As Interior’s primary water management agency, Reclamation’s mission has been to manage, develop, and protect water and water-related resources in 17 western states since 1902. Reclamation has led or provided assistance in the construction of most of the large dams and water diversion structures in the West for the purpose of developing water supplies for irrigation, municipal water use, flood control, and habitat enhancement, among others. Reclamation is organized into five regions—Great Plains, Lower Colorado, Mid-Pacific, Pacific Northwest, and Upper Colorado—and the agency’s central office in Denver provides technical and policy support. Each regional office oversees the water projects, including Title XVI projects and studies, located within its regional boundaries. The types of projects eligible under the Title XVI program include, among others, construction of water treatment facilities, pipelines to distribute reused water, and tanks and reservoirs to store reused water. The Title XVI program is one of several programs under Interior’s WaterSMART (Sustain and Manage America’s Resources for Tomorrow) Program. The WaterSMART program is implemented by Reclamation and the U.S. Geological Survey within Interior. According to an Interior document, the WaterSMART program focuses on identifying strategies to help ensure sufficient supplies of clean water for drinking, economic activities, recreation, and ecosystem health. Reclamation carries out its portion of the WaterSMART program by administering grants, including Title XVI grants for water reuse, conducting research, and providing technical assistance and scientific expertise. Reclamation offers three types of grants to project sponsors under the Title XVI program: construction projects, which are projects to plan, design, or construct infrastructure for the treatment and distribution of reused water; feasibility studies, which are documents that generally identify specific water reuse opportunities, describe alternatives, and incorporate other considerations, such as the financial capability of the project sponsor; and research studies, which are studies to help states, tribes, and local communities establish or expand water reuse markets, improve existing water reuse facilities, or streamline the implementation of new water reuse facilities. Key Terms Related to Water Reuse Acre-foot of water: about 326,000 gallons generally identify specific water reuse opportunities; describe alternatives; and incorporate other considerations, such as the financial capability of the project sponsor. Federal awards for construction projects under the Title XVI program are generally limited to 25 percent of total project costs—up to $20 million in federal funding—and require a 75 percent nonfederal cost share from the project sponsor. Federal funding for feasibility studies under the Title XVI program is generally limited to 50 percent of the total study costs, up to $450,000, and federal funding for research studies is generally limited to 25 percent of the total study costs, up to $300,000. Reclamation generally awards Title XVI grants for construction projects to project sponsors in installments over multiple years before the federal funding maximum for each project is reached, whereas it generally awards the full amount for feasibility and research study grants in a single year. Potable: water that is suitable for drinking. Project sponsors: water districts, wastewater or sanitation districts, municipalities, tribes, and other entities that develop projects or studies eligible for Title XVI grants. tribes, and local communities establish or expand water reuse markets, improve existing water reuse facilities, or streamline the implementation of new water reuse facilities. From fiscal year 1992, when the Title XVI program was established, through fiscal year 2009, Congress authorized 53 Title XVI projects. Each of these projects was subject to a cap on the federal cost share. In fiscal years 1992 through 2010, Congress generally directed funding for these specific authorized projects each year. Starting in fiscal year 2011, Congress began appropriating funding for the Title XVI program without directing specific funding to individual projects. As a result, Reclamation started using a competitive process to award Title XVI grants to projects and studies, through which project sponsors with authorized projects applied for Title XVI grants. Only the 53 projects that were already authorized by Congress were eligible to apply for grants for construction projects. Section 4009(c) of the WIIN Act, enacted in December 2016, authorized an additional $50 million to be appropriated for water reuse projects. To be eligible to receive Title XVI grants under the WIIN Act, projects must submit a completed feasibility study to Reclamation, and Reclamation must review the study to determine whether, among other things, the project is technically and financially feasible and provides a federal benefit in accordance with the reclamation laws. Reclamation is then to submit a report with the results of its review to Congress, and projects determined to be feasible are then eligible to apply for grants under the competitive grant program established by the WIIN Act. Each feasibility study identifies an estimated project cost. Like most projects individually authorized prior to the WIIN Act, the federal share of this cost is generally capped at 25 percent, up to $20 million. In addition to construction projects, Reclamation began awarding Title XVI grants to project sponsors for feasibility studies in fiscal year 2011 and for research studies in fiscal year 2016. Figure 1 shows a timeline of the Title XVI program. With water reuse, water that is typically unusable, such as municipal or industrial wastewater, undergoes additional treatment to make it suitable for certain purposes. For example, municipal wastewater typically undergoes primary and secondary treatment before it can be discharged into a river, stream, or other body of water. With water reuse, wastewater generally undergoes further (tertiary) treatment to remove additional nutrients and suspended solids and to disinfect the water. The treated water can then be reused for nonpotable uses, such as landscape or agricultural irrigation or industrial uses. In some cases, wastewater undergoes additional, advanced treatment—such as microfiltration and reverse osmosis—and may then be suitable for potable uses, such as injection into a groundwater basin or reservoir where it may later be extracted for drinking water. Figure 2 shows some of the typical treatment processes that may be applied to reused water, and figure 3 shows some of the typical uses of reused water. Several reports have shown that water reuse could offer significant untapped water supplies, particularly in coastal areas facing water shortages. For example, in a 2012 report on municipal wastewater reuse, the National Research Council of the National Academies estimated that U.S. municipalities discharged about 12 billion gallons of treated municipal wastewater each day into coastal waters. They estimated that reuse of these coastal discharges could directly augment available water sources by providing the equivalent of 27 percent of the municipal supply. Municipalities discharge another 20 billion gallons each day to inland locations. While reuse of inland discharges has the potential to affect the water supply of downstream users by decreasing the amount of water available to them, we previously found that at least some of this volume could also be beneficial. Even with such potential uses, the Environmental Protection Agency reported in 2012 that only 7 to 8 percent of municipal wastewater was being intentionally reused in the United States. In our past work, we have highlighted the importance of awarding competitive grants in a fair and transparent way and monitoring grants. In recent years, OMB has taken actions to help improve the effectiveness and efficiency of grantmaking across the federal government. In particular, in December 2014, OMB’s Uniform Guidance became effective for new grant awards after adoption by federal grantmaking agencies, including Interior. The Uniform Guidance requires, among other things, that federal agencies provide public notices of funding opportunities, and these notices are to contain information, such as key dates and the merit and other criteria that the agency will use to evaluate applications. The Uniform Guidance also requires certain monitoring activities for federal grants, such as generally requiring grant recipients to submit financial reports. From fiscal years 1992 through 2017, Reclamation awarded about $715 million for 46 construction projects and 71 studies under the Title XVI program, based on our review of agency documents. Most of this funding—about $703 million—went toward construction projects, while the remaining awards were for feasibility and research studies. Some construction projects remain eligible for Title XVI grants. Specifically, about $464 million in grant funding not yet awarded up to the federal ceiling remains for individually congressionally authorized Title XVI construction projects, and about $513 million remains in total estimated projects eligible for Title XVI grants under the WIIN Act, as of August 2018. Across the three different types of grants offered under the Title XVI program—construction projects, feasibility studies, and research studies—Reclamation awarded about $715 million from fiscal years 1992 through 2017, according to agency documents. This $715 million awarded under Title XVI leveraged more than $2.8 billion in nonfederal cost share. Reclamation awarded most of this Title XVI funding for construction projects, as shown in table 1. Overall, Reclamation awarded about $703 million under Title XVI to 46 construction projects from fiscal years 1992 through 2017. Of these 46 construction projects that received awards, 43 were individually congressionally authorized construction projects and 3 were construction projects that were eligible for Title XVI grants under the WIIN Act, according to agency documents we reviewed. Additionally, Reclamation made awards for 71 studies—58 feasibility study grants since fiscal year 2011 and 13 research study grants since fiscal year 2016. Based on our review of Reclamation financial data, some construction projects remain eligible for Title XVI grants. Eligible project costs fell into two categories: (1) grant funding not yet awarded up to the federal ceiling for individually congressionally authorized Title XVI construction projects, and (2) the federal share of estimated costs identified in feasibility studies for projects eligible for Title XVI grants under the WIIN Act. About $464 million in not-yet-awarded funding remained for 28 individually congressionally authorized Title XVI construction projects as of August 2018. Also, about $513 million remained in estimated project costs for the 40 construction projects that were eligible under the WIIN Act, as of August 2018, as shown in table 2 below. As of August 2018, of the 53 individually congressionally authorized construction projects, more than half—28 projects—had remaining project costs eligible for Title XVI grants. The 13 ongoing congressionally authorized projects had about $233 million in project costs that had not yet been awarded. Some project sponsors told us that they were in the process of designing or constructing projects. Others told us that while they were not currently designing or constructing projects, they had plans to pursue additional Title XVI grant awards in the future. More than one-third of the $233 million in remaining eligible project costs was for two projects— located in San Diego and San Jose, California—that were two of the projects authorized when the Title XVI program was created in 1992. The 15 congressionally authorized projects with no planned construction had remaining project costs of about $231 million eligible for Title XVI grants. Project sponsors identified several reasons why they were not planning to apply for further grant awards. Specifically, several project sponsors said they had faced challenges in applying for further grants because language in the statutes authorizing the projects limited the scope of their projects. For example, one project sponsor told us that it was interested in expanding its water reuse demonstration facility but that it was not eligible to apply for additional Title XVI grants because the statute that authorized the project specifically authorized a demonstration facility. In addition, one project sponsor stated that its project authorization had already reached its sunset date, which means the project can no longer apply for Title XVI grants. Some of the project sponsors with no construction planned said that they may consider applying for additional Title XVI grants under their existing authorizations in the future, should they decide to move forward with construction. However, others said that they had decided not to move forward with authorized projects and had no plans to apply for Title XVI grants in the future. For example, one project sponsor said that it had determined that its project was no longer financially feasible. In addition, as of August 2018, 40 projects had Reclamation-approved feasibility studies that had been transmitted to Congress, based on our review of agency documents, and were therefore eligible to apply for Title XVI construction grants under the WIIN Act. A total of about $513 million in project costs across these 40 projects remained eligible for Title XVI grants. Of the 40 projects, 20 applied for Title XVI grants in fiscal year 2017, and Reclamation selected 3 for awards. These 20 projects had about $269 million in project costs that remained eligible for Title XVI grants. Twenty projects did not apply for Title XVI grants in fiscal year 2017 and had about $244 million in project costs that remained eligible for these grants, as of August 2018. Title XVI projects and studies for fiscal years 1992 through 2017 cover various uses for reused water and include both urban and rural areas throughout the West, based on our review of agency data as well as documents from and interviews with project sponsors. For example, Title XVI construction projects produce both nonpotable and potable reused water for a variety of purposes, such as landscape and agricultural irrigation, habitat restoration, and extraction as drinking water. The projects and studies funded by the Title XVI program include both urban and rural areas throughout the West, with California accounting for 36 construction projects and about 90 percent of total Title XVI funding. Title XVI construction projects are generally large-scale infrastructure projects, such as water reuse treatment plants and pipelines, that produce, store, and distribute reused water for a variety of purposes, both nonpotable and potable. Since the inception of the Title XVI program, Reclamation has awarded Title XVI grants to construction projects that cumulatively provided nearly 390,000 acre-feet of reused water in 2017. According to Reclamation data, the projects funded by Title XVI individually delivered between 38 acre-feet of reused water and more than 100,000 acre-feet of water in fiscal year 2017. Most of these construction projects provided reused water for nonpotable uses across four main categories: (1) landscape irrigation, (2) agricultural irrigation, (3) commercial and industrial use, and (4) habitat restoration. Landscape irrigation. Landscape irrigation—including irrigation of golf courses, road medians, school grounds, parks, sport fields, and other green spaces—is the most common use of reused water produced by Title XVI projects, with 29 Title XVI projects producing reused water for this purpose, based on our analysis of documents from Reclamation and project sponsors. The reused, nonpotable water produced by such projects is generally distributed through purple-colored pipes, to denote that the water is not for drinking purposes. For example, the Title XVI program provided grants to Eastern Municipal Water District—a water district located in Southern California—to help build water reuse infrastructure, including pipelines, pumping stations, and storage tanks. With this added storage capacity, the district has the ability to store more than 2 billion gallons of reused water, which is used to irrigate sports fields, golf courses, parks, school grounds, and medians, according to the project sponsor. By maximizing use of its reused water, the project sponsor noted that the district is reducing its dependence on water piped in from other parts of the state or region. Similarly, the Title XVI program provided grants to help build pipelines and reservoirs to distribute and store reused water for landscape irrigation and other purposes in other parts of California (see fig. 4). Agricultural irrigation. Reused water produced by Title XVI projects is also used to irrigate a variety of agricultural products, including fruits and vegetables, flowers, and vineyards. For example, the North Valley Regional Recycled Water Program is helping to provide a reliable water source for the Del Puerto Water District, which provides water to approximately 45,000 acres of farmland in California’s San Joaquin Valley, according to the project sponsor. The Del Puerto Water District has encountered water shortages in recent years, which have created economic hardships on growers in the area, according to the project sponsor. Title XVI grants provided under WIIN Act authority helped the district expand its reused water supply and distribution infrastructure and ensure a reliable, drought-resistant water supply, according to the project sponsor. In addition, reused water produced by the Watsonville Area Water Recycling Project near Watsonville, California, is used to irrigate strawberries and other fruits and vegetables as well as flowers. The groundwater basin that serves the coastal region where Watsonville is located has been overdrafted for a long time, causing groundwater elevations to drop below sea level and leading to seawater intrusion that makes the groundwater unusable in certain areas, according to the project sponsor. This sponsor noted that Watsonville’s Title XVI project helps reduce demand on the overdrafted groundwater basin, which in turn helps to protect against further seawater intrusion and also provides a reliable, drought-tolerant water supply to help protect the region’s agricultural economy. Figure 5 shows flowers in a greenhouse that are irrigated with reused water from Watsonville’s Title XVI project. Commercial and industrial use. Reused water produced by Title XVI projects is used for cooling towers at power plants and data centers, oil production, toilet flushing in university and commercial buildings, and for other commercial and industrial purposes, according to project sponsors. For example, some of the reused water produced by the Southern Nevada Title XVI project is used for power plant cooling, and reused water from San Jose’s Title XVI project is used for cooling at data centers in California’s Silicon Valley. In addition, reused water from the Long Beach Area Reclamation Project is injected into the ground after oil is extracted, which helps prevent the ground from sinking, according to the project sponsor. Having access to a secure source of reused water can attract data centers and other businesses that require large amounts of water to areas that can guarantee access to reused water, according to a project sponsor and representatives from a nongovernmental water reuse organization we interviewed. Habitat restoration. Some Title XVI projects use reused water to restore wetlands or supply water to recreational lakes. For example, in California’s Napa Valley, reused water from the North Bay Title XVI project is being used to restore the Napa Sonoma Salt Marsh. Some threatened and endangered species, such as the Chinook Salmon, have started returning to the area since the restoration began, according to the project sponsor. Reused water from this Title XVI project also provides other habitat benefits. For example, wineries in the area that irrigate with reused water do not need to divert as much water from streams, which leaves more water for fish, according to the project sponsor. In addition, the North Valley Regional Recycled Water Program in California’s San Joaquin Valley supplies reused water to wildlife refuges and wetlands, in addition to agricultural lands. This area has the largest remaining freshwater marsh in the western United States, which provides critical habitat for migratory birds as well as other species, according to the project sponsor (see fig. 6). There are also several potable projects that have been funded by Title XVI. These projects generally fall into two categories: (1) indirect-potable reuse and (2) desalination. Indirect-potable reuse. Title XVI has provided grants for indirect-potable projects, in which wastewater undergoes advanced treatment to obtain potable-quality water. The water is then injected into an environmental buffer, such as a groundwater aquifer, where it is left for a certain amount of time before it is extracted. The water is treated again before it is distributed as drinking water. One use for highly-treated reused water is for seawater barriers, where water is injected into the ground to prevent the intrusion of high-salinity water into groundwater aquifers. Indirect- potable reuse has been gaining prominence, according to some project sponsors and representatives from nongovernmental water reuse organizations, with Title XVI grants going to several project sponsors for both the construction of facilities as well as research into optimal treatment methods. For example, the Groundwater Replenishment System in Orange County, California, which was partially funded by Title XVI, takes highly-treated wastewater that would have previously been discharged into the Pacific Ocean and purifies it using an advanced treatment process. The water is then injected into a groundwater aquifer and is later extracted as drinking water that serves more than 800,000 people, according to the project sponsor. Figure 7 shows reused water at several different points in the treatment process and reverse osmosis treatment equipment at Orange County’s Groundwater Replenishment System. Desalination. Title XVI has provided grants for projects that treat brackish groundwater—water that has a salinity above freshwater but below seawater—and then feed it directly into potable water distribution systems or into a groundwater aquifer or surface water reservoir. For example, the Mission Basin Groundwater Purification Facility in Oceanside, California, desalinates brackish groundwater using reverse osmosis and other treatment methods. The reused water supplies about 15 percent of the city’s water needs, according to the project sponsor. In addition to Title XVI construction projects, Reclamation’s feasibility and research studies also vary in their planned uses of reused water. For example, one feasibility study project sponsor we interviewed was awarded a Title XVI grant to investigate the feasibility and potential impacts of reusing produced water from oil and gas operations in Oklahoma. The study plans to investigate possible dual benefits of reusing produced water, including (1) providing a new source of water for irrigation and other purposes and (2) reducing the disposal of produced water as a possible means for addressing increased seismic activity associated with oil and gas operations, according to the project sponsor. Another feasibility study project sponsor we interviewed from a rural, landlocked community in Washington State is investigating the feasibility of creating a virtual zero discharge system that would eliminate all wastewater disposal by reusing the wastewater. Similar to feasibility studies, Title XVI research studies address different topics. For example, one project sponsor we interviewed was researching how to optimize filtration of reused water using membrane filtration, which is a critical treatment process to reduce contaminants in water. Another project sponsor was researching impediments and incentives to using reused water for agricultural irrigation. Based on our review of agency documents, project sponsors in 12 of the 18 states eligible to participate in the Title XVI program were awarded at least one type of funding under Title XVI since the inception of the program in 1992, as shown in table 3. From fiscal year 1992 through fiscal year 2017, Reclamation awarded about $640 million—or about 90 percent of total awarded Title XVI funding—to projects in California, the majority of which was for construction projects. The concentration of projects in California reflects the early emphasis of the Title XVI program on Southern California and reducing its reliance on water provided by the Colorado River, as well as the high level of interest in the program in the state, according to a 2010 Congressional Research Service report. Overall, project sponsors in 9 states were awarded feasibility study grants, sponsors in 4 states were awarded research study grants, and sponsors in 8 states were awarded construction grants (see fig. 8). Title XVI projects and studies include western urban and rural areas. In particular, many Title XVI projects are sponsored by entities in urban areas that serve a large population base. For example, the main part of the Los Angeles Area Water Supply Title XVI project is sponsored by the West Basin Municipal Water District, which has a service area of nearly 1 million people in 17 cities and unincorporated areas in Los Angeles County. This Title XVI project produces five different types of reused water to meet the unique needs of West Basin’s municipal, commercial, and industrial reuse customers, according to the project sponsor. Similarly, the City of San Diego, which has a population of about 1.4 million, was awarded Title XVI grants for a number of projects, including an indirect-potable reuse project anticipated to provide one-third of San Diego’s water supply by 2035, according to the project sponsor. Other Title XVI projects are sponsored by entities in rural areas and small cities. For example, the Hi-Desert Water District project serves a rural and economically disadvantaged community in the town of Yucca Valley, California, that has a population of about 20,000. This Title XVI project will fund facilities to collect, treat, and reuse treated wastewater, thereby eliminating degradation of the local groundwater supply and helping ensure a safer, reliable water supply for this community, according to the project sponsor. Similarly, the city of Round Rock, Texas, which has a population of about 120,000, sponsored the Williamson County Title XVI project. This project produces reused water for landscape irrigation, most of which is used to irrigate a 650-acre park, according to the project sponsor. Some Title XVI projects are sponsored by regional partnerships composed of different local entities. For example, in the late 1990s, 4 entities in Northern San Diego County—Carlsbad Municipal Water District, Leucadia Wastewater District, Olivenhain Municipal Water District, and San Elijo Joint Powers Authority—formed a coalition to leverage their water reuse programs; the coalition has since grown to 10 entities. This coalition sponsored an individually congressionally authorized Title XVI project, the North San Diego County project, and applied for a Title XVI grant for a new project eligible under the WIIN Act in fiscal year 2017. Similarly, in the northern part of the San Francisco Bay Area, 10 local agencies formed a regional partnership covering 315 square miles across Sonoma, Marin, and Napa Counties to sponsor the North Bay Water Reuse Program. According to the project sponsors involved in this regional partnership, using a regional partnership approach to water reuse projects provides an economy of scale; maximizes the ability to obtain local, state, and federal funding for the projects; and allows smaller, local entities to access funding and expertise for projects that would be out of reach without regional collaboration. See appendix I for more detailed information on specific Title XVI construction projects. Reclamation’s process for selecting projects and studies to award grants under the Title XVI program involves announcing the funding opportunity, establishing criteria to evaluate potential projects, and reviewing applications to make award decisions. We found that this process is consistent with relevant federal grant regulations outlined in OMB’s Uniform Guidance, based on our review of agency documents and federal grant regulations. The criteria Reclamation uses to evaluate Title XVI projects have changed in recent years, with the elimination or addition of some criteria and changes in the weighting of others. To start its selection process, Reclamation announces funding opportunities by developing annual funding opportunity announcements (FOA), which are publicly available on its website and on www.grants.gov. These FOAs contain information for applicants to consider prior to applying, including the types of eligible projects and studies, estimated funding available, information on the application review process, the application due date, and the criteria that Reclamation will use to score applications. Project sponsors submit applications for Title XVI grants to Reclamation in response to the FOAs, according to Reclamation officials. Reclamation officials then review the applications to ensure the projects are eligible and that applications are complete, according to agency officials we interviewed and documents we reviewed related to the selection process. Next, an application review committee scores eligible applications. The application review committee is composed of Reclamation staff representing the five regions and other staff with technical expertise. Committee members individually review and score each Title XVI application based on the evaluation criteria in the FOA. After the individual scoring, the application review committee meets collectively to discuss the scores; this meeting is generally facilitated by Title XVI program staff from Reclamation’s central office in Denver. If there are any outliers in the scores—e.g., if a committee member scores an application significantly higher or lower than the other members—then they are to discuss and may adjust the score to help ensure fairness and consistency in how the applications are scored relative to the evaluation criteria, according to agency officials. Following this discussion, Reclamation averages the members’ scores for each application and then ranks the applications based on the average scores. Reclamation creates a list of recommended projects and funding amounts for these projects, based on the rankings and congressional direction on the amount of funding for the Title XVI program in any given year. Reclamation’s process for selecting projects and studies to fund under the Title XVI program is consistent with relevant federal grant regulations outlined in the Uniform Guidance. Based on our review of Title XVI FOAs from fiscal years 2011 through 2018, all FOAs met the requirements prescribed by the Uniform Guidance. Specifically, the Uniform Guidance requires that grant funding opportunities be publicly announced and contain certain information, such as the evaluation criteria, key dates, and the process used to evaluate applications. Based on our review of FOAs, Reclamation’s FOAs were publicly announced and contained this information. Many project sponsors we interviewed said that Reclamation’s Title XVI application selection process is generally clear and well-managed and that Reclamation officials, at both the regional level and central office in Denver, were responsive and transparent throughout the selection process. Several project sponsors noted that Reclamation offered to debrief with Title XVI applicants after it made its grant selections; further, Reclamation officials provided constructive feedback to applicants to improve their applications in future years. Some project sponsors raised concerns about how long it takes WIIN Act- eligible Title XVI projects to be awarded grants. In particular, the WIIN Act provides that WIIN Act-eligible projects can only receive funding if an enacted appropriations act designates funding by project name, after Reclamation has recommended specific projects for funding and transmitted its recommendations to Congress. Given the timing of Reclamation’s FOA process, WIIN Act-eligible projects selected in a given fiscal year generally need to be included in the subsequent fiscal year’s appropriations act. For example, congressional direction in May 2017 provided that $10 million of the total Title XVI funding was to go to Title XVI WIIN Act-eligible projects, and Reclamation sent Congress its fiscal year 2017 selections for WIIN Act-eligible projects to fund in November 2017. However, according to Reclamation officials, Reclamation could not begin awarding fiscal year 2017 funding to selected projects until March 2018, after enactment of the fiscal year 2018 appropriations act, which listed the selected projects by name. One project sponsor noted that this two-part process created challenges related to the project timeline and budget. Reclamation officials said that project sponsors have also expressed concerns to Reclamation about how any resulting delays may affect the ability of projects to move forward. Reclamation officials noted that this is a statutory requirement and that they had discussed this process with project sponsors to make them aware of the timing for the grants. Reclamation has changed the evaluation criteria it uses to select projects to fund under the Title XVI program since it began using a competitive process in fiscal year 2011. Reclamation first developed criteria for the annual Title XVI project selection process in 2010, which it applied starting in fiscal year 2011. Prior to that, Congress generally provided project-specific funding direction for individually authorized Title XVI projects. According to agency officials, Reclamation developed the initial evaluation criteria for the annual Title XVI selection process based on (1) the language in the Reclamation Wastewater and Groundwater Studies and Facilities Act, as amended; (2) Reclamation goals and priorities for the program; and (3) the criteria Reclamation used to select projects to fund under the American Recovery and Reinvestment Act of 2009. Reclamation sought and incorporated public comments on the criteria in 2010. After that, Reclamation’s evaluation criteria for Title XVI construction projects generally remained unchanged from fiscal years 2011 through 2016. In fiscal years 2017 and 2018, Reclamation eliminated some criteria in the Title XVI FOAs for construction projects, added some new criteria, and changed the weighting of some criteria, based on our review of FOAs for those years. For example, in 2017, Reclamation more than doubled the weight of the economic criterion for the fiscal year 2017 FOA for WIIN Act-eligible projects, making it worth 35 percent of the points as compared to the previous 13 percent. Reclamation officials told us that these changes were made in response to the language of the WIIN Act— which listed a number of criteria for projects, including projects that provide multiple benefits—and comments they received from OMB during the review process for the revised criteria. In March 2018, Reclamation proposed further revisions to the evaluation criteria for the fiscal year 2018 Title XVI program and held a public comment period to solicit input on the proposed changes. The proposed FOA contained one set of criteria applicable to both types of eligible Title XVI construction projects—individually congressionally authorized and WIIN Act-eligible projects. Reclamation received 21 comment letters on the criteria and, after analyzing the comments, officials said that they made additional changes to some of the criteria before issuing the final fiscal year 2018 FOA on May 30, 2018. For example, Reclamation added clarification to the economic criteria. See appendix II for a more detailed description of the final fiscal year 2018 Title XVI criteria, as well as changes to the criteria in fiscal years 2017 and 2018. Several project sponsors noted that changes to the evaluation criteria may affect which projects are more competitive in Reclamation’s application scoring and project selection process. In particular, several project sponsors and representatives from nongovernmental organizations we interviewed told us they believed that recent changes— particularly the increased weight on economic criteria, including cost effectiveness—may disadvantage small projects. Others said increasing the weight on cost effectiveness may disadvantage new projects that are just beginning construction of costly new treatment facilities versus projects that are expanding existing facilities. Reclamation officials we interviewed stated that the economic criteria take into account the extent to which projects would provide multiple benefits—not just cost effectiveness. They also pointed out that they clarified in the fiscal year 2018 FOA that there are a number of ways to provide information on project benefits in Title XVI applications, including by describing benefits in a qualitative manner. They added that feedback from project sponsors had been positive on the additional changes Reclamation made in response to earlier stakeholder comments on the economic criteria for the final fiscal year 2018 FOA. Furthermore, Reclamation’s increased emphasis on economic criteria is consistent with federal principles on federal spending for water infrastructure projects, which states that federal infrastructure investments are to be based on systematic analysis of expected benefits and costs. To monitor Title XVI grants, Reclamation reviews financial and performance reports submitted by project sponsors, regularly communicates and visits with project sponsors to obtain information on the status of the projects, and collects information on the amount of water Title XVI projects deliver each year, which is included in Interior’s annual performance report. Financial and Performance Reports. In its financial assistance agreements for Title XVI grants, Reclamation generally requires project sponsors to submit financial and performance reports. Specifically, Reclamation generally requires that project sponsors submit financial and performance reports at least once per year and sometimes more frequently, as determined by the risk that each project poses, according to agency officials. Based on our review of reports, the financial reports list transactions related to Title XVI grants, such as expenditures, and the performance reports provide updates on the status of the Title XVI projects. Reclamation delineates its monitoring requirements, which generally include requirements for financial and performance reports, in the financial assistance agreements for Title XVI grants that each project sponsor agrees to prior to receiving funding. In our review of documents related to Reclamation’s monitoring process for Title XVI construction grants active in fiscal year 2017, we found that project sponsors submitted all but one financial and performance reports that Reclamation had required, and submitted all but two by their due date or within 2 weeks of this date. We found that Reclamation’s requirements are consistent with relevant federal grant regulations in OMB’s Uniform Guidance, which provide that federal awarding agencies, including Reclamation, generally are to collect financial reports from project sponsors at least annually. Ongoing Communication and Site Visits. To further monitor the performance of Title XVI grants, Reclamation officials communicate regularly with project sponsors via telephone and email and conduct site visits to obtain information on the status of the projects, according to Reclamation officials and project sponsors. Based on our review of agency guidance, Reclamation generally is to conduct at least one site visit per year for projects with significant on-the-ground activities, such as construction projects. During the visits, agency officials generally are to receive updates on progress made on the project and determine if it is on schedule and meets the scope of work identified in the financial assistance agreement. Reclamation generally requires officials to document these visits and other monitoring activities in project files, according to agency documents. Through the site visits and other communication with project sponsors, agency officials may also provide information on program requirements and respond to project sponsors’ questions about the Title XVI program. For example, during site visits, Reclamation officials have responded to project sponsors’ questions about the status of payments and allowable project costs and clarified requirements for financial and performance reports, according to our review of agency documents and interviews with project sponsors. In our review of Reclamation’s Title XVI construction grants active in fiscal year 2017, we found that Reclamation generally conducted annual site visits for Title XVI construction projects that year. We found that this is consistent with federal grant regulations in OMB’s Uniform Guidance, which state that federal awarding agencies may make site visits as warranted by program needs. Data Collection. Reclamation also annually collects data on the amount of water delivered from each Title XVI construction project, as well as projected water deliveries for the coming year. Reclamation analyzes the water delivery data, compares projected data to actual deliveries, and follows up with project sponsors to understand any discrepancies, according to agency officials. For example, actual water deliveries could be lower than projected deliveries if communities implement water conservation measures that result in projects having less wastewater to treat and deliver for reuse. According to Reclamation officials, information on the amount of reused water delivered from Title XVI projects helps them to monitor progress on Title XVI projects and helps demonstrate the benefits and accomplishments of the Title XVI program. These data are consolidated and included in Interior’s annual performance report to demonstrate how the agency is meeting Interior’s objective of achieving a more sustainable and secure water supply. Collecting data on Title XVI water deliveries is consistent with the Title XVI program’s purpose of supporting water supply sustainability by providing financial and technical assistance to local water agencies for the planning, design, and construction of water reuse projects. We provided a draft of this report to the Department of the Interior for review and comment. The Department of the Interior provided technical comments, which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of the Interior, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-3841 or fennella@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III. This appendix provides information on construction projects that are individually congressionally authorized under the Bureau of Reclamation’s Title XVI Water Reclamation and Reuse Program (Title XVI), as well as projects to which Reclamation awarded grants under the Water Infrastructure Improvements for the Nation Act (WIIN Act) funding opportunity in fiscal year 2017. Figure 9 below provides information on the 53 construction projects that have been individually authorized by Congress under the Title XVI program. The projects are ordered by the total amount of Title XVI funding each was awarded from fiscal years 1992 through 2017, from highest to lowest. Figure 10 below provides information on the three construction projects to which Reclamation awarded grants under the Title XVI WIIN Act funding opportunity in fiscal year 2017. The projects are ordered by the total Title XVI funding each was awarded in fiscal year 2017—the first year that grants were awarded under the WIIN Act—from highest to lowest. This appendix provides detailed information on the evaluation criteria the Bureau of Reclamation used to select projects to award grants under the Title XVI Water Reclamation and Reuse Program (Title XVI). The six evaluation criteria Reclamation used to select construction projects to fund in fiscal year 2018 are as follows (points are out of a total of 110 points). 1. Water Supply (35 points) a. Stretching Water Supplies (18 points): Points will be awarded based on the extent to which the project is expected to secure and stretch reliable water supplies. Consideration will be given to the amount of water expected to be made available by the project and the extent to which the project will reduce demands on existing facilities and otherwise reduce water diversions. b. Contributions to Water Supply Reliability (17 points): Points will be awarded for projects that contribute to a more reliable water supply. 2. Environment and Water Quality (12 points): Points will be awarded based on the extent to which the project will improve surface, groundwater, or effluent discharge quality; will restore or enhance habitat for nonlisted species; will address problems caused by invasive species; or will provide water or habitat for federally listed threatened or endangered species. Indirect benefits of the project will also be considered under this criterion. 3. Economic Benefits (35 points) a. Cost Effectiveness (10 points): Points will be awarded based on the cost per acre-foot of water expected to be delivered upon completion of the project and how the cost of the project compares to a nonreclaimed water alternative. b. Economic Analysis and Project Benefits (25 points): Points will be awarded based on the analysis of the project’s benefits relative to the project’s costs. 4. Department of Interior Priorities (10 Points): Points will be awarded based on the extent that the proposal demonstrates that the project supports the Department of the Interior priorities, such as utilizing natural resources and modernizing infrastructure. 5. Reclamation’s Obligations and Benefits to Rural or Economically Disadvantaged Communities (8 points) a. Legal and Contractual Water Supply Obligations (4 Points): Points will be awarded for projects that help to meet Reclamation’s legal and contractual obligations. b. Benefits to Rural or Economically Disadvantaged Communities (4 Points): Points will be awarded based on the extent to which the project serves rural communities or economically disadvantaged communities in rural or urban areas. 6. Watershed Perspective (10 Points): Points will be awarded based on the extent to which the project promotes or applies a watershed perspective by implementing an integrated resources management approach, implementing a regional planning effort, forming collaborative partnerships with other entities, or conducting public outreach. Reclamation changed some of its evaluation criteria in fiscal years 2017 and 2018. The fiscal year 2017 changes were made in response to requirements in the Water Infrastructure Improvements for the Nation Act (WIIN Act)—which listed several criteria for projects, including projects that provide multiple benefits—and comments from the Office of Management and Budget, according to Reclamation officials. The fiscal year 2018 changes were generally made in response to comments Reclamation received during the formal comment period it held in March and April 2018 to solicit input on the criteria, according to Reclamation officials. The changes to the criteria are shown in table 4. In addition to the individual named above, Elizabeth Erdmann (Assistant Director), Lesley Rinner (Analyst-in-Charge), Margaret Childs, and Sierra Hicks made key contributions to this report. Ellen Fried, Timothy Guinane, Thomas M. James, John Mingus, Patricia Moye, Anne Rhodes-Kline, Sheryl Stein, and Sara Sullivan made additional contributions.

Summary: Population growth and drought are among the factors that have placed increasing demands on the U.S. water supply, particularly in the arid West. The reuse of wastewater can help address water management challenges by treating water that is typically unusable and then reusing it for beneficial purposes, such as irrigation, according to the Environmental Protection Agency. Reclamation's Title XVI program awards grants for the study and construction of water reuse projects in 17 western states and Hawaii. From fiscal years 1992 through 2009, Congress individually authorized some Title XVI projects. In 2016, Congress amended the Title XVI program to allow grants to be awarded to additional water reuse projects. GAO was asked to review the Title XVI program. This report describes, among other things, for the Title XVI program (1) grants Reclamation has awarded for projects and studies and remaining projects that are eligible for grants, (2) the types and locations of projects and studies that have received grants, and (3) Reclamation's process for selecting projects and studies and its consistency with federal grant regulations as well as how the program's evaluation criteria have changed since 2011. GAO reviewed relevant laws, regulations, and agency guidance; analyzed financial data for fiscal years 1992 through 2017; compared documents related to the project selection process against federal grant regulations; and interviewed agency officials and nonfederal project sponsors with different types of projects. The Bureau of Reclamation, within the Department of the Interior, awarded about $715 million in water reuse grants for 46 construction projects and 71 studies under the Title XVI Water Reclamation and Reuse Program (Title XVI) from fiscal year 1992 through fiscal year 2017, according to agency documents. Most of the Title XVI funding—about $703 million—has been awarded for construction projects. Some construction projects remain eligible for Title XVI grant funding. About $464 million in eligible Title XVI grant funding not yet awarded remains for projects that Congress individually authorized; for projects eligible under the 2016 amendments to the Title XVI program, about $513 million remains. Title XVI projects and studies cover various uses for reused water. For example, many projects GAO reviewed produce reused water for landscape and agricultural irrigation, as well as water that may later be extracted for drinking water, as shown in the figure. Title XVI projects are located in western urban and rural areas, with California accounting for 36 construction projects. Reclamation's process to select Title XVI projects and studies to receive grants involves announcing the funding opportunity, establishing criteria to evaluate potential projects, and reviewing applications to make award decisions, according to agency documents GAO reviewed. GAO found that Reclamation's grant award process is consistent with relevant federal regulations for awarding grants. For example, the Title XVI funding opportunity announcements GAO reviewed contained information required by the regulations, such as the criteria used to evaluate applications. In recent years, Reclamation has changed the criteria it uses to evaluate projects, eliminating or adding some criteria and changing the weighting of others. Reclamation officials said that these changes were made in part in response to statutory changes.