Rural Water Infrastructure: Improved Coordination and Funding Processes Could Enhance Federal Efforts to Meet Needs in the U.S.-Mexico Border Region
Published: 2009-12-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: A serious problem for U.S. communities along the U.S.-Mexico border is the lack of access to safe drinking water and sanitation systems. Inadequate systems can pose risks to human health and the environment, including the risk of waterborne diseases. Numerous federal programs provide grants, loans, or other assistance to rural U.S. communities, including those in the border region, for drinking water and wastewater projects. The Government Accountability Office (GAO) was asked to determine (1) the amount of federal funding provided to rural U.S. communities in the border region for drinking water and wastewater systems and (2) the effectiveness of federal efforts to meet the water and wastewater needs in the region. GAO analyzed agency financial data; reviewed statutes, regulations, policies, and procedures; and interviewed federal, state, local, and private sector officials.
section_title: What GAO Found
paragraphs: Seven federal agencies--the Environmental Protection Agency (EPA), the Department of Agriculture (USDA), the Department of Housing and Urban Development (HUD), the U.S. Army Corps of Engineers (the Corps), Economic Development Administration (EDA), the Indian Health Service (IHS), and the Bureau of Reclamation (Reclamation)--obligated at least $1.4 billion for drinking water and wastewater projects to assist communities in the U.S.-Mexico border region from fiscal years 2000 through 2008. USDA and EPA obligated 78 percent, or about $1.1 billion, of the total $1.4 billion--with USDA obligating 37 percent, or $509 million, and EPA obligating 41 percent, or $568 million. Agencies provided assistance for a variety of drinking water and wastewater activities, such as constructing or improving treatment facilities and installing distribution lines. For example, of the $509 million total, USDA obligated about $502 million to public utilities or similar entities for construction of or improvements to water and wastewater infrastructure. It obligated over $7 million to individuals in the border region for household projects, such as repairs to indoor plumbing. Federal efforts to meet drinking water and wastewater needs in the border region have been ineffective because most federal agencies (1) have not comprehensively assessed the needs in the region, (2) lack coordinated policies and processes, and (3) in some cases have not complied with statutory requirements and agency regulations. Although federal agencies have assembled some data and conducted limited studies of drinking water and wastewater conditions in the border region, the resulting patchwork of data does not provide a comprehensive assessment of the region's needs. Without such an assessment, federal agencies cannot target resources toward the most urgent needs or provide assistance to communities that do not have the technical and financial resources to initiate a proposal for assistance. In contrast, IHS has collected data on water and wastewater conditions for each tribal reservation. As a result, the agency can select projects that target the greatest need. In addition, although some federal agencies recognize the importance of a collaborative and coordinated process to increase program effectiveness, agencies' policies and processes are generally incompatible or not collaborative with those of other agencies. For example, most federal programs require separate documentation to meet the same requirement and the agencies do not consistently coordinate in selecting projects. As a result, applicants face significant administrative burdens and project completion can be delayed. Moreover, GAO found that some agencies do not always meet the requirements stipulated in federal statutes and agency regulations concerning how they are to determine the eligibility of applicants or projects and how they are to prioritize funds. For example, USDA and HUD do not ensure that recipients' use of targeted funds intended for use in the border region complies with statutory requirements for establishing project priorities in the border region. Finally, the Corps has not established any guidance to ensure funds are targeted to those projects with the greatest need.

section_title: Letter
paragraphs: A serious problem along the U.S.-Mexico border is the lack of access to  safe drinking water and sanitation systems. U.S. residents who lack safe  drinking water systems often buy and store water in outdoor tanks or  barrels for drinking and other domestic uses. This practice represents a  significant health risk because the water is often transferred or stored in  open containers and is thereby subject to contamination. In addition, some  residents rely on substandard septic systems or cesspools to dispose of  sewage because they do not have access to wastewater treatment systems.  Leaks from substandard septic systems can contaminate sources of  drinking water, such as wells, and can also leave sewage on the ground,  where residents, especially children, may be exposed to bacteria and other  pathogens. Exposure to contaminated water and wastewater may  contribute to the increased rate of waterborne diseases in this region. For  example, according to an EPA report, waterborne diseases such as  hepatitis A and cholera occur at much higher rates in the Texas border  region than in other parts of the state.
Numerous federal programs provide grants, loans, or technical assistance  to rural communities in the United States, including those in the border  region, for drinking water and wastewater projects. Seven federal  agencies—the U.S. Department of Agriculture (USDA), the Environmental  Protection Agency (EPA), the U.S. Department of Housing and Urban  Development (HUD), the U.S. Army Corps of Engineers (the Corps), the  Department of Health and Human Service’s Indian Health Service (IHS),  the Department of Commerce’s Economic Development Administration  (EDA), and the Department of the Interior’s Bureau of Reclamation  (Reclamation)—administer programs that can assist rural communities in  the border region with acquiring drinking water and wastewater systems.
In addition, four of these seven federal agencies—USDA, EPA, HUD, and  the Corps—administer programs that are targeted specifically to the  border region. Agencies provide assistance for a variety of activities, such  as the planning, design, and construction of treatment facilities;  installation of distribution lines and pumping stations; and upgrades to  household plumbing. A combination of assistance from multiple programs  is used to fund some individual projects.
In response to your request for information on the status of rural water  infrastructure along the border region, this report addresses (1) the  amount of funding federal agencies have provided to rural households and  communities in the border region for the purposes of obtaining safe  drinking water and wastewater systems and (2) the effectiveness of  federal efforts to meet the drinking water and wastewater needs in the  border region. Our review focused on fiscal years 2000 through 2008.
To determine the extent of federal funding provided to rural households and  communities in the border region for drinking water and wastewater projects,  we collected and analyzed agency data on obligations provided for drinking  water and wastewater activities from those federal programs that, based on  our prior work and additional research, were the most likely to provide  assistance to the region. As stated earlier, these programs are primarily  administered by USDA, EPA, HUD, the Corps, EDA, IHS, and Reclamation.  Our review included programs that provide assistance specifically to rural  areas as well as programs that provide assistance to both rural and urban  areas. We assessed the reliability of the data we used by reviewing  information about the underlying database systems, reviewing the data to  identify outliers and inconsistent or missing values, and discussing the data  with knowledgeable agency officials. We determined that the data obtained  from these agencies were sufficiently reliable for the purposes of our review.  In addition, we electronically mapped the funds provided by the federal  agencies to identify the geographic distribution of funding. To determine the  effectiveness of federal efforts to meet the drinking water and wastewater  needs of the region, we identified and reviewed existing federal assessments  of drinking water and wastewater conditions; program statutes, regulations,  policies, and procedures to solicit, accept, and prioritize applications for  those agencies with programs targeted to the border region (i.e., USDA, HUD,  EPA, and the Corps); and coordination efforts among these agencies. We also  interviewed state and local government officials, officials from water and  wastewater utilities, nonprofit officials from the region, and such private  sector representatives as urban planners and engineers. In addition, we  conducted site visits in Texas, New Mexico, and Arizona, in which we  observed federally funded projects and discussed with state and local officials  their experiences applying for or receiving assistance from federal agencies.  Furthermore, we attended two interagency coordination meetings in which  various federal and state agency officials discussed the status of ongoing  drinking water and wastewater projects in the border region. A more detailed  description of our scope and methodology is presented in appendix I.
We conducted this performance audit from December 2008 to December  2009 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.
subsections: section_title: Background
paragraphs: The U.S.-Mexico border extends more than 2,000 miles, from the Gulf of  Mexico to the Pacific Ocean. As can be seen in figure 1, portions of four  states—Texas, New Mexico, Arizona, and California—encompassing 97  counties and 44 U.S. federally recognized tribal nations make up the  border region.
The region includes a wide range of community types, from large cities— such as Los Angeles, California, population 3.8 million—to small, rural  communities—such as Spofford, Texas, population 75. Of the 44 tribal  nations in the region, 30 are in California, 8 in Arizona, 1 in New Mexico, 2  in Texas, and 3 in both California and Arizona. The tribal nations range in  population from 1 household in the Jamul Indian Village in California to  3,572 households in the Tohono O’odham tribal nation in Arizona, whose  tribal land covers an area approximately the size of Connecticut.
subsections: section_title: History of Water and Wastewater Infrastructure in the Border Region
paragraphs: Throughout the border region, a lack of safe drinking water and adequate  wastewater treatment has been a continuous problem exacerbated by  large gains in population associated with rapid industrial growth that has  occurred over the past three decades. Part of this population increase has  occurred in communities now commonly referred to as colonias. Initially,  colonias emerged as developers sold small plots of residential land to  individuals without providing water or wastewater infrastructure.  Residents often placed a trailer or similar structure on the land or built  their homes themselves, many starting with just one room and adding on  periodically as they were able to afford it. Numerous news articles during  the 1980s and 1990s described colonias, with one referring to colonias as  “pockets of poverty” with conditions similar to those generally associated  with “third-world” conditions. When colonias first began to emerge, they  were often located in remote areas outside of incorporated cities where  developers sold land as residential without adhering to the ordinances and  regulations of the cities; however, more recently many local governments  have begun to classify entire cities or subdivisions within a city as  colonias.
Since water and wastewater infrastructure were lacking when they bought  their lots and built their homes, many residents in colonias relied on on- site alternatives. For example, to obtain water, some used contaminated  wells, while others hauled and stored water in barrels or tanks. For  wastewater disposal, residents used methods such as septic tanks or  cesspools. Septic systems can treat waste safely, but they can also  contaminate drinking water with sewage and organic matter if they are not  installed and maintained properly. Effective septic systems require that the  type and amount of soil be sufficient to absorb wastewater, and that the  systems not be located too close to groundwater or surface water. In  contrast, cesspools can pose a risk of contamination because they do not  treat wastewater and are merely holes in the ground for the disposal of  sewage. Problems associated with failing septic systems are not restricted  to colonias. Rural households throughout the region can experience  difficulties maintaining proper on-site wastewater treatment. Figure 2  compares proper septic system function with improper cesspool disposal.
In response to public health concerns in the border region caused by a  lack of clean drinking water and adequate sewage treatment, Congress  established various programs with dedicated funding. For example, in the  early 1990s, Congress established dedicated funding for water and  wastewater projects to benefit residents of colonias. These funds have  been used for a number of projects to provide colonia residents safe  drinking water and adequate sewage disposal, yet some colonias continue  to lack these basic services. Appendix II provides additional information  on the establishment of federal funding to assist colonias.
Colonias are still found throughout the border region, though their  characteristics vary widely. Present-day colonias are communities of all  types and sizes, both incorporated and unincorporated. For example, a  colonia can be a tribal reservation, a fast-growing retirement community,  or a high-poverty subdivision. Moreover, not all colonias have the same  level of need. For example, a town in Arizona that already had water and  wastewater service was designated a colonia in 2008 because the local  water utility did not have the funds to address routine repairs, and  believed that the designation would increase its ability to receive federal  funds. In contrast, residents of the El Conquistador colonia in Hudspeth  County, Texas, have lived without access to water and wastewater service  for over 20 years.
section_title: Agencies That Provide Assistance in the Region
paragraphs: To help communities and households throughout the border region obtain  safe drinking water and adequate wastewater treatment, seven federal  agencies provide grants, loans, and technical assistance under separate  programs and congressional authorizations. These include the following:    EPA, which has funding for drinking water and wastewater systems that is  complementary to its regulatory and enforcement authorities under the  Safe Drinking Water Act and the Clean Water Act. EPA provides grants for  water and wastewater infrastructure in the border region through several  different programs including the    U.S.-Mexico Border Water Infrastructure Program. EPA’s binational  program provides grants to water and wastewater facilities within 62 miles  of the border. EPA allots most of these funds to the Border Environment  Cooperation Commission (BECC) and the North American Development  Bank (NADB). These organizations then administer these funds to  implement project development activities and construction. In addition to  the funds administered by BECC and NADB, EPA provides grants to tribal  nations within the border region.
Colonias Wastewater Treatment Assistance Program (CWTAP). EPA  awarded grants to the state of Texas from fiscal years 1993 through 1999  for the purpose of funding the construction and improvement of water and  wastewater systems in colonias. The state of Texas obligated this funding,  along with a state match, to public entities during fiscal years 2000 through  2008.
Drinking Water and Clean Water State Revolving Fund Programs. EPA  annually provides grants to states to help finance local drinking water and  wastewater projects nationwide through the Drinking Water and Clean  Water State Revolving Fund Programs. The states use this funding, along  with a required 20 percent match, to capitalize their state revolving funds.  The funds provide low-cost loans or other financial assistance for a wide  range of water infrastructure projects. In addition, EPA provides funds from  the Drinking Water and Clean Water Revolving Fund Programs to tribal  nations throughout the United States for water and wastewater projects.
USDA, which provides grants, loans, and technical assistance for rural  water and wastewater projects through its Water and Environmental  Program. The department can provide assistance for various activities,  such as construction of water treatment and sewage collection facilities,  connection of single-family homes to water distribution or wastewater  collection lines, and training for the operation of water and wastewater  utilities. While the program is available to eligible entities nationwide,  USDA has been required by annual appropriations acts to set aside a  portion of this funding—up to $25 million annually—for water and  wastewater systems that benefit colonia residents (referred to as the  Section 306C Colonia funds).
HUD, which disburses grants to states and local governments through the  Community Development Block Grant (CDBG) Program to fund housing,  infrastructure, and other community development activities. The annual  appropriation for CDBG is split according to HUD formulas so that 70  percent is allocated among eligible metropolitan cities and counties  (referred to as entitlement communities) and 30 percent among the states  to serve cities with populations of fewer than 50,000 and counties with  populations of fewer than 200,000 (referred to as nonentitlement  communities). Each border state is required to use up to 10 percent of  total funds for projects to meet the water, sewage, and housing needs of  colonia residents (referred to as the Colonia Set-aside). According to a  HUD official, HUD determines each state’s Colonia Set-aside amount  annually based on input from state officials and other colonia  stakeholders, such as nonprofit organizations. For fiscal years 2000  through 2008, HUD established a 10 percent annual set-aside amount for  Texas, New Mexico, and Arizona and a 5 percent annual set-aside for  California. Additionally, HUD provides CDBG funds to tribal nations that  can be used for any eligible CDBG activity, including water or wastewater  projects.
IHS, which constructs water and wastewater projects through its  Sanitation Facilities Construction (SFC) Program. This assistance is  available to tribal nations within the United States, and through the  program, IHS constructs various projects, including distribution and  collection lines, treatment facilities, and home connections.
EDA, which provides grants to economically distressed areas through its  Public Works and Economic Development Program. The funds are used  for construction of public facilities, including water and wastewater  facilities.
The Corps, which has provided assistance for water and wastewater  projects in the border region as directed by Congress. Congress has  authorized and appropriated funds for the Corps to provide assistance for  a number of projects, including projects to benefit colonias in need of  water or wastewater infrastructure.
Reclamation, which has been directed to provide assistance for drinking  water or wastewater treatment projects in response to individual project  authorizations but does not have an established program for such  assistance. However, in 2006, Congress passed the Rural Water Supply Act,  directing Reclamation to develop a rural water supply program.
Entities that can seek assistance from most of these federal agencies  include local units of government, tribal nations, water or wastewater  utilities or similar entities, nonprofit organizations, or individual  homeowners. Each federal program has its own application process but  generally involves the following steps:    Pre-application meeting. Federal agencies generally require the entity  seeking assistance to meet with agency officials prior to submitting an  application. During this meeting, officials and the potential applicant  discuss program eligibility, the type of assistance needed, and application  requirements.
Submission of application. After the pre-application discussion, the entity  seeking assistance prepares an application that can include information  such as financial, engineering, and environmental studies that describe the  project plan and its costs. Some agencies require additional  documentation, such as evidence of public support for the project and  documentation that the entity cannot obtain commercial credit at a  reasonable rate.
Review and evaluation of application. Once an agency receives an  application, officials review it for eligibility. After the agency determines  that an application meets program eligibility requirements, it may be  further evaluated, depending on whether the assistance being requested is  from a competitive or a noncompetitive program. For competitive  programs, agencies generally score each application according to  established criteria and then rank the applications so that the projects  with the highest scores will receive priority for available funds. For  noncompetitive programs, agencies will generally obligate funding as  applications are deemed eligible until all available funds are depleted.
section_title: Federal Agencies Provided at Least $1.4 Billion over 9 Years for Water and Wastewater Infrastructure in the Border Region
paragraphs: We found that seven federal agencies obligated at least $1.4 billion for  drinking water and wastewater projects in the U.S.-Mexico border region  from fiscal years 2000 through 2008. USDA and EPA obligated 78 percent,  or about $1.1 billion, of the total $1.4 billion. The remaining 22 percent, or  $309 million, came from HUD, the Corps, IHS, EDA, and Reclamation.  Table 1 provides additional data regarding federal funds obligated to the  border region for water and wastewater projects by agency and program.
Details about the funding provided by each of the seven federal agencies  to the border region from fiscal year 2000 through 2008 include the  following:    EPA obligated at least $568 million in grants, or 41 percent of the total  federal funding provided to the region. Of that, about $471 million was  obligated through programs targeted to the border region, while just over  $98 million was obligated through nationwide programs. Of the $471  million targeted to the border region, EPA obligated $298 million in grant  funds through the U.S.-Mexico Border Water Infrastructure Program, and  $173 million in grant funds through the Colonias Wastewater Treatment  Assistance Program. Of the $98 million from nationwide programs, $61  million was congressionally directed in EPA’s State and Tribal Assistance  Grant (STAG) account appropriations, according to data provided by EPA.  The remaining nationwide program funds were obligated to tribal nations  through the Drinking Water and Clean Water Revolving Fund Programs  (about $36 million). Appendix V provides additional data on the  obligations from EPA in the border region. In addition, state-administered  revolving loan funds partially capitalized by EPA provided approximately  $3.4 billion in loan financing to water and wastewater projects in the  border region through the Clean Water and Drinking Water State  Revolving Fund Programs from fiscal years 2000 through 2008. For  example, the California Department of Health obligated about $1.7 million  for repairs to the drinking water distribution system in Imperial County,  California. Appendix VI provides additional data on the obligations from  the Drinking Water and Clean Water State Revolving Fund programs in the  border region.
USDA obligated about $509 million, or about 37 percent of the total federal  funding. Of the $509 million, it obligated $208 million in grant funds  through its Section 306C Colonia funds. The remaining $302 million—$209  million in loan funds and $93 million in grant funds—was obligated  through its nationwide Water and Environmental Program. Of the $509  million total, USDA obligated about $502 million (98 percent) to public  utilities or similar entities for construction or improvements to water and  wastewater infrastructure. For example, USDA obligated $2.9 million in  grants and almost $1 million in loans to the city of Truth or Consequences,  New Mexico, for improvements to the wastewater treatment plant and  extension of collection lines. It obligated over $7 million to individuals in  the border region for household projects, such as installing indoor  plumbing. Appendix IV provides additional data on the obligations from  USDA funds in the border region.
HUD obligated about $218 million, or 16 percent of the total federal  funding provided to the region. Almost all of the funds, $217 million,  were obligated as grant funds through the Community Development B Grant Programs. The remainder, $925,000, was obligated from HUD’s  Economic Development Initiative Special Project account, according to  lock  officials. Of the $217 million in CDBG grants, $51 million of this was  identified by states in HUD’s database as obligated for water or  wastewater projects in a colonia. For example, New Mexico obligated  about $265,000 to extend water distribution lines to 20 residents of a  colonia in Sierra County. Additional funds from the Colonia Set-aside  Program may have been used in colonias for water and wastewater  projects, but we were unable to determine the total amount because HUD  does not comprehensively distinguish in its data system which of the  CDBG obligated funds are under the Colonia Set-aside. Of the $217 million  in CDBG grants, HUD obligated $2.6 million through its Indian CDBG  program to two tribal nations—the Salt River Pima-Maricopa Indian  Community and the San Pasqual Band of Mission Indians. Appendix VII  provides additional data on the obligations from HUD in the border region.
IHS obligated about $45 million for the construction of sanitation facilities  on tribal nations in the border region. For example, IHS obligated about $8  million to provide basic sanitation services to residents of the Tohono  O’odham tribal nation by participating in a modular bathroom program.  Through this effort, residents living in traditional adobe structures that  lack indoor plumbing are able to attach a modular bathroom to the home  and then connect to a wastewater distribution line. Appendix VIII provides  additional data on federal obligations made to each tribal nation in the  border region.
EDA obligated about $39 million in grant funds for public infrastructure  projects that included water or wastewater activities. These funds were  obligated for 29 projects. For example, EDA obligated $3.2 million in grant  funds for a water system project in San Bernardino, California. This  project included land acquisition for new water wells, well drilling, new  pipeline, a booster pump, obtaining water rights, an engineering and  environmental assessment, and removal of an elevated water tank.
The Corps obligated just over $4 million in assistance to projects within  the border region. The assistance was used for 6 congressionally directed  projects in New Mexico, and 3 projects to assist colonias in Texas  conducted under the Water Resources Development Act of 1992, which  authorized the Corps to assist communities with water and wastewater  needs.
Reclamation obligated almost $4 million in grant funds for 5 water supply  projects, for which Congress specifically authorized and appropriated  funds, according to agency documents. Reclamation currently funds  projects only in response to specific congressional directives, but it was  authorized in 2006 by the Rural Water Supply Act to establish a rural water  supply program. We reported in 2007 that Reclamation planned to  develop programmatic criteria to determine eligibility for participation in  this program and to assess the status of authorized rural water supply  projects and other federal programs that address rural water supply  issues, as the act required, by December 2008. As of September 2009,  agency officials told us that the establishment of the program is still a  priority, but it has been delayed by the change of Administration and by  efforts to develop a strategy for implementation of the American Recovery  and Reinvestment Act funds. Agency officials stated they hope to have  the program established by the end of calendar year 2009.
Of the 97 counties in the border region, 94 received some assistance, and 3  received no assistance during fiscal years 2000 through 2008. Figure 3  shows the amounts provided to the 94 counties that received some  assistance, which ranged from a low of just under $260,000 provided to  Reagan County, Texas, and to a high of almost $130 million provided to  Cameron County, Texas.
Appendix III provides further data on each county, including its rural- urban classification and the funding obligated by federal agencies.
section_title: Federal Efforts Have Not Been Effective in Meeting the Water and Wastewater Needs of the Border Region
paragraphs: Federal efforts have not effectively addressed the drinking water and  wastewater needs in the border region because agencies (1) have not  comprehensively assessed the needs of the region, (2) lack coordinate policies and processes, and (3) in some cases have not complied with  statutory requirements and agency regulations.
subsections: section_title: Agencies Have Not Comprehensively As Water and Wastewater Conditions, Hampering Their Ability to Meet the Needs of the Region
paragraphs: O ver the years, some federal agencies have conducted assessments to  identify water and wastewater conditions in the border region, but non these assessments either individually or collectively provides a  comprehensive picture of the needs of the region. We identified  following assessments that either have been conducted by federal  agencies or are ongoing:    EPA commissioned a study to set a baseline, as of December 2003, for its  U.S.-Mexico Border Water Infrastructure Program by estimating the  number of households without basic water and wastewater service in area served by the program. While the data collection effort was used by  the agency to establish performance measures and strategic goals, the  agency did not establish a process to update the data to reflect current  conditions. Without such a process, the accuracy and usefulness of the  data are limited. In addition, the study did not distinguish between home with appropriate septic systems and homes without them.
In addition, EPA has reviewed applications received from both the U.S.  and Mexico sides of the border through its U.S.-Mexico Border Water  Infrastructure Program in 2004, 2006, and 2008 to determine the total  amount of funding requested from the border region. The requests for  assistance ranged from $590 million to over $1 billion in project  construction costs. During the most recent solicitation, over 130 projects  on the U.S. side of the border requested assistance representing $800  million in total project cost, according to EPA officials. While EPA told this effort provides the agency with a snapshot that reflects the existing  needs in the region, it acknowledges this snapshot is not a comprehensiv assessment of need in the region and captures only the need from those  entities that seek assistance from the U.S.-Mexico Border Water  Infrastructure Program.
Further, EPA conducts the nationwide Clean Watersheds Needs Survey  every 4 years to identify the funds needed to address problems with  wastewater treatment facilities. Similarly, the agency conducts an  assessment every 4 years to identify the funds needed for existing d water facilities to comply with safe drinking water quality standards.  However, on the basis of information provided by agency officials, we not believe that either of these efforts provides the agency with a  comprehensive assessment of the border region. For example, acc to officials, these assessments have not traditionally been successful in  collecting data from small communities. Officials told us that the 2004  Clean Watersheds Needs Survey had a 36 percent response rate from  wastewater systems that serve small communities (those with fewer th 10,000 wastewater customers). In addition, officials told us the 2007  drinking water assessment includes data for all existing utilities servi ng  over 100,000 customers, but only a sample of small community systems  are included in the assessment—600 of the approximately 33,000 such  systems nationwide. Because many of the communities in the border  region are small, we do not believe that they would be captured by the survey.
In 2008, USDA, reported on the amount of funds directed to colonias in  each of the four border states and the amount of unfunded applications  the agency received for the program in fiscal year 2008. This report was i response to a request from the Senate Agriculture Committee to, among  other things, provide a report that “identifies where additional resources  are most needed.” According to our review of USDA’s report, the  department did not identify where additional resources are needed simply reported its backlog of applications from each state. For exampl e,  the report stated that the department had a pre-application and application  backlog of approximately $117 million—with pre-applications accounting  for $108 million and applications accounting for $9 million. As with EPA’s  assessment of applications submitted to the U.S.-Mexico Border Water  Infrastructure Program, these figures represent only those entities that  have contacted USDA for assistance, and therefore do not provide a  complete assessment of those areas where resources are most needed.
HUD has provided funds for local governments to identify colonias and the  water and wastewater conditions within them. From 1992 through 2008,  HUD-funded assessments were completed for 43 of the 67 Texas counties in the border region. For example, a 2008 assessment for Dimmitt County,  Texas, found that 113 housing units lacked centralized water service.  However, as some assessments were conducted more than a decade ago  or longer, they may not reflect current conditions. HUD also provided  funds to the U.S. Geological Survey (USGS) to collect data on  infrastructure in colonias for 6 counties in Texas. The dataset, released in  2007, includes information such as number of households, source of  potable water, and whether wastewater collection is available.
Since 1989, IHS has collected data on the water and wastewater  infrastructure conditions for each tribal reservation in the United This information is available through its Sanitation Deficiency System and is updated annually. As a result, IHS can select projects that target the  greatest need and report on effectiveness to meet the water and  wastewater needs of tribal nations, including those within the border  region.
States.
In 2007, BECC began efforts to identify the water and wastewater  infrastructure needs within the 62-mile region north of the U.S.-Me xico  border. The study is expected to compare the number of existing water  and wastewater connections with the total number of homes and is  expected to identify gaps in access to centralized services. According BECC officials, data collection and analysis were completed for New  Mexico in the first quarter of 2009 and are currently being conducted f Texas, California, and Arizona. BECC expects to complete all data  collection and analysis and issue the study by the end of 2010.
Rural communities may also lack the financial resources to hire a  consultant who can help them design a project and prepare the app materials, including the preliminary engineering and environmental  documents. According to several officials that we spoke to, engineer and environmental reports can cost from $30,000 to $100,000. A prior  federal study has identified this high initial cost as a major obstacle to providing federal assistance for water and wastewater service in the  region.  While federal assistance to help offset this high initial cost is available through some programs, such as EPA’s U.S.-Mexico Border  Water Infrastructure Program, the overall federal assistance provided  such activities is minimal—from fiscal years 2000 through 2008, the  program provided funds to 62 projects in the border region represent about $15 million in grant funds.
Although few federal agencies have made efforts to build institutional  capacity in border communities, we did find some efforts by state  programs and nonprofits. For example, the Texas Colonias Initiative  Program has colonia ombudsmen who assist communities with basic  infrastructure needs. In 1999, the state of Texas established a Colonias  Initiative Program to advance efforts to connect colonia residents’ homes  to water and wastewater services. The program’s ombudsmen work in  counties in the border region with the highest colonia populations— Hidalgo, El Paso, Starr, Webb, Cameron, Nueces, and Maverick Counties.  The role of the ombudsmen includes the following:    serving as liaisons among colonia residents, federal and state agencies,  local governments, and utility companies;  facilitating effective communication among colonia stakeholder groups to  improve living conditions for colonia residents;    mediating among interested groups to resolve situations that prevent the  provision of water and wastewater service;    serving as conduits for information by conducting community outreach  and facilitating community meetings with colonia residents; and    monitoring the different phases of projects to ensure progress and project completion.
State and local officials told us that the ombudsmen had helped  communities overcome obstacles to obtaining service and had provided  valuable information on colonia conditions to state and federal agencies.
section_title: Agencies Lack Coordinated Policies and Processes for Providing Federal Assistance in the Border Region
paragraphs: The federal agencies that provide most of the funding for water and  wastewater projects in the border region—EPA, USDA, and HUD—have  not developed comprehensive coordinated policies and procedures,  resulting in administrative burdens for applicants, duplication of efforts,  and inefficient use of resources. However, the agencies have long  recognized the need for improved coordination, and in 1997 these agencies  issued a joint memorandum to encourage cooperation among federal,  state, and local funding agencies. The memorandum states that the  agencies will foster coordination efforts by establishing a uniform  application, standardizing requirements, coordinating funding cycles, and  collaborating in project selection to improve program delivery to small  and rural communities, including those in the border region.
USDA-Rural Utility Service, Department of Housing and Urban Development, and U.S. because the engineer had to complete two separate sets of engineering  documentation for EPA and USDA. The applicant could have saved thesefunds had EPA and USDA established uniform engineering requirements.  In addition, because most federal programs have no process by which to coordinate and share information on projects they have selected for  funding, we found examples where agencies made inefficient use of  limited resources. both provided funds to design wastewater projects that would serve t same communities in Hidalgo County, Texas. EPA provided funds to  design the project as an expansion of service from an existing utility, whil USDA provided funds to design the project as a new wastewater treatmen facility. The community elected to build the new facility, thus eliminat ing  the need for the EPA design work and resulting in a waste of those federal  funds. In another example, HUD provided a utility in Hudspeth County,  Texas, over $860,000 in grant funds from 2004 to 2006 to extend water  distribution and waste collection lines for residents of a colonia. However,  as of September 2009, the distribution lines remain unused because the  utility does not have enough water to serve the additional households. T he  utility intended to use funding from USDA to construct a new well, but the  funding obligated by the agency was not enough to cover project costs.The utility has been unable to obtain the additional assistance from federal  agencies, and no additional water supply has been acquired in the 3 years  after the HUD funds were provided to construct the distribution lines,  resulting in a $900,000 investment of federal funds in distribution lines that  are not usable. We received conflicting reports about this project from  USDA and utility officials. Specifically, a USDA official in the state offic told us that the agency could provide loan funds only to complete the  project and that the agency advised the utility against applying for  assistance because the utility could not handle any additional loan burden In contrast, USDA headquarters officials told us that the agency orally  offered a loan to the utility to complete the project, but the utility d submit an application to officially request the assistance, and a  representative of the utility told us that the utility did meet with USDA  officials and it was discouraged from submitting an application.
For example, we found a case where EPA and USDA  .
EPA’s U.S.-Mexico Border Water Infrastructure Program recently adopted a process to  coordinate with federal agencies that are providing funding for a project the program may  fund.
In contrast, federal and tribal officials told us that the collaborative  relationship between EPA’s tribal programs and IHS is a model that has  been beneficial for tribal nations. The agencies have created a pr coordinate project selection and development in which EPA uses data o the needs of tribal nations from IHS to select projects. According data, IHS administers almost all jointly funded projects, and as a result  applicants need to deal with only one federal point of contact.
Furthermore, we found examples of states in the border region that have  made efforts to better coordinate funding for water and wastewater  projects among federal, state, and local agencies and thereby make the  application process easier, maximize the use of funds, and reduce  complications during project development. The following are ex coordination within the states:  Texas has developed a coordination group for the state and federal  agencies that provide funding to colonias, and for representatives from  s of  regulatory agencies. This group meets quarterly to discuss the statu ongoing projects in colonias and any impediments to their completion.
California organizes “funding fairs,” where several state and federal  agencies come together in communities throughout the state to prov information on potential assistance that may be available.
Arizona has developed a committee that consists of several state and  federal agencies that conduct meetings throughout the state. According to  state officials, these meetings provide communities the opportunity t discuss their needs with the officials and to determine which funding  agency could best meet their needs.
New Mexico, through executive orders, established an initiative to, am other things, increase collaboration among state agencies that fund water  infrastructure. As a result of the initiative, the state developed a single application process for entities seeking assistance with water and  wastewater infrastructure to complet e and submit to one state office  through a Web-based portal that then disseminates the application to  numerous other state and federal agencies for review. The state has also  developed a single set of engineering requirements that state and some  federal agencies agreed to accept. In addition, a workgroup of state and  federal officials meets biweekly to review the applications and identify the  combination of programs that would best meet the needs of individ ual  applicants. Federal participation includes the New Mexico USDA Rura Development office, and state participation includes the New Mexico s agencies administering the HUD CDBG Program and the Clean Water and Drinking Water State Revolving Fund Programs.
Our past work on issues that cut across multiple agencies, such as rural  water infrastructure, has shown that agencies face numerous challenges  For example, we have found that their efforts to improve coordination. agency missions may not be mutually reinforcing or procedures and  processes may be incompatible. However, we found that without a  coordinated approach, programs can waste scarc overall effectiveness of the federal effort. In order to overcome significant  differences in agency missions, cultures, and established ways of doing  business, collaborating agencies must have a clear and compelling  rationale to work together. The compelling rationale for agencies to  collaborate can be imposed externally through legislation or other  directives or can come from the agencies’ own perceptions of the be they can obtain from working together. In either case, among the key  practices that can help agencies enhance and sustain their collaborative  efforts, include the following:  e funds and limit the  defining and articulating a common outcome;  agreeing on roles and responsibilities;  establishing compatible policies, procedures, and other means to operate across agency boundaries;  identifying and addressing needs by leveraging   developing mechanisms to monitor, eva luate, and report on results.
section_title: Agencies Have Not A Ensured Compliance with Statutory Requirements in Implementing Programs for the Border Region
paragraphs: We found that USDA, HUD, and the Corps have not always ensured  compliance with statutory requirements and regulations concerning the  eligibility of applicants or projects or the prioritization of funds from  programs targeted at the border region.
subsections: section_title: Agencies Are Not Ensuring Compliance with Statutory Eligibility Requirements
paragraphs: HUD and the Corps are not ensuring compliance with eligibility  requirements set by Congress when they distribute federal assistance.  Specifically, we found the following:  HUD. Under the Cranston-Gonzalez Act, the states of Arizona, Californi New Mexico, and Texas shall each ma to meet the needs of the residents of colonias in the State relating to  water, sewage, and housing,” a specified percentage of CDBG funds they  receive. Under the act, the term “colonia” means any identifiable  community that, among other things, is determined to be a colonia on basis of objective criteria, including lack of potable water supply; lack of  adequate sewage systems; and lack of decent, safe, and sanitary ho using.  In short, the act requires grants to be made for projects meeting the needs  of colonias residents, which must be related to water, sewage, and  housing.  ke available, “for activities designed  We found that HUD has not developed guidance for determining wh constitutes a colonia, has not made such determinations, and has not  reviewed states’ determinations. Lacking guidance and direction from  HUD, states have applied the requirement differently. For example, in  California and New Mexico most colonias are designated as communit with substandard housing and a lack of either potable water or adequat sewage systems. In Arizona, designations use any one of the three  statutory criteria. In Texas, designations are made for areas with  substandard housing that lack either adequate water or wastewater  treatment, and which are unincorporated, criteria not found in the act.  HUD officials said that the CDBG Program relies on states to make  decisions that make the most sense for the particular state, and officials  e  do not agree that varying interpretations by states suggest that the guidance is problematic. However, officials stated that in the future,  will issue guidance that reportedly will include information on the  documentation needed by states to support that a colonia meets stat requirements.
HUD officials also told us that the agency interprets the statute as  authorizing colonia funds to be spent on any currently eligible CDB activity. However, the statute expressly limits the Colonia Set-aside to  activities relati ng to water, sewage, and housing. As the agency has not  limited state use of the funds, grants have been obligated for numerous  activities. Arizona obligated only about 32 percent of the Colonia Se funds for water, wastewater, or housing activities, and the remainder w used for other activities not consistent with the limitations in the act,  including about $560,000 for a neighborhood job center and almost  $180,000 for a garbage collection vehicle. HUD officials did not say  whether the guidance the agency intends to issue in the future will discuss  eligible activities.
Corps. The Water Resources Development Act of 1992, as amended,  authorizes the Corps to provide assistance for wastewater treatment  facilities, water systems, and related structures for colonias in the United  States along the Un ited States-Mexico border. Although the act does not  define colonias, the legislative history for the program shows that colonias  were considered to be rural settlements in the border region that lack adequate basic water and sewer facilities, specifically stating that most  these communities rely on outhouses or substandard septic tanks. We foun that the Corps has not defined “colonia” for the purposes of the act, or  developed any guidance for use of these funds. The Corps recognizes that  unlike other Section 219 projects, which have specifically identified pro s  locations (e.g., congressionally directed), the colonias Section 219 project i essentially a programmatic authority. Nonetheless, Corps officials stated the  orps  program was too small for the agency to develop guidance. While the C s  states that it independently verifies that the assistance it provides under thi provision is going to colonias, Corps officials acknowledged that the agency  does not have criteria for identifying eligible colonias, and it is unclear by  what basis the Corps has verified the communities are colonias as meant in  ject  the authorizing statute. As a result, the Corps cannot ensure that its  assistance is going to colonias.
section_title: Agencies Do Not Ensure Funds Intended for Use in the Border Region Are Provided to Those with the Greatest Need
paragraphs: USDA and HUD do not ensure that funds intended for use in the border  region comply with statutory requirements for establishing project  priorities in the border region. Further, the Corps has not established any  guidance to ensure funds are targeted to those projects with the greatest  need. Specifically, we found the following:  USDA. The Consolidated Farm and Rural Development Act, as amended,  directs USDA to provide financial assistanc e for water supply and waste  facilities and services to communities whose residents face significant  health risks, because the community’s residents do not have access to  such facilities. The act states that USDA must give preference to entities  “that propose to provide water supply or waste disposal services to the  residents of those rural subdivisions commonly referred to as colonias  are characterized by substandard housing, inadequate roads and drainage and a lack of adequate water or waste facilities.” Thus, the provision  requires USDA to give preference to water and waste projects in colonias  where other infrastructure and housing are also inadequate.
We found that USDA has no process in place to ensure that entities  “propos to provide water supply or waste disposal service colonias are given preference. Instead, USDA told us it views an entity  ment  proposing to assist any community the relevant state or local govern has designated as a colonia as qualifying for the preference. USDA does  not attempt to independently verify whether these entities meet the  threshold eligibility requirement (proposing to serve communities in which most residents lack access to adequate water or waste facilities), or that th e  areas to be served meet the statutory definition of “colonia.” The age ncy  also has failed to provide any guidance elaborating on the meaning of an  “adequate” water or waste disposal system, or of “colonia.” Despite the lack  of guidance, USDA told us that it considers as inadequate a system with a ny  violation of the Safe Drinking Water Act or Clean Water Act, as appropria te.
As a result of these issues, we believe that USDA has no assurance that  entities proposing to serve eligible colonias with the required  characteristics have received the required statutory preference. For  example, we found that USDA gave an entity proposing a water utility  improvement project in New Mexico the colonia preference and obligated  $700,000 from the colonia funds. The improvements to the water utility  included a new well, tank, and related infrastructure. Rather than  reserving the colonia preference to projects that serve areas living without  these basic necessities, the agency provided the same preference to this  project, which was intended to serve new development, according to the  USDA project summary. By awarding the same preference to projects that  benefit communities with existing infrastructure, the agency is failing to  give preference to those entities proposing to “provide water supply or  waste disposal services” to colonias that have the statutory characteristics  and live without basic necessities.
HUD. The Cranston-Gonzalez Act requires Colonia Set-aside grants to be  made in accordance with a distribution plan having the greatest need for such assistance. To do so would require a state  to at a minimum identify colonias, discuss the relative needs of colonias,  and select projects reflecting the colonias with greatest needs. However,  we found that HUD has failed to ensure that state distribution plans reflect  that priority is given to the colonias with the greatest need. Instead, HUD  officials told us that it is up to the states to determine the needs-based gran t  priorities and the agency does not believe it has the authority to direct states on how to distribute the funds as long as it is in accordance with a  distribution plan. We believe that without direction and oversight from   that gives priority to colonias  HUD, states may not be meeting the statutory requirements. For example,  one state does not distinguish between Colonia Set-aside funds and CDBG funds and does not actually “set aside” the colonias funds to  distribute based on priority of needs. Instead, the state splits the available  funds among the regional Councils of Governments, which then determine  how to distribute the funds to local projects. The distribution proces vary by region—e.g., one region rotates eligibility among the eligible entities  in the county, providing each eligible entity an equal distribution of the  funds. The state later adds up the total of the projects that it considers  qualifying as colonias to justify the set-aside amount. While HUD officials  may believe states are identifying the colonias with the greatest needs, w do not agree that this complies with the act, which requires the agency  to  take the necessary steps to ensure that the states are doing so. In a July 20 report, the HUD Inspector General also recommended that HUD address  this issue, and HUD agreed to issue guidance to assist states to “more  clearly articulate the priorities” in developing their method of distribution. As of November 2009, the agency had not yet issued this guidance, but  officials told us the agency still intends to issue the guidance in the near  future.
In July 2008, the HUD Inspector General issued a report auditing the Colonias Set-aside  program, including HUD actions to ensure compliance and detailed review of uses of funds  by states. Our findings are consistent with those reported by the Inspector General. HUD,  HUD’s Community Development Block Grant Set-Aside for Colonias Was Not Used for Its  Intended Purposes, 2008-FW-0001 (Washington, D.C.: July 29, 2008). assist the community on the entity’s readiness to enter into the req cost-sharing agreement. By using this approach, the Corps is failing to  ensure limited funds are provided to those with the greatest need.
Appendix II provides additional information on the establishment of  federal funding to assist colonias and GAO’s analysis of legal requir related to eligibility and project priorities.
section_title: Conclusions
paragraphs: Meeting the drinking water and wastewater needs of the border region is a  difficult undertaking. Among other things, the remoteness of many  communities can make it difficult to identify residents in need of water  and wastewater services. In addition, the program differences resulting  from separate mandates and project eligibility requirements for the  various federal programs add to the complexity of coordinating funding  needed to complete projects in the region. The ultimate success of  providing these basic services to residents of the border region hinge several factors, of which a well-coordinated implementation approach  based on a comprehensive assessment of the region’s existing water wastewater needs is key. Federal agencies have obligated more than $1.4  billion in recent years to fund numerous projects that provided water an d  wastewater service to residents in the border region. However, despite th extensive efforts that have gone into these projects and the agencies’  recognition over a decade ago of the benefits from coordinated policies  and procedures, the lack of (1) an overall needs assessment for the region,  (2) comprehensive coordinated policies and procedures, and (3)  compliance with all statutory and program requirements is undermining  the effectiveness of the federal efforts. We believe that the impact of these  deficiencies has limited the availability of federal assistance, crea administrative burden for applicants, delayed project completion, and  failed to ensure that federal funds are used effectively and directed  according to the criteria established in federal statutes. In a time of  constrained resources, continuing to provide an uncoordinated federal  response is not the most effective use of federal resources to meet the  drinking water and wastewater needs in the border region.
section_title: Matters for Congressional Consideration
paragraphs: In order to better address the needs of the region, Congress may wish to  consider establishing an interagency mechanism or process, such as a task  force on water and wastewater infrastructure in the border region that  includes the federal agencies that administer programs in the region.  Congress may wish to direct any task force, in partnership with state and  local officials, to  leverage collective resources to identify needs within the border region— including the identification of the water infrastructure status within  colonias, and the extent to which the lack of institutional capacity has  impeded communities within the border region from seeking assistanc in light of these ne coordinated policies and procedures across relevant agencies, such as a  coordinated process for the selection of projects, and standardized  applications and environmental review and engineering requirements the extent possible;  eds, establish a framework for compatible and    evaluate the degree to which there are gaps in the programs and what  resources or authority would be needed to address them; and    provide periodic status reports regarding the progress made in deve this strategic and coordinated approach.
Congress may also wish to consider reemphasizing the priorities for use of  nds  Colonia Set-aside funds by specifically requiring HUD to make these fu available only for grants related to the three existing statutory  and by directing HUD to report annually to Congress on the purposes for  which such funds were used and the steps it is taking to ensure that the  funds are being used for the required purposes.
section_title: Recommendations for Executive Action
paragraphs: We are making the following three recommendations for executive action.
To ensure that funding established to meet the needs of colonias is used in ways that are consistent with statutory and regulatory requirements, we  recommend that  he Secretary of Agriculture direct Rural Development to revise its  process of determining eligibility to ensure that the agency only provides  Section 306C colonia funds for projects that benefit colonias, as defined by  federal statute, and to revise its priority process to better target limited  funds to those projects meeting the statutory preference criteria.
The Secretary of Housing and Urban Development ensure that state  agencies provide Colonia Set-aside funds only for projects that benefit  colonias, as defined by federal statute, and to promptly establish guidance to ensure states follow a method of distribution that results in the  prioritization of Colonia Set-aside funds to those colonias with the great need. Further, the Secretary should monitor the states’ uses of all Colonia  Set-aside funds as a distinct component of CDBG monitoring. est  If the Corps continues to assist communities with water and wastewa related activities through the colonia program, the Secretary of Defense direct the Chief of Engineers and Commanding General of the U.S. Army  Corps of Engineers to develop eligibility criteria and a standard pro cess to  review and select activities for funding that targets the assistance to those  with the greatest need. The process should comply with all applicable  regulations and include verification of eligibility.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the U.S. Department of Agriculture (USDA), the  Environmental Protection Agency (EPA), the Department of Housing and  Urban Development (HUD), and the U.S. Army Corps of Engineers (Corps)  with a draft of this report for their review and comment. In addition, we  sent relevant portions of the report to the Department of Commerce’s  Economic Development Administration, the Department of Health and  Human Service’s Indian Health Service, and the Department of the  Interior’s Bureau of Reclamation for their review and technical comment.
In its written comments, USDA provided several observations on the  report’s findings but disagreed with the report’s recommendation.  Specifically, USDA agreed that our report accurately reflects the  assistance that has been provided in the border region and stated that  more work and additional funding are needed to continue the progress  being made. USDA also agreed with our report’s finding that there is comprehensive federal assessment of the region’s water and wastewater  systems. However, USDA questioned whether a federal level  comprehensive assessment is needed to effectively address water syst inadequacies or whether a locally based federal presence that leverages  local knowledge of local conditions might not be more effective. W agree that local knowledge of local needs is an important element that  help inform decision makers, we continue to believe that without a  comprehensive assessment of the region, federal agencies providing  assistance to the region lack necessary information on the magnitude of  the problem and on how best to prioritize and target limited resources.  Additionally, USDA stated that it believes the examples presented in our  report where coordination would have improved the project outcome are rare instances and that the examples of state level coordination in our  report demonstrate that effective coordination is occurring amongst the  programs. While we agree that some level of coordination is occurrin disagree that the examples cited in our report are rare instances. Dur our review, we contacted numerous officials in the border region— including local, state, and tribal officials; engineers and other consultant nonprofit representatives; water and wastewater utility representatives;  and residents—and these officials consistently provided us with numerous  s;  examples of the type of concerns they have experienced  due to ineffect coordination among the federal agencies. Moreover, while state efforts to  coordinate funding for water and wastewater projects are beneficial; we  found that these efforts are not consistent throughout the region and can  not replace the need for coordination of policies and procedures among  federal agencies. We therefore continue to believe that without a  coordinated approach federal programs continue to place additional  burden on applicants, waste scarce funds, and limit the overall  effectiveness of the federal effort. Finally, in its comments, USDA  disagreed with our recommendation that it should revise its process of  determining eligibility to ensure that Section 306C colonia funds are only  provided to those projects that benefit colonias, as defined by federal  statute, and to revise its priority process to better target limited funds to  those projects meeting the statutory preference criteria. Specifically,  USDA stated that its current process complies with statutory requirements  and that preference is given to entities that propose to provide water or  waste disposal services to colonias. In explaining its position, USD that the characteristics of a colonia to be given preference per the statute  do not constitute a definition. We disagree with USDA’s interpretation of  the statute and continue to believe that USDA must determine that an area  proposed for assistance has these characteristics before the agency  provides preference to an entity for funding decisions. Our  recommendation would allow entities that propose to provide water and  wastewater disposal services to colonias that match the statutory  characteristics to receive preference for limited federal funds and ensure  that the agency is providing federal funds to those with the greatest need.  USDA’s letter can be found in appendix IX.
In its written comments on the draft report, HUD provided several  clarifications about its disagreement with our interpretation  of the  statutory requirements for the CDBG program and also commented on ou recommendations, although it did not state whether it agreed or di with them. For example, with regard to our recommendations that state  agencies only provide colonia set-aside funds for projects that benefit  colonias, as defined by federal statute, and th ensure that states follow a method of distribution that results in the  prioritization of Colonia Set-aside funds to those colonias with the g reatest  need, HUD stated that it will issue guidance to the states that will ad dress  the proper administration of the Colonia Set-aside funds. HUD stated that  this guidance is currently being finalized, but did not provide a timetable  for its release or specify how the guidance would address the issues GAO identified. With regard to our recommendation that HUD should take  additional actions to monitor the states’ use of Colonia Set-aside funds,  HUD stated that it already monitors distinct components of the state  at HUD establish guidance to  CDBG program and as part of this process also monitors a portion of the  Colonia Set-aside funds. HUD stated that it has recently developed a new  monitoring exhibit specifically to assist in the review of Colonia Set-aside  funds. Because HUD has not finalized its guidance we believe that our  recommendation remains valid.  The Department of Housing and Urban  Development’s letter can be found in appendix X.
In its comments on the draft report, DOD stated that it believes that th Corps’ current method of determining which communities receive  assistance under its Section 219 program is appropriate; however, DOD  partially concurred with our recommendation, and stated that should  he  Congress direct additional funds to the colonias Section 219 program, t Corps will develop written guidance on eligibility criteria and the process’s agreement with the  for selection of activities. While we appreciate DOD need for a formal process and written guidance, we continue to be  concerned about the Corps ad hoc selection process for these colonias  to  water and wastewater projects. This is because such a process fails ensure that limited funds are provided to those colonias with the greates need—which GAO has found to be a key factor in federal program  effectiveness. The Department of Defense’s letter can be found in  appendix XI.
The U.S. Environmental Protection Agency, the Department of  Commerce’s Economic Development Administration, the Department of  of  Health and Human Service’s Indian Health Service, and the Department the Interior’s Bureau of Reclamation provided technical comments, which  we incorporated throughout the report as appropriate.    e date of this report. At that time, we will then provide copies of this  arties. We will also send copies to the Secretaries of Agriculture, Housing  As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  th report to the appropriate congressional committees and other interested  p and Urban Development, and Defense, and the Administrator of the  nvironmental Protection Agency. In addition, this report will be available  E at no charge on GAO’s Web site at http://www.gao.gov. If you or your staff  have questions about this report, please contact me at (202) 512-3841 or  mittala@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this repor Key contributors to this report are listed in appendix XII.  t.
section_title: Appendix I: Scope and Methodology
subsections: section_title: Determining How Much Federal Funding Was Provided to the Border Region
paragraphs: To determine how much federal funding was obligated to rural households  and communities in the border region for water and wastewater projects,  we identified seven agencies with programs that may have provided  assistance to these areas. We then collected and analyzed obligation and  project location data from each of the seven agencies—the U.S.  Department of Agriculture (USDA), the Environmental Protection Agency  (EPA), the Department of Housing and Urban Development (HUD), the  U.S. Army Corps of Engineers (the Corps), the Department of Health and  Human Service’s Indian Health Service (IHS), the Department of  Commerce’s Economic Development Administration (EDA), and the  Department of the Interior’s Bureau of Reclamation (Reclamation)—from  fiscal years 2000 through 2008. We collected data from each agency for the  97 counties that are within 150 miles of the border region. We  geographically located the data using MapInfo. We assessed the reliability  of the data we used by reviewing information about the underlying  database systems, reviewing the data to identify outliers and inconsistent  or missing values, and discussing the data with knowledgeable agency  officials. We present more details about the data, their limitations, and  how we addressed these limitations below. On the basis of these efforts,  we determined that the data were sufficiently reliable for the purposes of  this report.
subsections: section_title: Environmental Protection Agency
paragraphs: The Border Environmental Cooperation Commission and the North  American Development Bank provided grant and loan obligation data for  all projects that received funds from EPA’s U.S.-Mexico Border Water  Infrastructure Program. The reports are based on data tracked by the  agency’s financial systems and program management data. As U.S.-Mexico  Border Water Infrastructure Program grant funds are obligated to entities  in both the United States and Mexico, we filtered the data to include only  projects that were located in the United States. Additionally, we included  only water and wastewater projects in our review.
EPA provided grant obligation data for congressionally designated  projects from the Special Appropriation Act Projects (SAAP) database. We  filtered these data to include only projects whose primary purpose was  designated as drinking water or wastewater. The SAAP database does not  include county-level data, so we identified the county for each project  based on location data EPA was able to provide. After the county was  identified for each project, we filtered the data to include only projects in  counties within 150 miles of the border.
EPA provided grant obligation data on tribal programs from spreadsheets  used to track projects. EPA provided data for those tribal nations it  determined to be within 150 miles of the border region.
State agencies from Arizona, California, New Mexico, and Texas provided  loan obligation data for the Drinking Water State Revolving Fund and  Clean Water State Revolving Fund programs.
section_title: U.S. Department of Agriculture
paragraphs: USDA provided grant and loan obligation data for all water and  wastewater utility programs from its Community Program Application  Processing (CPAP) system. For some projects that were within the areas  of our site visits, we obtained additional information, such as copies of the  original applications and project summary data. USDA provided grant  obligation data for the single-family programs from the Rural Development  Data Warehouse. A number of records in the dataset did not include  physical addresses. However, all records did include at least county and  state data.
We did not include one of USDA’s Section 504 single-family programs in  our review. The Section 504 program provides funds to individual  households for numerous activities, including water and wastewater  projects—such as repairs to septic systems or water wells—but the funds  can also be used for other household repairs not related to water or  wastewater. USDA does not centrally track how the funds were utilized,  and we could not determine what portion of the funds was relevant for our  review.
section_title: Department of Housing and Urban Development
paragraphs: HUD provided grant obligation data from its Integrated Disbursement and  Information System (IDIS). HUD was not able to extract data by county,  but rather provided data for all water and wastewater activities in counties  eligible to receive Community Development Block Grant funding in Texas,  New Mexico, Arizona, and California. We then reviewed the project  location data and determined the county in which each project was  located, and we imported the data into a geographic information system  and extracted only those activities conducted in the 97 counties included  in our review.
Within the IDIS, HUD tracks project activities through matrix codes. We  obtained data for matrix code 03J—water and sewer improvements, and  matrix code 14A—rehab, single-family residential units. HUD also provides  funds for planning purposes—matrix code 20—some of which may have  been used for water and wastewater activities. However, we found the  data for matrix code 20 often did not include enough information to  determine whether the project included a water or wastewater  component. We did not include these projects in our review.
Furthermore, although we requested data from fiscal years 2000 through  2008, HUD could not ensure that all funds for fiscal year 2008 were  included in our data. At the time HUD extracted the data, the agency had  not verified that all states had finished inputting data into the database.  However, officials stated that they believe most, if not all, of the data were  included.
section_title: Indian Health Service
paragraphs: IHS provided grant obligation data from its Project Data System. We  obtained data for all water and wastewater projects in Arizona, California,  New Mexico, and Texas. We then reviewed and filtered the data by tribal  name and included only the funds obligated to tribal nations located  within 150 miles of the U.S.-Mexico border. We determined the tribal  nations located in the border region using data provided by EPA, IHS, and  the Bureau of Indian Affairs. IHS also provided needs data from the  Sanitation Deficiency System.
section_title: Economic Development Administration
paragraphs: EDA provided grant obligation data from its Operations Planning and  Control System. Agency officials identified and provided data for those  projects with a water or wastewater component. We reviewed the data and  excluded several projects from our review as they were not directly  related to the provision or improvement of water or wastewater systems,  and thus outside the scope of our review.
section_title: U.S. Army Corps of Engineers
paragraphs: The Corps provided data from its P2 Project Management System. Corps  officials identified and provided data for drinking water and wastewater  projects that received assistance in the border region. We did not collect  data for regulatory permits or projects conducted on military installations  in the region.
section_title: Bureau of Reclamation
paragraphs: Reclamation identified and provided data for water and wastewater  projects. We determined that several projects were not directly related to  the provision or improvement of drinking water or sewage treatment  systems, and were thus outside the scope of our review. Specifically, we  did not include obligations for activities related to storm water runoff,  water recycling, or desalination studies.
section_title: Rural Areas Identified Using a System Based on Population and Commuting Patterns with Census Tracts
paragraphs: The federal government has not established a formal or consistent  definition of what constitutes a rural area. The term “rural” is defined  differently by Congress and each federal agency according to agency  guidelines and individual project or program authorizations. Depending on  the agency, rural areas may be defined as ranging from fewer than 2,500 to  fewer than 50,000 persons. Some agencies and programs that fund water  and wastewater projects in the border region do not focus on serving rural  or urban areas but instead provide funds to eligible applicants from any  location.
We determined that, for purposes of this report, the best system for  differentiating rural from urban areas would be based on ZIP codes rather  than on counties. Because the number of ZIP codes in the nation is so  much larger than the number of counties, classification systems based on  ZIP code measures offer a more precise means of identifying rural areas  than county-based systems. However, because of data limitations and the  multiple ZIP codes often served by projects, we could not reliably track  funding to the ZIP code level; we chose to use the dominant Rural Urban  Commuting Area (RUCA) system, developed by the Washington State  Office of Community and Rural Health in 2001. The system relies on both  population and commuting patterns of census tracts to classify each  county as rural or urban based on the counties’ dominant commuting  patterns. The dominant RUCA system is based on the 10-tiered subcounty  RUCA system developed by ERS in conjunction with the Department of  Health and Human Services in the late 1990s. The rural-urban continuum  system does not explicitly define “rural.” However, the rural-urban  continuum codes can be combined to create rural and urban designations  for counties.
section_title: Effectiveness of Federal Efforts
paragraphs: To assess the effectiveness of federal efforts, we based our review on key  evaluation criteria identified in previously published GAO reports. Our  review did not assess the benefits of individual projects; rather, we  determined the effectiveness of the collective federal effort of the  programs. Specifically, to determine the effectiveness of the federal effort,  we identified whether the agencies with programs targeted to the border  region had (1) comprehensively assessed the needs they seek to address;  (2) developed cooperative policies, procedures, and requirements; and (3)  adhered to all statutory and regulatory requirements, including those that  ensure assistance is targeted to those with the greatest need.
In order to determine whether federal agencies have comprehensively  identified the drinking water and wastewater needs of the region, we  reviewed existing assessments and interviewed federal officials regarding  their assessment efforts. To determine agencies’ efforts to enhance and  sustain collaboration with other agencies, we reviewed coordination  documentation, such as memorandums of agreement; reviewed program  requirements; and interviewed federal officials. To determine if agencies’  programs comply with statutory requirements, we reviewed applicable  authorizing statutes, appropriations acts, regulations, and agency policies  and guidance. We also reviewed program policies and procedures to solicit  and accept applications, and interviewed federal officials regarding their  practices. In addition, we reviewed key legislative history for key statutes  and any relevant case law. Furthermore, we asked agency attorneys and  program officials for explanations where we found noncompliant  practices.
We conducted site visits to colonias, tribal nations, and other communities  in Texas, New Mexico, and Arizona. During the site visits, we observed  water and wastewater conditions in the border region and federally  funded projects. We also interviewed local, state, tribal, and federal  officials; engineering consultants; nonprofit representatives; urban  planners; water and wastewater utility representatives; and residents  regarding their experiences applying for or receiving assistance from  federal agencies. In selecting our site visit locations, we considered a  number of factors, including (1) geographic location, (2) proximity to  identified colonias, (3) proximity to tribal nations, (4) location of federally  funded water and wastewater projects, (4) location of federal agency field  offices, and (5) recommendations from state and local officials of areas  that either lacked basic services or have received the services as a result  of receiving federal funds. While the results of the site visits cannot be  generalized to all sites or projects, the results do reflect a range of  geographic diversity and water and wastewater needs. In addition to the  site visits, we conducted telephone interviews with local, state, tribal, and  federal officials, and nonprofit representatives in Texas, New Mexico,  Arizona, and California not located within the areas where we conducted  site visits to obtain additional information on water and wastewater  conditions in their communities and their experiences with federal  assistance.
Furthermore, we attended two interagency coordination meetings in  which various federal and state agency representatives discussed the  status of ongoing drinking water and wastewater projects in the border  region and the challenges they face completing them.
section_title: Appendix II: Additional Information on Eligibility and Prioritization Requirements for USDA, HUD, and Corps Programs Targeted to the Border Region
paragraphs: This appendix provides additional information on GAO’s analysis of legal  requirements related to eligibility and project priorities for targeted USDA,  HUD, and Corps programs. This information includes relevant history of  the program’s original authorizing legislation, and additional details and  citations.
subsections: section_title: Legislative History of the USDA, HUD, and Corps Colonias Programs
paragraphs: The federal government’s role in assisting colonias was primarily  established when the 101st and 102nd Congresses established dedicated  funding—in programs administered by USDA, HUD, and the Corps—to  address the needs of colonias. These agencies were directed to establish  programs dedicated to assisting these communities. The legislative  histories of the program authorizations emphasize that the key concern  over colonias was public health impacts stemming from the lack of clean  drinking water and the inadequate disposal of sewage; for example, one  particular concern was that the inadequate systems in use, combined with  flooding conditions, would result in human waste in the roads.  Statements throughout the Congresses consistently depict colonias as  areas that lack safe drinking water and sewage disposal facilities, and the  colonias were sometimes likened to areas with “third world” conditions.  ewer  Substandard housing is also mentioned, but the lack of water and s are the predominant characteristics. For example, the sponsor of the administered Colonia Set-aside explained, “These citizens do not have  sewer, they do not have sewage systems, they do not have running water,  and I think that is a travesty in America, that American citizens do not  have the basic necessities of life.” Another representative, when  introducing amendments to the USDA program legislation, stated “here  are hundreds of individuals that live in the colonias that will suffer from a  lack of adequate water and sanitation facilities. This situation is truly  dangerous in terms of sanitation and health hazards from the lack of  proper water and sewer systems.” Finally, when the provision authorizing  the Corps’ colonias assistance was added to the Water Resource and  Development Act bill, a representative explained: “Colonias are rural  settlements along the United States-Mexico border which lack or have  inadequate basic water and sewer facilities. All of the colonias to receive  funding under this amendment are located in the United States . . . . Most  of the inhabitants of these communities use outhouses or substandard   HUD- septic tanks for their waste disposal. A set-aside for these areas is  particularly crucial from a health standpoint. Because of substandard  water resources, contagious diseases pose a particular threat to people  living in colonias.”
The Consolidated Farm and Rural Development Act, as amended, directs  USDA to provide financial assistance for water supply and waste facilities  and services to communities whose residents face significant health risks,  because the communities’ residents do not have access to such facilities.  The act states that USDA must give preference to entities “that propose to  provide water supply or waste disposal services to the residents of those  rural subdivisions commonly referred to as colonias that are characterized  by substandard housing, inadequate roads and drainage, and a lack of  adequate water or waste facilities.” Thus, the provision requires USDA to  give preference to water and waste projects in colonias where other  infrastructure and housing are also inadequate.
We found that USDA has no process in place to ensure that entities  “propos to provide water supply or waste disposal services” to these  colonias are given preference. USDA officials explained that the agency  considers the funding for colonias to be a set-aside, and therefore only  considers entities proposing to assist colonias for this funding. However,  in implementing the program, USDA told us it views any entity proposing  to assist an area that the relevant state or local government has designated  as a colonia as qualifying for the preference, and awards funds to them  on a first-come, first-served basis. USDA does not attempt to  independently verify whether these entities meet the threshold eligibility  requirement (that they propose to provide service to areas where most  residents lack access to adequate water or waste facilities), or that the  areas to be served meet the statutory definition of “colonia.” While agency  regulations repeat the statutory requirement for threshold eligibility and  define “colonia”, the agency has failed to provide any guidance  elaborating on the meaning of an “adequate” water or waste disposal  system, or how to identify those colonias with the statutory preference  characteristics. Despite the lack of guidance, USDA told us that it  considers as inadequate a system with any violation of the Safe Drinking  Water Act or Clean Water Act, as appropriate. Furthermore, the agency  simply accepts local designations of colonias to satisfy the regulation and  the statute.
As a result, USDA has no assurance that entities proposing to serve  colonias with the required characteristics have received the required  preference. By allowing colonia funds to be used for projects that benefit  communities with existing infrastructure, the agency is failing to give  preference to those colonias that have the statutory characteristics and  live without basic necessities.
Under section 916 of the Cranston-Gonzalez National Affordable Housing  Act, the states of Arizona, California, New Mexico, and Texas shall each  make available, “for activities designed to meet the needs of the residents  of colonias in the State relating to water, sewage, and housing,” a  specified percentage of CDBG funds they receive. Under the act, the term  “colonia” means any identifiable community that, among other things, is  determined to be a colonia on the basis of objective criteria, including lack  of potable water supply, lack of adequate sewage systems, and lack of  decent, safe, and sanitary housing. The act requires grants to be made in  accordance with a distribution plan that gives priority to colonias having  the greatest need for such assistance. In short, the act requires grants to be  made for projects meeting the needs of colonias residents, which must be  related to water, sewage, and housing, and which give priority to the  colonias with greatest need.
With respect to the meaning of “colonia,” HUD told us the agency has not  developed guidance regarding interpretation of the definition or  determination of eligible entities. HUD’s sole written interpretation of the  definition, issued in a 2003 notice, asserts that all three criteria must be  met; nonetheless, HUD officials also stated that the agency allows states to  interpret the definition as requiring only one of the three criteria to be  met. Finally, HUD officials told us that as they give grants to the states  for distribution to colonias, the states are ultimately responsible f determining eligible entities; to do so, the states rely on formal  “designation” of colonias. Without guidance from HUD, states have applied  the requirement differently. For example, in California and New Mexico,  most colonias are designated as communities with substandard housing  and a lack of either potable water or adequate sewage systems. In Arizona  designations use any one of the three statutory criteria. In Texas,  designations are made for areas with substandard housing that lack either  adequate water or wastewater treatment, and which are unincorporated, a  criterion not found in the act. While interpreting colonias as those  designated by states may have been the correct interpretation of the  Cranston-Gonzalez Act until 1992, in that year Congress repealed a  provision requiring that a colonia must be designated as such by the state  to be eligible for funds. process was changed so that a colonia can be qualified for this program  without regard to a state or county action. We believe that HUD’s  reliance on the states in carrying out section 916 fails to give effect to this A committee report explains that the designation  change in law. HUD officials said that the CDBG Program relies on states  to make decisions that make the most sense for the particular state, and  officials do not agree that varying interpretations by states suggest that thelack of guidance is problematic. However, officials stated that HUD will be  issuing guidance, which they say will include information on the  documentation states need to support that a colonia meets statutory requirements.
Housing and Community Development Act of 1992, Pub. L. No. 102-550, § 810 (Oct. 28,  1992).
HUD officials also told us that it is up to the states to determine the needs- based grant priorities. However, under the act, states must distribute the  colonia funds according to distribution plans that give priority to the  colonias in the greatest need of assistance. To do so would require a state  to at a minimum identify colonias, discuss the relative needs of colonias,  and select projects reflecting the colonias with the greatest needs.  However, we found that HUD has failed to ensure that state distribution  plans reflect priority given to the colonias with greatest need. Instead,  HUD officials do not believe the agency has the authority to direct states  on how to distribute the funds as long as it is in accordance with a  distribution plan. Without direction and oversight from HUD, states may  not be meeting the statutory requirements. While HUD officials may  believe states are identifying the colonias with the greatest needs, section  916 requires the agency to not just rely on mere belief, but take such steps  as required to ensure it is doing so.
HUD officials also told us that the agency interprets the statute as  authorizing colonia funds to be spent on any currently eligible CDBG  activity. However, the statute expressly limits the set-aside to activities  relating to water, sewage, and housing. Lacking guidance and direction  from HUD, states have applied the requirement differently.
Finally, HUD officials said they are required to give states “maximum  feasible deference” in interpreting statutory requirements related to the  Colonia Set-aside. HUD regulations establish the maximum feasible  deference policy; however, the regulations provide for deference only to  states’ interpretations of CDBG requirements under the Housing and  Community Development Act of 1974 and certain HUD regulations. The  Colonia Set-aside requirement, however, was established by section 916 of  the Cranston-Gonzalez National Affordable Housing Act, which stands  alone and is not an amendment to the Housing and Community  Development Act of 1974. Thus, HUD’s maximum feasible deference  regulation by its terms does not encompass state interpretations related to  the set-aside. Even if it were applicable, the regulation limits deference to  state interpretations that “are not plainly inconsistent with the Act and the  Secretary’s obligation to enforce compliance with the intent of the  Congress as declared in the Act.” As outlined above, HUD has not taken  steps to ensure state interpretations related to funding of set-aside  projects, such as which activities are eligible, are in accordance with law.
subsections: section_title: The Corps
paragraphs: The Water Resources Development Act of 1992 authorized the Corps to  provide assistance to colonias. The colonias authorization is unique  among WRDA section 219 projects, which are otherwise specific  earmarked projects; that is, Congress has not directed the funds to  particular colonias projects. The authorization limits grants to “colonias  in the United States along the United States-Mexico border,” but does not  define colonias. While limited, the legislative history shows that colonias  were understood to be “rural settlements along the United States-Mexico  border which lack or have inadequate basic water and sewer facilities,”  and that “ost of the Inhabitants of these communities use outhouses or  substandard septic tanks for their waste disposal.” In addition, Congress  has elsewhere defined colonias as “based on objective criteria, including  lack of potable water supply, lack of adequate sewage systems, and lack of  decent, safe, and sanitary housing.” Nonetheless, the Corps has never  developed a definition, an interpretation, or guidance for staff to use in  determining whether an assistance recipient is a colonia eligible for the  program. Although the Corps recognizes that the colonias section 219  project is essentially a programmatic authority, nonetheless, Corps  officials stated the program was too small for the agency to develop  guidance. The Corps claimed to independently verify in letter reports,  which are brief project reports that the Corps prepares before providing  assistance to an entity, that the assistance it provides under this provision  is going to colonias; however, the Corps acknowledged that it does not  have criteria for identifying eligible colonias. Thus, while these letter  reports describe the areas, it is unclear by what basis the Corps has  verified they are colonias as meant in the authorizing statute. As a result,  the Corps cannot ensure that its assistance is going to colonias.
section_title: Appendix III: Total Obligations and Rural-Urban Categories for Water and Wastewater Projects in the Border Region, Fiscal Years 2000-2008, by County
subsections: section_title: USDA Water and Environmental
section_title: USDA Water and Environmental
section_title: Appendix IV: Total USDA Obligations for Water and Wastewater Projects in the Border Region, Fiscal Years 2000-2008, by County
paragraphs: The following figure displays the ranges of USDA funding obligated to  counties in the border region for water and wastewater projects.
section_title: Appendix V: Total EPA Obligations and Rural- Urban Categories for Water and Wastewater Projects in the Border Region, Fiscal Years 2000- 2008, by County
paragraphs: The following figure displays the ranges of EPA funding obligated to  counties in the border region for water and wastewater projects.
section_title: Appendix VI: Total Obligations from Clean Water and Drinking Water State Revolving Funds and Rural-Urban Categories for Water and Wastewater Projects in the Border Region, Fiscal Years 2000-2008, by County
paragraphs: Rural-urban  continuum codeRural (7)
Rural (6)
Urban (2)
Rural (8)
Rural (6)
Rural (7)
Rural (9)
Rural (6)
Rural (7)
Urban (3)
Rural (9)
Urban (2)
Rural (6)
Rural (7)
Rural (8)
Urban (3)
Urban (2)
Rural (8)
Urban (3)
Rural (9)
Rural (6)
Urban (4)
Rural (6)
Urban (1)
Rural (9)
Urban (4)
Rural (7)
Rural (9)
Urban (4)
Rural (6)
Rural (6)
Rural (9)
Rural (9)
Urban (5)
Rural (8)
Urban (1)
Rural (8)
section_title: Appendix VII: Total HUD Obligations and Rural- Urban Categories for Water and Wastewater Projects in the Border Region, Fiscal Years 2000- 2008, by County
paragraphs: The following figure displays the ranges of HUD funding obligated to  counties in the border region for water and wastewater projects.
section_title: Appendix VIII: Total Obligations for Water and Wastewater Projects in the Border Region, Fiscal Years 2000-2008, by Tribal Nation
subsections: section_title: IHS Sanitation Facilities Construction
paragraphs: PA, USDA, an ata.
section_title: Appendix IX: Comments from the Department of Agriculture
paragraphs: The following are GAO’s comments to the Department of Agriculture’s  letter dated December 8, 2009.
subsections: section_title: GAO Comments
section_title: Appendix X: Comments from the Department of Housing and Urban Development
paragraphs: The following are GAO’s comments to the Department of Housing and  Urban Development’s letter dated December 10, 2009.
subsections: section_title: GAO Comments
paragraphs: water, sewage, and housing. We did not make any change to our rep in response to HUD’s further explanation.    .  Our report recognizes that HUD has stated its intent to issue guidance  to assist states to more clearly articulate the priorities in developing  their method of distribution. However, during the course of the  engagement, we asked HUD for a draft version of the guidance or  other documentation so that we could review the contents of the  guidance and assess whether it would adequately address our  concerns. Because HUD did not provide us with any documentation,  we have made no modifications to the report in response to this  comment.   4.  We disagree with HUD’s characterization of our discussion regarding  the interpretation of the colonia definition. As stated in our report,  HUD has failed to provide guidance on the interpretation of colonia.  During our review, the only documented definition we found that H issued in relation to the Colonia Set-aside is in a HUD Office of  Community Planning and Development Notice, which as HUD  indicates in its response, is not followed by the agen considered to be an official interpretation of the statute. We continue  to believe that to ensure compliance with statutory guidance; HUD  should undertake a review of the statute and issue clear guidance to  states concerning its interpretation of the definition. We did not revise the report in response to this comment. cy, and is not  5.  During our review, we conducted interviews with numerous state a local officials throughout the border region—including officials  representing the state agencies that administer HUD’s CDBG funds.
However, our review focused on the federal efforts to meet needs in the U.S.-Mexico border region and not the state efforts. We made no  changes in response to this comment.  6.  We have modified the report and clarified that the total funding HUD obligated (about $218 million) is a combination of CDBG funds (about  $214 million), Indian CDBG funds (about $3 million), and funds  provided through the Economic Development Initiative Special  Account (about $1 million).   7.  Our report already recognizes the changes HUD intends to make to its  data system. However, we have added an additional statement to our discussion that the change will allow HUD to verify that all projects  funded with Colonia Set-aside funds are located within a colonia.
8.  We disagree with HUD’s characterization that our report suggests that  HUD still requires the states to formally designate colonias, or that  HUD should be the party to designate colonias. Our report clearly  states that we believe that HUD should be conducting activities as  necessary to ensure that the states’ use of funds is compliant with the law. As stated in the report, soon after the enactment of the law that  established the Colonia Set-aside requirement, Congress amended  law to remove a requirement that a colonia be designated by the s or county, and as a result we recognize that no formal designation is  required. Yet, in implementing the program, states are informally  designating colonias, HUD is deferring to the state determinations as  though they were formal designations, and HUD has not provided  guidance concerning state implementation of the Colonia Set-aside as  to how eligible colonias are to be identified. We have made no  revisions to the report in response to this comment. 9.  The report does not include any information that would indicate that  the project in Hudspeth County, Texas has been closed. The rep clearly states that HUD provided a utility over $860,000 in grant from 2004 to 2006 to extend water distribution lines and waste  collection lines for residents of a colonia; and that as of September  2009, the distribution lines remain unused because the utility does n have enough water to serve the additional households and the utility  has not been able to obtain the funding needed to construct a new  well. We made no changes to the report in response to this comment.
section_title: Appendix XI: Comments from the U.S. Army Corps of Engineers
paragraphs: The following is GAO’s comment to the U.S. Army Corps of Engineer’s  letter dated December 10, 2009.
subsections: section_title: GAO Comment
paragraphs: Our report recognized that the Corps had prepared letter reports, which  are brief project reports that the Corps prepares before providing  assistance to an entity, prior to undertaking each project. However, our   report clearly states that the Corps does not have criteria for identifying  eligible colonias. Therefore, while these letter reports are prepared, it is  unclear by what basis the Corps has verified they are colonias as meant in  the authorizing statute. We made no changes to the report in response to  this comment.
section_title: Appendix XII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition t o the individual named above, Sherry L. McDonald, Assistant  Director; Elizabeth Beardsley; Virginia Chanley; Bernice Dawson; Teague  Lyons; Benjamin Shouse; and Jay Spaan made significant contribu this report.