RUS, EDA, Reclamation, and the Corps each have distinct missions and fund rural water supply and wastewater projects under separate programs and congressional authorizations. Furthermore, each agency has its own definition of what constitutes a rural area and a unique organizational structure to implement its programs. Specifically, RUS administers the U.S. Department of Agriculture’s rural utilities programs throughout the country, which are aimed at expanding electricity, telecommunications, and water and waste disposal services. RUS provides assistance for water supply and wastewater projects through its Water and Environmental Program and defines rural areas for this program as incorporated cities and towns with a population of 10,000 or fewer and unincorporated areas, regardless of population. RUS manages this program through its headquarters in Washington, D.C., and 47 state offices, each supported by area and local offices. EDA provides development assistance to areas experiencing substantial economic distress regardless of whether or not they are rural or urban. EDA primarily provides assistance for water supply and wastewater projects in distressed areas through its Public Works and Development Facilities Program and uses a U.S. Census Bureau definition for rural areas that is based on metropolitan statistical areas. EDA manages this program through its headquarters in Washington, D.C., six regional offices, and multiple field personnel. Reclamation was established to implement the Reclamation Act of 1902, which authorized the construction of water projects to provide water for irrigation in the arid western states. Reclamation generally manages numerous municipal and industrial projects as part of larger, multipurpose projects that provide irrigation, flood control, power, and recreational opportunities in 17 western states, unless otherwise directed by the Congress. Reclamation provides assistance for water supply projects through individual project authorizations and defines a rural area as a community, or group of communities, each of which has a population of not more than 50,000 inhabitants. Reclamation manages these projects through its headquarters in Washington, D.C., and Denver, Colorado, five regional offices, and multiple field offices in the western United States. The Corps’ Civil Works programs investigate, develop, and maintain water and related environmental resources throughout the country to meet the agency’s navigation, flood control, and ecosystem restoration missions. In addition, the Civil Works programs also provide disaster response, as well as engineering and technical services. The Corps provides assistance for water supply and wastewater projects through authorizations for either a project in a specific location, or for a program in a defined geographic area, and does not have a definition for rural areas. The Corps administers its programs and projects through its Headquarters in Washington, D.C., eight regional divisions, and 38 district offices. These agencies rely on several sources of funding—including annual appropriations from the general fund and from dedicated funding sources, such as trust funds—to provide financial support for these projects and programs. RUS, EDA, Reclamation, and the Corps obligated $4.7 billion to 3,104 rural water supply and wastewater projects from fiscal years 2004 through 2006. Of these obligations, RUS obligated nearly $4.2 billion (or about 90 percent) of the funding—about $1.5 billion in grants and about $2.7 billion in loans—to about 2,800 projects. EDA, Reclamation, and the Corps provided a combined $500 million in grants to rural communities for about 300 water supply and wastewater projects. Table 1 shows the number of projects and the amount of obligations for rural water supply and wastewater projects by agency for fiscal years 2004 through 2006. Figures 1 through 4 show the location of these rural water supply and wastewater projects by agency during fiscal years 2004 through 2006. RUS provided the majority of the funding to the largest number of projects, while Reclamation provided the largest amount of funding per project. As table 1 shows, the average RUS grant was approximately $680,000 per project, while the average Reclamation grant was about $22 million per project. EDA and Corps grants averaged about $1 million and $800,000 per project, respectively. The average Reclamation grant amount was significantly larger than the grant amounts provided by the other agencies because Reclamation provided funding to a relatively small number of large regional water supply projects that span multiple communities. For example, during fiscal years 2004 through 2006, Reclamation obligated nearly $87 million of the about $459 million estimated total cost for the Mni Wiconi project. This project will provide potable water to about 51,000 people in rural communities spanning seven counties and three Indian Reservations. The Mni Wiconi project covers approximately 12,500 square miles of the state of South Dakota or roughly 16 percent of the state’s total land area. Figure 5 shows the location of the Mni Wiconi project area. In contrast, the other three agencies primarily provided funding to relatively smaller scale projects located in single communities. For example, Penns Grove, New Jersey, a community with a population of about 5,000, received an $800,000 EDA grant to upgrade a wastewater treatment plant with an estimated total project cost of $1.16 million. Similarly, according to Corps officials, Monticello, Kentucky, a community with a population of about 6,000, received about $312,500 from the Corps for two sewer line extensions with total project costs of about $435,000. This community also received about $1 million from RUS for water and sewer line upgrades with an estimated total project cost of about $1.4 million. While the types of projects RUS, EDA, Reclamation, and the Corps fund are similar, varying agency eligibility criteria can limit funding to certain communities based on their population size, economic need, or geographic location. Specifically, RUS and EDA have established nationwide programs with standardized eligibility criteria and processes under which communities compete for funding. In contrast, Reclamation and the Corps have historically provided funding to congressionally authorized projects in certain geographic locations, without standardized eligibility criteria. Table 2 shows the types of projects each agency funds, the funding mechanisms they use, and their eligibility criteria. The rural water projects that RUS, EDA, Reclamation, and the Corps fund are similar, and all four agencies use similar funding mechanisms. While Reclamation primarily provides funding for water supply projects, RUS, EDA, and the Corps fund both water supply and wastewater projects. These projects primarily include the construction or upgrading of water or wastewater distribution lines, treatment plants, and pumping stations. For example, all four agencies funded water line expansions or upgrades in either residential or commercial areas. RUS, EDA, and the Corps also funded sewer line extensions into either residential or commercial areas. RUS and EDA have established nationwide programs with standardized eligibility criteria and processes under which communities compete for funding. Specifically, RUS’ eligibility criteria require projects to be located in a city or town with a population of less than 10,000 or an unincorporated rural area, regardless of the area’s population. EDA’s eligibility criteria require projects to be located in economically distressed communities, regardless of the size of the community served, and the project must also create or retain jobs. RUS’ eligibility criteria require water supply or wastewater projects to serve rural areas. A project must be located in a city or town with a population of less than 10,000 or in an unincorporated rural area regardless of the population. For example, St. Gabriel, Louisiana, with a population of about 6,600, received RUS funding to expand sewer lines to connect residents to a wastewater treatment plant. Similarly, Laurel County Water District No. 2, which provides potable water to about 17,000 residents who live in unincorporated rural areas of southeastern Kentucky between the cities of London, Kentucky, and Corbin, Kentucky, received RUS funding to upgrade a water treatment plant to accommodate potential growth opportunities in the area. Table 3 provides the number of RUS funded rural water supply and wastewater projects by state for fiscal years 2004 through 2006. To apply for RUS funding for a water supply or wastewater project, a community must submit a formal application. Once the formal application is submitted, communities then compete for funding with other projects throughout the state. In general, RUS officials in the state office rank each proposed project according to the project’s ability to alleviate a public health issue, the community’s median household income, and other factors. As applications are reviewed and ranked on a rolling basis, RUS officials in the state office generally decide which projects will receive funding until all funds are obligated for the fiscal year. RUS provides both grants and loans for eligible projects, and communities must meet certain requirements depending upon the type of assistance they are requesting. For example, RUS grants can be used to finance up to 75 percent of a project’s cost based on a number of factors including a community’s financial need and median household income. Alternatively, to receive a loan, the community must certify in writing, and RUS must determine, that the community is unable to finance the proposed project from their own resources or through commercial credit at reasonable rates and terms. For projects also funded through RUS loans, RUS requires the community to charge user fees that, at a minimum, cover the costs of operating and maintaining the water system while also meeting the required principal and interest payments on the loan. For example, RUS provided the Wood Creek Water District, located in Laurel County, Kentucky, a $1 million grant and a $7.98 million loan for a major water treatment plant expansion. A Wood Creek official told us that the water district had attempted to obtain a loan from a commercial lender; however, the loan would have had an interest rate of 7 percent and a term of 20 years, which would have rendered the project financially unfeasible. According to RUS, Wood Creek was able to receive a loan with an interest rate of 4.3 percent and a term of 40 years, thereby significantly reducing the annual loan payments.