Testimony 

Before the Subcommittee on Federal 

Workforce, Postal Service, and the District 

of Columbia, Committee on Oversight and 

Government Reform, U.S. House of 

Representatives

United States Government Accountability Office

GAO 

DRINKING WATER 

The District of Columbia 

and Communities 

Nationwide Face Serious 

Challenges in Their Efforts 

to Safeguard Water Supplies

Statement of John B. Stephenson, Director 

Natural Resources and Environment 

For Release on Delivery

Expected at 2:00 p.m. EDT

Tuesday, April 15, 2008

 

GAO-08-687T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 15, 2008

DRINKING WATER

The District of Columbia and Communities

Nationwide Face Serious Challenges in Their Efforts

Highlights of GAO-08-687T, a testimony to Safeguard Water Supplies

before the Subcommittee on Federal 

Workforce, Postal Service, and the District

of Columbia, Committee on Oversight and 

Government Reform, U.S. House of 

Representatives 

The discovery in 2004 of lead 

contamination in the District of

Columbia’s drinking water resulted

in an administrative order between 

the Environmental Protection 

Agency (EPA) and the District’s 

Water and Sewer Authority 

(WASA), requiring WASA to take a 

number of corrective actions. 

WASA also took additional, longerterm measures, most notably a 

roughly $400 million program to 

replace what may be 35,000 lead

service lines in public space within 

its service area. 

As in WASA’s case, water utilities 

nationwide are under increasing 

pressure to make significant 

investments to upgrade aging and 

deteriorating infrastructures, 

improve security, serve a growing

population, and meet new 

regulatory requirements. 

In this context, GAO’s testimony 

presents observations on (1) 

WASA’s efforts to address lead 

contamination in light of its other 

pressing water infrastructure 

needs, and (2) the extent to which 

WASA’s challenges are indicative of 

those facing water utilities 

nationwide. 

To address these issues, GAO 

relied primarily on its 2005 and 

2006 reports on lead contamination 

in drinking water, as well as other

recent GAO reports examining the 

nation’s water infrastructure needs

and strategies to address these

needs. 

With the introduction of orthophosphate to its drinking water WASA has 

consistently tested below the federal action level for lead. However, WASA is

reevaluating its roughly $400 million, longer-term solution for replacement of 

what may be 35,000 lead service lines within its jurisdiction. In addition to the 

program’s high cost, a key problem WASA faces is that, by law, it may only 

replace the portion of the service line that it owns; replacing the portion on

private property is at the homeowner’s discretion. Accordingly, WASA has 

been encouraging homeowners to participate in the program by replacing 

their own portion of the lead lines. Despite these efforts, however, 

homeowner replacement of lead service lines remains limited. Of the 14,260 

lead service lines WASA replaced through the first quarter of fiscal year 2008, 

there were only 2,128 instances in which the homeowner participated in 

private side replacement. Many questions remain about the benefits of partial 

lead service line replacement. In fact, some research to date suggests that 

partial service line replacement results in (1) short-term spikes in lead levels 

immediately after partial replacement and (2) little long-term reduction in lead 

levels. WASA’s dilemma over this program is taking place within the context 

of its other staggering infrastructure needs. Most notably, WASA is 

undertaking a $2.2 billion effort to meet the terms of a consent decree with 

EPA requiring the utility to control its sewer overflow problems. 

WASA’s challenges in addressing its lead contamination problems and other 

infrastructure demands are mirrored across the country, where infrastructure 

needs are estimated to range from $485 billion to nearly $1.2 trillion 

nationwide over the next 20 years. In particular, many utilities have had 

difficulty in raising funds to repair, replace, or upgrade aging capital assets; 

comply with regulatory requirements; and expand capacity to meet increased

demand. For example, based on a nationwide survey of several thousand 

drinking water and wastewater utilities, GAO reported in 2002 that 29 percent 

of the drinking water utilities and 41 percent of the wastewater utilities were 

not generating enough revenue from user rates and other local sources to 

cover their full cost of service. GAO also found that about one-third of the 

utilities (1) deferred maintenance because of insufficient funding, (2) had 20 

percent or more of their pipelines nearing the end of their useful life, and (3) 

lacked basic plans for managing their capital assets. Other GAO work 

suggests that the nation’s water utilities could more effectively manage their

infrastructure at a time when huge investments are needed. In 2004, for 

example, GAO cited “comprehensive asset management” as one approach that 

could help utilities better identify and manage their infrastructure needs. 

While by no means a panacea to their fundamental fiscal challenges, water 

utilities can use comprehensive asset management to minimize the total cost

of designing, acquiring, operating, maintaining, replacing, and disposing of 

capital assets over their useful lives, while achieving desired service levels. 

To view the full product, including the scope 

and methodology, click on GAO-08-687T. 

For more information, contact John B. 

Stephenson at (202) 512-3841 or

stephensonj@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here to testify on the infrastructure challenges facing

the District of Columbia’s Water and Sewer Authority (WASA), 

highlighting its efforts to reduce lead exposure. In doing so, we will also 

put our comments in the context of the many fiscal challenges and 

competing demands facing all water utilities, including WASA. 

Media reports in early 2004 about lead contamination of the District’s 

drinking water raised serious concerns about the health risks posed to its 

residents from existing lead service lines, and about how local and federal 

agencies were carrying out their responsibilities. WASA’s lack of timely 

disclosure of this problem, and the subsequent confused effort by 

government agencies to inform the public on steps to protect itself, led to

numerous congressional hearings and a June 2004 administrative consent 

order between the Environmental Protection Agency (EPA) and WASA. 

WASA agreed to take a number of corrective actions, including improving 

its water sampling procedures and subsequent reporting of these results to 

EPA; enhancing its public education efforts; and developing a plan to 

identify additional lead service lines. In addition, orthophosphate was 

added to WASA’s water supply in August 2004 to form a protective coating 

inside lead service lines and fixtures to prevent lead from leaching into 

drinking water. 

To address the problem in the long-term, WASA decided to undertake 

what it estimates to be at least a $400 million program to replace the 

public portions of all its customers’ lead service lines (roughly 35,000

lines) by 2016 and to also provide various incentives to encourage the 

replacement of lead service lines in private space. In the District of 

Columbia, homeowners are responsible for the portion of the service line 

that runs from the property line to the home. Homeowners may replace 

this portion of the line if they choose, but this replacement is not required.

The lead problem in the District of Columbia also prompted EPA to review

the adequacy of federal regulations on lead in drinking water. In October 

2007, EPA made several changes to the monitoring and public notice 

provisions of the Safe Drinking Water Act’s Lead and Copper Rule, the 

principal federal regulation protecting public water system consumers 

from exposure to lead and copper in drinking water. 

As important as the lead contamination problem has been to WASA and its 

customers, it is not the only issue with which the utility must grapple. Like 

many other large water utilities, WASA is also responsible for wastewater 

Page 1 GAO-08-687T 
collection and transmission, including operation and maintenance of its 

wastewater treatment facility and sanitary sewer system. While the utility 

has sought to modernize many parts of its wastewater facilities, some 

components date back to the early 19th century. Like most utilities, WASA 

must provide for replacement or rehabilitation of its existing system, and 

construct extensions to this system for development and growth as 

needed. 

The federal government has had a significant impact on the nation’s 

drinking water and wastewater infrastructure by (1) providing financial 

assistance to build new facilities or upgrade existing ones and (2) 

establishing regulatory requirements that affect the technology, operation, 

and maintenance of utility infrastructure. As the agency that regulates 

drinking water and surface water quality, EPA provides a significant 

amount of financial assistance for facilities that supply drinking water and 

treat wastewater. This assistance is primarily in the form of grants to the 

states to capitalize revolving loan funds, which are used to finance 

improvements to drinking water and wastewater treatment facilities. In 

addition to its financial investment, EPA has promulgated regulations to 

implement the Safe Drinking Water Act and Clean Water Act, which have 

been key factors in shaping water systems’ capital needs and management 

practices. 

In my testimony today I will present observations on (1) WASA’s efforts to 

address lead contamination in light of its other pressing water 

infrastructure needs, and (2) the extent to which WASA’s challenges are 

indicative of those facing other water utilities across the nation. 

To address these questions, we are summarizing and updating reports we 

issued in 20051

 and in 20062 on the lead contamination problem in the 

District of Columbia’s drinking water supplies, and on the status of 

WASA’s effort to address this problem. We are also highlighting some of 

the work we have recently completed that addresses the magnitude of the

nation’s water infrastructure needs, the problems utilities face in 

 1

GAO, District of Columbia’s Drinking Water: Agencies Have Improved Coordination,

but Key Challenges Remain in Protecting the Public from Elevated Lead Levels, 

GAO-05-344 (Washington, D.C.: Mar. 31, 2005). 

2

GAO, Drinking Water: EPA Should Strengthen Ongoing Efforts to Ensure That

Consumers Are Protected from Lead Contamination, GAO-06-148 (Washington, D.C.: 

Jan. 4, 2006). 

Page 2 GAO-08-687T 
addressing them, and the strategies utilities can employ to help them best 

meet their needs. We prepared this testimony in April 2008, based on work 

performed over the last three years, 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. 

In summary: 

• The introduction of orthophosphate to its water supply has enabled WASA

to consistently test below the federal action level for lead in drinking 

water, but the Authority is reevaluating its longer-term roughly $400 

million program to replace what may be 35,000 lead service lines in public 

space. Importantly, this program only addresses the replacement of the 

public portion of customers’ lead lines. Customers would need to finance 

replacement of their private portion of the lead lines (at a cost that could 

reach $2,500) on their own. Yet despite WASA’s efforts to encourage 

homeowner participation, private side replacement of lead service lines 

remains limited. Of the 14,260 lead service lines WASA replaced through 

the first quarter of fiscal year 2008, there were only 2,128 instances in 

which the homeowner participated in the private side replacement. 

Importantly, many questions remain about the benefits of partial lead 

service line replacement. Research suggests that short-term spikes in lead

levels occur immediately after partial replacement, and little long-term 

reduction in lead levels may be achieved. WASA’s reevaluation of this 

program is taking place within the context of its staggering infrastructure 

needs, most notably a $2.2 billion effort to meet the terms of a consent 

decree with EPA to address sewer overflow problems. 

• WASA’s difficulties in meeting myriad fiscal demands are mirrored across 

the country: water infrastructure needs nationwide are estimated to range 

from $485 billion to nearly $1.2 trillion over the next 20 years. In 

particular, many utilities have had difficulty raising funds to repair, 

replace, or upgrade aging capital assets; comply with regulatory 

requirements; and expand capacity to meet increased demand. For 

example, based on a survey of several thousand drinking water and 

wastewater utilities, we reported in 2002 that 29 percent of the drinking 

water utilities, and 41 percent of the wastewater utilities, were not 

generating enough revenue from user rates and other local sources to 

Page 3 GAO-08-687T 
cover their full cost of service.3

 We also found that about one-third of the 

utilities (1) deferred maintenance because of insufficient funding, (2) had 

20 percent or more of their pipelines nearing the end of their useful life, 

and (3) lacked basic plans for managing their capital assets. Other GAO 

work suggests that the nation’s water utilities could more effectively 

manage their infrastructure at a time when huge investments are needed. 

In 2004, for example, we cited “comprehensive asset management” as one 

approach that can help utilities better identify and manage their 

infrastructure needs.4

 Though by no means a panacea for their profound 

fiscal challenges, comprehensive asset management can help water 

utilities minimize the total cost of designing, acquiring, operating, 

maintaining, replacing, and disposing of capital assets over their life cycle, 

and can do so in a way that achieves the level of service customers desire. 

Lead contamination of drinking water is difficult and expensive to control. 

It seldom occurs naturally in source water supplies like rivers and lakes; 

therefore it cannot be treated at a centralized treatment facility. Rather, 

lead enters drinking water primarily from the corrosion of materials 

containing lead in the water distribution system and in household 

plumbing. These materials include lead service lines that connect a house

to the water main, lead-based solder used in a house to join copper pipe, 

and brass faucets and other plumbing fixtures. 

The Safe Drinking Water Act is the key federal law protecting public water 

supplies from harmful contaminants.5

 EPA’s 1991 Lead and Copper Rule, 

promulgated pursuant to the Act, requires water systems to protect 

consumers against exposure to elevated levels of lead in drinking water by 

chemically treating water to reduce its corrosiveness and by collecting 

water samples from consumer taps and testing them for evidence of lead 

corrosion.6

 EPA considers lead to be elevated (known as the “action 

level”) when lead levels are higher than 15 parts per billion in over 10 

percent of tap water samples taken. Because lead contamination generally

Background 

 3

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

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

4

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

Utilities Better Identify Needs and Plan Future Investments, GAO-04-461 (Washington,

D.C.: Mar. 19, 2004). 

5

42 U.S.C. 300f-300j. 

6

40 C.F.R. pt. 141, subpart I. 

Page 4 GAO-08-687T 
occurs after water leaves the treatment plant, the Lead and Copper Rule 

requires testing for lead at consumers’ taps. If elevated lead levels are 

found and persist after treatment to minimize the water’s corrosiveness, 

the water system must annually replace 7 percent of the lead service lines

that it owns. 

Implementation and enforcement of the Lead and Copper Rule in the 

District of Columbia is complicated because of the number and nature of

the entities involved. The Washington Aqueduct, owned and operated by 

the U.S. Army Corps of Engineers, is responsible for water treatment 

(including corrosion control). WASA purchases water from the 

Washington Aqueduct and delivers it to District residents, and is 

responsible for monitoring tap water samples for lead. EPA Region III in 

Philadelphia has oversight and enforcement authority for the District’s 

public water systems. 

Similar to many of the other approximately 400 largest drinking water 

systems in the United States (i.e., serving populations greater than 

100,000), WASA is also responsible for wastewater collection and 

transmission, including operation and maintenance of its wastewater 

treatment facility and sanitary sewer system. This water infrastructure in 

the District of Columbia, like in many older cities, is aging and will require 

substantial funding over the next several years for replacement or 

rehabilitation. 

A June 17, 2004, administrative order for compliance on consent between

EPA and WASA required WASA to take a number of corrective actions 

that, by necessity, enhanced its coordination with EPA and the D.C. 

Department of Health. Among these actions were developing a plan to

identify additional lead service lines, improving the selection of sampling 

locations and reporting of water testing results to EPA, developing a 

strategy to improve WASA’s public education efforts, and collaborating 

with the D.C. Department of Health to set priorities for replacing lead

service lines. Most importantly, with the introduction of orthophosphate to

the drinking water supply, WASA met, and has continued to meet, federal 

standards for lead in drinking water.7

 WASA’s most recent report on lead 

WASA Has Reduced 

Lead in Drinking 

Water But Faces Many 

Other Challenges to 

its Water and 

Wastewater 

Infrastructure 

 7

Orthophosphate was introduced to the WASA’s drinking water supply in August 2004 to

form a protective coating inside lead service lines and fixtures to prevent lead from 

leaching into drinking water. 

Page 5 GAO-08-687T 
levels in D.C. drinking water was delivered to EPA in January 2008. WASA 

reported that 90 percent of the samples had lead levels of 11 parts per 

billion (ppb) or less, which is below EPA’s lead action level of 15 ppb. This

is the sixth monitoring period in a row that WASA has met the lead action 

level. 

To resolve its lead problem in the long-term, however, WASA decided that 

it needed to undertake a program to replace the public portions of all its 

customers’ lead service lines (roughly 35,000 lines) by 2016. WASA 

estimates that its program to replace all the District’s lead service lines 

will cost at least $400 million. Importantly, this figure reflects only the cost 

to replace the public portion of customers’ lead lines. Customers would 

need to finance replacement of their private portion of the lead lines (at a 

cost that could reach $2,500) on their own. Through the first quarter of 

fiscal year 2008, WASA has spent $105 million on the program, and expects 

to spend roughly another $300 million by 2016. 

Perhaps the most important complication facing WASA’s lead service line 

replacement program is that ownership of lead service lines in the District 

of Columbia is shared—WASA owns the portion from the water main to 

the property line, and homeowners own the portion from the property line 

to the home. Homeowners may pay to replace their portion of the lead

service line at the same time as WASA replaces its portion, but are not 

required to do so. Figure 1 shows the configuration of a service line from 

the water main to a customer’s home. 

Page 6 GAO-08-687T 
Figure 1: Lead Service Line Configuration

Service

line

Water

main Water meter Water shutoff valve

Property

line

Source: WASA.

WASA established a program to encourage homeowners to replace their 

portion of lead service lines. This program included: 

• a low-interest loan program for low-income residents, offered through a 

local bank;

• grants of up to $5,000 for low-income residents, offered by the District of 

Columbia Department of Housing and Community Development; and: 

• a fixed-fee structure for line replacement of $100 per linear foot plus $500 

to connect through the wall of the home, to make pricing easier for 

homeowners to understand. 

Page 7 GAO-08-687T 
Despite these incentives, D.C. homeowners have been reluctant to replace

the private side of the lead service line. Through the length of WASA’s lead

service line replacement program, beginning in fiscal year 2003 and 

running through the first quarter of fiscal year 2008, of the 14,260 lead 

service lines replaced in public space, only 2,128 homeowners replaced 

the private portion of their lead service line.8

These totals are particularly troublesome given the lack of information 

about the benefits of partial lead service line replacement. Indeed, experts 

disagree about the effectiveness of removing only part of a lead service 

line. Studies that EPA cited in the Lead and Copper Rule suggest that longterm exposure to lead from drinking water decreases when a service line 

is only partially replaced. However, after partial replacement of a lead 

service line, exposure to lead in drinking water is likely to increase in the 

short term because cutting or moving the pipe can dislodge lead particles 

and disturb any protective coating on the inside of the pipe. Some experts 

believe that lead exposure can increase after partial service line 

replacement because of galvanic corrosion where the dissimilar metals of 

the old and new pipes meet. 

A study presented at the 2006 American Water Works Annual Conference 

summarizing the experience of partial lead service line replacement by the 

Greater Cincinnati Water Works found that partial replacements of lead 

lines resulted in much higher lead levels in the water for up to 1 month 

after replacement, even though the system was optimized for corrosion 

control.9

 Even after this initial period, the sites with partial replacements 

had similar water lead concentrations as the sites in which the entire lead

line was left in place—indicating there would be little, if any, benefit of 

partial lead line replacement. In the study, only completely replacing the 

lead service line resulted in both short- and long-term water quality 

improvements in all of the sites tested. The authors also noted that the use 

of a Teflon sleeve, or some other method of treating the portion of the line 

remaining in service, may help to protect water quality, but that more 

needs to be done in this area. Recognizing the need for more research, 

 8

WASA has indicated that of the service lines currently replaced in public space, 3,408 are 

also considered “full” replacements because it found that the private portion of the service 

line was already non-lead. 

9

Jeff Swertfeger, David J. Hartman, Cliff Shrive, Deborah H. Metz, Jack DeMarco, et al. 

“Water Quality Effects of Partial Lead Line Replacement.” 2006 Annual American Water 

Works Association Conference, San Antonio, Texas.

Page 8 GAO-08-687T 
EPA has partnered with the American Water Works Association Research

Foundation on a study of the relative contributions of service lines and 

plumbing fixtures to lead levels at the tap. The projected completion of the 

study is November 2008.

In light of these problems, WASA is now considering whether its current 

lead line replacement program should be restructured, particularly given 

its high cost and the competing demands on its budget. As a water utility 

serving a large metropolitan area, the lead problem has posed only one of 

several major infrastructure challenges for the utility and its customers. 

For example, approximately one-third of the District (by acreage) is 

served by combined sewers, which carry both sanitary waste from homes 

and businesses and storm water drainage. During storms this untreated 

sewage is discharged directly into the Anacostia and Potomac Rivers, 

adversely impacting the quality of these waters. To meet federal water 

quality standards, WASA will need to spend considerable sums of money 

to deal with the problem. Specifically, a March 2005 consent decree 

between WASA and EPA requires WASA, by 2025, to implement WASA’s 

long-term control plan, including construction of large underground 

tunnels to temporarily store excess flows until they can be treated at the 

Blue Plains Wastewater Treatment Plant and other measures, to 

significantly reduce combined sever overflows into the Anacostia River 

and other area waterways.10 WASA has estimated the cost of this effort to 

reach $2.2 billion dollars. 

WASA’s challenges are mirrored across the country, where projected 

needs for investment in drinking water and wastewater infrastructure 

range from $485 billion to nearly $1.2 trillion over 20 years. The variation

in these estimates reflects alternative assumptions about the nature of 

existing capital stock, replacement rates, and financing costs. EPA 

reported in its most recent Drinking Water Infrastructure Needs Survey 

(issued in June 2005) that drinking water utilities alone will need an 

estimated $276.8 billion for the 20-year period ending in December 2022.11

EPA’s new estimate exceeds those from prior surveys by more than 60

percent, largely as a result of an increased emphasis on capturing 

WASA’s Water

Infrastructure 

Problems Mirror the 

Challenges Water 

Utilities Face 

Nationwide 

 10WASA states that combined sewer overflows will be reduced by 96 percent overall and by

98 percent in the Anacostia River. 

11U.S. Environmental Protection Agency, Drinking Water Infrastructure Needs Survey

and Assessment, Third Report to Congress, EPA 816-R-05-001 (Washington, D.C.: June 

2005). 

Page 9 GAO-08-687T 
previously underreported needs for infrastructure rehabilitation and 

replacement. According to EPA’s report, current needs increased by about

50 percent, but future needs rose by over 100 percent.12 EPA attributes the 

difference to a more complete assessment of the longer-term needs for 

addressing “aging infrastructure that is currently adequate, but will require 

replacement or significant rehabilitation over the next 20 years.” 

Pipeline rehabilitation and replacement represents a significant portion of 

the projected infrastructure needs for water utilities. EPA estimates that 

underground pipelines account for about 75 percent of the nation’s 

existing capital investment in drinking water and wastewater 

infrastructure. According to the American Society of Civil Engineers, U.S. 

drinking water and wastewater utilities are responsible for an estimated 

800,000 miles of water delivery pipelines and between 600,000 and 800,000 

miles of sewer pipelines, respectively. However, several recent studies 

have raised concerns about the condition of the existing pipeline network. 

For example, in August 2002, based on a nationwide survey of large 

drinking water and wastewater utilities, we reported that more than onethird of the utilities had 20 percent or more of their pipelines nearing the 

end of their useful life. In the case of one in 10 utilities, 50 percent or more 

of the utility’s pipelines were nearing the end of their useful life. Citing a 

“huge wave of aging pipe infrastructure,” the American Water Works 

Association in 2001 predicted a significant increase in pipe breaks and 

repair costs over the next 30 years—even if utilities increase their 

investment in pipe infrastructure several fold.13 Other studies make similar 

predictions for the pipelines owned by wastewater utilities.14

Despite the looming problems facing utility pipelines, our nationwide 

survey found that pipeline rehabilitation and replacement was not 

occurring as desired, with over two-thirds of the utilities reporting that 

 12EPA defines current needs as projects that a system considers a high priority for nearterm implementation to enable a water system to continue to deliver safe drinking water. 

Future needs are defined as projects that water systems do not currently need but would 

expect to address in the next 20 years as part of routine maintenance or replacement of

infrastructure because of predictable events, such as capital assets reaching the end of 

their useful life.

13American Water Works Association Water Industry Technical Action Fund, Dawn of the 

Replacement Era: Reinvesting in Drinking Water Infrastructure (Denver, Colo.: May 

2001). 

14For example, see Water Environment Research Foundation, New Pipes for Old: A Study 

of Recent Advances in Sewer Pipe Materials and Technology (2000). 

Page 10 GAO-08-687T 
they have fallen short of their desired pace of rehabilitation and 

replacement. Specifically, we found that roughly half of the utilities 

actually rehabilitated or replaced one percent or less of their pipelines 

annually, even though an estimated 89 percent of drinking water utilities 

and 76 percent of wastewater utilities believed that a higher level of 

rehabilitation and replacement should be occurring. More generally, we 

found that many utilities had deferred maintenance, minor capital 

improvements, and/or major capital improvements due to insufficient 

funding. About one-third of the utilities deferred maintenance 

expenditures, and similar percentages of utilities deferred expenditures in 

the other categories. According to EPA’s June 2005 Drinking Water 

Infrastructure Needs Survey, the largest category of need is the installation 

and maintenance of transmission and distribution systems—accounting 

for $183.6 billion, or about 66 percent of the needs projected through 2022. 

For wastewater systems, EPA’s 2004 Clean Watersheds Needs Survey 

projected infrastructure-related needs for publicly-owned wastewater 

systems of $202.5 billion through 2024.15

Several factors have contributed to the nation’s deteriorating water 

infrastructure over the years. The adequacy of the available funding, in 

particular, has been a key determinant of how well utility infrastructure 

has been maintained. However, according to our nationwide survey, a 

significant percentage of the utilities serving populations of 10,000 or 

more—29 percent of the drinking water utilities and 41 percent of the 

wastewater utilities—were not generating enough revenue from user 

charges and other local sources to cover their full cost of service. In 

addition, when asked about the frequency of rate increases during the 

period from 1992 to 2001, more than half the utilities reported raising their 

rates infrequently: once, twice, or not at all over the 10-year period. 

Our survey also raised questions about whether utility managers have 

enough information about their capital assets to effectively plan their 

future investment needs. We found that many utilities either did not have 

plans for managing their assets, or had plans that may not be adequate in 

scope or content. Specifically, more than one-fourth of the utilities did not

have plans for managing their existing capital assets. Moreover, for the 

utilities that did have such plans, the plans in many instances did not cover 

all assets or did not contain one or more key elements, such as an 

 15U.S. Environmental Protection Agency, Clean Watersheds Needs Survey 2004 Report to

Congress, (Washington, D.C.: January 2008). 

Page 11 GAO-08-687T 
inventory of assets, assessment criteria, information on the assets’ 

condition, and the planned and actual expenditures to maintain the assets. 

Citing communities’ funding difficulties, many have looked to the federal

government for financial assistance. However, if budgetary trends over the 

past few years serve as any indication, federal funding will not close the 

gap. The key federal programs supporting water infrastructure financing 

include the Clean Water State Revolving Fund (CWSRF) for wastewater 

facilities, and the Drinking Water State Revolving Fund (DWSRF) for 

drinking water facilities. Under each of these programs, the federal 

government provides seed money to states, which the states in turn use to 

support revolving funds that loan money to qualifying localities within 

their jurisdictions for new construction and upgrades. However, the trends

and overall funding levels associated with these programs, suggest that 

they will only have a marginal impact in closing the long-term water 

infrastructure funding gap. Federal appropriations for the CWSRF in 

particular have decreased by nearly 50 percent during the past five years—

from $1.34 billion enacted for fiscal year 2004 to $689 million enacted for 

fiscal year 2008. Funding for the DWSRF has remained virtually flat during

the same period. 

Growing infrastructure needs, combined with local pressure to keep user

rates low, make it imperative that utilities manage their resources as cost 

effectively as possible. While hardly a “silver bullet” for the water 

industry’s massive shortfall in infrastructure funding, comprehensive asset 

management is one approach that has shown promise in helping utilities 

better identify their needs, set priorities, and plan future investments. 

Basic elements of comprehensive asset management include: collecting 

and organizing detailed information on assets; analyzing data to set 

priorities and make better decisions about assets; integrating data and

decision making across the organization; and linking the strategy for 

addressing infrastructure needs to service goals, operating budgets, and 

capital improvement plans. At its most basic level, asset management gives 

utility managers the information they need to make sound decisions about 

maintaining, rehabilitating, and replacing capital assets—and to make a 

sound case for rate increases and proposed projects to their customers 

and governing bodies. 

Our 2004 report identified a number of asset management practices that

could help water utilities better manage their infrastructure and target 

their investments to achieve the maximum benefit. Among other things, 

we found that collecting, analyzing, and sharing data across the 

Comprehensive Asset 

Management Can Be an 

Effective Tool for 

Managing Infrastructure 

and Optimizing 

Investments When 

Resources Are 

Constrained 

Page 12 GAO-08-687T 
organization helped utilities make informed decisions about which assets 

to purchase, optimize their maintenance practices, and determine how 

long to repair an asset before replacement becomes more cost-effective. 

Some utility managers, for example, have used risk assessments to 

determine how critical certain assets (such as pipelines) are to their 

operations, considering both the likelihood and consequences of their 

failure. This systematic evaluation has helped them to target their 

resources accordingly, with the most critical assets receiving preventive

maintenance while other, less critical assets received attention on an as 

needed basis. 

Having better information on utility assets has not only allowed managers

to identify and prioritize investment needs, but has also helped them 

justify periodic rate increases to their customers and governing boards to

pay for needed improvements. In one case, for example, utility managers 

modeled information on pipe performance history and replacement costs 

and predicted the approximate number of pipe breaks at various levels of 

funding. By understanding the trade-offs between lower rates and higher

numbers of pipe breaks, the governing board was able to make an 

informed decision about the level of service that was appropriate for its 

community. 

Whether the problem is replacing lead service lines, as is the case for 

WASA, meeting new regulatory requirements, or paying the price for years 

of deferred maintenance, many utilities are facing huge investments to add 

new capital assets and replace others that are reaching the end of their 

useful life. Comprehensive asset management is one approach that shows 

real promise as a tool to help drinking water and wastewater utilities 

effectively target limited resources and, ultimately, ensure a sustainable 

water infrastructure for the future. Accordingly, our report recommended 

that the Environmental Protection Agency take steps to strengthen the 

agency’s existing initiatives on asset management and ensure that relevant

information is accessible to those that need it. 

Mr. Chairman, this completes my prepared statement. I would be happy to

respond to any questions you or other Members of this Subcommittee may 

have at this time. 

Page 13 GAO-08-687T 
For further information, please contact John B. Stephenson at (202) 512-

3841. Individuals making key contributions to this testimony included 

Elizabeth Beardsley, Ellen Crocker, Steve Elstein, Tim Minelli, Nathan 

Morris, Alison O’Neill, and Lisa Turner. 

Page 14 GAO-08-687T 

Contact and 

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