RURAL WATER 

INFRASTRUCTURE

Additional 

Coordination Can 

Help Avoid Potentially 

Duplicative 

Application 

Requirements

Report to Congressional Addressees

October 2012

GAO-13-111

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-111, a report to 

congressional addressees

October 2012

RURAL WATER INFRASTRUCTURE

Additional Coordination Can Help Avoid Potentially 

Duplicative Application Requirements 

Why GAO Did This Study

Many rural communities with 

populations of 10,000 or less face 

challenges in financing the costs of 

replacing or upgrading aging and 

obsolete drinking water and 

wastewater infrastructure. EPA and 

USDA oversee the three largest 

federally funded drinking water and 

wastewater funding programs for these 

communities. In response to Pub. L. 

No. 111-139, which directs GAO to 

identify and report on duplicative goals 

or activities in the federal government, 

this report examines the (1) potential 

for fragmentation, overlap, and 

duplication between EPA and USDA

drinking water and wastewater 

infrastructure programs and (2) extent 

to which these agencies coordinate at 

the federal and state level to fund 

community water infrastructure 

projects. GAO analyzed relevant laws 

and regulations and program data and 

documents. GAO also visited five 

states based on high rural funding 

needs and geographic location 

(Colorado, Montana, North Carolina,

Pennsylvania, and South Dakota) to 

meet with federal, state, and 

community officials and visit projects. 

What GAO Recommends

GAO recommends that EPA and 

USDA complete guidelines to help 

states develop uniform preliminary 

engineering reports, develop 

guidelines to help states develop

uniform environmental analyses, and 

reemphasize the importance of statelevel coordination. EPA neither agreed 

nor disagreed with GAO’s first two 

recommendations and concurred with 

the third. USDA neither agreed nor 

disagreed with the recommendations.

What GAO Found

Funding for rural water and wastewater infrastructure is fragmented across the 

three federal programs GAO reviewed, leading to program overlap and possible 

duplication of effort when communities apply for funding from these programs. 

The three federal water and wastewater infrastructure programs—the 

Environmental Protection Agency’s (EPA) Drinking Water and Clean Water State 

Revolving Fund (SRF) programs and the U.S. Department of Agriculture’s 

(USDA) Rural Utilities Service (RUS) Water and Waste Disposal program—have, 

in part, an overlapping purpose to fund projects in rural communities with 

populations of 10,000 or less. For the 54 projects GAO reviewed in the five states 

it visited, this overlap did not result in duplicate funding, that is funding for the 

same activities on the same projects. However, GAO identified the potential for 

communities to complete duplicate funding applications and related documents 

when applying for funding from both agencies. In particular, some communities 

have to prepare preliminary engineering reports and environmental analyses for 

each program. GAO’s analysis showed—and community officials and their 

consulting engineers confirmed—that these reports usually contain similar 

information but have different formats and levels of detail. Completing separate 

engineering reports and environmental analyses is duplicative and can result in 

delays and increased costs to communities applying to both programs. 

EPA and USDA have taken some actions to coordinate their programs and 

funding at the federal and state levels to help meet the water infrastructure needs 

of rural communities, but GAO’s review in five states showed that their efforts 

have not facilitated better coordination at the state level in more specific ways. 

EPA and USDA signed a joint memorandum in 1997 encouraging state-level 

programs and communities to coordinate in four key areas: program planning; 

policy and regulatory barriers; project funding; and environmental analyses and 

other common federal requirements. As of July 2012, EPA and USDA had taken 

action at the federal level to help the states coordinate better and make programs 

more efficient for communities applying for funding. For example, EPA and 

USDA had formed a working group to draft uniform guidelines for preliminary 

engineering report requirements, but this effort is not yet complete. However, the 

agencies have not taken action to help states develop uniform environmental 

analysis requirements, as called for in the 1997 memorandum. Without uniform 

requirements, communities face a continuing burden and cost of applying for 

federal and state funds to improve rural water and wastewater infrastructure. 

Coordination in the four key areas varied across the five states GAO visited. For 

example, state and federal officials in Montana created a drinking water and 

wastewater working group to coordinate project funding and to resolve regulatory 

barriers such as different funding cycles between the programs. In addition, state 

and federal officials in Pennsylvania coordinated to develop uniform 

environmental analysis requirements. However, in North Carolina and Colorado, 

state-level programs did not coordinate well initially about project funding, which 

resulted in the state-level programs planning to pay for the same projects. The 

programs were able to avoid paying for the same projects, but state-level RUS 

programs have or expect to deobligate almost $20 million committed to these 

projects and return the funding to USDA. Further delays in coordinating programs 

could prevent funds from reaching needy communities.

View GAO-13-111. For more information, 

contact David Trimble at (202) 512-3841 or 

trimbled@gao.gov.
Page i GAO-13-111 Rural Water Infrastructure 

Letter 1 

Background 6

Fragmentation and Overlap in EPA and USDA Programs Can 

Result in Potential Duplication of Community Efforts to Apply 

for Funding 15

Federal and State Actions Have Not Fully Facilitated Coordination 

for Funding Communities’ Projects 28

Conclusions 35

Recommendations for Executive Action 36

Agency Comments and Our Evaluation 37

Appendix I Objectives, Scope, and Methodology 42 

Appendix II Drinking Water and Clean Water State Revolving Fund Program Funds 

Provided to Communities with Populations of 10,000 or Less 47 

Appendix III Comments from the Environmental Protection Agency 49 

Appendix IV Comments from the U.S. Department of Agriculture’s Office of Rural 

Development 53 

Appendix V GAO Contact and Staff Acknowledgments 57

Tables 

Table 1: Funding Awards for 42 Drinking Water and Wastewater 

Projects Selected for Review 17

Table 2: Funding Awards for 12 Drinking Water and Wastewater 

Projects Selected for Review That Received Funding from 

an SRF Program and the RUS Program 21

Table 3: Similarities in Components of Preliminary Engineering 

Reports Prepared for the SRF and RUS Programs for Four 

Selected Projects 23

Contents 
Page ii GAO-13-111 Rural Water Infrastructure 

Table 4: Similarities in Components of Environmental Analyses 

Submitted to the SRF and RUS Programs for Four Selected 

Projects 26

Table 5: State SRF and RUS Program Activities to Implement 1997 

Joint Memorandum on Drinking Water and Wastewater 

Activities 32

Table 6: Drinking Water and Clean Water SRF Program Funds 

Provided to Communities with Populations of 10,000 or 

Less 47

Figures 

Figure 1: State Drinking Water and Clean Water SRF Program 

Funding Sources 8

Figure 2: Application Process and Timeline Generally Followed for 

EPA’s SRF and USDA’s RUS Programs 11

Abbreviations 

EPA Environmental Protection Agency 

HUD Department of Housing and Urban Development 

NEPA National Environmental Policy Act 

NIMS National Information Management System 

RUS Rural Utilities Service 

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 

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necessary if you wish to reproduce this material separately. 
Page 1 GAO-13-111 Rural Water Infrastructure 

United States Government Accountability Office

Washington, DC 20548 

October 16, 2012 

Congressional Addressees 

Many communities with populations of 10,000 or less face significant 

challenges in financing the costs of replacing or upgrading aging and 

obsolete drinking water and wastewater infrastructure. The demand for 

such drinking water and wastewater infrastructure projects in these 

communities, many of which are considered rural, is estimated by federal 

agencies to be more than $100 billion in the coming decades. For 

example, communities may need to upgrade basic wastewater systems, 

which treat wastes by allowing them to settle out in ponds or lagoons, 

with more sophisticated equipment that mechanically and biologically 

removes solids and contaminants. Or, communities may need to upgrade 

to more expensive filtration equipment to remove contaminants, such as 

arsenic or excess nutrients, as regulations become more stringent for 

drinking water quality and wastewater. Communities typically pay for 

drinking water and wastewater infrastructure through the rates charged to 

users of the drinking water and wastewater systems. In some cases, 

however, these communities do not have the number of users needed to 

spread the cost of major infrastructure projects and still maintain 

affordable user rates. In addition, unlike larger, urban communities that 

can issue their own public bonds to pay for major water and wastewater 

infrastructure improvements, it can be difficult for rural communities to 

independently finance such major improvements. In many cases, rural 

communities have limited access to financial markets, restricting their 

ability to issue bonds to raise capital. As a result, these communities 

depend heavily on federal and state grants and subsidized loan programs 

to finance their water and wastewater infrastructure projects. 

The Environmental Protection Agency (EPA) and the U.S. Department of 

Agriculture (USDA) oversee the three largest federally funded drinking 

water and wastewater infrastructure assistance programs. EPA 

administers the Drinking Water State Revolving Fund (SRF) program, 

which provides annual funding to states to finance projects for publicly 

and privately owned drinking water treatment plants, and the Clean Water 

SRF program, which provides funding to states to finance projects for 

constructing, replacing, or upgrading publicly owned municipal 

wastewater treatment plants. EPA allocates its funding in the form of 

capitalization grants to revolving fund programs administered by each 

state, and state officials in turn distribute loan funding for qualified 

drinking water and wastewater infrastructure projects in local 

 
 

Page 2 GAO-13-111 Rural Water Infrastructure 

communities. Communities of any size can apply for assistance. When 

allocating funds to community projects, state officials consider 

environmental factors, such as the projects’ impact on the communities’ 

compliance with federal and state regulations for drinking water and clean 

water. Over the long term, the state SRF programs are intended to be 

sustained through communities’ repayment of loans, creating a continuing 

source of assistance for priority drinking water and wastewater 

infrastructure projects. In fiscal year 2011, the Drinking Water and Clean 

Water SRF programs received $963 million and $1.5 billion in federal 

appropriations, respectively. 

USDA’s Rural Utilities Service (RUS) administers the Water and Waste 

Disposal program, which provides funding for both drinking water and 

wastewater projects in low-income rural communities of 10,000 or less.1

In fiscal year 2011, the program received $516 million in appropriations, 

which was then allocated to USDA offices located in each state, using a 

formula based on the state’s rural population, number of households in 

poverty, and rate of unemployment. Each USDA state office reviews 

project applications and approves funding for communities. If the USDA 

funds allocated to each state office are not fully obligated, they are pooled 

by USDA headquarters and redistributed to states that have projects 

ready to fund. 

We have previously reported that fragmentation and overlap among 

government programs can lead to duplicative program requirements.2

Fragmentation occurs when more than one federal agency, or more than 

one organization within an agency, is involved in the same broad area of 

national need. Overlap occurs when multiple agencies and programs 

have similar goals, engage in similar activities or strategies to achieve 

them, or target similar beneficiaries or recipients. Fragmentation can lead 

to overlapping programs and can create the potential for inefficiencies 

 

1

In this report, we refer to the RUS’ Water and Waste Disposal program as the RUS 

program. 

2

GAO, Managing for Results: Using the Results Act to Address Mission Fragmentation 

and Program Overlap, GAO/AIMD-97-146 (Washington, D.C.: Aug. 29, 1997). For more 

information on fragmentation, overlap, and duplication in federal programs see GAO, 

Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011) and 

GAO, Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, 

and Enhance Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 2012). 
 

Page 3 GAO-13-111 Rural Water Infrastructure 

such as duplication. Duplication occurs when two or more agencies or 

programs are engaged in the same activities to provide the same services 

to the same recipients; however, in some instances, duplication may be 

warranted because of the magnitude or nature of the federal effort. We 

have also reported that federal programs contributing to the same or 

similar outcomes should coordinate or collaborate on their efforts. For 

example, in August 1997, we reported that federal programs contributing 

to the same or similar outcomes should be closely coordinated, 

consolidated, or streamlined, as appropriate, to ensure that goals are 

consistent and that program efforts are mutually reinforcing.3

Furthermore, we have identified practices that can help enhance and 

sustain collaboration among federal agencies. In this report, we do not 

distinguish between the two terms coordination and collaboration.4

EPA and USDA have long recognized the potential for fragmentation, 

overlap, and duplication in their drinking water and wastewater 

infrastructure programs and the need for coordination to avoid these 

outcomes. Together with the Department of Housing and Urban 

Development (HUD),5

 EPA and USDA issued a joint memorandum in 

1997 that emphasized cooperation and coordination on jointly financed 

drinking water and wastewater infrastructure projects to, among other 

things, foster cooperation among the organizations that administer these 

programs and minimize duplication of planning efforts.6

 However, in 

December 2009, we reported that EPA, USDA, and other agencies that 

fund drinking water and wastewater infrastructure for rural communities 

along the U.S.-Mexico border lacked coordinated policies and processes 

 

3

GAO/AIMD-97-146. 

4

GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005). 

These practices include identifying common outcomes, developing joint strategies, 

leveraging resources, and establishing compatible policies and procedures across agency 

boundaries. 

5

HUD disburses grants to states and local governments through the Community 

Development Block Grant Program to fund housing, infrastructure, and other community 

development activities, including drinking water and wastewater projects. 

6

Joint Memorandum between USDA, EPA and HUD. Cooperation and Coordination on 

Jointly Financed Water and Wastewater Activities. (Washington, D.C.: April 3, 1997). 
 

Page 4 GAO-13-111 Rural Water Infrastructure 

and did not efficiently coordinate their programs, priorities, or funding.7 To 

better address the needs of the region, we suggested Congress consider 

establishing an interagency mechanism to coordinate programs and 

funding, such as a task force on water and wastewater infrastructure or 

other mechanism, in the border region. 

In 2010, Pub. L. No. 111-139 directed that GAO identify and report on 

federal programs, agencies, offices, and initiatives—either within 

departments or governmentwide—that have duplicative goals or 

activities.8

 Accordingly, the objectives of this report examine (1) the 

potential for fragmentation, overlap, and duplication among programs 

administered by EPA and USDA to address drinking water and 

wastewater infrastructure needs in rural communities and (2) the extent to 

which these agencies coordinate at the federal and state level to help 

meet the water infrastructure needs of rural communities. 

To address both objectives, we reviewed relevant statutes, regulations, 

guidance, budgets, and other documents; interviewed officials from EPA 

and USDA and representatives from engineering firms, local 

communities, and relevant nonprofit organizations; and obtained financial 

and other information about projects funded by at least one of the three 

programs from fiscal year 2007 through fiscal year 2011. To assess the 

extent of overlap between the programs, we compared annual funding 

data from EPA and USDA. We assessed the reliability of these data by 

interviewing EPA and USDA officials about the quality of the data and 

determined it to be reliable for our purposes. We visited a 

nongeneralizable sample of five selected states—Colorado, Montana, 

North Carolina, Pennsylvania, and South Dakota—to observe federally 

funded projects and discuss with state and local officials their experiences 

in disbursing and applying for funding from the EPA and USDA 

 

7

GAO, Rural Water Infrastructure: Improved Coordination and Funding Processes Could 

Enhance Federal Efforts to Meet Needs in the U.S.-Mexico Border Region, GAO-10-126 

(Washington, D.C.: Dec. 18, 2009). 

8

Pub. L. No. 111-139, § 21, 124 Stat. 29 (2010), 31 U.S.C. § 712 note. 
 

Page 5 GAO-13-111 Rural Water Infrastructure 

programs.9 From our analysis of EPA and USDA project needs data 

compiled by state each year, the five states we visited have high levels of 

drinking water and wastewater infrastructure needs for communities with 

populations of less than 10,000, in comparison with other states. We 

assessed the reliability of EPA’s data by reviewing its quality control 

reports. We assessed the reliability of USDA’s data by interviewing RUS 

officials on the quality control steps used in gathering the data. We 

determined the data were reliable for our purposes of selecting states. In 

addition, to determine the extent to which agencies coordinate at the 

federal and state level to help meet the water infrastructure needs of rural 

communities, we met with federal and state officials and considered 

EPA’s and USDA’s efforts to promote the guidance established in the 

1997 joint memorandum. Furthermore, we discussed the levels of 

coordination among federal and state agencies with local community 

officials who applied for and received funding from one or the other of the 

programs. To identify leading practices for coordination, we reviewed our 

prior work on practices that can help enhance and sustain collaboration 

among federal agencies.10 A more detailed description of our objectives, 

scope, and methodology is presented in appendix I. 

We conducted this performance audit from September 2011 to 

September 2012 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. 

 

9

We selected these five states on the basis of rural funding needs as identified by EPA 

and USDA, geographic location, and information provided by federal and state officials on 

the level of coordination occurring among water infrastructure programs. We selected 31 

communities and 54 projects using funding lists provided by state and federal officials to 

identify projects in communities that had applied for or received funding from the state 

SRF and RUS programs, or both, as well as recommendations from state and federal 

officials. Because these are nongeneralizable samples, the information obtained from 

these visits cannot be generalized to all states, communities, or projects but provides 

illustrative examples of their experiences in disbursing and applying for funding from the 

EPA and USDA programs. 

10GAO-06-15. 
 

Page 6 GAO-13-111 Rural Water Infrastructure 

Rural communities often have small or aging drinking water and 

wastewater systems. The need for a water project can arise for multiple 

reasons, including replacing or upgrading outdated or aging equipment 

that does not treat water to meet water quality standards and systems 

that do not produce water to meet new treatment standards. For example, 

arsenic is often present naturally in groundwater, and to meet new federal 

arsenic standards for drinking water, many rural communities using 

groundwater as a drinking water source will have to improve their drinking 

water systems to remove arsenic. EPA estimates that drinking water and 

wastewater infrastructure for small communities over the next several 

decades could cost more than $100 billion. 

This section describes (1) federal funding for drinking water and 

wastewater infrastructure projects in rural communities; (2) the process 

for applying for these federal funds, including the requirements state and 

federal agencies must ensure rural communities meet under the National 

Environmental Policy Act; and (3) our prior work on coordination among 

federal agencies and rural water infrastructure programs. 

The federal government administers a number of programs that assist 

rural communities in developing water and wastewater systems and 

complying with federal regulations, with EPA’s drinking water and clean 

water SRF programs and USDA’s RUS program providing the most 

funding. Communities typically pay for drinking water and wastewater 

infrastructure through the rates charged to users of the drinking water and 

wastewater systems. Large communities serve many people and can 

spread the cost of infrastructure projects over these numerous users, 

which makes projects more affordable. Small or rural communities have 

fewer users across which to spread rate increases, making infrastructure 

projects less affordable and these communities more reliant on federal 

funding to help lower the cost of projects through lower interest rates or 

grants that do not need to be repaid. 

The Safe Drinking Water Act and the Clean Water Act authorize the 

Drinking Water SRF and Clean Water SRF programs, respectively, as 

well as EPA’s authority to regulate the quality of drinking water provided 

by community water supply systems and the discharge of pollutants into 

the nation’s waters. Under the Safe Drinking Water Act, EPA sets 

standards to protect the nation’s drinking water from contaminants, such 

as lead and arsenic. In 1996, amendments to the act established the 

drinking water SRF program to provide assistance for publicly and 

privately owned drinking water systems. Under the Drinking Water SRF 

Background 

Federal Funding for Rural 

Water Infrastructure 

Projects 
 

Page 7 GAO-13-111 Rural Water Infrastructure 

program, states make loans and are required to provide a certain 

percentage of funding in loan assistance to communities of less than 

10,000.11 The Clean Water Act is intended to maintain and restore the 

physical, chemical, and biological integrity of our surface waters, such as 

rivers, lakes, and coastal waters. In 1987, amendments to the Clean 

Water Act established the Clean Water SRF program to provide 

assistance to publicly owned wastewater treatment facilities. Using the 

federal funds EPA provides to capitalize the state SRF programs, states 

provide loans to communities for drinking water and wastewater treatment 

projects. In order to qualify, states must contribute an amount equal to 20 

percent of the federal capitalization grant. States that qualify for funding 

are responsible for administering their individual SRF programs, and 

communities of any size can apply for assistance. Loans are generally 

provided at below-market interest rates, saving communities money on 

interest over the long term. As communities repay the loans, the states’ 

funds are replenished, enabling them to make loans to other eligible 

drinking water and wastewater projects, and creating a continuing source 

of assistance for communities. See figure 1 for a description of the state 

Drinking Water and Clean Water SRF program funding sources. 

Nationwide, there are almost 52,000 publicly and privately owned drinking 

water systems and 16,000 publicly owned wastewater treatment facilities. 

 

11Under the Safe Drinking Water Act, 15 percent of the amount credited to any state 

revolving loan fund in any fiscal year is to be available solely for providing loan assistance 

to public water systems that regularly serve fewer than 10,000 persons. 
 

Page 8 GAO-13-111 Rural Water Infrastructure 

Figure 1: State Drinking Water and Clean Water SRF Program Funding Sources 

Note: Some states also use the funds provided by EPA to support bond issuances that they then use 

to fund projects. 

USDA’s RUS administers a water and wastewater loan and grant 

program for rural communities with populations of 10,000 or less. The 

program is designed to address public health concerns in the nation’s 

rural areas by providing funding for new and improved drinking water and 

wastewater infrastructure. RUS provides a mix of loan and grant funding 

to communities that have been denied credit through normal commercial 

channels. Like the SRF programs, the RUS program makes loans at 

below-market rates to save communities interest over time but, unlike the 

SRF programs, the RUS program can make loans for up to 40 years, 

which helps lower communities’ annual repayment costs. In addition, 

communities do not need to repay funds received as grants, further 

helping to reduce the overall financial burden they incur upon a water 

project’s completion. To determine the amount of loans and grants a 
 

Page 9 GAO-13-111 Rural Water Infrastructure 

community receives, RUS assesses the potential increase in the water or 

sewer user rate needed to repay the loan. RUS provides grants to 

communities when necessary to reduce user rates to a level that the 

agency determines to be reasonable. 

Other federal agencies have programs that provide funds for drinking 

water and wastewater infrastructure, including HUD’s Community 

Development Block Grant program and the Department of Commerce’s 

Economic Development Administration’s Public Works and Economic 

Development Program. Under HUD’s program, communities use block 

grants for a broad range of activities to provide suitable housing in a safe 

living environment, including water and wastewater infrastructure. Thirty 

percent of block grant funds are allocated by formula to states for 

distribution to communities of 50,000 or less. Drinking water and 

wastewater needs compete with other public activities for funding and, 

according to HUD officials, account for about 10 percent of all block grant 

funds nationally. Economic Development Administration’s Public Works 

and Economic Development Program provides grants to small and 

disadvantaged communities to construct public facilities, including 

drinking water and wastewater infrastructure, to alleviate unemployment 

and underemployment in economically distressed areas. In addition, the 

U.S. Army Corp of Engineers and the Department of the Interior’s Bureau 

of Reclamation provide financial assistance for some large drinking water 

and wastewater projects, but these projects must be authorized by 

Congress prior to construction. 

In addition to these federal programs, some states have created their own 

programs to provide assistance for drinking water and wastewater 

infrastructure. For example, the North Carolina Rural Economic 

Development Center provides infrastructure loans for communities in the 

state’s rural counties. In Montana, the Treasure State Endowment 

Program provides grants to make drinking water and wastewater projects 

more affordable for the state’s communities. 

The state SRF programs and the RUS program each have their own 

application process through which communities can apply for funding, 

although the application processes generally include similar steps: (1) 

completing an application that asks for, among other things, basic 

demographic, legal, and financial information associated with the project; 

(2) developing a preliminary engineering report that provides basic design 

specifications and other technical information for the project; and (3) 

conducting an environmental analysis that considers the environmental 

Application Process and 

National Environmental 

Policy Act Requirements 
 

Page 10 GAO-13-111 Rural Water Infrastructure 

effects of the proposed project and alternatives. The state agencies 

responsible for EPA’s SRF programs and USDA state offices review 

these documents, prioritize the projects based on agency-determined 

criteria, provide comments to communities on how their applications can 

be improved, and ultimately approve or reject the request for funding. 

Communities can choose to apply for funding to different federal and 

state programs at any stage during the process. In some cases, the SRF 

and RUS programs will work together to jointly fund the same project if 

the project is too large for one agency to fund, or if it will make the project 

more affordable for the community. If their requests are approved, 

communities design the projects, obtain construction bids, contract to 

build the projects, and are reimbursed by the funding agency. 

Communities usually hire a consulting engineer to develop the preliminary 

engineering reports and conduct the environmental analyses for a project. 

In addition, EPA and USDA pay for technical service providers that 

communities can use to help them understand and apply for their 

programs. Communities can also get assistance from local planning 

districts, which are voluntary associations of county and municipal 

governments that provide development assistance to their membership. 

A 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. 

Figure 2 shows the application process and timeline that is generally 

followed for both EPA and RUS programs. 
 

Page 11 GAO-13-111 Rural Water Infrastructure 

Figure 2: Application Process and Timeline Generally Followed for EPA’s SRF and 

USDA’s RUS Programs 

Note: These steps are a general representation of the funding application and approval process. The 

exact order and timing of the steps may vary by state or program. 

The state SRF and RUS state-level programs review the likely 

environmental effects of projects they are considering funding using 

different levels of environmental analysis. These reviews occur either 

under the National Environmental Policy Act of 1969 (NEPA) for the RUS 
 

Page 12 GAO-13-111 Rural Water Infrastructure 

program,12 or for the SRF programs, under a state environmental review 

process similar to NEPA. EPA regulations define the necessary elements 

of these state “NEPA-like” reviews.13 Typically, a proposed water or 

wastewater project is subject to an environmental assessment or, in the 

rare case that the project is likely to significantly affect the environment, a 

more detailed environmental impact statement. If, however, the agency 

determines that activities of a proposed project fall within a category of 

activities the agency has determined has no significant environmental 

impact—a determination called a categorical exclusion—then the project 

applicant or the agency, as appropriate, generally does not have to 

prepare an environmental assessment or environmental impact 

statement.14 Because many community water and wastewater 

infrastructure projects either upgrade or replace existing infrastructure, 

projects rarely result in significant environmental impacts, and NEPA 

requirements can be satisfied through an environmental assessment or a 

categorical exclusion. In addition, in some cases, the funding agency may 

help complete the environmental analysis documents for a planned 

project. 

Our previous work has raised questions regarding sufficient coordination 

between drinking water and wastewater infrastructure funding programs, 

despite federal efforts to improve coordination at the state and local level. 

In December 2009, we reported that EPA, USDA, and other agencies that 

fund drinking water and wastewater infrastructure for rural communities 

along the U.S.-Mexico border, lacked coordinated policies and processes 

and did not efficiently coordinate their programs, priorities, or funding.15

Specifically, without efficient coordination, applicants faced significant 

administrative burdens that, in some cases, resulted in project delays 

 

12Pub. L. No. 91-190, 83 Stat. 852 (1970), codified as amended at 42 U.S.C. §§ 4321-

4347 (2011). Under NEPA, federal agencies must assess the effects of major federal 

actions—those they propose to fund, carry out, or to permit—that significantly affect the 

environment. NEPA has two principal purposes: (1) to ensure that an agency carefully 

considers detailed information concerning significant environmental impacts and (2) to 

ensure that this information will be made available to the public. 

13See 40 C.F.R. 35.3140(b) (CWA); 40 C.F.R. § 35.3580(c) (SDWA). 

14According to USDA, under RUS regulations, non-administrative categorical exclusions 

require additional supporting documentation. 

15GAO-10-126. 

Federal Agencies’ 

Coordination for Rural 

Water Infrastructure 
 

Page 13 GAO-13-111 Rural Water Infrastructure 

because the programs required separate documentation to meet the 

same requirements and did not consistently coordinate in selecting 

projects. For example, an engineer in Texas told us that one community 

applying for funding had to pay $30,000 more in fees because the 

engineer had to complete two separate sets of engineering 

documentation for EPA and USDA. As we stated in our December 2009 

report, the applicant could have saved these funds had EPA and USDA 

established uniform engineering requirements. To resolve such 

inefficiencies, we suggested Congress consider establishing an 

interagency mechanism, such as a task force, of federal agencies 

working in the border region. One of the responsibilities of this task force 

would be to work with state and local officials to develop standardized 

applications and environmental review and engineering documents, to the 

extent possible, for the federal and state agencies working in the border 

region. 

Similarly, our October 2005 report discusses collaboration and practices 

that federal and state agencies can engage in to enhance and sustain 

interagency collaboration.16 In the report, we define collaboration as any 

joint activity that is intended to produce more public value than could be 

produced when organizations act alone. According to the report, agencies 

can enhance and sustain interagency collaboration by engaging in one or 

more of the following practices: 

 define and articulate a common outcome; 

 establish mutually reinforcing or joint strategies; 

 identify and address needs by leveraging resources; 

 agree on roles and responsibilities; 

 establish compatible policies, procedures, and other means to operate 

across agency boundaries; 

 develop mechanisms to monitor, evaluate, and report on results; 

 reinforce agency accountability through agency plans and reporting; 

and 

 

16GAO-06-15. 
 

Page 14 GAO-13-111 Rural Water Infrastructure 

 reinforce individual accountability for collaborative efforts through 

performance management systems. 

For a number of these practices, the report states that nonfederal 

partners, key clients, and stakeholders need to be involved in decision 

making. Additionally, a number of important factors, such as leadership, 

trust, and organizational culture, are necessary elements for a 

collaborative relationship. 

Consistent with the findings of our October 2005 report, the 1997 joint 

memorandum signed by EPA, USDA, and HUD encourages cooperation 

in developing strategic plans for each agency’s program and encourages 

cooperation among program managers at the state level to remove as 

many barriers as possible in program regulations or policy. In addition, 

the memorandum encourages the development of common practices 

across agencies, including regularly communicating and leveraging funds 

to make the most efficient use of available resources. Moreover, the 

memorandum encourages the signing agencies to prepare common 

documents, including one environmental analysis per project, that meet 

all the federal and state agencies’ requirements. This memorandum is 

similar to governmentwide NEPA regulations and various guidance 

issued by the Council on Environmental Quality, which emphasize the 

need for coordination among federal and state agencies on environmental 

and other requirements.17 Most recently, the council issued a March 2012 

guidance that encourages federal agencies to cooperate with state, tribal, 

and local governments so that one document satisfies as many applicable 

environmental requirements as practicable. In addition, the guidance 

encourages federal agencies to enhance coordination under NEPA by 

designating a lead agency responsible for conducting an environmental 

analysis.18 Furthermore, according to the guidance, a federal agency 

preparing an environmental analysis should consider adopting another 

federal agency’s environmental analysis if it addresses the proposed 

 

17The Council on Environmental Quality, which is part of the Executive Office of the 

President, coordinates federal environmental efforts in the development of environmental 

policies and initiatives. 

18A lead agency must supervise the preparation of an environmental analysis if more than 

one federal agency either (1) proposes or is involved in the same action or (2) is involved 

in a group of actions directly related to each other because of their functional 

interdependence or geographical proximity. 40 C.F.R. § 1501.5(a). 
 

Page 15 GAO-13-111 Rural Water Infrastructure 

action and meets the standards for an adequate analysis under NEPA 

and the adopting agency’s NEPA guidance. 

Drinking water and wastewater infrastructure funding is fragmented 

among the three programs we reviewed—EPA’s Drinking Water and 

Clean Water SRF programs and USDA’s RUS program. As a result, 

overlap can occur when communities with populations of 10,000 or less 

apply to one of the SRF programs and the RUS program. For the 54 

projects we reviewed in the five states we visited, this overlap did not 

result in duplicate funding or funding for the same activities on the same 

project. Specifically, for 42 projects that we reviewed, the state SRF 

programs or the RUS program funded the projects individually, and for 

the remaining 12 projects that we reviewed, the state SRF and RUS 

programs each contributed a portion of the overall project cost because 

none of the programs could cover the full cost individually, according to 

community officials. However, we identified potentially duplicative efforts 

by communities to complete funding applications and related documents 

for both agencies. 

Overlap can occur among the state SRF and RUS programs because 

they can each direct funding to communities with populations of 10,000 or 

less. As a result, these communities are eligible to apply for funding from 

more than one of these programs. For example, communities of 10,000 or 

less can apply to the state Clean Water SRF and RUS programs for funds 

to install or upgrade wastewater treatment plants and sewer lines. In 

addition, communities of 10,000 or less can apply to the state Drinking 

Water SRF and RUS programs for funds to install, repair, improve, or 

expand treatment facilities, storage facilities, and pipelines to distribute 

drinking water. 

The state SRF and RUS programs have funded projects in communities 

with populations of less than 10,000 in recent years, according to our 

analysis of SRF and RUS data from July 1, 2007, through June 30, 2011. 

Specifically, over this time frame, communities with populations of 10,000 

or less received $3.2 billion, or 36 percent of total Drinking Water SRF 

funding. Similarly, such communities received $6.3 billion, or 24 percent 

Fragmentation and 

Overlap in EPA and 

USDA Programs Can 

Result in Potential 

Duplication of 

Community Efforts to 

Apply for Funding 

The SRF and RUS 

Programs Provide 

Overlapping, but Not 

Duplicative, Funding to 

Communities with 

Populations of 10,000 or 

Less 
 

Page 16 GAO-13-111 Rural Water Infrastructure 

of total Clean Water SRF funding.19 In accordance with its mission, the 

RUS program has directed all of its funding for drinking water and 

wastewater infrastructure projects to such communities, for a total of $11 

billion from October 1, 2006, through September 30, 2011. The amount of 

program funding overlap between the state SRF and RUS programs 

varies among the states, with some states showing greater overlap than 

others. State Drinking Water SRF program funding overlap with the RUS 

program ranged from 7 percent in Rhode Island to 93 percent in Virginia, 

and state Clean Water SRF program funding overlap with the RUS 

program ranged from 8 percent in California to 74 percent in 

Pennsylvania. Additional information about variations in program funding 

overlap is provided in appendix II. 

Overlap in program funding could lead agencies to fund the same project, 

resulting in the potential for duplication. However, for the state SRF and 

RUS programs, the majority of projects we reviewed in the five states 

were funded by either one of the SRF programs or the RUS program, in 

conjunction with other federal or state program funds, such as HUD’s 

Community Development Block Grant program, Montana’s Treasure 

State Endowment Program, and programs from the North Carolina Rural 

Economic Development Center.20 Table 1 shows the funding awards for 

community projects in states we visited. In the five states we visited—

Colorado, Montana, North Carolina, Pennsylvania, and South Dakota—42 

of the 54 projects we reviewed received funding from the SRF or RUS 

programs, in addition to other sources. 

 

19EPA’s state-level data are provided as a total amount starting from when EPA began 

providing SRF funds to the states. According to EPA documents, EPA began to provide 

Drinking Water SRF program funds in federal fiscal year 1997, or starting October 1, 

1996, and states reported these data from their corresponding fiscal year—starting on July 

1, 1996. Similarly, EPA began to provide Clean Water SRF program funds in federal fiscal 

year 1988, or starting October 1, 1987; states reported on the funds received beginning in 

their corresponding fiscal year—starting on July 1, 1987. 

20The Community Development Block Grant program primarily focuses existing or 

proposed drinking water and wastewater transmission lines. Because of this specific focus 

of the program, we determined the possibility for duplication with the EPA and USDA 

programs was slight. In addition, the five states we reviewed have additional sources of 

funding for water and wastewater infrastructure. For the projects we reviewed in these 

states, we did not identify duplicate funding from these sources of funds. 
 

Page 17 GAO-13-111 Rural Water Infrastructure 

Table 1: Funding Awards for 42 Drinking Water and Wastewater Projects Selected for Review 

All amounts in dollars 

State/community/project Clean Water SRF Drinking Water SRF RUS Other Total

Colorado 

Eckley (DW) $100,000 $100,000

Grover (DW) 518,000 518,0000

Grover (WW) 1,019,000 17,500 1,036,500

Mack (WW)a 0

Nunn (DW) 2,424,000 0a 10,000 2,434,000

Pagosa Springs (WW) 0b 0b 1,250,000 1,250,000

Paonia (DW) 824,780 500,000 1,324,780

Salida (WW) 14,719,000 2,918,000 17,637,000

Salida (DW) 545,000 545,000

Montana 

East Helena (WW) 324,350 303,239 627,589 

East Helena (WW) 356,215 32,408 388,623 

East Helena (WW) 5,677,000 850,000 6,527,000 

Gallatin Gateway County Water 

and Sewer District (WW) 

 3,465,000 850,000 4,315,000 

Valier (DW) 1,977,500 792,200 2,769,700 

Valier (WW) 600,000 600,000 1,200,000 

North Carolina 

Clinton (WW) 594,020 594,020 

Clinton (DW) 285,699 285,699 

Columbia (DW) 491,401 500,000 991,401 

Hertford (WW) 854,187 854,187 

Southeastern Wayne Sanitary 

District (DW) 515,000 364,850 879,850 

Southeastern Wayne Sanitary 

District (DW) 0a 6,500,000 38,000 6,538,000 

Trinity (Phase 1) (WW) 3,000,000 3,000,000 

Trinity (Phase 2) (WW) 3,377,900 692,100 4,070,000 

Trinity (Phase 3) (WW) 5,000,000 2,500,000 7,500,000 

Trinity (Phase 4) (WW) 2,100,000 2,100,000

Trinity (Phase 4A) (WW) 4,845,000 1,205,000 6,050,000 

Tuckaseigee Water and Sewer 

Authority (WW) 300,000 500,000 800,000 

Wilkesboro (Combination) 300,000 572,150 872,150
 

Page 18 GAO-13-111 Rural Water Infrastructure 

All amounts in dollars 

State/community/project Clean Water SRF Drinking Water SRF RUS Other Total

Wilkesboro (WW) 7,363,544 1,000,000 8,363,544 

Pennsylvania 

Gratz (DW) 396,000 310,000 706,000 

Millerstown Municipal Authority 

(WW) 1,807,500 3,615,000 5,422,500 

Muddy Run Regional Sewer 

Authority (WW) 20,144,000 20,144,000

Muddy Run Regional Sewer 

Authority (WW) 571,435 571,435

Royalton (WW) 1,140,000 1,140,000

South Dakota 

Clay Rural Water System (DW) 844,968 844,968 

Clay Rural Water System (DW) 2,208,000 2,208,000 

Clay Rural Water System (DW) 1,369,758 100,000 1,469,758 

Fall River Water Users System 

(North Well) (DW) 1,178,500 460,000 1,638,500 

Faulkton (DW) 511,725 511,725

Mobridge (DW) 213,500 25,000 238,500 

Mobridge (DW) 62,442 62,442 

Southern Black Hills Rural Water 

System (DW) 4,517,000 767,098 5,284,098

Legend: DW = drinking water project; WW = wastewater project 

Source: GAO analysis of federal, state, and local documents. 

Notes: “Combination” indicates projects that had both a drinking water and wastewater component. 

“Other” indicates federal, state, and local funding sources not listed in this table. A blank cell indicates 

funding was not requested from the specific source. Other sources of funding include HUD’s 

Community Development Block Grant; state sources such as Montana’s Treasure State Endowment 

Fund and and programs from the North Carolina Rural Economic Development Center; and the 

community’s own reserve funds. 

We selected communities and projects on the basis of funding data and recommendations provided 

by state officials. Because these are nongeneralizable samples, the information obtained cannot be 

generalized to all communities or projects but provides illustrative examples of community 

experiences in applying for funding from the EPA and USDA programs. See appendix I for additional 

details. 

a

Community asked for, but did not receive, funding. 

b

Community received funds from SRF and RUS programs, but returned them. 
 

Page 19 GAO-13-111 Rural Water Infrastructure 

In addition to the 42 projects that were separately funded by the state 

SRF or RUS programs, 12 projects we reviewed received funding from 

both the SRF and RUS programs (see table 2 for funding details). Our 

analysis of these projects showed the programs did not pay for the same 

activities with their funding, and according to state and community 

officials, the joint funding for a community’s project was beneficial and 

warranted. Specifically, according to federal, state, and community 

officials we interviewed, jointly funded projects tended to be relatively 

expensive projects that exceeded one or the other agency’s ability to fund 

independently or that needed additional funding to make the project 

affordable for community residents. Following are examples: 

 Washington, Pennsylvania, population approximately 3,500, sought 

funding from both the Clean Water SRF and RUS programs, and 

other programs, for its nearly $21 million sewer project to install over 

200,000 feet of sewer lines. The community initially sought funding 

from the Clean Water SRF program, but then decided to seek 

additional funding from the RUS program after realizing the project 

exceeded available funding from the SRF program, according to the 

consulting engineer the community used. The Clean Water SRF 

program provided $10.3 million, and the RUS program provided $5.5 

million. 

 Hertford, North Carolina, population approximately 2,200 sought 

funding from the Drinking Water SRF and RUS programs for its 

project to expand drinking water capacity by drilling wells, installing 

water supply lines, expanding the water treatment plant, and 

constructing an elevated storage tank. Similar to the Washington, 

Pennsylvania, project, community officials said that the Hertford 

project was too expensive for a single agency to fund. The Drinking 

Water SRF program provided $2.6 million toward the project, and the 

RUS program provided $772,000. 

 Faulkton, South Dakota, population approximately 800, sought 

funding from the Drinking Water SRF, the RUS program, and the 

Community Development Block Grant program to replace water 

pipelines and install a water tower. The town applied to multiple 

programs to receive grants to help ensure that the project would be 

affordable to its residents. The Drinking Water SRF program provided 

a loan in the amount of $500,000 and immediately forgave the 
 

Page 20 GAO-13-111 Rural Water Infrastructure 

balance of the loan, effectively providing these funds at no cost to the 

community.21 The RUS program provided $2.1 million in funds to this 

project, including grant funds, which helped keep the project 

affordable. The Community Development Block Grant program 

provided approximately $519,000 in additional funds, and the 

community put forth $149,000. 

 

 

21This is called “principal forgiveness,” which means that the state SRF program forgave 

all or a portion of the remaining loan balance for a community’s water or wastewater 

infrastructure project. Under the American Reinvestment and Recovery Act of 2009 and 

subsequent appropriations, states were required to use a portion of their capitalization 

grants, under their state SRF programs, to provide additional subsidization to eligible 

recipients in the form of forgiveness of principal, negative interest loans, or grants, or any 

combination of the three. 
 

Page 21 GAO-13-111 Rural Water Infrastructure 

Table 2: Funding Awards for 12 Drinking Water and Wastewater Projects Selected for Review That Received Funding from an 

SRF Program and the RUS Program 

All amounts in dollars 

State/community/project Clean Water SRF Drinking Water SRF RUS Other Total

Montana 

Conrad (WW) $1,335,000 $2,942,400 $1,255,527 $5,532,927

North Carolina 

Burgaw (WW) 3,000,000 5,000,000 3,500,000 11,500,000

Hertford (DW) 2,569,647 772,000 610,222 3,951,869

Tuckaseigee Water and Sewer 

Authority (WW) 

3,000,000 10,250,000 800,000 14,050,000

Pennsylvania 

Shamokin Coal Township Joint 

Sewer Authority (WW) 

20,000,000 17,640,000 2,610,000 40,250,000

Washington Township (WW) 10,288,000 5,466,300 5,150,000 20,904,300 

South Dakota 

Fall River Water Users System (North 

Expansion Project) (DW) 

612,000 1,128,000 633,000 2,373,000

Fall River Water Users System 

(System Improvements Project) (DW) 

750,000 958,000 6,391 1,714,391

Faulkton (DW) 500,000 2,124,000 668,175 3,292,175

Mobridge (DW) 500,000 931,000 407,000 1,838,000

Selby (DW) 100,000 514,000 310,900 924,900

Selby (WW) $700,000 $1,815,000 $774,000 $3,289,000

Legend: DW = drinking water project; WW = wastewater project 

Source: GAO analysis of federal, state, and local documents. 

Notes: Other indicates federal, state, and local funding sources not listed in this table. A blank cell 

indicates funding was not requested from the specific source. Other sources of funding include HUD’s 

Community Development Block Grant; state sources such as Montana’s Treasure State Endowment 

Fund; programs from the North Carolina Rural Economic Development Center; and the community’s 

own reserve funds. 

We selected communities and projects on the basis of funding data and recommendations provided 

by state officials. Because these are nongeneralizable samples, the information obtained cannot be 

generalized to all communities or projects but provides illustrative examples of community 

experiences in applying for funding from the EPA and USDA programs. See appendix I for additional 

details. 
 

Page 22 GAO-13-111 Rural Water Infrastructure 

Program overlap among the state SRF and RUS programs can result in 

potential duplication of communities’ efforts to prepare funding 

applications and related documents, including preliminary engineering 

reports and environmental analyses, according to our analysis of project 

documents and interviews with engineers and community officials in the 

five states we visited. In these states, as with others, the state SRF and 

RUS programs require the communities to submit a preliminary 

engineering report and an environmental analysis as part of their loan 

applications. 

Preliminary engineering reports submitted by communities to the SRF 

and RUS programs contained many of the same components, but the 

format and the level of detail required varied. Table 3 shows the similar or 

common components included in these preliminary engineering reports of 

four projects we reviewed. We judgmentally selected an example from 

one community in each state that had at least one jointly funded project or 

that had applied to both programs for funding, and that prepared 

preliminary engineering reports.22

 

 

22In Pennsylvania, agencies prepare technical documents, called Act 537 Plans, for 

wastewater infrastructure projects. These documents are required by Pennsylvania state 

law and include similar information to preliminary engineering reports. According to 

Pennsylvania officials, communities applying for funds for drinking water infrastructure 

projects are required to submit a typical preliminary engineering report, but they told us 

they have not jointly funded a drinking water project for several years. 

Fragmentation and 

Overlap in State SRF and 

RUS Programs Can Result 

in Potentially Duplicative 

Application Efforts by 

Communities 

Preliminary Engineering Report 
 

Page 23 GAO-13-111 Rural Water Infrastructure 

Table 3: Similarities in Components of Preliminary Engineering Reports Prepared for the SRF and RUS Programs for Four 

Selected Projects 

 Pagosa Springs, CO 

Wastewater 

 Tuckaseigee Authority, 

NC Wastewater 

 Faulkton, SDa 

Drinking Water 

 Conrad, MTa 

Wastewater 

Report component SRF RUS SRF RUS SRF/RUS SRF/RUS 

Project planning area / 

summary 

 

Location X X X X X 

Environmental resources 

present 

 X X X X X 

Wetlands X X X 

100-year floodplain 

analysis 

 X X X 

500-year floodplain 

analysis 

 X 

Growth areas and population 

trends 

 X X X X X X 

Existing facilities 

Location X X X X X 

History X X X X X X 

Condition of facilities X X X X X X 

Financial status of any existing 

facilities 

 X X X X 

Need for or purpose of 

project 

 

Health, safety, and 

security/compliance 

 X X X X X 

System operation and 

maintenance 

 X X X X X 

Growth X X X X X 

Alternative approaches 

Description of alternatives X X X X X X 

Design criteria X X X X 

Environmental impacts X X X X X 

Land requirements/site 

selection 

 X X X X 

Construction problems X X X X 

Cost estimates X X X X X X 

Advantages and disadvantages 

of alternatives 

 X X X X X 

 
 

Page 24 GAO-13-111 Rural Water Infrastructure 

 Pagosa Springs, CO 

Wastewater 

 Tuckaseigee Authority, 

NC Wastewater 

 Faulkton, SDa 

Drinking Water 

 Conrad, MTa 

Wastewater 

Report component SRF RUS SRF RUS SRF/RUS SRF/RUS 

Proposed project 

Project design X X X X X 

Project cost estimates X X X X X X 

Annual operating budget X X X X X 

Income X X X X X 

Operations and 

maintenance costs 

 X X X X X X 

Debt repayments/service X X X X X 

Reserves X X 

Short-lived assetsb X X X 

Conclusions and 

recommendations 

 X X X X X 

Preliminary implementation 

schedule 

 X X X X 

Sources: GAO analysis of federal, state, and local documents. 

a

This community produced one preliminary engineering report and submitted it to both programs. 

b

Short-lived assets, for the purpose of these preliminary engineering reports, include equipment that 

have a planned life less than the repayment period of the loan. 

As table 3 shows, the preliminary engineering reports for both programs 

asked for similar information such as project location, community growth 

and population, existing facilities, alternative approaches to the project, 

and environmental and technical details of the project. The preliminary 

engineering reports prepared for the RUS program also included 

information on debt service and short-lived assets—those assets that 

have a planned life less than the repayment period of the loan—while the 

SRF engineering reports did not include such information. 

Engineers and community officials we interviewed in some states told us 

that they prepare separate preliminary engineering reports for each 

agency when a community applies for funding from both agencies, which 

can increase costs to the communities. Specifically, officials and 

engineers in some states told us the requirements for USDA’s RUS 

preliminary engineering report are generally more rigorous. They stated 

that these reports contain similar information but with different formats 

and levels of detail. Examples are as follows: 

 In North Carolina, engineers and a technical service provider we 

interviewed told us that the state SRF and RUS formats for the 
 

Page 25 GAO-13-111 Rural Water Infrastructure 

preliminary engineering reports differed significantly in format but 

contained much of the same information. State officials told us the 

state SRF programs do not typically accept preliminary engineering 

reports completed for the state-level RUS program because they try to 

maintain a common format to enable efficient review. Similarly, the 

state-level RUS program officials said that they do not accept reports 

completed for the state SRF programs. 

 In Colorado, an engineer for several projects we reviewed told us that 

the engineering firm had to complete preliminary engineering reports 

for both the state SRF programs and the RUS program even though 

the reports had similar formats and information. 

 In South Dakota, engineers told us that to minimize effort, time, and 

cost to the community, they prepare preliminary engineering reports to 

meet state SRF, RUS, and other program requirements even if the 

community does not initially seek funds from all of these programs. 

These engineers said doing so helps minimize the additional effort it 

would take to revise the report at a later time if the community decided 

to seek additional funds. According to another engineer, if the 

preliminary engineering report is completed to meet just the SRF 

programs’ requirements, the firm will require additional time and 

money to meet the additional preliminary engineering report 

requirements necessary to apply for funding through the RUS 

program. 

Montana and Pennsylvania take a different approach than the other three 

states we visited as follows: 

 Montana has a uniform preliminary engineering report accepted by 

most federal and state agencies. Engineers said that the agencies ask 

for some different information, which they gather in amendments to 

the report instead of having communities submit similar information 

multiple times. 

 In Pennsylvania, officials from state SRF and state-level RUS 

programs said they encourage communities to apply to either the SRF 

or RUS programs and do not often jointly fund projects. Officials from 

both programs told us that when they do fund projects jointly, they try 

to accept one another’s documents to avoid duplicating them. 

We also found similarities in the environmental analyses submitted by 

communities to the SRF and RUS programs for four of the projects in the 

states we visited. According to our review of environmental analyses 

Environmental Analysis 
 

Page 26 GAO-13-111 Rural Water Infrastructure 

submitted to the state SRF and RUS programs—we judgmentally 

selected one in each of four communities and states that had jointly 

funded projects or applied to both programs for funding—each 

environmental analysis followed a similar overall format and contained 

many of the same components, but the level of analysis and the level of 

detail needed to satisfy federal and state requirements varied. Table 4 

shows the overall format and similar components for these environmental 

analyses. The agencies ask for information on many of the same 

components, including purpose and need, alternatives analysis, and 

environmental consequences. 

Table 4: Similarities in Components of Environmental Analyses Submitted to the SRF and RUS Programs for Four Selected 

Projects 

 Conrad, MT 

Wastewater 

 Selby, SDa

Drinking Water 

 Mack, CO 

Wastewater 

 Hertford, NCa

Drinking Water 

Component SRF RUS SRF/RUS SRF RUS SRF/RUS 

Purpose and need X X X X X 

Alternatives analysis X X X X X X 

Environmental consequences 

Land use /geology X X X X X X 

Floodplains X X X X X X 

Wetlands X X X X X X 

Cultural resources and historic 

properties 

 X X X X X X 

Biological resources X X X X X X 

Water quality/quantity X X X X X X 

Coastal resources X X 

Air quality X X X X X X 

Transportation X X X 

Noise X X X X X X 

Socioeconomic/environmental justice X X X X 

Mitigation strategy X X X X X X 

Sources: GAO analysis of state SRF and RUS data. 

a

Other agencies accepted the SRF environmental analysis for this project. 

The extent to which communities duplicate their environmental analyses 

for each program varies by state, depending on the extent to which water 

and wastewater infrastructure programs in the state accept each other’s 

work or use each other’s documents. In Colorado, North Carolina, and 

South Dakota, the communities can submit the final approved 
 

Page 27 GAO-13-111 Rural Water Infrastructure 

environmental analyses prepared for the RUS program to the SRF 

programs, which eliminates one of the documents they have to prepare. 

However, in these states, the state-level RUS program will not typically 

accept the analysis prepared for the SRF program because the state 

analyses are less rigorous, according to RUS officials. In Pennsylvania, 

the state programs have agreed to uniform environmental requirements, 

and the communities therefore submit the same document to both 

programs. Communities may be required to submit additional information, 

as needed, to meet requirements specific to each program. In Montana, 

the state SRF programs prepare an environmental analysis for the 

community that is primarily based on information that the community 

submits in the preliminary engineering report, but the community prepares 

the environmental analysis that it submits to the state RUS program. 

Furthermore, in some cases, the state programs may require the same 

type of environmental analysis for a project but, in other cases, the state 

programs may require different levels of environmental analysis—such as 

a categorical exclusion. For example, for a single wastewater project, the 

town of Conrad, Montana, completed an environmental analysis for the 

state-level RUS program, while the state SRF program completed the 

environmental analysis for the town. In contrast, Pagosa Springs, 

Colorado, submitted an environmental checklist to the state SRF program 

for its wastewater project and received a categorical exclusion but had to 

submit an environmental analysis for the application it submitted to the 

state-level RUS program for the same project. Variation exists across 

states despite NEPA regulations stating that federal agencies should 

eliminate duplication with state and local procedures by providing for joint 

preparation of environmental analyses or by adopting appropriate 

environmental analyses. According to state SRF officials, state-level RUS 

officials do not always accept state analyses because NEPA regulations 

under the RUS program are rigid and because some state RUS officials 

are not flexible in their interpretation of the requirements for 

environmental analyses. State RUS officials, however, told us that 

environmental analyses by some state environmental programs are not 

sufficient to meet federal NEPA standards, making it difficult for them to 

accept these environmental analyses. 

Potentially duplicative application requirements, including preliminary 

engineering reports and environmental analyses, may make it more costly 

and time-consuming for communities to complete the application process. 

For example, if consulting engineers have to provide similar, or even the 

same, information, in two different engineering reports or environmental 

analyses, their fees to the community may be higher. Engineers we 
 

Page 28 GAO-13-111 Rural Water Infrastructure 

interviewed estimated that preparing additional preliminary engineering 

work could cost anywhere from $5,000 to $50,000 and that the cost of an 

environmental analysis could add as little as $500 to a community’s costs 

or as much as $15,000. Moreover, having to complete separate 

preliminary engineering reports or environmental analyses may delay a 

project because of the additional time required to complete and submit 

these documents. State officials in Montana told us that coordination 

between federal and state programs and the implementation of uniform 

application requirements could reduce the time it takes an applicant to 

complete a rural water infrastructure project by up to half. 

Our review of five states and local communities in those states showed 

that EPA and USDA have taken some actions to coordinate their 

programs and funding at the federal and state level to help meet the 

water infrastructure needs of rural communities, but not others specified 

in the 1997 memorandum. Because these federal programs are 

implemented at the state level, efforts to coordinate between the agencies 

primarily occur among state officials managing the SRF and other water 

infrastructure programs, the RUS state-level offices, and the communities 

whose projects they fund. In some cases, inconsistent coordination at the 

state level has led to potential duplication for communities applying for 

funding and inefficiencies in program funding. EPA and USDA, at the 

federal level, and the state SRF and RUS state-level offices, have taken 

some actions to coordinate but have not taken others that could help 

avoid duplication of effort by communities applying for project funding. 

Recognizing the importance of coordinating the SRF and RUS programs 

at the state level, EPA and USDA agencies have taken some actions at 

the federal level to encourage coordination between the state-level 

programs and communities but not other actions specified in the 1997 

memorandum. The 1997 joint memorandum signed by EPA and the 

USDA sought to improve coordination among federal and state agencies 

as they help fund community projects. It identified four major actions that 

state and state-level federal offices can take to improve coordination and 

reduce inefficiencies and potential duplication of effort. These actions are 

consistent with several of the leading practices we identified in our 

Federal and State 

Actions Have Not 

Fully Facilitated 

Coordination for 

Funding 

Communities’ 

Projects 

Agencies Have Taken 

Some Actions to 

Encourage Coordination at 

the State and Community 

Level but Not Others 
 

Page 29 GAO-13-111 Rural Water Infrastructure 

October 2005 report on interagency collaboration.23 These actions are as 

follows: 

Cooperate in preparing planning documents. The memorandum 

encourages state SRF and RUS programs to cooperate in preparing 

planning documents, including operating, intended use, and strategic 

plans that are required under each agency’s programs. The 

memorandum says that the federal and state programs should endeavor 

to incorporate portions of each agency’s planning documents to minimize 

duplication of planning efforts. This action is consistent with two leading 

practices for interagency collaboration identified in our previous work—

defining and articulating common outcomes and developing joint 

strategies—through which partner agencies can overcome significant 

differences in agency missions and cultures, and align their activities and 

resources to accomplish common goals. 

Cooperate to remove policy and regulatory barriers. The memorandum 

states that agencies should cooperate in removing as many barriers to 

coordination as possible in program regulations or policy by, for example, 

coordinating project selection systems and funding cycles. This action is 

consistent with a leading practice for interagency collaboration identified 

in our previous work—promoting compatible policies and procedures. 

Cooperate on project funding. The joint memorandum encourages state 

SRF and state-level RUS officials to meet on a regular basis to cooperate 

in determining what projects will receive funding and which program 

should fund which project, and to discuss the possibility of jointly funding 

projects when necessary. This action is consistent with two of the leading 

practices for interagency collaboration identified in our previous work—

agreeing upon roles and responsibilities and leveraging resources. 

Through such actions, federal and state agencies funding water and 

wastewater infrastructure can clarify which agencies will be responsible 

for taking various steps and for organizing joint and individual agency 

efforts and thereby obtain benefits that they would not have realized by 

working individually. 

Cooperate in preparing environmental analyses and meeting other 

common federal requirements. The joint memorandum states that, 

 

23GAO-06-15. 
 

Page 30 GAO-13-111 Rural Water Infrastructure 

whenever possible, agencies should cooperate on federal requirements 

that are common across agencies—environmental analyses and other 

common documents, such as preliminary engineering reports—in order to 

create one comprehensive application package per project. This action is 

consistent with our leading practice for interagency collaboration of 

establishing compatible policies and procedures for operating across 

agency boundaries. Through such an action, federal and state agencies 

would seek to make policies and procedures more compatible. 

In February 2012, EPA, USDA, and several other federal and state 

agencies created a working group to examine the feasibility of developing 

uniform guidelines for preliminary engineering report requirements. The 

group plans to develop a draft outline for uniform preliminary engineering 

report guidelines by September 2012 and has received numerous 

examples and comments from participating states. According to RUS 

officials, however, once the draft outline is developed it must be reviewed 

by participating state and federal agencies before it is considered final, 

and the final outline could be delayed if agency review and response 

times are slow. In addition, EPA and USDA have taken action at the 

federal level to help the states coordinate better and make programs 

more efficient for communities applying for funding. Specifically, EPA and 

USDA coordinate at the federal level to encourage states to emphasize 

coordination between their SRF programs and RUS, as well as with local 

communities. According to EPA and USDA officials, to inform state 

officials and communities about the programs and funding opportunities 

available in their respective states, the federal agencies participate in 

conferences and workshops, conduct Webinars, and sponsor training. 

The federal agencies also issue guidance to their programs. For example, 

EPA issued a report in 2003 providing case studies and innovative 

approaches on how state SRF programs could better coordinate with 

other programs with similar purposes. In addition, in June 2011, EPA and 

USDA signed a Memorandum of Agreement to work together to help 

communities implement innovative strategies and tools to achieve shortand long-term water and wastewater infrastructure sustainability. Among 

other things, the memorandum encourages the agencies to share and 

distribute resources and tools to communities that promote long-term 

sustainability and to provide training and information that encourages the 

adoption and adaptation of effective water infrastructure management 

strategies. 

The actions that EPA and USDA have taken to date, such as providing 

guidance in the 1997 memorandum, have helped states and state-level 

federal agencies to coordinate generally but have not facilitated better 
 

Page 31 GAO-13-111 Rural Water Infrastructure 

coordination at the state level in more specific ways. In particular, the 

federal agencies have not taken actions, highlighted in the 1997 

memorandum, to develop common documents for communities to apply 

to different funding programs. For example, EPA and USDA have not 

created a working group or taken similar action to work with other federal 

and state officials to develop a uniform environmental analysis. Making 

environmental analyses more compatible would be consistent with the 

March 2012 Council on Environmental Quality guidance on eliminating 

duplication in federal NEPA efforts. Similar to the 1997 joint 

memorandum, Council of Environmental Quality NEPA regulations and 

guidance encourage coordination between state and federal agencies in 

preparing environmental documents to reduce the time and cost required 

to make federal permitting and review decisions while improving 

outcomes for communities and the environment. According to agency 

officials, the agencies have not taken such action because they believe 

they have coordinated sufficiently. According to EPA officials, the states 

conduct NEPA-like analyses but are not required to meet the same NEPA 

requirements as federal agencies, and EPA cannot therefore dictate what 

documents the states use. In addition, USDA officials said that the RUS 

program’s NEPA guidance documents already encourage state-level 

RUS offices to coordinate with the state SRF programs to accept RUS’s 

environmental analyses, as appropriate and consistent with guidance 

from the Council on Environmental Quality. Without agreement to use 

common environmental analyses, however, rural communities could 

continue to spend more effort and resources to meet application 

requirements for improving their water and wastewater infrastructure. 

In the five states we visited, the state-level programs varied in the actions 

they took to coordinate their water and wastewater infrastructure 

programs consistent with the 1997 joint memorandum. In some states, 

the state SRF and RUS programs have developed innovative ways to 

coordinate and remove barriers to coordination consistent with the 1997 

memorandum but, in other states, the state SRF and RUS programs have 

been less successful, leading to potential duplication for communities 

applying for funding and inefficiencies in program funding. Table 5 shows 

the extent of actions to coordinate taken by the state SRF programs and 

state-level RUS programs in the five states we visited. Some community 

officials we met with suggested that, for the drinking water and 

wastewater infrastructure programs, good coordination among state 

officials would involve meeting on a regular basis to cooperate in 

determining what projects would receive funding, thereby leveraging 

agency funds that are increasingly limited. 

State-Level Programs Took 

Varied Actions to 

Coordinate in Five States 

We Visited 
 

Page 32 GAO-13-111 Rural Water Infrastructure 

Table 5: State SRF and RUS Program Activities to Implement 1997 Joint Memorandum on Drinking Water and Wastewater 

Activities 

Activities to Implement 1997 Joint Memorandum 

States 

Cooperate in 

preparing planning 

documents 

Cooperate to remove 

regulatory and policy 

barriers 

Cooperate on project 

funding 

Cooperate on preparation 

of environmental 

analysis documents and 

other common federal 

requirements 

Colorado No No Partial No 

Montana No Yes Yes Partial 

North Carolina No No Partial No 

Pennsylvania No Yes Partial Partial 

South Dakota No Yes Yes No 

Sources: GAO analysis of state documents and interviews. 

In the five states we visited, the state SRF and state-level RUS programs 

varied in the number and types of action they had taken to coordinate, as 

described in the memorandum. However, the state-level programs did not 

take actions to cooperate in preparing planning documents. The extent of 

actions taken by the five states consistent with the memorandum are as 

follows: 

Cooperate in preparing planning documents. In the states we visited, 

state SRF and RUS programs do not regularly coordinate when 

developing agency-specific planning documents. State SRF officials 

identify the projects that apply to their program in planning documents 

called intended use plans. In these plans, the states rank projects using 

state-determined criteria following EPA guidance, such as environmental 

and health concerns. Similarly, state-level RUS officials develop funding 

plans in which they separately rank projects applying to their program 

using national criteria that focus primarily on economic development, as 

well as environmental and health concerns. 

Cooperate to remove policy and regulatory barriers. The state SRF and 

RUS programs in three of the states we visited had cooperated to remove 

policy barriers to coordination, such as differences in funding cycles. 

Specifically, in those states, federal and state officials meet regularly to 

ensure funding cycles are aligned to avoid unnecessary project delays. 

For example, in South Dakota, the state’s SRF and other state water and 

wastewater infrastructure funding programs have the same funding cycles 

and application timelines, which are administered by one agency. State 

and local officials told us that having the state funding programs aligned 
 

Page 33 GAO-13-111 Rural Water Infrastructure 

made it easier to navigate differences in funding cycles with RUS and 

other federal funding programs operating in the state. In addition, 

Montana officials created a working group to share information across 

state water and wastewater infrastructure programs and coordinate 

funding cycles. State and local officials in Montana said that regular 

coordination between federal and state officials on individual projects 

helped manage programmatic differences, such as differing funding 

cycles, to avoid lengthy delays in funding projects. Officials and engineers 

in both states said that the benefits of these joint efforts included 

reductions in community costs and administrative burdens for submitting 

applications and related documents, as well as reductions in the federal 

and state agencies’ time in reviewing the documents. Other states have 

not worked to remove policy and regulatory barriers to coordination. For 

example, state and local officials in North Carolina told us that differences 

in application processes and funding cycles for the federal and state 

programs, including state SRF programs and the RUS program, 

increased the complexity and cost of applying for funding. Multiple 

agencies in the state that fund drinking water and wastewater 

infrastructure projects, including the SRF programs, have different 

funding cycles, so that communities have to apply separately to each 

program and at different times to make the project affordable. State and 

local officials in Colorado told us that they faced similar barriers. 

Cooperate on project funding. Officials in all the states we visited meet at 

various times during the year, although some meet more frequently and 

discuss project funding in greater detail. Officials in Montana and South 

Dakota told us that they meet regularly to discuss upcoming projects, 

project applications, and coordination of funding, when possible. For 

example, officials from federal and state drinking water and wastewater 

funding programs in the Montana working group share information and 

discuss current projects and communities applying for funding. 

Community representatives said that state SRF program officials hold 

monthly meetings between the applicant and other state and federal 

funders to ensure that adequate funding is available to keep the project 

moving forward and to resolve any differences between the community 

and the federal and state programs providing funding. Similarly, in South 

Dakota, officials for the state SRF and RUS programs told us that they 

discuss project applications routinely and work closely with officials from 

local planning districts who, in turn, use their expertise working with 

federal and state programs to help communities apply for funding. In 

Pennsylvania, the state SRF and state-level RUS programs coordinate 

early in the application process by (1) conducting joint outreach sessions 

with communities interested in applying for drinking water and wastewater 
 

Page 34 GAO-13-111 Rural Water Infrastructure 

project funding and (2) directing communities to the program that better 

fits their needs, according to state officials we spoke with. State-level 

officials and engineers we spoke with identified improvements in the 

efficiency and effectiveness of the programs because the officials direct 

communities to the program that best fits their needs or provides the best 

opportunity for a successful application. 

Officials in Colorado and North Carolina also meet but do not regularly 

discuss project funding or the communities that have applied for funding, 

and said that they have experienced lapses in program efficiency and 

effectiveness, such as loss of federal funding for the state. Officials in 

both states told us coordination is complicated by communities not 

disclosing that they have applied to other state or federal programs for 

funding. Specifically, according to federal and state officials, in some 

cases, communities and the consulting engineers representing them will 

sign a funding agreement with either the state SRF or state-level RUS 

program but continue to seek additional grant or subsidized loan funding 

from other state and federal programs to get additional grant funding or 

better loan terms. State SRF and state-level RUS program officials in 

North Carolina and Colorado told us that not disclosing multiple funding 

sources can lead to inefficiencies when state SRF program officials and 

state-level RUS officials are unaware that a community has applied to 

both programs. Specifically, state-level officials who administer the RUS 

program in North Carolina and Colorado reported having to or expecting 

to deobligate a total of more than $20 million that they had committed to 

fully fund projects because they were unaware that the state SRF 

programs had committed to fully fund the same projects. The state-level 

RUS program in North Carolina expects to have to deobligate funding for 

three projects totaling about $4.9 million in loan and grant funding, and 

the RUS program in Colorado had to deobligate funding for seven 

projects totaling $15.6 million. The two RUS state offices could not meet 

internal agency deadlines to fully obligate their available funds and, as a 

result, had to return these funds to the RUS headquarters pool. State 

officials in North Carolina recently developed a uniform cover sheet for all 

state drinking water and wastewater funding program applications that 

asks communities to disclose other sources of funding. However, in our 

review of the uniform cover sheet, applicants are not asked to provide 

information on funding requested from RUS and other federal drinking 

water and wastewater funding programs. 

Cooperate in preparing environmental analyses documents and other 

common federal requirements. In our visits to Montana and Pennsylvania, 

we learned that federal and state programs, including the state SRF and 
 

Page 35 GAO-13-111 Rural Water Infrastructure 

RUS programs, have coordinated to streamline the application process in 

their states. For example, in Montana, these programs coordinated to 

develop uniform application materials and preliminary engineering report 

requirements that are accepted by all federal and state water and 

wastewater infrastructure programs in the state. Similarly, in 

Pennsylvania, program officials agreed upon uniform environmental 

analyses that are accepted by all programs, which reduce the cost and 

time for completing applications. Other states we visited have not agreed 

on uniform application requirements. According to federal and state 

officials in Colorado, North Carolina, and South Dakota, the state SRF 

and RUS programs have not developed documents with common formats 

and requirements for drinking water and wastewater infrastructure 

projects because of difficulty in integrating multiple program requirements. 

Specifically, state and local officials said that much of the information 

required in the environmental analyses was the same, but that agencies 

could not agree on a standard format and level of detail. For example, 

state SRF and RUS program officials in Montana told us they had tried, 

but were unable, to develop a uniform format for the presentation of their 

environmental analyses even though they had done so for their 

preliminary engineering reports. Furthermore, officials in Colorado and 

North Carolina expressed concern that having uniform documents that 

incorporated both state SRF and RUS program requirements would slow 

the application processes for all three programs and make them more 

costly. Specifically, officials administering both of the state SRF programs 

were concerned that, by adopting a format compatible with RUS policies 

and procedures, they would make the state SRF application process 

more onerous. 

Rural communities rely on federal grants and loans to meet their water 

and wastewater infrastructure needs and to keep their drinking water and 

sewer user rates affordable. It is therefore important to make the most 

efficient use of limited federal funds to help as many communities as 

possible and to eliminate potential duplication of effort by communities 

when they apply for funds. EPA and USDA recognized in a 1997 

memorandum that it is necessary to more effectively and efficiently 

coordinate the SRF and RUS programs at the state level through four 

major actions: in preparing planning documents, removing policy and 

regulatory barriers, meeting regularly to discuss project funding, and 

preparing common environmental analyses and other common federal 

requirements. In addition, EPA and USDA have taken actions to 

encourage states to improve coordination over the past 15 years. 

Specifically, recent actions by EPA and USDA, such as their efforts to 

Conclusions 
 

Page 36 GAO-13-111 Rural Water Infrastructure 

inform state officials and communities about the programs and funding 

opportunities by participating in conferences and workshops, conducting 

Webinars, and sponsoring training, as well as creating a working group to 

examine the possibility of developing guidelines to assist states in 

developing uniform preliminary engineering reports to meet requirements 

for federal and state programs, are encouraging and will help 

communities. However, the guidelines have not yet been completed, and 

EPA and USDA have not initiated a similar effort to develop guidelines for 

uniform environmental analyses that can be used to meet federal and 

state requirements. Without uniform documents, rural communities face a 

continuing burden and additional costs when applying for federal funds to 

improve their water and wastewater infrastructure. The state-level 

programs in the five states we reviewed varied in the number and types of 

actions they had taken to coordinate across the four key areas in the 

1997 memorandum. Some state-level programs have developed 

innovative ways to coordinate and remove barriers to coordination, but in 

other states, the programs have been less successful, warranting 

stronger federal attention. Moreover, the state-level programs did not take 

actions to cooperate in preparing planning documents in any of the 

states. Until the state-level programs are regularly coordinating across the 

four key areas in the 1997 memorandum, including when developing 

planning documents, they will continue to risk potential program 

inefficiencies. Additional delays in taking actions to help improve such 

coordination could prevent EPA and USDA from more effectively and 

efficiently providing limited resources to needy communities. 

To improve coordination and to reduce the potential for inefficiencies and 

duplication of effort, we recommend that the Secretary of Agriculture and 

the Administrator of EPA take the following three actions: 

 ensure the timely completion of the interagency effort to develop 

guidelines to assist states in developing their own uniform preliminary 

engineering reports to meet federal and state requirements; 

 work together and with state and community officials to develop 

guidelines to assist states in developing uniform environmental 

analyses that could be used, to the extent appropriate, to meet state 

and federal requirements for water and wastewater infrastructure 

projects; and 

 work together and with state and community officials through 

conferences and workshops, Webinars, and sponsored training to 

Recommendations for 

Executive Action 
 

Page 37 GAO-13-111 Rural Water Infrastructure 

reemphasize the importance of coordinating in all four key areas in 

the 1997 memorandum. 

We provided EPA and USDA with a draft of this report for their review and 

comment, and both agencies provided written comments. EPA neither 

agreed nor disagreed with our first two recommendations but concurred 

with the third. USDA neither agreed nor disagreed with any of our 

recommendations. EPA’s comments are provided in appendix III and 

USDA’s comments are provided in appendix IV. Both agencies made 

technical comments that we incorporated as appropriate. In addition, we 

sent relevant portions of this report to state or federal officials responsible 

for administering the state SRF programs and state-level RUS programs 

for their review and technical comment. 

In its comments on our first recommendation, that the agencies complete 

their efforts to develop uniform requirements for preliminary engineering 

reports, EPA stated that it supported the intent of the recommendation but 

noted it does not have the authority to require states to adopt a required 

format and that some states may not utilize it. EPA recommended that we 

replace the word “requirements” with the word “format.” USDA also 

indicated that EPA and HUD have no authority to require state 

governments to use a particular preliminary engineering report outline 

and requested that we therefore change the word “requirements” to the 

word “guidelines.” We recognize and agree that states have discretion to 

develop their own requirements for their SRF programs. In making our 

recommendations, we did not intend to limit states’ discretion in adopting 

their own preliminary engineering report requirements. However, we 

continue to believe that the federal agencies could do more to help states 

identify common requirements for their own uniform preliminary 

engineering report documents. We changed our recommendation to 

reflect that the states do have discretion and that the federal agencies 

should develop guidelines to help the states develop uniform preliminary 

engineering report requirements. 

In its comments on our second recommendation, to develop uniform 

requirements for environmental analysis documents, EPA stated that in 

principle it agreed with our recommendation but said it is not realistic to 

develop a one-size-fits-all approach. EPA said that developing the 

“essential elements” for environmental analyses should achieve the same 

outcome and requested that we change the word “requirements” to 

“essential elements.” USDA stated that it did not necessarily disagree 

with the intent of the recommendation but noted that EPA has limited 

Agency Comments 

and Our Evaluation 
 

Page 38 GAO-13-111 Rural Water Infrastructure 

authority to dictate specific requirements to states implementing the SRF 

program. It also identified several procedural and policy hurdles including 

the fact that USDA’s NEPA requirements are typically more stringent than 

the reviews under the SRF programs. USDA stated that it would work 

with EPA to discuss the concept of unified reviews and identify what 

would be required to achieve such reviews. USDA suggested that the 

Council on Environmental Quality could be called on to facilitate a 

working group between federal water and wastewater infrastructure 

funding programs on NEPA implementation. In making our 

recommendation, we did not intend to limit states’ discretion in adopting 

their own requirements for environmental analyses. We changed the 

wording of our recommendation to clarify that the agencies would develop 

guidelines to assist states in developing common requirements for 

environmental analyses. We also note that USDA’s suggestion for the 

Council on Environmental Quality to facilitate a working group seems 

reasonable but did not make this part of our recommendations because 

we did not review the Council on Environmental Quality as part of our 

work. 

EPA concurred with our third recommendation, that the agencies work 

together and with state and community officials in all four key areas of the 

1997 memorandum, while USDA neither agreed nor disagreed with the 

recommendation. EPA said that our report showed that little overlap 

existed between the programs but that state-level coordination should be 

encouraged more broadly. USDA said that it had no control over 

communities that choose to change funding sources to a state SRF 

program after accepting funding from the state-level RUS programs. We 

understand that communities have the discretion to change funding 

sources if better loan and grant terms are available, but strong 

coordination can help the agencies know when communities are applying 

to other programs and what other communities might need funding. Such 

coordination, envisioned in the 1997 memorandum, can avoid the loss of 

funds from states with high needs and other inefficiencies identified in this 

report. Furthermore, as EPA confirmed in its comments, state-level 

coordination can be encouraged more broadly to help other state and 

federal water and wastewater infrastructure funding programs better 

leverage limited state and federal funds. 

Finally, in its general comments on the draft report, USDA commented on 

GAO’s use of a relatively small sample of states for this review and that 

the RUS programs in those states were experiencing a transition in 

leadership and had not had time to develop relationships and learn other 

agencies’ programs. We selected states that had high rural water and 
 

Page 39 GAO-13-111 Rural Water Infrastructure 

wastewater infrastructure needs and a range of experience coordinating 

their water and wastewater infrastructure funding programs. We clearly 

state in the report that the sample is small and that our results cannot be 

generalized to all states. We recognize that the experience and trust 

established through long-term relationships is critical to the establishment 

of good coordination between federal and state programs. However, 

given the amount of time the memorandum has been in place, we believe 

that if good coordination between state SRF and state-level RUS 

programs had been established prior to the transition in state-level RUS 

leadership, it would have facilitated a smoother transition, and many of 

the challenges identified in our report may have been avoided. 

We will send copies of this report to the Administrator of EPA, the 

Secretary of Agriculture, the appropriate congressional committees, and 

other interested parties. In addition, the report will be available at no 

charge on the GAO Web site at http://www.gao.gov. If you or your staff 

members have any questions about this report, please contact me at 

(202) 512-3841 or trimbled@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix V. 

David C. Trimble 

Director 

Natural Resources and Environment 

 
 

Page 40 GAO-13-111 Rural Water Infrastructure 

List of Congressional Addressees 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Vice Chairman 

Committee on Appropriations 

United States Senate 

The Honorable Kent Conrad 

Chairman 

The Honorable Jeff Sessions 

Ranking Member 

Committee on the Budget 

United States Senate 

The Honorable Joseph I. Lieberman 

Chairman 

The Honorable Susan M. Collins 

Ranking Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable James M. Inhofe 

Ranking Member 

Committee on Environment and Public Works 

United States Senate 

The Honorable Hal Rogers 

Chairman 

The Honorable Norm Dicks 

Ranking Member 

Committee on Appropriations 

United States House of Representatives 

The Honorable Paul Ryan 

Chairman 

The Honorable Chris Van Hollen 

Ranking Member 

Committee on the Budget 

United States House of Representatives 

 
 

Page 41 GAO-13-111 Rural Water Infrastructure 

The Honorable Darrell Issa 

Chairman 

The Honorable Elijah Cummings 

Ranking Member 

Committee on Oversight and Government Reform 

United States House of Representatives 

The Honorable Bob Gibbs 

Chairman 

The Honorable Tim Bishop 

Ranking Member 

Subcommittee on Water Resources 

and Environment 

Committee on Transportation and Infrastructure 

House of Representatives 

The Honorable Scott Brown 

United States Senate 

The Honorable Tom Coburn 

United States Senate 

The Honorable Claire McCaskill 

United States Senate 

The Honorable Mark R. Warner 

United States Senate 
Appendix I: Objectives, Scope, and 

Methodology 

Page 42 GAO-13-111 Rural Water Infrastructure 

The objectives of this report examine (1) the potential for fragmentation, 

overlap, and duplication between the Environmental Protection Agency’s 

(EPA) Drinking Water and Clean Water State Revolving Fund (SRF) 

programs and the U.S. Department of Agriculture’s (USDA) Rural Utilities 

Service (RUS) Water and Wastewater Disposal program, both of which 

address water and wastewater infrastructure needs in rural communities, 

and (2) the extent to which these programs coordinate with each other at 

the federal and state level to help meet the water infrastructure needs of 

rural communities. We selected these programs for this review because 

they provided the highest amount of federal funds to water and 

wastewater infrastructure projects, which include projects in rural 

communities—defined for this report as communities with populations of 

10,000 or less—in fiscal year 2011. The federal government has not 

established a formal or consistent definition of what constitutes a rural 

community; however, RUS defines a rural community as having a 

population of 10,000 or less. EPA, although it does not define 

communities as rural, gathers data on funding to communities of various 

sizes, including communities with populations of 10,000 or less. For both 

agencies, communities can include entities such as towns, cities, or 

counties, which make the decision whether to apply for funding from the 

programs. In some cases, regional water utilities or other utility 

associations can apply on behalf of a community or a group of 

communities. Using this definition allowed us to obtain and analyze 

similar data from both agencies. 

To address both objectives, we reviewed government reports, statutes, 

regulations, guidance, budgets, and other relevant documents to identify 

federal support for rural water infrastructure programs and specifically the 

support provided by the Clean Water SRF, Drinking Water SRF, and RUS 

programs. In addition, we interviewed officials from EPA and USDA and 

from relevant nonprofit organizations, including the environmental finance 

center at Boise State University and the Council of Infrastructure 

Financing Authorities to collect financial and other information on the 

extent of fragmentation, overlap, duplication, and coordination among 

these rural water funding programs, as well as the current challenges 

facing rural communities. We then selected a nongeneralizable sample of 

five states to visit—Colorado, Montana, North Carolina, Pennsylvania, 

and South Dakota—to review the extent of fragmentation, overlap, and 

duplication among the EPA and USDA programs and the extent of 

coordination among the programs at the state level. The information from 

this sample cannot be generalized to all states but provides illustrative 

examples of their experiences in applying for funding from the EPA and 

USDA programs. We conducted site visits to these states to observe 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology 

Page 43 GAO-13-111 Rural Water Infrastructure 

federally funded projects, discuss the funding process, and discuss 

community experiences applying for funding from the EPA and USDA 

programs. In each state, we judgmentally selected a nongeneralizable 

sample of communities to visit and projects to observe by analyzing lists 

of water and wastewater infrastructure projects we obtained from state 

SRF and state-level RUS program officials, and obtaining 

recommendations from officials we interviewed. We used the lists of 

projects to identify communities and projects that had applied for or 

received funding from the state SRF and RUS programs, or both. We 

reviewed a total of 54 projects in a total of 31 communities across five 

states, all of which had experience in applying for funds for a drinking 

water or wastewater project, or both, from the SRF or RUS programs. As 

with the state sample, the information from the communities and projects 

we selected cannot be generalized to other communities and projects but 

provide illustrative examples. 

To address the first objective, we assessed fragmentation between the 

Clean Water SRF, Drinking Water SRF, and RUS programs by examining 

statutes, regulations, and guidance relevant to the programs. To 

determine overlap between the programs, we calculated the proportion of 

SRF funding that was allocated to communities with populations of 

10,000 or less for state fiscal years 2007 through 2011 (state fiscal years 

generally start in July and end in June). We used data from EPA’s 

National Information Management System (NIMS), which collects and 

summarizes data on Clean Water and Drinking Water SRF program 

funding directed to communities of populations of all sizes, including 

communities with populations of 10,000 or less by states—the same size 

of communities toward which RUS directs its funding.1

 We conducted 

interviews with EPA officials to assess the reliability of the NIMS data and 

found it reliable for our purposes of identifying state SRF funding for 

communities with populations of 10,000 or less. We compared this 

proportion of SRF funding with total RUS funding provided from USDA’s 

accounting system. We interviewed RUS officials about how these 

funding data are maintained and determined that it was reliable for our 

purposes of identifying USDA funding for communities with populations of 

10,000 or less. 

 

1

Data for the Drinking Water SRF program are reported for communities with populations 

of 10,000 or less. Data for the Clean Water SRF program are reported for communities 

with populations of 9,999 or less. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 44 GAO-13-111 Rural Water Infrastructure 

To determine the potential for duplication at the project and activity level, 

we collected funding data for projects that had been funded by the state 

SRF programs, the state-level RUS programs, or both, as well as funding 

data from the communities we visited or whose officials we spoke with. In 

addition, we spoke with state SRF, state-level RUS, and community 

officials and consulting engineers to assess the extent to which projects 

were funded separately by state SRF or state-level RUS programs, or 

were jointly funded by these programs, and what activities were 

conducted. Duplication occurs when two or more agencies or programs 

are engaged in the same activities or provide the same services to the 

same recipients; however, in some instances, duplication may be 

warranted because of the magnitude or nature of the federal effort. 

Further, we collected and analyzed application materials—preliminary 

engineering reports and environmental analyses—from communities if the 

community had a project that was jointly funded by both the SRF and 

RUS programs or had applied to both programs for the same project. On 

the basis of this criterion, we obtained preliminary engineering reports for 

four projects in four states and environmental analyses for four projects in 

the same four states. To analyze the documents, we identified the 

components of each document and compared them with the others to 

determine those that were similar and different. We spoke with consulting 

engineers in those communities to determine whether the communities 

were required to submit separate documents with similar information to 

both programs. Because of the limited size of each sample, the results of 

our analysis are not generalizeable to all such documents. 

To address the second objective, we reviewed documents and initiatives, 

including a 1997 joint memorandum signed by EPA and USDA promoting 

better coordination between the state SRF and state-level RUS programs 

and interviewed headquarters officials at EPA and USDA to identify 

national efforts to encourage better coordination at the state level. To 

analyze whether EPA and USDA efforts and initiatives incorporated 

leading practices for interagency collaboration, we compared guidance in 

the 1997 memorandum with our prior work on practices that can help 

federal agencies enhance and sustain collaboration.2

 In the states we 

visited, to determine how closely the state SRF and state-level RUS 

programs coordinate and whether their efforts to coordinate are 

consistent with the 1997 memorandum, we reviewed state-level guidance 

 

2

GAO-06-15 
Appendix I: Objectives, Scope, and 

Methodology 

Page 45 GAO-13-111 Rural Water Infrastructure 

and documentation from state coordinating bodies and interviewed statelevel SRF and RUS program officials, community officials, consulting 

engineers, and technical assistance providers. We identified actions 

taken by states that were consistent with actions identified in the 1997 

memorandum and assessed whether these fulfilled the actions identified 

in the memorandum using “yes” to indicate the action was fully taken, “no” 

to indicate that it was not taken at all, and “partial” to indicate the action 

had not been fully taken. 

We selected the five states we visited using a multistep process and 

several sources of information: funding needs for rural areas; geographic 

location; and level of coordination between state and community partners. 

We first narrowed the number of states we could visit to 15 states by 

analyzing EPA and USDA data on funding needs. To do so, we 

determined the relative level of funding needed in each state using the 

following data, by state, for communities with populations of 10,000 or 

less: (1) per capita needs for drinking water infrastructure, (2) per capita 

needs for clean water infrastructure, (3) drinking water infrastructure 

needs as a percentage of total state drinking water needs, (4) clean water 

infrastructure needs as a percentage of total state clean water needs, (5) 

the number of backlogged RUS water and wastewater infrastructure 

project requests, and (6) the total amount of RUS loan and grant funding 

requested for the backlogged projects. We obtained and analyzed these 

six categories of data from EPA’s Drinking Water and Clean Water Needs 

Assessment reports, and USDA’s data on backlog of funding applications. 

To assess the reliability of EPA’s data, we reviewed the agency’s quality 

control efforts over the data. To assess the reliability of the USDA data, 

we interviewed RUS officials on how they obtained and verified the data. 

We determined that both sets of data were sufficiently reliable for our 

purposes of selecting a sample of states to visit. Because not all states 

had complete data, we created three groups of states for analysis: 35 

states had full data, or data for all 6 categories; 11 states had partial data, 

or data for 4 of the 6 categories; and 4 states had mixed data that we 

determined was not sufficient to analyze. Because the amount of data 

varied for each group, we determined that we would sample from each 

group separately. 

Next, for the 35 states that provided complete data, we ranked the states 

from highest to lowest (numbering the highest 1 and so on) within each of 

the six categories, basing the ranking on either percentage or dollars, 

depending on the category. We then identified the top 10 states in each 

category, selected the 10 states that appeared in three or more of the six 

categories and added the scores across the six categories for each state. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 46 GAO-13-111 Rural Water Infrastructure 

We then conducted a very similar process for the 11 states that had 

partial data, except that we identified the states with the top five highest 

values in each of the four categories of data and then selected the three 

states that appeared in at least three of the four categories. This parallel 

analysis gave us 10 states from the full data group and 3 states from the 

partial data group. We then selected 2 states from the third group of 

states, which had mixed data available, on the basis of their physical size 

and the fact that they had the most data available in the group. 

We further narrowed down the number of states we could visit using 

geographic dispersion as a criterion. We located the 15 states selected 

through our analysis of funding data in six Department of Census 

divisions and selected five that were ranked first according to the six 

categories.3

 We also selected 2 states from the partial-data group and 

one state from the mixed-data group, for a total of 8 states. 

From the eight remaining states, we selected Colorado, Montana, North 

Carolina, Pennsylvania, and South Dakota to visit based on the extent of 

coordination among the state SRF and RUS programs and the 

communities they served. We called the state SRF and RUS state-level 

officials to discuss whether the programs met and how frequently they 

jointly funded projects. We considered the range of coordination in each 

of the eight states to judgmentally select the five states we visited. 

We conducted this performance audit from September 2011 to 

September 2012 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. 

 

3

The Census groups states and the District of Columbia into four regions and nine 

divisions within those regions. In the Northeast region, there are two divisions, the MidAtlantic Division and the New England Division. In the Midwest Region, there are two 

divisions, the East North Central and West North Central divisions. In the Southern 

Region, there are three divisions, the South Atlantic Division, the East South Central 

Division, and the West South Central Division. Finally, in the Western Region, there are 

two Divisions, the Mountain Division and the Pacific Division. 
Appendix II: Drinking Water and Clean Water 

State Revolving Fund Program Funds Provided 

to Communities with Populations of 10,000 or 

Less 

Page 47 GAO-13-111 Rural Water Infrastructure 

Table 6 provides information on the percentages and amounts of funding 

provided, by state, through EPA’s Drinking Water and Clean Water SRF 

programs to communities with populations of 10,000 or less. 

Table 6: Drinking Water and Clean Water SRF Program Funds Provided to Communities with Populations of 10,000 or Less 

Dollars in millions 

 Drinking Water SRF Clean Water SRF 

July 1, 1996-June 30, 2011a July 1, 1987-June 30, 2011b

State 

Percentage of 

statewide funds Amount of funding

Percentage of 

statewide funds Amount of funding

Alabama 33% $115.4 20% $204.1

Alaska 44 106.7 33 127.3

Arizona 25 160.9 27 370.8

Arkansas 36 68.2 37 198.8

California 16 196.2 8 409.1

Colorado 44 174.9 43 394.0

Connecticut 24 27.4 19 314.9

Delaware 31 43.6 57 146.6

Florida 33 203.2 19 682.3

Georgia 50 143.9 22 291.6

Hawaii 30 35.7 24 122.5

Idaho 76 132.4 52 215.2

Illinois 44 325.0 23 703.2

Indiana 44 206.1 28 701.6

Iowa 52 260.5 47 635.2

Kansas 43 195.9 44 447.0

Kentucky 28 58.5 29 286.7

Louisiana 33 64.6 19 128.5

Maine 70 115.8 55 320.6

Maryland 49 93.5 22 322.6

Massachusetts 9 111.4 10 486.5

Michigan 39 257.6 13 456.9

Minnesota 53 336.3 33 862.3

Mississippi 40 87.4 26 160.5

Missouri 55 167.6 24 523.4

Montana 66 115.2 56 201.0

Nebraska 81 144.7 53 208.6

Nevada 45 72.3 13 49.8

Appendix II: Drinking Water and Clean Water 

State Revolving Fund Program Funds 

Provided to Communities with Populations of 

10,000 or Less 
Appendix II: Drinking Water and Clean Water 

State Revolving Fund Program Funds Provided 

to Communities with Populations of 10,000 or 

Less 

Page 48 GAO-13-111 Rural Water Infrastructure 

Dollars in millions 

 Drinking Water SRF Clean Water SRF 

July 1, 1996-June 30, 2011a July 1, 1987-June 30, 2011b

State 

Percentage of 

statewide funds Amount of funding

Percentage of 

statewide funds Amount of funding

New Hampshire 55 75.8 30 189.9

New Jersey 13 95.9 14 567.1

New Mexico 33 35.0 23 71.3

New York 42 1,304.1 9 1,084.3

North Carolina 31 88.8 33 431.3

North Dakota 40 114.2 30 93.2

Ohio 30 248.8 26 1,397.9

Oklahoma 26 156.3 22 185.5

Oregon 71 173.4 48 429.1

Pennsylvania 44 298.9 74 1,755.9

Puerto Rico 27 49.4 33 137.3

Rhode Island 7 15.3 17 189.2

South Carolina 12 21.1 19 149.7

South Dakota 42 121.6 31 136.2

Tennessee 51 83.0 23 257.9

Texas 27 283.2 18 1,016.7

Utah 71 108.5 41 154.4

Vermont 89 102.4 66 137.3

Virginia 93 211.0 23 569.5

Washington 59 250.0 52 616.0

West Virginia 69 100.3 68 530.0

Wisconsin 40 145.2 23 452.1

Wyoming 41% $67.8 20% $68.3

Total $8,170.9 $20,591.7

Source: GAO analysis of EPA data. 

Note: For the Clean Water SRF program, EPA began to provide SRF funds in federal fiscal year 

1988, or on October 1, 1987; states reported on the funds received beginning in their corresponding 

fiscal year—starting on July 1, 1987—according to EPA documents. Similarly, for the Drinking Water 

SRF program, EPA began to provide funds in federal fiscal year 1997, or on October 1, 1996, and 

states reported these data from their corresponding fiscal year—starting on July 1, 1996—according 

to EPA documents. 

a

Data for the Drinking SRF program are reported for communities with populations of 10,000 or less. 

b

Data for the Clean Water SRF program are reported for communities with populations of 9,999 or 

less. 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 49 GAO-13-111 Rural Water Infrastructure 

Appendix III: Comments from the 

Environmental Protection Agency 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 50 GAO-13-111 Rural Water Infrastructure 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 51 GAO-13-111 Rural Water Infrastructure 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 52 GAO-13-111 Rural Water Infrastructure 
Appendix IV: Comments from the U.S. 

Department of Agriculture’s Office of Rural 

Development 

Page 53 GAO-13-111 Rural Water Infrastructure 

Appendix IV: Comments from the U.S. 

Department of Agriculture’s Office of Rural 

Development 
Appendix IV: Comments from the U.S. 

Department of Agriculture’s Office of Rural 

Development 

Page 54 GAO-13-111 Rural Water Infrastructure 
Appendix IV: Comments from the U.S. 

Department of Agriculture’s Office of Rural 

Development 

Page 55 GAO-13-111 Rural Water Infrastructure 
Appendix IV: Comments from the U.S. 

Department of Agriculture’s Office of Rural 

Development 

Page 56 GAO-13-111 Rural Water Infrastructure 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Page 57 GAO-13-111 Rural Water Infrastructure 

David C. Trimble, (202) 512-3841or trimbled@gao.gov 

In addition to the individual above, Susan Iott, Assistant Director; John 

Barrett; Elizabeth Beardsley; Mark Braza; Elizabeth Curda; Richard 

Johnson; Micah McMillan; Sara Ann Moessbauer; Dan Royer; Tina 

Sherman; Carol Herrnstadt Shulman; and Kiki Theodoropoulos made key 

contributions to this report. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(361341)
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