. The primary 

function of a GIS is to link multiple sets of geospatial data and display the combined 

information as maps with different layers of information.
production to flows from the town’s sanitary sewer and wastewater 

treatment plant to ensure that these overall flows are neither too high 

nor too low and no less than 90 percent of the community’s drinking 

water eventually makes it to the wastewater utility for treatment. Other 

officials we interviewed in the selected states described a range of 

goals, some of which did not relate to asset management. For 

example, some officials told us that their goals related to customer 

demand were to simply keep the water utility operating or to meet 

peak customer demand.

· Critical assets. EPA’s 2008 best practices guide states that water 

utilities need to know which assets are the most critical to sustaining 

the water utility’s operations, their risk of failing, and the 

consequences if they do fail. Officials from 18 of 25 of the small water 

utilities in our selected states told us they had identified their water 

utility’s critical assets, but officials from 11 of 25 of those utilities said 

they have assessed the probability of failure for every critical asset. 

Officials we interviewed in 15 of 25 of the utilities in the selected 

states told us that, generally, the likelihood and consequences of 

failure for assets informed their decisions about which infrastructure 

projects to fund. Officials we interviewed in the selected states 

described taking a range of approaches to identify and assess their 

critical assets. For example, an official from one small water utility 

described the process of identifying and assigning a score (i.e., minor, 

major, or catastrophic) to each critical asset based on the impact that 

asset’s failure would have on the environment and customer needs. 

An official with another small water utility described having enough 

experience with the water utility to keep mental notes about which 

assets were critical to the water utility’s operations, and another 

official described using an online, computer-based system to operate 

critical assets remotely to monitor the probability of failure.

· Minimum life-cycle cost. EPA’s 2008 best practices guide states 

that asset management enables a water utility to determine the 

minimum life-cycle cost—that is, the lowest cost options for providing 

the highest level of service over the lifetime of an asset. According to 

the guide, water utilities can achieve this by scheduling operations 

and maintenance based on the condition of assets; knowing the costs 

to repair, rehabilitate, and replace assets; and having specific 

response plans in case assets fail. Officials from 19 of the 25 small 

water utilities we reviewed in the selected states told us they conduct 

regular maintenance, but officials from 9 of 25 said they knew the cost 

of rehabilitation versus the cost of replacement for all water utility’s 

assets. For example, one official said that the water utility had not 

Page 17 GAO-16-237 Water Infrastructure
determined the costs of rehabilitation versus replacement because the 

assets were too old to be considered for rehabilitation. Additionally, 

officials from 15 of the 25 small water utilities in our selected states

had written plans that describe their water utility’s response in the 

case of asset failure. Concerning written plans to address asset 

failure, one official described a plan outlining discrete protocols the 

water utility should take to address asset failures or emergencies, but 

another official described a list of individuals or repair companies the 

water utility should notify when an asset fails.

· Long-term funding plan. EPA’s 2008 best practices guide states that 

asset management activities related to developing long-term funding 

plans involve determining whether the water utility has enough 

funding to maintain its assets based on the required level of service 

(i.e., customer demands, regulatory requirements, and the capability 

of the utility’s assets) and whether the user rates are sufficient for the 

water utility’s long-term needs. EPA’s 2011 report on the 

characteristics of small water utilities described communities and 

water utilities as generally separating funds by routine operations and 

maintenance and capital improvements and that they may also have 

an emergency fund or reserve fund earmarked for a specific 

purpose.

Page 18 GAO-16-237 Water Infrastructure

39 Officials at 19 of the 25 small water utilities in the selected states 

told us they had established a reserve fund to cover the cost of short-lived 

assets,40 but officials at 11 of the 25 small water utilities told us they had 

enough funds to cover their water utility’s long-term capital 

infrastructure needs. For example, an official from one small water 

utility described using a two-tiered rate structure consisting of a 

monthly water usage rate and a depreciation fee. This official said that 

the water utility uses the monthly rate to cover operations and 

maintenance and short-term capital infrastructure costs and sets the 

depreciation fee aside to fund long-term capital infrastructure costs. 

Other officials from small utilities described a range of approaches to 

planning for the long-term. For example, some small water utility 

officials told us that the water utility established separate reserves for 

short- and long-term capital investment needs, but an official from one 

small water utility described establishing a general surplus account 

into which the water utility put any surplus funds available at the end 

of the year for repairs and replacement.

 

39Environmental Protection Agency, EPA 816-R-10-022.

40USDA defines short-lived assets as those with an estimated useful life of 15 years or less.
· Asset management programs and plans. According to EPA’s 2008 

best practices guide, asset management is implemented through an 

asset management program and typically includes a written asset 

management plan. Officials at the small water utilities we interviewed 

said that they are implementing asset management practices as a 

routine course of business rather than a concerted effort to implement 

a formal asset management program or plan. Therefore, officials at 5 

of the 25 small water utilities in the selected states said that they had 

a written asset management plan.

The small utilities in our selected states were implementing some asset 

management practices, but officials we interviewed with 9 of the 10 state 

SRF programs in our selected states told us that, generally, the large 

water utilities in their states were more likely than small water utilities to 

implement asset management.

Page 19 GAO-16-237 Water Infrastructure

41 Similarly, a 2013 market research study by 

McGraw-Hill Construction found that larger water utilities were more frequently 

implementing asset management practices than smaller water utilities.42 Officials 

from the large utility we interviewed in Maine and the large utility we 

interviewed in New Mexico said they were implementing what they 

considered as comprehensive asset management practices, that is, 

practices as outlined in all five components of EPA’s framework. For 

example, officials from a large water utility in Maine said that it had a 

performance goal for the district’s fire hydrants related to the level of 

service provided to customers—that is, all fire hydrants would be in 

working order and would not spend more than 3 days out of service. 

These officials said that the inspections of the fire hydrants were 

electronically tied to the asset management software, which allows the 

water utility’s managers to monitor the status of the inspections and track 

progress related to the performance goal.

 

41Officials in one state told us that the large water utilities in their state were as likely as small 

water utilities to implement asset management. 

42McGraw-Hill Construction’s study defined a “small utility” as one serving less than 50,000 

people and did not include water utilities serving populations of fewer than 3,300. 
EPA and USDA headquarters officials and state SRF and USDA officials 

cited benefits for both water utilities and federal agencies resulting from 

water utilities’ use of asset management practices. They also cited 

challenges for water utilities—particularly small water utilities—in 

implementing asset management practices, particularly the costs of 

implementing such practices.

Page 20 GAO-16-237 Water Infrastructure

EPA and USDA headquarters officials and state SRF and USDA officials 

cited benefits for water utilities that implement asset management, 

including: (1) cost savings for water utilities that prolong the useful life of 

their assets and avoid costly emergency repairs, (2) more efficient, 

focused long-term planning of management and operations, and (3) 

improved financial health for water utilities. They also cited benefits for 

federal agencies.

Cost savings. EPA headquarters and state SRF and USDA officials told 

us that water utilities implementing asset management can experience 

cost savings by prolonging the useful life of the assets they already own 

through preventive maintenance, including pipe lining and repair, and 

deferring replacement costs. EPA’s guidance states that preventive 

maintenance can help water utilities avoid unnecessary additional costs. 

Officials in our review provided the following examples:

· An official from one small water utility in Maine told us that the 

process of creating an asset inventory helped the water utility identify 

assets they did not know they owned and therefore had not 

maintained. This official also told us that the utility’s use of asset 

management helped utility staff assess the condition of the utility’s 

assets and implement a regular preventive maintenance schedule to 

maintain those assets. According to the official, this helped the utility 

avoid larger replacement costs, but he could not estimate the amount 

of savings.

· Another official with a small water utility in Idaho told us that the utility 

used asset management to plan the maintenance and repair of its 

drinking water reservoir and fire hydrants, which extended their useful 

life and resulted in cost savings.

EPA, USDA, and State 

Officials Identified Benefits 

Resulting from Water 

Utilities’ Use of Asset 

Management Practices 

and Challenges in 

Implementing Such 

Practices

Benefits
· Another official with a small water utility in Maine told us that the utility 

assessed the condition of its sewer lines and realized that hydrogen 

sulfide —a result of the type of materials used to construct the pipes—

had built up and put several lines at risk of collapsing. The official said 

the utility spent $12,000 to remove the hydrogen sulfide and 

prevented the collapse.

More efficient and focused long-term planning of operations and 

management. State SRF and USDA officials said that water utilities 

implementing asset management can plan more efficiently for the longterm, such as planning for capital investments, identifying changes in 

infrastructure needed as a result of population change, hiring or 

succession planning, improved emergency planning; and making 

decisions about repairs and replacements. The officials we interviewed 

highlighted the following examples:

· Officials at a small water utility in New Mexico told us that having an 

asset management plan allowed the utility to prioritize its capital 

investment needs, identify the associated costs, and determine what 

resources it would need going forward.

· An official with a small water utility in Arkansas told us that the utility 

used its asset management plan to assess the effect of a new 

housing development on its drinking water and wastewater 

infrastructure over the next 5 years. As a result of this assessment, 

the water utility was able to set connections and new user fees to 

recover the costs of adding the housing development without 

increasing water utility rates for existing residents.

· An official with a small water utility in Maine told us that because it 

identifies assets, maintenance schedules, and replacement 

schedules, creating an asset management plan was the best way for 

water utilities to transfer decades of knowledge retiring operators and 

maintenance staff had about the system. The official said that 

ensuring the continuity of operations and service to the community 

after employees retire provides some long-term planning.

Improved financial health. State SRF and USDA officials told us that 

water utilities implementing asset management can improve their financial 

health. EPA headquarters officials said that asset management can help 

water utilities better budget for capital investments and justify increases in 

user rates. Asset management also enables water utilities to better 

account for the value of their capital assets and asset depreciation, which 

can improve financial transparency and help the utilities with the 

Page 21 GAO-16-237 Water Infrastructure
documentation needed for financial audits. The officials we interviewed 

highlighted the following examples:

· An official at a small water utility in Maine told us that the utility used 

its asset management plan to determine its financial needs, calculate 

a new user rate to meet these needs, and successfully justify raising 

rates to the water utility board and its customers.

· Another official at a small water utility in New Mexico told us that the 

water utility uses its asset management program to track its finances, 

including the depreciation of its assets—information that is typically 

reviewed as part of its financial audit.

Benefits to federal agencies. According to state SRF and USDA 

officials we interviewed, the federal agencies with programs that provide 

loans and grants to small water utilities to help fund capital infrastructure 

can also benefit from water utilities’ use of asset management, as follows:

· State SRF and USDA officials said that a benefit of asset 

management, for lenders, is knowing that federal funds would be 

better targeted for infrastructure projects that address a community’s 

greatest needs and knowing that the federal funds are paying for a 

project that the community could not afford on its own.

· EPA officials stated that increased use of asset management by small 

water utilities would improve the utilities’ assessments of their capital 

needs, thereby improving the quality of the data collected for EPA’s 

needs assessments. In addition, EPA officials we interviewed said 

that water utilities’ use of asset management can result in more 

accurate information about infrastructure needs, such as costs, and 

better management of the funds spent on infrastructure repairs and 

replacement.

Page 22 GAO-16-237 Water Infrastructure

43

In addition to benefits, the state SRF and USDA officials we interviewed 

generally identified the following key challenges small water utilities face 

in implementing asset management:

· Costs. According to EPA’s 2008 guidance on asset management for 

local officials, implementing an asset management program may 

 

43Generally, “repairs” are defined as work going beyond normal maintenance and 

“replacement” is the substitution with a new or equivalent item. 

Challenges
include start-up costs. For example, SRF officials in one state told us 

that start-up costs are the largest costs for water utilities, often 

challenged with limited resources, in implementing asset 

management. According to state SRF and USDA officials, start-up 

costs can include (1) purchasing asset management tools, such as 

software or creating GIS maps, or (2) hiring an engineer or consultant 

to create an asset management program or plan on water utilities’ 

behalf. For example, officials with two separate small water utilities in 

New Mexico told us that they spent $34,000 and $50,000, 

respectively, to hire a company to create GIS maps of the water 

utility’s assets and officials with another small water utility in New 

Mexico told us that they paid an engineer $12,000 to develop an asset 

management plan.

· Funding. State SRF and USDA officials we interviewed said that 

small water utilities have difficulty obtaining funds or anticipate they 

will have difficulty obtaining funds to cover the start-up and 

maintenance costs associated with asset management. In describing 

challenges with funding asset management, for example, officials with 

a small water utility in New Mexico told us that the utility did not have 

the funds to pay an engineering firm to develop the needed additional 

GIS maps with the locations of their assets and would have to apply to 

a state infrastructure grant program for an additional $50,000.

· Human resources. According to the state SRF and USDA officials 

we interviewed, small water utilities do not have human resources to 

dedicate to asset management. For example, officials with a small 

water utility we visited in Maine said that, at the time of our review, the 

Maine Department of Transportation was completing a major road 

project in the state that affected the buried pipes for multiple 

communities, including the one in which this utility operated. These 

utility officials said that work on these pipes in addition to the routine 

day-to-day responsibilities of operating the utility left the small staff 

little time to work on asset management. Similarly, an official with 

another small water utility in Maine told us that one staff person was 

assigned to develop an inventory of the water utility’s assets, and that 

finding the time was the greatest constraint to completing the 

inventory, coordinating with operations and maintenance staff, and 

implementing additional asset management practices.

· Information. Acquiring information about how to start or maintain an 

asset management program was another challenge for small utilities 

that state SRF and USDA officials cited. For example, officials with a 

small water utility in New Mexico said that the town leadership was 

Page 23 GAO-16-237 Water Infrastructure
unaware of asset management prior to applying for an infrastructure 

loan through a state program. As a result, it took some time for the 

water utility operator and the utility’s board to understand the asset 

management concept and implement the activities required as part of 

the state’s loan program.

· Political support. According to some of the state SRF and USDA 

officials we interviewed, small water utilities are challenged with 

garnering and maintaining the political support of elected officials and 

the local community to begin or maintain an asset management 

program or increase user rates or expend funds on repairs as a result 

of implementing an asset management program. For example, an 

official with a small water utility said that the town’s council was 

supportive of the recommendations the utility operator made 

regarding the likelihood of failure for assets and the need to address 

those assets before they failed. However, the town council did not 

always implement the recommendations because, among other 

things, they said they wanted to avoid having to raise user rates to 

cover the costs. An official with another water utility said that the water 

utility would benefit from raising user rates incrementally each year, 

but that elected officials do not want to raise rates, even minimally, 

because the community would not support such raises.

EPA and USDA are taking steps to help small utilities implement asset 

management and address identified challenges that water utilities face.

EPA and USDA recognize the benefits to water utilities and their loan 

programs and the need for water utilities, particularly small water utilities, 

to increase their use of asset management, but the agencies do not 

collect information on asset management that would enable them to track 

their efforts or compile information on costs and benefits that could be 

used to encourage wider use.

Page 24 GAO-16-237 Water Infrastructure

EPA and USDA Are 

Taking Steps to Help 

Small Utilities 

Implement Asset 

Management but Do 

Not Collect 

Information on Asset 

Management to Track 

Its Use or Compile 

Information on Costs 

and Benefits
EPA and USDA officials told us that they would like for as many water 

utilities as possible to increase their managerial and financial capacity, 

including the implementation of asset management. The officials said 

they are aware that small water utilities face challenges in implementing 

asset management and are taking steps to help them. To help small 

water utilities implement asset management, EPA and USDA provide 

funding for the development of asset management plans, free or low-cost 

tools such as software to develop asset management programs and 

plans, classroom training, and one-on-one technical assistance or 

coaching.

Both agencies provide funding for the development of asset management 

plans, helping to address the challenges of costs and funding. EPA 

provides funds that can be used for the development of asset 

management plans through grants to state drinking water SRF programs. 

According to state SRF officials in some of our selected states, these 

funds can help water utilities address challenges in finding the funds to 

cover the start-up costs of asset management activities. For example, 

officials with the Maine Drinking Water SRF program told us that the state 

SRF program uses its drinking water SRF funds

Page 25 GAO-16-237 Water Infrastructure

44 to pay up to 75 percent of 

the cost of developing an asset management plan for water utilities serving 

populations of fewer than 3,300 people and up to 50 percent for water utilities 

serving populations of more than 3,300 people. According to these officials, 

about 15 water utilities have applied for this funding between 2013 and 

2015. State officials with the Delaware Drinking Water and Clean Water 

SRF programs, for example, told us that they recently started a new 

program providing grants to water utilities for funding activities leading to 

the development of an asset management plan. As of June 2015, the 

state had provided a grant ranging from $60,000 to $100,000 to each of 

the 4 publicly-owned water utilities that participated in the program.

State SRF officials in some of the 10 states in our review told us that in 

meeting state requirements for SRF loans,45 small water utilities in their 

 

44Subject to certain limitations states may use a portion of their drinking water SRF grants to fund 

various activities, including training, technical assistance and programs to develop technical, 

managerial, and financial capacity.

45The SRF programs are implemented by the states. While EPA establishes high-level 

requirements for the programs, states may impose additional or more specific requirements that 

differ by state. 

EPA and USDA Are Taking 

Steps to Help Small Water 

Utilities Implement Asset 

Management

Funding
states were engaging in some asset management practices.

Page 26 GAO-16-237 Water Infrastructure

46 State officials we 

interviewed provided examples, such as requiring (1) a report of the 

inventory and condition of the utility (or preliminary engineering report)47

to show technical capacity; (2) a community to raise user rates to pay back the 

loan; or, (3) a community to set up a reserve fund to pay for short-lived 

assets. Officials we interviewed at 10 of the 25 small water utilities in the 

selected states said that they currently had an SRF loan.

USDA officials in the agency’s headquarters and all 10 state offices we 

interviewed also told us that, as a result of their loan requirements,48 small 

water utilities with USDA loans were engaging in some asset management 

practices. USDA headquarters officials told us that asset management is 

incorporated throughout their loan conditions. Specifically, USDA state 

officials said that they consider the following loan conditions to equate to 

asset management practices: requiring (1) a review of financial audits, (2) 

a preliminary engineering report, (3) a community to create a reserve to 

fund debt payments and cover the repair and replacement of short-lived 

assets, (4) development of an operations and maintenance manual, and 

(5) the restructuring of user rates to cover the cost of the loan and repair 

and replacement of short-lived assets. According to some USDA 

headquarters and state officials, USDA’s state offices also conduct 

periodic (every 3 years) inspections of the condition of the facilities they 

fund once they are built. Officials we interviewed at 6 of the 25 small 

water utilities in the selected states said that they currently had a USDA 

loan.49

 

46Under the Safe Drinking Water Act (SDWA), states may not provide Drinking Water SRF loan 

assistance to systems that do not have the technical, managerial, and financial capability to ensure 

compliance with the SDWA unless the use of such assistance will ensure compliance, and the 

system has agreed to make the necessary changes in operation to ensure that it has the 

technical, managerial, and financial capacity to comply over the long term. 

47A preliminary engineering report describes the proposed project, including its purpose, 

features of the proposed location, condition of any existing facilities, alternative 

approaches considered, design features, and costs. The report is prepared using a 

template. 

48The Water and Waste Disposal program is implemented by USDA under federal regulations 

that apply to all states.

49Officials in 5 of the 25 small water utilities we interviewed said that they had both an SRF and 

USDA loan.
USDA officials said that their use of the preliminary engineering report is the key 

way in which the agency introduces its loan applicants to asset management. In 

2013, USDA, in conjunction with EPA and other federal agencies and 

states, issued a preliminary engineering report template, a planning 

document that, in general, includes an inventory of the category of assets 

and assessment of the assets in the entire facility (e.g., the assets 

involved in the project being funded, a map of the assets in the water 

utility); information about the need for the project (including most critical 

aging infrastructure and future growth needs); and the costs for the repair, 

rehabilitation, and replacement of some assets. USDA regulations require 

loan applicants to submit a preliminary engineering report, and encourage 

applicants to consult agency guidelines in preparing the report.

Page 27 GAO-16-237 Water Infrastructure

50 In a 2013 

bulletin to state officials, USDA encourages its state offices to use the 

preliminary engineering report template. EPA does not require SRF loan 

applicants to submit a preliminary engineering report, but like USDA, it 

encourages its use; specifically, it encourages state SRF programs to 

require its use.51 EPA officials told us that as of October 2015, 10 state 

SRF programs had adopted the preliminary engineering report template 

and 10 other state SRF programs had adopted it and modified it by 

including additional requirements.

Both agencies provide free or low-cost tools for developing asset 

management programs and plans to help address the challenges of cost 

and providing information. EPA provides a free asset management 

software program, and both EPA and USDA provide free tools such as 

guidebooks, case studies, and other written materials for small water 

utilities on the agencies’ websites. EPA’s free software program, Check 

Up Program for Small Systems (CUPSS), allows water utilities to develop 

asset management programs and plans. EPA officials told us that the 

original development of CUPSS was funded with SRF funds. Users of 

CUPSS can enter data into the system to develop an inventory of assets, 

record information to track the scheduling of maintenance tasks, and 

produce a written asset management plan. EPA officials told us that, with 

CUPSS, water utility managers can produce a report specifically 

communicating the condition of the water utility’s assets to elected 

officials. EPA also provides free training on how to use CUPSS. The 

 

507 C.F.R. §§ 1780.33, 1780.55 (2015).

51According to an EPA official, the intent of the SRF program is to provide states with 

flexibility in implementing their SRF programs. 

Free or Low-Cost Tools
availability of CUPSS also allows utilities to avoid some of the costs they 

would incur if they were to hire a professional engineering firm to do the 

same work. For example, an official with a small water utility we 

interviewed said that he did not incur any monetary costs to implement 

asset management because he used CUPSS to develop his asset 

management plan and program.

EPA, USDA, and state SRF programs provide classroom training on 

asset management to help provide information to operators and other 

staff about how to implement asset management.

· EPA’s Environmental Finance Center (EFC) 

Page 28 GAO-16-237 Water Infrastructure

52 at the University of North 

Carolina at Chapel Hill leads the Smart Management for Small Water 

Systems project that provides 1-day workshops for operators of water 

utilities on various aspects of managing a water utility. According to an 

official with the EFC at the University of North Carolina at Chapel Hill, 

the EFC partners with other EFCs (including the University of New 

Mexico and Wichita State University) to conduct the workshops, which 

include a discussion of asset management. As stated on the website 

for the EFC at the University of North Carolina at Chapel Hill, from 

2012 to 2014, these EFCs held more than 100 workshops, with 2,000 

participants, in all 50 states and four U.S. territories.

· According to USDA headquarters officials, operators of small water 

utilities and their elected officials participate in financial and 

managerial training courses provided by organizations, such as the 

National Rural Water Association,53 Rural Community Assistance 

Partnership,54 and others. According to these officials, these training 

 

52EPA provides grants through its EFC Grant Program to selected public and private universities or 

colleges and nonprofit organizations to provide technical assistance to communities on a 

range of EPA priorities, including improving financial capacity. This assistance includes 

studies of user rates for water utilities, one-on-one technical assistance, workshops and 

other classroom trainings, and written guidance. For fiscal years 2016 through 2021, EPA 

will provide grants to nine EFCs that serve 9 of its 10 regions. 

53The National Rural Water Association is a nonprofit organization dedicated to training, 

supporting, and promoting the water and wastewater professionals that serve small 

communities across the United States. 

54The Rural Community Assistance Partnership is a federally-funded network of nonprofit 

organizations that provide training, technical assistance, and other resources related to water and 

wastewater issues for small, rural communities and tribes. Most of its project communities 

are economically disadvantaged and have a population under 2,500.

Classroom Training
sessions can include asset management. An official with the National Rural 

Water Association told us that the organization’s training sessions generally 

include a component of asset management. Officials with the Rural 

Community Assistance Partnership told us that their organization 

provides workshops specifically on implementing asset management, 

including workshops for elected officials.

· EPA and USDA officials told us that the agencies’ key collaborative 

effort is a workshop on water utility management, with the goal of 

helping to increase water utilities’ managerial and financial capacity. 

The workshop, based on a 2013 EPA and USDA document entitled 

Rural and Small Systems Guidebook to Sustainable Utility 

Management,

Page 29 GAO-16-237 Water Infrastructure

55 describes 10 steps in effectively managing a water utility. 

EPA and USDA officials said that asset management is discussed as part of 1 

of the 10 steps. EPA and USDA’s guidebook defines the steps, describes 

challenges water utilities may face related to the steps and the effects 

of those challenges, and describes the types of actions taken by highperforming water utilities to address the challenges. The workshop 

materials focus primarily on the logistics of implementing a workshop. 

EPA and USDA train technical assistance providers to conduct the 

workshop for water utilities. Both agencies also provide free materials 

for the workshop on their websites. A 2015 EPA and USDA report56

stated that the agencies had trained1,600 persons in workshops across 

the United States since 2013. EPA agreed with our estimate that the 

two agencies, together, train about 250 water utilities per year. USDA 

officials told us that for fiscal year 2015, the agency provided a grant 

to a technical assistance provider to provide two workshops in each of 

the 50 states. EPA funds this effort through its Small Systems 

Training and Technical Assistance Grants program, and USDA funds 

this effort through its Water & Waste Disposal Technical Assistance & 

Training Grants program.

· State SRF programs also use some of their federal funds to provide 

classroom training, for small water utilities, on a variety of topics 

related to building small water utilities’ managerial and financial 

 

55EPA and USDA, Rural and Small Systems Guidebook to Sustainable Utility Management, 

(Washington, D.C.: 2013). According to EPA and USDA officials and EPA’s website, the 

guidebook is adapted from another guidebook and training course, “Effective Utility 

Management,” designed for medium to large utilities. 

56USDA and EPA, Making A Difference for Rural and Small Utilities: Sustainable Rural and 

Small Utility Management Initiative, (Washington, D.C.: 2015). 
capacity, including asset management. For example, according to 

Maine Drinking Water SRF officials, Maine’s Drinking Water SRF 

program provided four $25,000 grants to a local technical assistance 

provider to train operators of small water utilities and their elected 

officials on asset management. 

This classroom training provides water utilities with education and 

information about asset management and how to implement an asset 

management program.

Both agencies also provide one-on-one technical assistance or coaching 

on asset management, which helps address the challenges of costs, 

funding, and providing information. EPA, USDA, and state SRF programs 

work with many of the same organizations to provide technical assistance 

services in their states. EPA also reaches small water utilities through its 

EFCs. The two primary organizations with whom EPA and USDA work to 

reach small water utilities are the National Rural Water Association and 

Rural Community Assistance Partnership. EPA and USDA officials have 

said that their contracts for technical assistance with these two providers 

are not exclusively for asset management, but that technical assistance 

providers are trained to and frequently help water utilities implement asset 

management and develop asset management plans. In conjunction with 

its workshop on sustainable utility management, EPA and USDA officials 

told us that technical assistance providers, in their workshops, also 

conduct follow-up calls to workshop participants and, if necessary, 

provide one-on-one assistance. The availability of one-on-one technical 

assistance also allows water utilities to avoid some of the costs they 

would incur if they were to hire a professional engineering firm to do the 

same work. For example, an operator with a small water utility in Maine 

told us that the utility developed its asset management program and plan 

through CUPSS with the free help of an organization contracted with EPA 

and USDA to provide technical assistance. This operator said the water 

utility’s asset management program would not have been developed 

without this technical assistance.

Page 30 GAO-16-237 Water Infrastructure

One-on-One Technical 

Assistance or Coaching
EPA and USDA recognize the benefits of asset management to water 

utilities and their loan programs and the need for water utilities, 

particularly small water utilities, to increase their use of asset 

management. Both agencies—EPA since 2003 and USDA since 2011—

have identified asset management as a tool that water utilities can use to 

increase their ability to address infrastructure needs. In their 2011 

memorandum of agreement, EPA and USDA agreed to collaborate in 

promoting ways that small water utilities can better manage their 

infrastructure needs and highlighted the use of asset management to 

ensure long-term technical, managerial, and financial capacity. EPA and 

USDA agreed to coordinate agency activities and financial assistance in 

areas that would increase the technical, managerial, and financial 

capacity of small water utilities. The memorandum also stated that EPA 

and USDA would encourage communities to implement system-wide 

planning, including asset management, and that the two agencies would 

share and distribute resources to water utilities and provide training and 

information. EPA and USDA officials told us that they want their efforts to 

result in as many water utilities as possible increasing their managerial 

and financial capacity, including the use of asset management. However, 

even though EPA and USDA promote sustainable water infrastructure, 

and the agencies encourage water utilities to better manage their 

resources to address the long-term challenges posed by deteriorating 

infrastructure, limited funds, and declining populations, they do not—and 

are not required to—collect information on utilities’ use of asset 

management. Specifically, they do not collect information that tracks the 

results of their training efforts on utilities’ use of asset management 

practices or compile information on the benefits and costs of 

implementing asset management.

First, EPA and USDA do not collect information that tracks the results of 

the agencies’ training efforts (e.g., whether participating utilities use asset 

management practices). EPA stated in a 2011 policy document 

describing its plans to promote sustainable water infrastructure that the 

agency has an interest in tracking the results of the agency’s training. 

This is consistent with our January 2004 report on selected agencies’ 

experiences and lessons learned in designing training and development 

programs and our March 2004 guide on assessing strategic training and 

development efforts for human capital,

Page 31 GAO-16-237 Water Infrastructure

57 in which we reported that evaluating 

 

57 GAO-04-291 and GAO-04-546G. 

EPA and USDA Do Not 

Collect Information on 

Asset Management to 

Track Their Efforts or 

Compile Information on 

Costs and Benefits to 

Encourage Wider Use
training programs is key to ensuring that training is effective in 

contributing to the accomplishment of agency goals and objectives. It is 

also consistent with our September 2005 report on enhancing 

performance management, which states that information can be used to 

make decisions that affect future strategies, planning and budgeting, 

identifying priorities, and allocating resources.

Page 32 GAO-16-237 Water Infrastructure

58

Both EPA and USDA collect some information from the water utilities that 

participate in classroom training or receive one-on-one technical assistance; 

however, the agencies do not collect information that may allow them to 

better measure the results of their efforts to assist utilities. EPA collects 

information on the number of utilities that have taken training per year and 

reports this as part of its major performance goals. For example, as 

stated above, since 2011, 250 small utilities per year have taken the EPA 

and USDA trainings (of the 68,000 utilities nationwide). In addition, both 

EPA and USDA collect feedback from water utilities on their experience in 

training. For example, the agencies collect feedback forms from those 

attending the training to determine how to improve it. However, the 

information EPA collects does not show whether the water utilities that 

receive training from the agencies went on to incorporate asset 

management practices into their work processes or whether these water 

utilities have improved their managerial or financial capacity.

EPA and USDA officials said that information on water utilities’ use and 

incorporation of asset management would help EPA and USDA 

understand how the training and technical assistance they provide are 

affecting utilities’ use of asset management. EPA officials said that they 

would like to collect data on water utilities’ incorporation of asset 

management and determine whether these water utilities have improved 

their managerial or financial capacity, but they do not have the resources 

to do so. An EPA official said that when the agency was considering a 

nationwide study in 2006, the agency wanted to study the incorporation, 

costs, and benefits, of water utilities’ use of asset management. However, 

EPA found that the costs of such a data collection effort would be in the 

hundreds of thousands of dollars. In particular, according to an EPA 

official, in addition to the costs of collecting the data from water utilities, 

the agency would also face costs in submitting the required Information 

Collection Request proposal to OMB. USDA officials similarly stated that 

 

58GAO-05-927. 
they would be interested in collecting data on how the water utilities that 

participate in their sustainability workshops incorporated asset 

management or other management practices into their work processes. 

However, a USDA official told us that the agency would have to explore 

whether it could do a study such as this.

Leveraging existing data collection methods to collect information, such 

as adding questions to existing information collection requests, could be a 

cost-effective option for EPA and USDA to obtain information on water 

utilities’ use of asset management. In particular, EPA’s drinking water and 

clean water infrastructure needs assessment surveys provide national 

data on water utilities’ infrastructure repair, rehabilitation, and 

replacement needs. EPA officials said that EPA works in partnership with 

states to obtain the data, and it works with state officials to convey the 

importance of the surveys. This work includes discussing the types of 

questions in the surveys, including any additional policy areas the 

questions will cover. EPA officials told us that the agency can add 

questions to the needs assessment surveys and has done so in the past 

on such policy issues as climate change and energy efficiency; the 

officials said that few states have responded to the questions, however, 

because participation by the states and water utilities is voluntary, and 

states are not required to answer all of the questions in the surveys.

EPA officials said that the agency included questions about asset 

management in the clean water needs assessment survey in 2008 and 

2012. Specifically, these officials said, the questions asked water utilities 

to identify the status of their implementation of asset management and 

related costs. According to these officials, the agency did not receive 

enough responses to analyze and include the data in the final reports. 

EPA officials representing the clean water needs assessment survey said 

that they would be open to more discussions with states about asset 

management given their increased awareness. An EPA official that works 

with the drinking water needs assessment survey told us that EPA has 

not systematically asked questions about asset management in the 

drinking water needs assessments survey because the agency has 

determined that its efforts are best focused on asking questions required 

to determine infrastructure needs and for which the agency is likely to 

receive a large response from the states. In addition, this official said that 

EPA encourages water utilities to implement asset management practices 

through its guidance to states about the types of information the agency 

will accept as support for responses to the survey. An EPA official said 

that the agency has not considered or determined what asset 

management questions it might ask on the drinking water needs 

Page 33 GAO-16-237 Water Infrastructure
assessment survey. By continuing to include questions on the clean water 

needs assessment and considering questions about water utilities’ use of 

asset management to include in the drinking water needs assessment 

survey, EPA may have better assurance that it is collecting information in 

a cost-effective way to assess the effectiveness of its asset management 

training efforts with USDA. The EPA official representing the drinking 

water needs assessment survey said that there would be value for the 

agency in asking water utilities about asset management.

Second, EPA and USDA do not collect information on the benefits and 

costs of using and implementing asset management to encourage use. 

EPA and USDA do not—and are not required to—compile information on 

the benefits and costs of implementing asset management to encourage 

small utilities to use it. EPA and USDA officials stated that increasing 

water and wastewater utilities’ use of asset management increases the 

utilities’ managerial and financial capacity and, for this reason, EPA and 

USDA (through technical assistance providers) share anecdotal data to 

encourage water utilities to adopt asset management. In particular, these 

officials said that they promote managerial and financial capacity building 

trainings, which include asset management training, by attending 

conferences at which they present to water utility officials, provide oneon-one technical assistance outreach, and engage in conversations with 

state SRF and USDA officials. EPA also provides some information about 

the potential benefits of asset management in documents available on its 

website. For example, EPA’s 2008 best practices guide provides a list of 

the benefits of using asset management.

EPA and USDA’s training materials for their workshops on Rural and 

Small Systems Guidebook to Sustainable Utility Management include 

examples of management challenges and best practices— many of which 

are asset management practices—to address the challenges. The 

training materials do not, however, include cases showing communities’ 

use of asset management and the resulting benefits, including the costs 

that could result from implementing these best practices. According to an 

EPA official, most of the information on benefits, including cost savings, 

and costs comes from specific anecdotes and materials that technical 

assistance providers have developed and conveyed through their 

individual training and interactions with water utilities’ staff or governing 

bodies. Some of EPA’s technical assistance providers, such as the EFCs, 

have used information on the benefits of asset management to encourage 

water utility board members and city councils to adopt asset 

management.

Page 34 GAO-16-237 Water Infrastructure
However, the agencies have not compiled information about the benefits 

and costs of asset management into a single document that is more 

broadly available to water utilities. EPA and USDA officials told us that 

they had not considered compiling information about the benefits of asset 

management into one source, and they are not required to. However, 

providing information on benefits and costs to those who have not 

attended the agencies’ trainings could help encourage them to adopt 

asset management practices. We noted in a September 2002 report that 

agencies use information dissemination as one of several tools to achieve 

goals for programs in which agencies do not act directly, but inform and 

persuade others to act to achieve a desired outcome.

Page 35 GAO-16-237 Water Infrastructure

59 Additionally, in a 

September 2005 report, we reported that agencies can evaluate their efforts 

using fact-based understandings of how their activities contribute to 

accomplishing the mission and broader results and to identify and 

increase the use of program approaches that are working well.60 In this 

same report, we stated that agencies can adopt a number of practices to 

enhance the usefulness of information. One of these best practices for 

improving the use of information is to ensure that it is, among other 

things, relevant, accessible, and easy to use. For example, in 2006, EPA 

and the Federal Highway Administration collaboratively conducted a case 

study review of communities’ experiences, including the benefits, of 

implementing asset management across multiple infrastructure sectors 

such as water, wastewater, and transportation.61 According to the study, 

the purpose of the review was to provide, in one resource, relevant 

examples of how communities were responding to their infrastructure 

needs by using asset management practices.

An EPA official told us that, in 2006, the agency considered compiling 

information on cost savings by asking a question in a potential nationwide 

study of water utilities’ use of asset management but did not pursue this 

study because, among other things, the agency did not have the 

resources to pay for it at that time. This official told us that EPA has 

instead engaged in activities that cost less than a nationwide study, such 

as developing case studies or other small-scale information collection 

efforts. A USDA official said that the agency would be open to exploring 

 

59GAO-02-923. 

60GAO-05-927, 15.

61Environmental Protection Agency and Department of Transportation, Federal Highway 

Administration, Multisector Asset Management Case Studies (Washington, D.C.). 
ways to collaborate on a study of the benefits and costs of asset 

management for small water utilities. As shown by the EPA and Federal 

Highway Administration study, EPA provided useful examples of the 

benefits for entities considering asset management by compiling and 

making broadly available information about the benefits and costs of 

asset management. Consistent with best practices for using performance 

information, compiling the information that EPA and USDA technical 

assistance providers share with water and wastewater utilities to 

document the benefits and costs of asset management could provide a 

resource for a broader audience of small water utilities that are 

considering using this approach. Both EPA and USDA officials said that 

they had developed several materials for small water utilities through their 

coordinated efforts and that a compilation of existing cases and examples 

of communities’ use of asset management, its benefits, including cost 

savings, and costs could be useful in persuading some water utilities to 

use asset management.

EPA and USDA have provided millions of dollars of federal funding to 

help small water utilities increase their technical, managerial, and 

financial capacity to better meet the challenge of repairing and replacing 

the nation’s aging water infrastructure and, also, provide safe and clean 

water to communities. Both agencies have identified asset management 

as a tool that water utilities can use to increase their ability to address 

current and future infrastructure needs.

EPA and USDA have played a significant role in encouraging and helping 

water utilities to implement asset management through funding 

conditions, training, and other resources. With 68,000 water utilities 

across the country, it is important to know which are using asset 

management and which are not. However, EPA and USDA do not collect 

information on water utilities’ use of asset management, particularly from 

utilities that have taken part in agency training sessions on asset 

management. Existing data collection efforts such as EPA’s needs 

assessment surveys may be a cost-effective means of doing this. By 

continuing to include questions in the clean water needs assessment 

survey and considering questions about water utilities’ use of asset 

management to include in the drinking water needs assessment survey, 

EPA may have better assurance that it is collecting information in a costeffective way to assess the results of its asset management training 

efforts with USDA. In addition, persuading elected officials and 

communities of the need for infrastructure investment is important, as is 

the need to use asset management to make investment decisions. EPA 

Page 36 GAO-16-237 Water Infrastructure

Conclusions
and USDA share the benefits and costs of asset management in various 

documents provided on their websites and through technical assistance 

providers. However, the agencies have not compiled the information on 

the benefits and costs of asset management, particularly the cost 

savings, into one source. A documented compilation of the benefits and 

costs of asset management, including the cost savings, consistent with 

performance management best practices, that is widely available to water 

utilities, may be helpful to EPA and USDA in encouraging a broader 

audience of small water utilities to consider adopting asset management.

As EPA and USDA continue to consider ways to track and promote water 

utilities’ implementation of asset management, we recommend the 

following:

· First, that the Administrator of EPA direct the Office of Groundwater 

and Drinking Water and Office of Wastewater Management to 

continue to include questions on water utilities’ use of asset 

management in the clean water needs assessment and consider 

including questions about water utilities’ use of asset management in 

future drinking water infrastructure needs assessment surveys.

· Second, that the Administrator of EPA, and the Secretary of USDA, 

through the Rural Development Agency, consider compiling into one 

document the existing cases and examples of the benefits and costs 

of asset management and widely share this information with water 

utilities.

We provided the Administrator of EPA and the Secretary of USDA with a 

draft of this report for review and comment. In written comments provided 

by EPA (reproduced in app. IV), EPA generally agreed with our findings 

and recommendations. In addition, in an e-mail received from the GAO 

and OIG Liaison Officer within USDA’s Rural Development agency, 

USDA agreed with our report. 

In response to our recommendation that EPA continue to include 

questions on water utilities’ use of asset management in the clean water 

needs assessment and consider including such questions in future 

drinking water infrastructure needs assessment surveys, EPA included “a 

significant caveat” to its agreement. Specifically, EPA’s comments stated 

that the agency generally agrees with the recommendation, with the 

significant caveat that the method for continuing to assess the 

effectiveness of the agency’s asset management training and technical 

Page 37 GAO-16-237 Water Infrastructure

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
assistance must be both effective and efficient. It further stated that 

although the agency has included asset management questions as part of 

the needs assessment surveys in the past, this mechanism has led to 

limited information regarding the level of implementation of asset 

management at utilities. Further, the comments stated that the needs 

assessment survey may not be the most efficient and effective way to 

collect these data since the survey’s primary focus and design is to 

assess and quantify the nation’s infrastructure need and not the adequate 

implementation of asset management. EPA stated that it would be willing 

to explore other means of obtaining data that would provide an indication 

of how utilities are benefitting from the agency’s asset management 

training and technical assistance. We continue to consider the needs 

assessment survey to be a cost-effective and efficient method for 

collecting data from water utilities. If EPA explores others approaches and 

finds that the information can be systematically collected from the nation’s 

water utilities for comparison over time, we agree other approaches could 

be appropriate.

In response to our recommendation that EPA and USDA consider 

compiling, and widely share, existing cases and examples of the benefits 

and costs of asset management, EPA noted that it agrees that it is 

important to educate utilities on the benefits of asset management in 

protecting the nation’s infrastructure investment and described steps it 

has taken to do so. EPA stated that, as funding and resources allow, the 

agency would most likely consider the development of a case study 

compilation document focused on local decision makers who are key to 

ensuring that asset management is a priority and is implemented 

appropriately. We agree that focusing on local decision makers is 

important and believe that a document compiling case studies could be 

useful and made available to water utilities as well as local decision 

makers. USDA did not comment specifically on this recommendation and 

stated in its e-mail message that the agency will continue to emphasize 

asset management through its technical assistance providers funded 

through the agency’s Technical Assistance and Grant program and joint 

EPA/USDA Work-Shop-in-a-Box initiative.

We are sending copies of this report to the appropriate congressional 

committees; the Administrator of EPA; the Secretary of Agriculture; the 

Director, Office of Management and Budget; and other interested parties. 

In addition, this report is available at no charge on the GAO website at 

http://www.gao.gov.

Page 38 GAO-16-237 Water Infrastructure
If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or gomezj@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.

J. Alfredo Gómez

Director, Natural Resources and Environment

Page 39 GAO-16-237 Water Infrastructure
Federal law does not require water utilities to implement asset 

management. However, in 2014, federal law began requiring all recipients 

of Clean Water State Revolving Fund (SRF) loans for repair, 

replacement, or expansion of a water utility to develop fiscal sustainability 

plans.

Page 40 GAO-16-237 Water Infrastructure

1 According to the law, fiscal sustainability plans should include (1) an 

inventory of critical assets; (2) an evaluation of the condition and performance of 

such assets or groups of assets; and (3) a plan for maintaining, repairing, 

and, as necessary, replacing the utility and a plan for funding such 

activities. According to Environmental Protection Agency (EPA) officials, 

some of the activities required as part of the fiscal sustainability plan are 

asset management practices.

Officials in one state told us their state requires water utilities to develop 

asset management plans as a condition of SRF loans for water 

infrastructure, and officials in another state told us their state requires 

asset management plans for SRF loan forgiveness.2 Other states may 

provide incentives during the application process. Specifically, states may award 

additional points in the application scoring process known as “priority points.” 

Table 1 provides information about the requirements and incentives 

reported by officials in the states we reviewed.

 

1Water Resources Reform and Development Act of 2014, Pub. L. No. 113-121, § 5003, 128 Stat. 

1193, 1323 (codified at 33 U.S.C. § 1383(d)(1)(E)(i) (2015). 

2We interviewed state officials responsible for managing EPA’s Drinking Water and Clean Water 

SRF programs as well as officials in USDA’s state offices in a nonprobability sample of 10 states. 

To select these states, we used EPA’s most recent needs assessment data (i.e., 2011 for 

drinking water infrastructure and 2008 for wastewater infrastructure) to identify the state in 

each of EPA’s 10 regions with the highest percentage of small water utility needs. These 

states were: Arizona, Arkansas, Delaware, Idaho, Iowa, Minnesota, Mississippi, New 

York, Vermont, and Wyoming. See EPA, Drinking Water Infrastructure Needs Survey and 

Assessment: Fifth Report to Congress, EPA 816-R-13-006 (Washington, D.C.: April 2013) 

and Clean Watersheds Needs Survey 2008: Report to Congress, EPA-832-R-10-002 

(Washington, D.C.: May 2010). At the time of our state selection, EPA had not released its 

2012 report. 

Appendix I: Requirements and Incentives for 

Asset Management
Page 41 GAO-16-237 Water Infrastructure

Table 1: Reported Drinking Water and Clean Water SRF Asset Management Requirements and Incentives for the States We 

Reviewed

Drinking Water SRF Clean Water SRF

State Required

Required for loan 

forgiveness Priority points Required

Required for loan 

forgiveness Priority points

Arizona No No No No No No

Arkansas No No Yes No No No

Delaware No No No No No Yes

Idaho No No Yes No No Yes

Iowa No No No No No No

Maine No No No No Yes No

Minnesota No No No No No No

Mississippi No No No No No No

New Mexico No No Yes Yes No Yes

New York No No Yes No No No

Wyoming No No No No No No

Vermont No No Yes No No No

Legend: Yes = State officials we interviewed told us the state program has a requirement or incentive for asset management programs and/or plans.

No = State officials we interviewed told us that the state does not have a requirement or incentive for asset management.

Sources: GAO analysis of interviews with state Drinking Water and Clean Water SRF officials. │ GAO-16-237

Note: The states listed in this table are those states we included in our review. We did not ask water 

utilities about requirements for loan forgiveness in our interviews.
This report examines selected water utilities’ use of asset management. 

Our objectives were to examine (1) what is known about the use of asset 

management among the nation’s water utilities—particularly small water 

utilities—including benefits and challenges, if any, for water utilities 

implementing asset management and (2) steps, if any, that the 

Environmental Protection Agency (EPA) and U.S. Department of 

Agriculture (USDA) are taking to help small water utilities implement asset 

management.

To examine what is known about water utilities’ use of asset 

management, including benefits and challenges, if any, we used EPA’s 

framework for asset management. The framework, from EPA’s 2008 

Asset Management: A Best Practices Guide,

Page 42 GAO-16-237 Water Infrastructure

1 describes five components and 

the practices that comprise asset management. The components and practices 

described in this document formed the basis of our interview questions. We also 

used other EPA documents describing the agency’s asset management 

framework: 2003 Asset Management: A Handbook for Small Water 

Systems: One of the Simple Tools for Effective Performance (STEP) 

Guide Series 2and 2008 Building an Asset Management Team3. This criterion 

remains relevant today because it is a federally-developed asset 

management framework for water utilities.

To determine if there were existing sources of information on the extent to 

which utilities use asset management, we interviewed EPA and USDA 

Rural Development staff about data each agency collects on water 

utilities’ use of asset management, including any data on asset 

management collected by EPA in its national needs assessment surveys. 

We also interviewed representatives of national water and wastewater 

associations to identify potential data sources. Through this process, we 

identified one national study, a market research study conducted by 

McGraw-Hill Construction, a company that provides analytics, news, and 

intelligence for the North American construction industry, and CH2M, a 

 

1Environmental Protection Agency, Asset Management: A Best Practices Guide, EPA 816-F-08-

014 (Washington, D.C.: April 2008).

2Environmental Protection Agency, Building an Asset Management Team, EPA 816-F-08-016 

(Washington, D.C.: April 2008).

3Environmental Protection Agency, Asset Management: A Handbook for Small Water Systems: 

One of the Simple Tools for Effective Performance (STEP) Guide Series, EPA 816-R-03-016, 

(Washington, D.C.: September 2003).

Appendix II: Objectives, Scope, and 

Methodology
company that, among other things, provides consulting services related to 

asset management.

Page 43 GAO-16-237 Water Infrastructure

4 The report described the results of a survey of 451 

persons representing water utilities in the United States and Canada and the 

extent to which they had adopted 14 asset management practices. Thirty 

percent of the 451 persons in the survey sample represented utilities 

providing only drinking water services and 70 percent represented utilities 

providing drinking water and wastewater services. The 14 practices 

included such actions as (1) the use of a computerized maintenance 

management system, (2) the use of an asset register to facilitate analysis 

and planning, (3) the development of customer service and asset servicelevel performance measures, and (4) consideration of risks and 

consequences of alternative investment/ budget decisions, but the report

did not describe how the 14 practices were selected. The report also 

included information from confidential interviews with water utilities on 

their insights in implementing asset management. We reviewed the 

authors’ description of the study’s methodology and determined that the 

data were sufficient for the purpose of describing qualitative information to 

corroborate information we obtained from our interviews about large 

utilities’ use of asset management because the study authors included 

asset management practices that were similar to those identified by EPA.

To understand the extent to which small utilities are using asset 

management, we conducted semistructured interviews with officials in a 

nonprobability sample of 10 states: Arizona, Arkansas, Delaware, Idaho, 

Iowa, Minnesota, Mississippi, New York, Vermont, and Wyoming. To 

select these 10 states, we identified the state in each of EPA’s 10 regions 

with the highest percentage of small water utility needs, using EPA’s most 

recent needs assessment data from the 2011 Drinking Water 

Infrastructure Needs Survey and Assessment and the 2008 Clean 

Watersheds Needs Survey.

5 EPA’s 2011 Drinking Water Infrastructure 

Needs Survey and Assessment calculated the need among small water 

utilities serving fewer than 10,000 people for 35 of the 50 states. For the 

remaining 15 states, EPA provided data on small water utilities serving 

fewer than 3,300 people. We calculated the percentages of small water 

 

4McGraw-Hill Construction, Water Infrastructure Asset Management: Adopting Best Practices to 

Enable Better Investments: Smart Market Report (Bedford, MA: 2013). 

5Environmental Protection Agency, Drinking Water Infrastructure Needs Survey and Assessment: 

Fifth Report to Congress, EPA 816-R-13-006 (Washington, D.C.: April 2013) and Environmental 

Protection Agency, Clean Watersheds Needs Survey 2008: Report to Congress, EPA-832-R-10-

002 (Washington, D.C.: May 2010).
utilities’ share of statewide need for these 15 states using this information. 

The 2008 Clean Watersheds Needs Survey calculated the need for small 

water utilities serving fewer than 10,000 people for 47 states, the District 

of Columbia, and U.S. territories. It did not report data for 3 states, 

Alaska, North Dakota, or Rhode Island. As a result, we did not include 

these states in the data we used for our selection.

In our sample of 10 states, we used a standard set of questions for 

conducting interviews, by telephone, with state drinking water and clean 

water State Revolving Fund (SRF) program officials and USDA state 

office staff. Our standard set of questions consisted of closed- and openended questions to ensure we consistently captured officials’ responses. 

During these interviews, we asked officials to estimate the use of asset 

management practices by water utilities’ in their state, the benefits for 

utilities and lenders of using asset management, the challenges small 

utilities experience in implementing asset management, funding and 

technical assistance for asset management available to water utilities in 

their state, and the asset management practices for which small utilities 

are most in need of technical assistance. In addition, we asked USDA 

officials about the loan conditions they consider to be asset management 

practices. We also specifically asked SRF officials about requirements for 

asset management practices or plans as a condition of SRF loans. In 

these interviews with officials representing state SRF programs, USDA 

state offices, and small water utilities, we did not receive answers to every 

close-ended question we asked; we note in the report the number of 

answers provided for each question. Because our sample of states was a 

nonprobability sample, responses from the officials we interviewed cannot 

be generalized to other states and their water utilities, but they illustrate 

some of the uses of asset management practices among small water 

utilities in states with the greatest infrastructure needs.

In addition to interviewing state SRF and USDA officials in the 10 

selected states, we interviewed, by telephone, officials in a 

nongeneralizable, random sample of small drinking water and wastewater 

utilities serving populations of 10,000 or less. To select these small water 

utilities, we used two EPA databases of water utilities. To identify drinking 

water utilities, we used EPA’s Safe Drinking Water Information System, a 

database of information about drinking water utilities and their regulatory 

violations. To identify wastewater utilities, we used a publicly available 

database of the water utilities included in the 2008 Clean Watersheds 

Needs Survey. We assessed the data reliability for both databases by, 

among other things, reviewing published documents and data regarding 

EPA’s quality assurance and quality control procedures for the needs 

Page 44 GAO-16-237 Water Infrastructure
survey assessment tools, contacting EPA officials to ensure we used the 

correct search fields and parameters, and reviewing past GAO reports 

and other documentation on the reliability of the data. Through these 

steps, we determined that the data were sufficiently reliable for our 

purposes of sampling drinking water and wastewater utilities in each of 

our 10 states. We selected a sample of 40 utilities, two drinking water and 

two wastewater utilities in each of the 10 selected states, and conducted 

interviews with at least one drinking water and one wastewater utility in 9 

of the 10 states, for a total of 25 water utility interviews. (All of the water 

utilities we contacted in Mississippi declined to participate or did not 

respond to our interview requests.) To ensure our sample represented a 

range of small water utilities, we selected one drinking water utility serving 

a population of more than 500, but less than or equal to 10,000 and one 

drinking water utility serving a population of 500 or fewer people. 

Similarly, for each of the 10 states we selected one wastewater utility 

serving a population between 1,000 and 10,000 and one wastewater 

utility serving a population of less than 1,000 in each of the 10 selected 

states. In addition to the 40 utilities, we also generated a back-up list of 

randomly selected water utilities from which to choose if the utilities in the 

original sample declined to participate in our review or did not respond to 

our requests for an interview after three or more attempts. In total, we 

contacted 68 water utilities in all 10 of the states and conducted 

interviews with officials representing 25 water utilities in 9 states. Of these 

25, 12 were drinking water utilities, and 13 were wastewater utilities. 

Table 2 provides a summary of the population served and ownership for 

the water utilities we interviewed in the 10 states.

Page 45 GAO-16-237 Water Infrastructure
Table 2: Water Utilities Interviewed in the 10 States, by Population Served and Ownership

Page 46 GAO-16-237 Water Infrastructure

Population served Number of utilities Ownership Number of utilities

Drinking water Less than 500 5 Public 9

501 to 10,000 7 Private 3

Wastewater Less than 1,000 7 Public 13

1,000 to 10,000 6 Private 0

Total n/a 25 n/a 25

Source: GAO. │ GAO-16-237

Our interviews with small water utilities consisted of a standard set of 

closed- and open-ended questions. Officials participating in these 

interviews were, for example, water utility operators or superintendents, 

maintenance staff, public works directors, elected city officials, water 

utility board members, and engineers. We asked about officials’ familiarity 

with asset management as defined by EPA, the extent to which they were 

implementing asset management practices, and, if so, the costs and cost 

savings they had identified, whether water utility staff or governing 

officials had received technical assistance on asset management, and 

contextual background on the community in which they served. Because 

our sample of water utilities in the 10 selected states was a 

nongeneralizable sample, we do not use the data collected from these 

states to generalize about the use of asset management in other states 

and by other water utilities.

To analyze the open-ended questions in our surveys, we conducted 

several content analyses. Specifically, we conducted a content analysis to 

categorize the benefits (to water utilities and federal agencies) of asset 

management and the challenges small utilities face in implementing asset 

management practices. To identify categories in which to classify the 

open-ended responses, we examined the responses and used content 

analysis software to count the words officials used most frequently and 

identified broad groupings of concepts. We classified the responses to the 

open-ended questions on benefits to water utilities into the following 

categories: (1) planning, (2) financial, (3) awareness (of the system and 

assets), (4) management, (5) technical, (6) other benefits, and (7) 

unaware of benefits. We classified the responses to the open-ended 

questions on benefits to federal agencies into the following categories: (1) 

system and (2) lender. We classified the responses to the open-ended 

questions on challenges into the following categories: (1) financial, (2) 

human resources, (3) support, (4) education, and (5) other challenges. 

Where appropriate, we also identified subcategories to classify 

responses.
To conduct the content analysis of responses, two analysts independently 

assigned officials’ responses to one or more categories and compared 

their analyses. All initial disagreements regarding the categorizations of 

officials’ responses were discussed and reconciled. The analysts then 

tallied the number of responses in each category. We tabulated the 

responses from closed-ended questions counts. To characterize officials’ 

views we identified throughout this report, we defined modifiers to 

quantify officials’ views. For example, “most” represents instances in 

which at least one state official in more than five states provided a 

response. The modifiers are as follows:

For state SRF and USDA state offices in the 10 selected states,

· “most” represents state SRF and USDA officials in more than 5 states,

· “half” represents state SRF and USDA officials in 5 states, and

· “some” represents state SRF and USDA officials in less than 5 states.

We also conducted two in-person visits to Maine and New Mexico. We 

selected Maine and New Mexico based on recommendations from EPA 

and USDA officials in the agencies’ headquarters, national water and 

wastewater associations, and technical assistance providers. In addition, 

we selected New Mexico because of the state’s requirement that water 

utilities have an asset management plan as a condition of Clean Water 

SRF infrastructure funding. The officials that recommended Maine 

generally told us they did so because the state has long encouraged 

utilities to adopt asset management. During our visits to Maine and New 

Mexico, we interviewed a total of 12 small and large, public and private, 

water utilities. We selected these water utilities based on 

recommendations from state SRF officials and technical assistance 

providers in each state and, in the case of New Mexico, EPA regional 

office staff. Table 3 provides descriptive information about the water 

utilities we interviewed in Maine and New Mexico.

Page 47 GAO-16-237 Water Infrastructure

Table 3: Description of the Water Utilities Interviewed in Maine and New Mexico
Page 48 GAO-16-237 Water Infrastructure

Name of utility Utility type

Ownership 

type Utility size

Population 

served

Maine Farmington Water District Drinking Water Public Small 4,050

Portland Water District Drinking Water Public Large 136,945

Great Salt Bay Sanitary District Wastewater Public Small 1,403

Thomaston Pollution Control 

Department

Wastewater Public Small

2,562

Ogunquit Sewer District Wastewater Public Small 1,092

City of Saco Wastewater Public Small 7,810 

New Mexico Agua Sana User’s Association Drinking Water Public Small 1,200

El Valle Water Alliancea Drinking Water Public Small 1,732

Rainsville Water and Sanitation 

District

Drinking Water and 

Wastewater

Public Small

250

Eldorado Area Water and 

Sanitation District

Drinking Water and 

Wastewater

Public Small

7,350

Albuquerque Bernalillo County 

Water Utility Authority

Drinking Water and 

Wastewater

Public Large

601,983

Entranosa Water and Wastewater 

Association

Drinking Water and 

Wastewater

Private Small

8,500

Sources: GAO summary of in-person interviews, EPA’s Safe Drinking Water Information System, and 2008 Clean Watersheds Needs Survey database and other water utility documents. │ GAO-16-237

Note: Data for utility type and ownership type are from in-person interviews with officials at these 

utilities. Data on utility size and population served are from EPA’s Safe Drinking Water Information 

System (drinking water utilities) and the database for the 2008 Clean Watersheds Needs Survey 

(wastewater utilities).

a El Valle Water Alliance is a consortium of 11 small water utilities, operating under one management 

structure.

To examine the steps, if any, that EPA and USDA have taken to help 

small water utilities implement asset management, we reviewed EPA and 

USDA guidance, reports, training materials, and software tools available 

on asset management. One particular guidance we used was the 2011 

Memorandum of Agreement on Promoting Sustainable Rural Water and 

Wastewater Systems, which describes EPA’s and USDA’s joint efforts to 

promote the technical, managerial, and financial capacity of small utilities 

and includes an emphasis on promoting asset management.6 We then 

interviewed EPA and USDA officials to understand the actions they have 

taken, the funds they have spent, and the efforts they have made to 

 

6EPA and USDA, Memorandum of Agreement Between the United States Environmental 

Protection Agency and the United States Department of Agriculture-Rural Development Rural 

Utilities Service, Promoting Sustainable Rural Water and Wastewater Systems (Washington, 

D.C.: June, 2011). 
coordinate on asset management activities. We also interviewed technical 

assistance providers funded by EPA and USDA to conduct trainings and

one-on-one technical assistance on asset management. These technical 

assistance providers included the EPA-funded Environmental Finance 

Centers at the University of New Mexico, Wichita State University, 

Cleveland State University, and University of North Carolina at Chapel Hill 

and the National Rural Water Association and Rural Community 

Assistance Partnership’s national offices and local affiliates in Maine and 

New Mexico. We compared the information we collected about the steps 

EPA and USDA have taken to key practices related to federal agencies’ 

training efforts and collection and dissemination of information that we 

identified in previous reports.

Page 49 GAO-16-237 Water Infrastructure

7

We conducted this performance audit from January 2015 to January 2016 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives.

 

7GAO-04-291, GAO-04-546G, GAO-05-927, and GAO-02-923. 
The Environmental Protection Agency (EPA) and the U.S. Department of 

Agriculture (USDA) have funded asset management activities through 

their existing programs and, more recently, used some of this funding for 

collaborative efforts. Specifically, EPA officials told us that they first began 

funding asset management activities through the Drinking Water State 

Revolving Fund (SRF) program when the 1996 amendments to the Safe 

Drinking Water Act authorized states to use a certain percentage of their 

grants for such programs. According to USDA officials, USDA has 

contracted with national organizations that incorporated asset 

management training as part of their work in assisting small water utilities 

in managing and operating their facilities. With the 2011 issuance of a 

memorandum of agreement on sustainable infrastructure, EPA and 

USDA agreed to collaborate on training and to coordinate agency 

activities and financial assistance in areas that would increase technical, 

managerial, and financial capacity, including through the use of asset 

management.

Page 50 GAO-16-237 Water Infrastructure

1 As a result, EPA and USDA spending on asset management 

activities falls under various larger programmatic areas.

EPA’s spending falls into the following three categories:

· Small Systems Training and Technical Assistance Grants. EPA 

funds asset management activities through this grant program to 

improve technical, managerial, and financial capacity of small drinking 

water and wastewater utilities. In fiscal year 2014, EPA provided an 

estimated $13.1 million in grants to support training and technical 

assistance for small utilities. Of the estimated $13.1 million, about $3 

million was used to provide training and technical assistance to water 

utilities to improve financial and managerial capacity, which included 

asset management.2 In December 2015, legislation was enacted to 

reauthorize the small systems training and technical assistance grants 

program for $15 million per year for fiscal years 2015 through 2020.3

 

1EPA and USDA, Memorandum of Agreement Between the United States Environmental 

Protection Agency and the United States Department of Agriculture-Rural Development Rural 

Utilities Service, Promoting Sustainable Rural Water and Wastewater Systems

(Washington, D.C.: June, 2011).

2According to an EPA document summarizing the grant program and fiscal year 2014 awards, the 

remaining estimated $10.1 million was used to assist operators and owners of small public 

water systems in understanding requirements of the Safe Drinking Water Act (SDWA) and 

specific National Primary Drinking Water Regulations; and, training to help owners of 

private wells improve water quality. 

3Grassroots Rural and Small Community Water Systems Assistance Act, Pub. L. No. 114-

346, § 4 (2015). 

Appendix III: Federal Funding for Asset 

Management
· Drinking Water SRF. EPA also funds asset management training and 

technical assistance through the Drinking Water SRF. Subject to certain 

limitations, states may reserve a portion of these grants to fund various 

activities including training and technical assistance. States can spend 

2 percent of their SRF grants to provide small water utilities with 

technical assistance; up to 4 percent for state program administration 

and technical assistance to water utilities of any size; up to 10 percent 

for the development of technical, managerial, and financial capacity, 

operator certification programs, and other activities; and up to another 

15 percent for a variety of activities that can also include programs to 

develop technical, managerial, and financial capacity. Examples of 

assistance that states can provide with these funds include such 

activities as written guidance, one-on-one coaching, and online and 

classroom training that can include asset management.

· Environmental Finance Center Grant Program. EPA also funds 

asset management activities through its Environmental Finance 

Center Grant Program. EPA officials said that in fiscal year 2014 they 

provided a total of $1 million in grants to selected public, private 

universities or colleges, and nonprofit organizations to provide 

technical assistance to communities on a range of EPA priorities, 

including improving financial capacity.

Page 51 GAO-16-237 Water Infrastructure

4 This assistance included one-onone technical assistance, workshops and other classroom trainings, 

and written guidance. EPA’s Environmental Finance Center at the 

University of New Mexico has been working on asset management 

since 2003 and has provided training and technical assistance on the 

use of asset management since 2006.

USDA funds asset management activities through two programs:

· Water & Waste Disposal Technical Assistance & Training Grants. 

This program provides grants to various nonprofit organizations for 

technical assistance on managerial topics, assistance with preparing 

loan applications, and helping water utilities to find solutions to 

problems in operating their facilities. USDA provides the grant funds 

for 1 year. In fiscal year 2014, USDA provided an estimated $19 

million to nonprofit organizations. Nonprofit organizations can apply to 

provide services to one state or multiple states. USDA gives priority to 

 

4According to EPA documents, the agency requested $2 million in grant funds for this program for 

fiscal year 2016. 
certain types of applicants, including those that serve communities of 

fewer than 5,500 or fewer than 2,500, and those that will primarily 

provide ‘‘hands on’’ technical assistance and training to water utility 

managers and operators experiencing problems with operations and 

maintenance or management.

· Circuit Rider Program—Technical Assistance for Rural Water 

Systems.

Page 52 GAO-16-237 Water Infrastructure

5 Under this program, the National Rural Water 

Association—a training and technical assistance organization serving 

small communities—is contracted to provide staff in each of the 50 

states with technical assistance on day-to-day operational, 

managerial, and financial issues. Specifically, according to the 

information the National Rural Water Association publishes on its 

website,6staff known as “circuit riders” work on site with water utility 

personnel to troubleshoot problems, evaluate alternative technological 

solutions, recommend operational improvements, assist with leak 

detection, respond to natural disasters and other emergencies, 

provide hands-on training, participate in board and council meetings, 

and conduct user rate analyses. In fiscal year 2014, USDA provided 

about $15 million for the Circuit Rider Program.

 

5The name of USDA’s Circuit Rider program reflects the delivery of the technical 

assistance—that is, staff with expertise in operating water utilities travel to provide 

targeted assistance to water utilities.

6National Rural Water Association, http://nrwa.org/initiatives/training-and-technicalassistance/ (accessed on November 24, 2015). 
Page 53 GAO-16-237 Water Infrastructure

Appendix IV: Comments from the 

Environmental Protection Agency
Page 54 GAO-16-237 Water Infrastructure
Page 55 GAO-16-237 Water Infrastructure
J. Alfredo Gómez, (202) 512-3841 or gomezj@gao.gov

In addition to the individual named above, Susan Iott, Assistant Director; 

Mark Braza; Antoinette Capaccio; Bruce Crise; Tahra Nichols; and Alison 

O’Neill made key contributions to this report. In addition, Jon Melhus and 

Kiki Theodoropoulos made important contributions to this report.

Page 56 GAO-16-237 Water Infrastructure

Appendix V: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Page 57 GAO-16-237 Water Infrastructure

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460

OFFICE OF WATER

JAN 11 2016

Mr. Alfredo Gomez

Acting Director

Natural Resources and Environment

U.S. Government Accountability Office

Washington. DC 20548

Dear Mr. Gomez:

Thank you for the opportunity to review and comment on the Government 

Accountability Office' s Draft Report GA0-16-237, "EPA and USDA are 

Helping Small Water Utilities with Asset Management ; Opportunities 

Exist to Better Track Results:•The purpose of this letter is to provide the 

U.S. Environmental Protection Agency’s response to your findings, 

conclusions and recommendations.

In the draft report, GAO examines water utilities' implementation of asset 

management including (1) what is known about the use of asset 

management among the nation's water utilities, including benefits and 

challenges, and (2) steps that the EPA and the USDA are taking to help 

small water utilities implement asset management.

Appendix VI: Accessible Data

Agency Comment 

Letter

Text of Appendix IV: 

Comments from the 

Environmental Protection 

Agency

Page 1
As stated in the report, the EPA's fifth national assessment of public water 

system infrastructure needs show a total twenty-year capital improvement

need of $384.2 billion. The Agency agrees with GAO that water utilities 

may benefit from implementing asset management as it may result in cost 

savings and more efficient long-term planning. The draft report 

recognizes some of the challenges to asset management implementation 

faced by smaller utilities, such as limited human resources, lack of 

technical knowledge, and lack of understanding and/or support from local 

decision makers.

Finally, the EPA appreciates the recommendation s made by the GAO 

and is pleased that our partnership with USDA is helping small water 

utilities manage their infrastructure. While we agree that collecting 

information on the long-term results and impacts of the EPA’s training and 

technical assistance activities would be beneficial, the approach to doing 

so must be both practical and low cost. While not highlighted specifically 

in the GAO report, we think that educating local decision makers on the 

benefits of implementing asset management practices to protect their 

infrastructure investment and ensure sustainable and reliable water 

services is ex1remely important. Development of a document highlighting 

asset management best practices for water utilities is one of many 

possible educational tools that the EPA will consider with USDA, as 

funding and resources allow. The specific recommendations and our 

response can be found below.

GAO Recommendation

As the EPA and USDA continue to consider ways to track and promote 

water utilities' implementation of asset management, we recommend the 

following:

· First, that the Administrator of the EPA direct the Office of Ground 

Water and Drinking Water and the Office of Wastewater 

Management to continue to include questions on utilities' use of 

asset management in the clean water needs assessment and 

consider including questions about water utilities' use of asset 

management in future drinking water infrastructure needs 

assessment surveys.

· Second, that the Administrator of the EPA, and the Secretary of 

USDA, through the Rural Development Agency, consider 

compiling into one document the existing cases and examples of 

the benefits and costs of asset management and widely share this 

information with water utilities.

Page 58 GAO-16-237 Water Infrastructure

Page 2
E PA Response

The Agency generally agrees with GAO's recommendation of continuing 

to assess the effectiveness of the EPA's asset management training and 

technical assistance, with the significant caveat that the method for doing 

so must be both effective and efficient. Although the Agency has included 

asset management questions as part of the needs assessment surveys in 

the past, this mechanism has led to limited information regarding the level 

of implementation of asset management at utilities. The needs 

assessment surveys may not be the most efficient and effective way to 

collect this data since the survey's primary focus and design is to assess 

and quantify the nation's infrastructure need and not the adequate 

implementation of asset management. The EPA would be willing to 

explore other means of obtaining data that would provide an indication of 

how utilities are benefiting from the EPA's asset management training and 

technical assistance.

Further, the Agency agrees that it is important to educate utilities on the 

benefits of asset management in protecting the nation's infrastructure 

investment. In an effort to do this, the Agency has taken steps to help 

water utilities implement asset management by providing training, 

technical assistance, free asset management software and resources that 

not only document the benefits of asset management, but also provide 

simple steps and worksheets to help utility staff start building their asset 

management inventory and compiling infom1ation on the condition of 

their assets. As funding and resources allow, we would most likely 

consider the development of a case study compilation document focused 

on local decision makers who are key to ensuring that asset management 

is a priority and is implemented appropriately. The Agency believes that 

educating local decision makers on asset management can help to (1) 

improve a system’s financial health by prioritizing rehabilitation and 

replacement of assets, and (2) build public trust by demonstrating to 

customers how public funds are being prioritized to sustain reliable 

drinking and wastewater services, and will lead to greater support of 

active asset management implementation.

Summary of recent financial assistance to support asset management

The Agency's financial assistance to support asset management 

implementation at the Local level has been provided through two main 

sources of funding, the Drinking Water State Revolving Fund and the 

national Training and Technical Assistance grants. The Drinking Water 

State Revolving Fund set-asides are used by the states to support 

Page 59 GAO-16-237 Water Infrastructure
capacity activities, which include asset management and board member 

training. On average, states use up to 16% of the allowed funds to 

support capacity building activities.

The Agency is aware of six states that require asset management plans 

and/or board member training as a condition of receiving Drinking Water 

State Revolving Funds and five other states that assign priority points. In 

fiscal years 20 12-2014, the Agency awarded approximately $32 million in 

competitive grants to provide training and technical assistance to small 

public water systems. This funding provided training and tools to improve 

small system operations and management practices. Areas of assistance

provided by this funding included asset management , as well as capacity 

improvement, fiscal planning and rate setting. The Agency expects to 

announce fiscal year 201 5 funds by January 2016.

The EPA developed the Check Up Program for Small Systems (CUPSS) 

to provide all the tools required to implement asset management activities 

and develop effective asset management plans. The Agency developed 

CUPSS to help small system owners and operators implement asset 

management by increasing their knowledge of their systems by 

conducting an asset inventory, prioritizing the replacement of their assets 

developing annual budgets and revising their plans as needed . The 

Agency continues to conduct trainings and provide technical assistance to 

utilities and states that use CUPSS, as resources allow. Due to limited 

resources, the Agency has not been able to upgrade CUPSS in recent 

years, but utilities and states continue to promote the use of asset 

management and conduct training using this free online tool.

Thank you for the opportunity to provide comments on the draft report. 

The Agency looks forward to continuing to work with GAO to improve the 

implementation of asset management in drinking water and wastewater 

utilities. If you have any questions, please contact Maria Lopez Carbo in 

the Office of Ground Water and Drinking Water at lopez-carbo.ma 

ria@epa.gov and Bonnie Gitlin at gitlin.bonnie@epa.gov in the Office of 

Water Management.

Sincerely,

Joel Beauvais

Deputy Assistant Administrator

Page 60 GAO-16-237 Water Infrastructure

Page 3
Water Infrastructure: Approaches and Issues for Financing Drinking 

Water and Wastewater Infrastructure. GAO-13-451T. Washington, D.C.: 

March 13, 2013.

Water Infrastructure: Comprehensive Asset Management Has Potential to 

Help Utilities Better Identify Needs and Plan Future Investments. 

GAO-04-461. Washington, D.C.: March 19, 2004.

Water Infrastructure: Information on Financing, Capital Planning, and 

Privatization. GAO-02-764. Washington, D.C.: August 16, 2002.

Page 61 GAO-16-237 Water Infrastructure

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