Year 2000 Computing Crisis: Status of the Water Industry (Letter Report,
04/21/99, GAO/AIMD-99-151).

Pursuant to a congressional request, GAO identified the water utility
sector's vulnerability to year 2000 problems, focusing on: (1) the
reported status of year 2000 readiness; and (2) activities being
undertaken to address this issue.

GAO noted that: (1) water and wastewater treatment facilities often use
automated control systems and equipment to obtain, treat, and distribute
drinking water, and to collect, treat, and release wastewater; (2) these
control systems and equipment are subject to year 2000 failures; (3)
however, little is known about the year 2000 status of the nation's
water and wastewater facilities; (4) while the President's Year 2000
Conversion Council's water sector working group has undertaken an
awareness campaign and is urging national water sector associates to
continue to survey their memberships to determine their year 2000
readiness, to date these associations' surveys have had low response
rates; (5) further, Environmental Protection Agency officials stated
that the agency lacks the rules and regulations necessary to require
water and wastewater facilities to report on their year 2000 status, and
that developing such rules and regulations would be a time-consuming
process; (6) GAO surveyed state regulators to identify their efforts to
monitor the year 2000 status of the water and wastewater facilities they
regulate, and found a wide range of responses; (7) a few states were
proactively collecting year 2000 compliance data from the facilities
they regulate, while a much larger group of states was disseminating
year 2000 information, and another group was not actively using either
approach; (8) further, only a handful of state regulators believed that
under the current regulatory framework, they were responsible for
ensuring facilities' year 2000 compliance, or overseeing facilities'
business continuity and contingency plans; and (9) as a result,
insufficient information is available to assess and manage year 2000
efforts in the water sector, and little additional information is
expected under the current regulatory framework.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-151
     TITLE:  Year 2000 Computing Crisis: Status of the Water Industry
      DATE:  04/21/99
   SUBJECT:  Potable water
	     Information resources management
	     Wastewater management
	     Wastewater treatment
	     Public utilities
	     Y2K
	     Reporting requirements
	     Systems conversions
	     Surveys
IDENTIFIER:  Y2K

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AI99151.book GAO United States General Accounting Office

Report to the Special Committee on the Year 2000 Technology
Problem, U. S. Senate

April 1999 YEAR 2000 COMPUTING CRISIS

Status of the Water Industry

GAO/AIMD-99-151

  GAO/AIMD-99-151

United States General Accounting Office Washington, D. C. 20548
Lett er

Page 1 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

GAO

Accounting Information Management Division Lett er

B-282528 Letter April 21, 1999 The Honorable Robert F. Bennett
Chairman The Honorable Christopher Dodd Vice Chairman Special
Committee on the

Year 2000 Technology Problem United States Senate

A clean supply of drinking water and the removal and treatment of
wastewater are critical to the safety and well- being of the
public as we move into the next century. At your request, we
identified the water utility sector's vulnerability to Year 2000
problems, the reported status of Year 2000 readiness, and
activities being undertaken to address this issue. On April 12,
1999, we briefed your office on the results of our work. The
briefing slides are included in appendix I.

This report provides a high- level summary of the information
presented at that briefing, including background information, Year
2000 risks, actions taken by the President's Council on Year 2000
Conversion, the reported

readiness of the drinking water and wastewater industries, actions
taken by regulators to oversee water and wastewater facilities'
Year 2000 status, and practices used by leading facilities to
address their Year 2000 problems. This report also presents
suggestions we are making to reduce the risk of

Year 2000- related failures of drinking water or wastewater
services, and to ensure that the public has adequate information
about what is being done to reduce the risk of such failures.

Results in Brief Water and wastewater treatment facilities often
use automated control systems and equipment to obtain, treat, and
distribute drinking water, and to collect, treat, and release
wastewater. These control systems and equipment are subject to
Year 2000 failures. However, little is known about the Year 2000
status of the nation's water and wastewater facilities. While the
President's Year 2000 Conversion Council's water sector working
group has undertaken an awareness campaign and is urging national
water sector associations to continue to survey their memberships
to determine their

Year 2000 readiness, to date these associations' surveys have had
low response rates. Further, Environmental Protection Agency (EPA)
officials stated that the agency currently lacks the rules and
regulations necessary to require water and wastewater facilities
to report on their Year 2000

B-282528 Page 2 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

status, and that developing such rules and regulations would be a
timeconsuming process. We surveyed state regulators to identify
their efforts to monitor the Year

2000 status of the water and wastewater facilities they regulate,
and found a wide range of responses. A few states were proactively
collecting Year 2000 compliance data from the facilities they
regulate, while a much larger group of states was disseminating
Year 2000 information, and another group was not actively using
either approach. 1 Further, only a handful of state regulators
believed that under the current regulatory framework, they

were responsible for ensuring facilities' Year 2000 compliance, or
overseeing facilities' business continuity and contingency plans.
As a result, insufficient information is available to assess and
manage Year 2000 efforts in the water sector, and little
additional information is expected under the current regulatory
framework. Background The United States' population is served by
about 55,000 community drinking water facilities and by about
16,000 public wastewater

facilities. 2 While most of these facilities are relatively small,
about 3,300 large and very large drinking water facilities and
about 500 large and very large wastewater facilities serve the
majority of the population. 3

In most communities, water flows or is pumped from a raw water
source such as a lake or stream into a water treatment facility
where solids are aggregated and filtered out, and chemicals are
added to disinfect the water. Other chemicals may also be added to
control minerals or corrosion. Drinking water is then typically
pumped into a storage tank or reservoir, and distributed via
gravity or pumping stations through water mains to homes and
businesses. Wastewater is subsequently collected from homes and
businesses through sewer lines and often pumped via pumping
stations

1 The state Public Utility Commissions we surveyed were more
proactive, but they typically oversee a minority of the facilities
in each state. 2 This excludes people who receive their water from
individually- owned and operated sources, including wells and
springs. It also excludes those whose wastewater is treated by on-
site septic systems or privately- owned wastewater facilities.

3 According to EPA, large drinking water facilities serve between
10, 001 and 100,000 people and very large facilities serve over
100,000 people. A major wastewater association categorizes
wastewater treatment facilities by the flow of wastewater treated
per day, with large facilities generally treating between 10
million and 100 million gallons per day and the very large
facilities treating more than 100 million gallons per day.

B-282528 Page 3 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

to a wastewater treatment facility. At this facility, solids are
allowed to settle out or are filtered out, and chemicals are added
to disinfect the effluent before it is released often to a river,
stream, or lake. Treated effluent from wastewater facilities is
often taken in by drinking water facilities downstream.

The Water Sector is Vulnerable to Year 2000 Failures

Many water facilities rely on information technology and digital
controls with embedded microprocessors to process and distribute
drinking water, and to collect and treat wastewater. 4 In large
and medium facilities, Supervisory Control and Data Acquisition
(SCADA) systems are often used to monitor and control equipment.
Programmable logic controllers (PLC) communicate with the SCADA
systems and with electronic controls in equipment such as pumps,
valves, and sensors. Even smaller facilities that perform many
functions manually will often use some level of automation to
control their water and wastewater treatment processes. Year 2000-
induced failures in SCADA systems, PLCs, or electronic controls

could affect a facility's ability to monitor and control its
operations, resulting in loss of pressure in a drinking water
system; under- or overtreated drinking water; or overflow of
untreated sewage into public waterways. Additionally, although
many facilities have manual backup

procedures in place, failures of multiple systems may overtax
staff resources even if each failure is manageable in itself. In
addition to Year 2000 risks posed by internal systems, water and
wastewater facilities are heavily dependent on external entities,
including the power and telecommunications infrastructure and
chemical suppliers. An official at a large water facility told us
that without power, the facility

would shut down. He noted that even minor fluctuations in power
supply affect the facility's operations by causing pumps to shut
down. 4 A facility's level of automation can range from highly
automated process controls to mostly manual operations, with
medium and large facilities more likely to be highly automated
than smaller facilities.

B-282528 Page 4 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

The President's Council on Year 2000 Conversion Has Been Active in
the Water Sector, But Little is Known About Most

Water Facilities' Year 2000 Readiness The President's Council on
Year 2000 Conversion established a water

sector working group, led by EPA. This working group has
undertaken a number of activities, including an awareness campaign
aimed at disseminating information on the Year 2000 problem to
water and

wastewater facilities. It has also urged water sector trade
associations to continue surveying their memberships as to the
water and wastewater facilities' Year 2000 readiness. To date,
associations' surveys have had low response rates and, as a
result,

little is known about the status of the nation's water and
wastewater facilities. Specifically, three national drinking water
associations sent a voluntary survey to about 4,000 water facility
operators through August 1998. Survey responses showed that 51
percent of respondents had completed an internal assessment of
their Year 2000 risks, and 81 percent expected to complete their
internal Year 2000 work in time. However, there was only an 18-
percent response rate overall, and these responses accounted for
less than 1 percent of the nation's very small to medium
facilities; about 8 percent of the nation's large facilities; and
about 25 percent of the very large facilities.

Additionally, a national wastewater association surveyed its
membership of mostly large public wastewater facilities in June
and again in October 1998. The latest survey results indicated
that by the end of April 1999, only 35 percent of respondents
expected to complete Year 2000 repairs, 24 percent expected to
complete Year 2000 testing, and 18 percent expected to complete
implementation of system repairs. However, the survey response
rate was low falling from a 37- percent response rate in June to a
21- percent response rate in October. Further, because the
membership consisted of mostly large facilities, few small and
medium facilities participated in this survey. Responses to the
latest survey account for less than 1 percent of the nation's very
small to medium public facilities, 7

percent of the nation's large public facilities, and 15 percent of
the nation's very large public facilities. Because the water
associations have not had a high response rate, other
organizations may need to fill in the gaps in information. EPA
officials stated, however, that without developing regulations and
information collection rules which would likely be a very time-
consuming process they lack the means to require facilities to
report on their Year 2000 status. As a result, little is known on
a national level regarding water facilities' Year 2000 readiness.

B-282528 Page 5 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

Regulators' Year 2000 Activities Vary, Resulting in Insufficient
Information About the Year 2000 Readiness of the Water Sector

The Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)
provide EPA regulatory authority for drinking water and wastewater
quality. EPA has delegated responsibility to most states for basic
regulatory functions such as enforcing drinking water standards,
and issuing and enforcing permits that allow wastewater facilities
to discharge treated wastewater. EPA monitors and collects
compliance information from the states.

In addition to the responsibilities provided under the SDWA and
CWA, many states have legislation providing Public Utility
Commissions (PUCs) other regulatory responsibilities, including
rate- setting, handling of

consumer complaints, inspections, and audits of private water and
wastewater facilities. 5 Most state PUCs regulate facilities that
serve a small portion of the population. Only a few affect a
broader population. Specifically, five states' PUCs responsible
for drinking water and two states' PUCs responsible for wastewater
regulate facilities that serve over half of those states'
population. 6 We surveyed state administrations and PUCs to
identify their efforts to monitor the Year 2000 status of the
water and wastewater facilities they regulate and found a wide
range of initiatives. A few state administrations were proactively
collecting readiness information from the facilities they

regulated; a much larger group was disseminating Year 2000
information; and another large group was inactive on the Year 2000
issue. In general, the PUCs were more proactive, but again, most
PUCs affect only a small portion of the state population. Appendix
I provides further details on each state's survey responses.

In other survey results, only a few state administrations reported
that, under the current regulatory framework, they were
responsible for ensuring facilities' Year 2000 compliance or
overseeing facilities' business continuity and contingency plans.
EPA officials agreed that current regulations do not require
states to take responsibility for the Year 2000 issue. 5 About 20
states also provide PUCs the authority to regulate some public
facilities. 6 The five states with PUCs that regulate drinking
water facilities serving over half the population are Connecticut,
Indiana, Rhode Island, West Virginia, and Wisconsin. The two
states with PUCs that regulate wastewater facilities serving over
half the population are Rhode Island and West Virginia.

B-282528 Page 6 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

Because of the large number of state regulators that are not
collecting facilities' readiness information, there is
insufficient information to assess and manage Year 2000 efforts in
the water sector. Further, little additional information is
expected under the current regulatory framework.

Leading Facilities Use Common Practices To Address Year 2000 To
gain insight into the practices used at water sector facilities
that were

identified as having made progress in their Year 2000 efforts, we
visited small, medium, and large water and wastewater facilities.
We found that these leading organizations had practices that were
consistent with our published guidance for addressing the Year
2000 issue. 7 Leading facilities' practices included (1) gaining
executive management support, (2) conducting enterprise- wide
inventories of information systems

and components, (3) prioritizing systems and components to be
converted or replaced, (4) identifying, prioritizing, and
mobilizing needed resources, (5) replacing noncompliant systems
and hardware, (6) testing converted and replaced systems and
components, and (7) developing contingency plans for mission-
critical systems. A few facilities had also developed

innovative practices such as bar- coding every inventory item to
facilitate tracking its Year 2000 progress and requiring operators
to practice running facilities without electronic controls.

Suggested Actions In order to reduce the risk of Year 2000-
related failures of drinking water and wastewater services and to
ensure that the public has adequate

information about what is being done to reduce the risk of such
failures, we suggest that:

 The President's Council on Year 2000 Conversion consider
requesting that the water sector associations publicly disclose
the status of those facilities that have responded to surveys, and
identify those that have not responded. In doing so, the Council
may want to consider developing a template for collecting and
disclosing Year 2000 status

information.  If the current approach of using associations to
voluntarily collect

information does not yield the necessary information on water
facilities' 7 Year 2000 Computing Crisis: An Assessment Guide
(GAO/ AIMD- 10. 1. 14, September 1997); Year 2000 Computing
Crisis: Business Continuity and Contingency Planning (GAO/ AIMD-
10. 1. 19, August 1998); and Year 2000 Computing Crisis: A Testing
Guide (GAO/ AIMD- 10. 1. 21, November 1998).

B-282528 Page 7 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

Year 2000 readiness by June 1999, the Council consider whether
legislative remedies, such as requiring facilities to disclose
their Year 2000 readiness data by September 1999, are feasible and
should be

proposed.  The Council, EPA, and the states determine which
regulatory

organization should take responsibility for assessing and publicly
disclosing the status and outlook of water sector facilities' Year
2000 business continuity and contingency plans. EPA officials
generally agreed with our suggested actions. However, they noted
that associations may be unwilling to disclose facilities' Year
2000 status and state which facilities have not responded to
surveys. One

official also stated that additional legislation may be needed if
EPA is to take responsibility for overseeing facilities' Year 2000
business continuity and contingency plans. Objectives, Scope, and
Methodology

As requested, our objectives were to determine what Year 2000
issues could affect our nation's water sector and what the
President's Council on Year 2000 Conversion, leading facilities,
and state regulatory offices are doing to address Year 2000 issues
associated with community water and wastewater

services. To identify what Year 2000 issues could affect the water
and wastewater industries, we contacted trade associations and
engineers and utilized government, private- sector, and trade
association Internet sites. We also visited selected water and
wastewater facilities to obtain information about the extent of
system vulnerabilities.

To identify the Council's activities to address Year 2000 issues
associated with water and wastewater industries, we met with
officials and attended water sector meetings at EPA. To identify
what leading facilities are doing

to address the Year 2000 problem, we visited leading water sector
organizations and identified practices they thought helped them
make progress in addressing the Year 2000 problem. Lastly, to
identify what state regulatory offices are doing to address the
Year 2000 issues associated with community water and wastewater
services, we surveyed state water sector regulators in January and
February 1999. To do so, we developed a questionnaire, pretested
it at three state locations, and administered it by

telephone and fax. We validated our results by obtaining
documentation to support interviewees' responses.

B-282528 Page 8 GAO/AIMD-99-151 Year 2000 Status of the Water
Industry

We conducted our work at the Environmental Protection Agency in
Washington, D. C., and at selected water and wastewater treatment
facilities throughout the country. We performed our work from
November 1998

through April 1999, in accordance with generally accepted
government auditing standards. We provided a copy of our briefing
materials, which were used in preparing this report, to
Environmental Protection Agency officials representing the water
sector working group of the President's Council on Year 2000
Conversion. The Deputy Assistant Administrator, the Senior
Information

Resources Management Official of the Office of Water, the Special
Assistant to the Director for Ground Water and Drinking Water, and
two Special Assistants to the Office of Wastewater Management
provided oral comments on the briefing. We have incorporated these
comments as appropriate throughout this report.

We are sending copies of this report to the Honorable John
Koskinen, Chairman of the President's Council on Year 2000
Conversion; the Honorable Carol M. Browner, Administrator of the
Environmental

Protection Agency; the Honorable Jacob J. Lew, Director of the
Office of Management and Budget; and other interested parties.
Copies will be made available to others upon request.

If you have any questions on matters discussed in this letter,
please call me at (202) 512- 6408, or Colleen Phillips, Assistant
Director, at (202) 512- 6326. We can also be reached by e- mail at
willemssenj. aimd@ gao. gov and phillipsc. aimd@ gao. gov,
respectively. Other major contributors to this report are listed
in appendix II.

Joel C. Willemssen Director, Civil Agencies Information Systems

Page 9 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

Appendix I Briefing on the Year 2000 Status of the Water Industry
Appendi x I

1 Accounting and Information

Management Division Y2K Drinking Water and

Wastewater April 12, 1999 Amended April 19, 1999 Briefing for the
Senate Special Committee on the Year 2000 Technology Problem

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 10 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

2 Briefing Overview

 Objectives and Methodology  Background: Sector Decomposition and
Demographics  Year 2000 Risks in the Water Sector  President's
Council on Year 2000 Conversion Actions

and Reported Sector Status  GAO Survey: State Regulators' Actions
Leading Facilities' Practices  Observations  Suggested Actions

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 11 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

3 Objectives

Determine:  What Year 2000 issues could affect water and
wastewater

industries  What the President's Council on Year 2000 Conversion
is doing

to address Year 2000 issues associated with water and wastewater
industries

 What state regulatory offices are doing to address the Year 2000
issues associated with community water and wastewater services

 What leading facilities are doing to address the Year 2000
problem

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 12 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

4 Overview of Methodology

To address these objectives, we:  contacted trade associations and
engineers and utilized

government, private sector, and trade association Internet sites
for pertinent water industry and Year 2000 information

 attended the President's Council on Year 2000 Conversion water
utilities sector meetings at the Environmental Protection Agency
to learn about the Council's actions and plans

 surveyed Year 2000 actions of state water sector regulators by
developing a questionnaire, pretesting it at three state
locations, and administering the questionnaire by telephone and
fax

 visited leading water sector facilities to learn about best
practices in addressing the Year 2000 problem

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 13 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

5 Background:

Decomposition of Water Sector  Public and Private Water

Facilities Large Medium Small

 Federal Facilities DOD  Others

 Public and Private Wastewater Treatment Facilities

 Large  Medium  Small

 Federal Facilities  DOD  Others D rin kin g W ater W as t ewater

W at er U t ilit y S ec t or

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 14 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

6 Background:

Water Sector Demographics  Approximately 55, 000 community
drinking water facilities serve

about 94% of the U. S. population.  The remainder of the
population receive their water from

individually owned and operated sources including wells, cisterns,
and springs.

 About 16, 000 public wastewater facilities collect and process
over 32 billion gallons of wastewater per day from about 187
million people (about 70% of the U. S. population).

 The remainder of the U. S. population's wastewater is treated by
on- site septic systems or privately- owned wastewater facilities.

Source: Environmental Protection Agency

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 15 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

7 Background:

Water Sector Demographics (cont'd.)  The nation's water and
wastewater treatment facilities are diverse:

 Publicly- Owned:  generally owned and operated by local
governments-- counties

and municipalities or by water or sanitation districts.  serve a
majority of the population.  Privately- Owned:

 generally owned and operated for profit.  serve a minority of the
population.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 16 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

8 Background:

Water Sector Demographics (cont'd.) EPA categorizes drinking water
facilities according to the number of people they serve:

Size Population served Number of facilities

Very Small 25- 500 about 32,000 Small 501- 3,300 about 14,000
Medium 3,301- 10, 000 about 4,000 Large 10, 001- 100,000 about
3,000 Very Large Over 100,000 about 330

 About 75 percent of the population is served by large or very
large water facilities.

 Levels of automation range from manual operations to highly
automated process control systems-- medium and large facilities
tend to be more automated.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 17 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

9 Background:

Water Sector Demographics (cont'd.)  The Association of
Metropolitan Sewerage Agencies (AMSA)

categorizes wastewater facilities according to the flow of
wastewater treated. These facilities range from very small to very
large.

 About 13, 000 public wastewater facilities treat less than 1
million gallons per day.

 47 public wastewater facilities treat more than 100 million
gallons per day.

 As with drinking water, levels of automation range from manual
operations to highly automated process control systems-- medium
and large facilities tend to be more automated.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 18 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

10 Background: General Schematic of Drinking

Water and Wastewater Facilities

Wastewater treatment facility:

Wastewater flows or is pumped into a facility where typically
solids are allowed to settle out or are filtered out and chemicals
are added to disinfect the effluent before it is released.
Drinking water treatment

facility: Water flows or is pumped into a facility where typically
solids are aggregated and filtered out and chemicals such as
chlorine or ozone are added to disinfect the water. Other
chemicals may be added to control minerals or corrosion.

Wastewater is collected from homes and businesses through sewer
lines and often pumped via pumping stations to a treatment
facility. Drinking water is typically

pumped into storage tanks or reservoirs and then distributed via
gravity or pumping stations through water mains to homes and
businesses.

Raw water source: lake, river, stream, acquifer

Treated effluent from wastewater facilities is often taken in by
drinking water facilities downstream

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 19 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

11 Year 2000 Risks in the Water Sector

 Many water facilities rely on information technology and digital
controls with embedded microprocessors to process and distribute
drinking water and to collect and treat wastewater.

 Potential Year 2000 failure modes and consequences include:
Supervisory Control and Data Acquisition (SCADA) systems-- which
enable

plant operators to monitor and control equipment throughout a
large treatment plant-- may fail, making it difficult to monitor
facility operations.

 Digital controls for pumps may fail, resulting in lack of
pressure in drinking water systems or overflow of untreated
sewage.

 Digital controls or sensors for chemical metering systems may
fail, resulting in under- treated or over- treated drinking water;
or discharge of untreated sewage, which may render public waters
unusable or unsafe.

 Although many facilities have manual backup procedures, failures
of multiple systems in a facility may overtax staff resources--
even if each failure is manageable by itself.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 20 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

12 Year 2000 Risks in the Water Sector:

Supervisory Control and Data Acquisition  A central Supervisory

Control and Data Acquisition (SCADA) console, from which a plant
operator can monitor and control equipment throughout a large
treatment plant.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 21 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

13 Year 2000 Risks in the Water Sector:

Programmable Logic Controller  An equipment cabinet with

programmable logic controllers that communicate with electronic
controls for individual pieces of equipment such as pumps, valves,
and sensors, and with the central SCADA system.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 22 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

14 Year 2000 Risks in the Water Sector

 Even if a water facility does not use computers or equipment with
digital controllers, it can be affected by others that do, such as

 electric power companies,  telecommunications companies, and
chemical suppliers.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 23 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

15 Actions of the President's Council on Year

2000 Conversion Water Utility Sector  The President's Council on
Year 2000 Conversion designated EPA as the lead

for the water utility sector. To date, EPA has  disseminated
information on the Year 2000 problem;  encouraged sector trade
associations to survey their membership and to

conduct follow- up surveys;  issued policy to encourage Year 2000
testing by stating its intent to waive

civil penalties, and to recommend against criminal prosecution,
for environmental violations caused by Year 2000 testing-- subject
to certain conditions, including the need to correct any testing-
related violations immediately; and  asked its regional offices to
encourage states that are not currently doing so

to take action to address the Year 2000 problem in water
facilities.  However, EPA officials say the agency lacks the means
to require facilities to

report on their Year 2000 status without the time- consuming
development of regulations and rules.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 24 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

16 President's Council on Year 2000 Conversion Water

Utility Sector: Reported Preparedness of Drinking Water Facilities

 Three key drinking water associations, including the American
Water Works Association (AWWA), sent a voluntary survey to about
4,000 facility operators through August 1998.

 725 operators responded by December 1998. About half reported
they had completed their Year 2000 assessments of internal
systems.

 AWWA cautions that the responses may be biased in favor of
facilities that are better prepared for the Year 2000.

 Survey responses account for less than 1 percent of the nation's
very small to medium facilities; about 8 percent of the nation's
large facilities, and about 25 percent of the very large
facilities.

 AWWA plans to conduct a follow- up survey and report updated
findings by July 1999.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 25 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

17 President's Council on Year 2000 Conversion Water

Utility Sector: Reported Preparedness of Wastewater Facilities

 In June 1998, the Association of Metropolitan Sewerage Agencies
(AMSA) surveyed its membership of 206 mostly large municipal
facilities. AMSA reported

 37 percent responded, and  of these, 95 percent had begun to
implement solutions for the Year 2000

problem.  In October 1998, AMSA conducted another survey focusing
on when facilities

expected to complete major conversion steps. AMSA reported  21
percent responded, and  the respondents project that by April
1999;

 35% would be complete with repair  24% would be complete with
testing  18% would be complete with implementation.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 26 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

18 President's Council on Year 2000 Conversion Water

Utility Sector: Reported Preparedness of Wastewater Facilities
(cont'd.)

 Survey responses account for less than 1 percent of the nation's
very small to medium public facilities; about 7 percent of the
nation's large public facilities, and about 15 percent of the very
large public facilities.

 The wastewater association plans to conduct a follow- up survey
and report updated findings by July 1999.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 27 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

19

The shaded area indicates the regulators we surveyed

GAO Survey: Overview of Regulatory Framework

Regulation of Drinking Water Contaminants and Discharge of
Wastewater Effluents

Other Regulatory Responsibility

(could include rate- setting, handling consumer complaints,
inspections, and audits)

Regulators US Environmental Protection Agency (EPA)

The Safe Drinking Water (SDWA) and Clean Water Act (CWA) provide
EPA certain regulatory responsibilities for water quality. EPA has
delegated authority to most state administrations for basic
regulatory functions such as enforcing drinking water standards
and issuing and enforcing permits that allow facilities to
discharge treated wastewater. EPA monitors and collects compliance
information from states.

State administrations

Unless EPA retained authority under SDWA and CWA or this authority
was further delegated to local administrations, state
administrations are responsible for regulatory functions such as
enforcing drinking water standards under SDWA and issuing and
enforcing permits under CWA. Some state legislation provides
additional authority. States report federal compliance information
back to EPA, and can lose their regulatory authority if the
facilities do not meet regulatory standards.

Public utility commissions (PUCs)

State legislation often provides authority to PUCs to regulate
private water and wastewater facilities. Nineteen states also
provide PUCs the authority to regulate some public facilities.
PUCs typically oversee a minority of the facilities in each state.

Local administrations

States may delegate authority to regulate specific components of
SDWA and CWA to local administrations. Some local administrations
also have local legislation that provides them with authority to
regulate additional health requirements.

State and local legislation provide local administrations with
authority to regulate public water and wastewater facilities.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 28 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

20 GAO Survey: Scope

 Conducted January through February 1999  Interviewed the primary
drinking water, wastewater, and public utility

commission contact in each state  Interviews were conducted via
telephone or faxed questionnaire and

validated by documentation supporting interviewees' responses
Respondent rates:

 50 drinking water administrations 100%  50 wastewater
administrations 100%  50 public utility commissions-- drinking
water 88%  50 public utility commissions-- wastewater 88%

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 29 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

21 GAO Survey:

Analysis Approach  We placed each state regulator into one of
three categories:*

 Proactive-- these regulators reported taking action to assess the
readiness of water or wastewater facilities. Most proactive states
also reported taking action to provide (1) information about the
Year 2000 problem, or (2) guidance about how to address the Year
2000 problem to facility operators in their states.

 Active-- these regulators reported taking action to disseminate
general information about potential Year 2000 problems or notify
operators about their responsibilities to ensure that their
facilities remain in compliance with applicable regulations after
1/ 1/ 2000, but did not assess the Year 2000 progress of
facilities in their states.

 Inactive-- these regulators reported not taking action to provide
information about potential Year 2000 problems to facility
operators, or to assess the readiness of water sector facilities
in their states.

*Note: One should not draw conclusions about the state of
individual water facilities on the basis of a regulator's level of
activity. A regulator's activity level is one of many factors that
may affect facilities' progress.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 30 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

22 GAO Survey: Summary of Results

Status Drinking water

administration Public water

commission (drinking water)

Water pollution control administration (wastewater)

Public utility commission (wastewater)

Proactive

Reported taking action to assess readiness of water facilities

2 34 3 21

Active

Reported taking action to disseminate information about the
problem

28 1 30 2

Inactive

Reported taking no action

20 3 17 0

Reported lack of regulatory authority

6 21

Did not respond to questionnaire 6 6

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 31 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

23 GAO Survey:

Drinking Water Administrations Summary of actions by state
drinking water administrations on the Year 2000 problem

Condition States Description Proactive

(2)

Colorado, Minnesota These states reported taking action to assess
readiness of drinking water facilities. Most of these states also
reported taking action to provide (1) information about Year 2000,
or (2) guidance about how to address Year 2000 to operators in
their states.

Active (28)

Arkansas, California, Florida, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Maryland, Massachusetts, Missouri, New Hampshire,
New York, North Dakota, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,
Washington, Wisconsin, West Virginia, Wyoming 1

These states reported taking action to disseminate information
about the problem or notify operators about their responsibility
for Year 2000, but did not assess the Year 2000 progress of
facilities in their states.

Inactive (20)

Alabama, Alaska, Arizona, Connecticut, Delaware, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi, Montana, Nebraska,
Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma,
Oregon

These states reported not taking action to provide information
about potential Year 2000 problems to facility operators, or to
assess the readiness of drinking water facilities in their states.
Some of these states said they plan to take action in the future.

1 The US Environmental ProtectionAgency has regulatory authority
inWyoming underthe Safe Drinking WaterAct. Note: Facilities may
have received Year2000 informationfromother sources, including
EPA, trade associations, and otherstate organizations.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 32 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

24 GAO Survey: Public Utility Commissions that

Regulate Drinking Water Summary of actions by state public utility
commissions responsible for regulating drinking water facilities

on the Year 2000 problem 1

Condition States Description Proactive

(34)

Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut 2 , Delaware, Idaho, Illinois, Indiana, Iowa,
Kentucky, Maine, Maryland, Mississippi, Missouri, Montana, Nevada,
New Hampshire, New Jersey, New York 3 , North Carolina, Ohio,
Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Utah,
Vermont, West Virginia, Wisconsin, Wyoming

These states reported taking action to assess the Year 2000 status
of drinking water facilities. Most of these states also reported
taking action to provide (1) information about Year 2000, or (2)
guidance about how to address Year 2000 to operators in their
states.

Active (1)

Florida This state reported taking action to disseminate
information about the problem or notify operators about their
responsibility for Year 2000, but did not assess the Year 2000
progress of facilities in the state.

Inactive (3)

Kansas, Nebraska, Washington These states reported not taking
action to provide information about potential Year 2000 problems
to facility operators, or to assess the readiness of drinking
water facilities in their states. Some of these states said they
plan to take action in the future.

Non- Regulating (6)

Georgia, Michigan, Minnesota, North Dakota, South Dakota, Texas

These state public utility commissions reported they are not
responsible for regulating private drinking water facilities.

Non- Responding (6)

Hawaii, Louisiana, Massachusetts, New Mexico, Pennsylvania,
Virginia These states did not respond to the questionnaire.

1 Inmoststates, the PUC regulates facilities thatserve arelatively
small percentage of the population. However, infive states--
Connecticut, Indiana, Rhode Island, West Virginia, and Wisconsin
the PUC regulates facilities thatserve overhalf of the population.
2 Connecticutreported ithas collected Year2000 information
fromonly the 3 largestinvestorowned waterfacilities inthe state.
They said they are only secondarily

tracking the status of the other mediumand smaller size water
facilities they regulate. 3 New York reported that they are
actively monitoring Year 2000 compliance forthe 6 largestregulated
facilities serving about80% of the regulated population.

They reported thatthe remaining 374 companies, 20% of the
population, are monitored ona less rigorous basis. Note:
Facilities may have received Year2000 informationfromother
sources, including EPA, trade associations, and otherstate
organizations.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 33 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

25 GAO Survey:

Wastewater Administrations Summary of actions by state water
pollution control (wastewater) administrations on the Year 2000
problem

Condition States Description Proactive

(3)

Alaska, California, Utah These states reported taking action to
assess readiness of wastewater facilities. Most of these states
have also reported taking action to provide (1) information about
Y2K, or (2) guidance about how to address Y2K to operators in
their states.

Active (30)

Alabama, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois,
Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota,
Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York,
North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island,
South Carolina, South Dakota, Vermont, Wisconsin, Wyoming

These states reported taking action to disseminate information
about the problem or notify operators about their responsibility
for Y2K, but did not assess the Year 2000 progress of facilities
in their states.

Inactive (17)

Arkansas, Arizona, Connecticut, Georgia, Indiana, Louisiana,
Maryland, Mississippi, Montana, New Mexico, North Dakota, Ohio,
Tennessee, Texas, Virginia, Washington, West Virginia

These states reported not taking action to provide information
about potential Y2K problems to facility operators, or to assess
the readiness of water pollution control facilities in their
states. Some of these states said they plan to take action in the
future.

Note: Facilities may have received Year2000 informationfromother
sources, including EPA, trade associations, and otherstate
organizations.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 34 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

26 GAO Survey: Public Utility Commissions that

Regulate Wastewater

Note: Facilities may have received Year2000 informationfromother
sources, including EPA, trade associations, and otherstate
organizations.

Summary of actions by state public utility commissions responsible
for regulating wastewater facilities on the Year 2000 problem 1

Condition States Description Proactive

(21)

Alaska, Arizona, Arkansas, Illinois, Indiana, Kentucky, Maryland,
Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey,
North Carolina, Ohio, Rhode Island, South Carolina, Tennessee,
Utah, West Virginia, Wisconsin

These states reported taking action to assess the Year 2000 status
of wastewater facilities. Most of these states also reported
taking action to provide (1) information about Year 2000, or (2)
guidance about how to address Year 2000 to operators in their
states.

Active (2)

California, Florida These states reported taking action to
disseminate information about the problem or notify operators
about their responsibility for Year 2000.

Inactive (0)

These states reported taking action to date to provide information
about potential Year 2000 problems to facility operators, or to
assess the readiness of wastewater facilities in their states.
Some of these states said they plan to take action in the future.

Non- Regulating (21)

Alabama, Colorado, Connecticut, Delaware, Georgia, Idaho, Iowa,
Kansas, Maine, Michigan, Minnesota, Nebraska, New York, North
Dakota, Oklahoma, Oregon, South Dakota, Texas, Vermont 2 ,
Washington, Wyoming

These state public utility commissions reported they are not
responsible for regulating private wastewater facilities.

Non- Responding (6)

Hawaii, Louisiana, Massachusetts, New Mexico, Pennsylvania,
Virginia

These states did not respond to the questionnaire.

1 Inmoststates, the PUC regulates facilities that serve
arelatively small percentage of the population. However, intwo
states-- Rhode Island and West Virginia the PUC regulates
facilities that serve over half the population. 2 Vermontreported
ithas regulatory authority for wastewater facilities; however,
they reported regulating none atthis time.

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 35 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

27 GAO Survey: Many People Are Served by

Facilities with Inactive Regulators  Note: Facilities may have
received Year 2000 information from other sources, including

EPA, trade associations, and other state organizations. Source:
GAO analysis based on EPA and PUC population data

Populations served by: Drinking water population

served (millions) Wastewater population

served (millions) Facilities with proactive regulators 36 32
Facilities with active regulators 151 98 Facilities with inactive
regulators 58 56 Totals 245 186

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 36 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

28 GAO Survey: Other Results

 Relatively few state regulators said they were responsible for
ensuring the Year 2000 compliance of water facilities:

 only 4 of 100 drinking water and wastewater administrations
reported being responsible for ensuring Year 2000 compliance

 less than half of the public utility commissions (PUCs) that
reported regulating water sector facilities said that they were
responsible for ensuring Year 2000 compliance

 some of these PUCs said they could not guarantee the Year 2000
compliance of water sector facilities they regulate

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 37 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

29 GAO Survey: Other Results (cont'd.)

 Relatively few state regulators said that they oversee Year 2000
business continuity and contingency plans (BCCPs) that will be
used by water facilities in the event of a Year 2000 emergency:

 3 drinking water administrations and 1 wastewater administration
reported they would oversee or review facilities' Year 2000 BCCPs

 1 wastewater administration reported that it has an advisory role
and expects facilities' BCCPs to be available for inspection

 14 PUCs that regulate drinking water and 7 PUCs that regulate
wastewater facilities said they would oversee or review BCCPs

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 38 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

30 Year 2000 Practices at Leading

Facilities  We observed a number of practices at leading
facilities that are consistent  with GAO Guidance:*

 Obtaining executive management support  Conducting an enterprise-
wide inventory of information systems and their

components  Prioritizing systems and components to be converted or
replaced  Identifying, prioritizing, and mobilizing needed
resources  Replacing noncompliant systems and hardware  Testing
converted and replaced systems and components  Developing
contingency plans for mission- critical systems

* Year 2000 Computing Crisis: An Assessment Guide (GAO/ AIMD- 10.
1. 14, September 1997) Year 2000 Computing Crisis: Business
Continuity and Contingency Planning (GAO/ AIMD- 10. 1. 19, August
1998) Year 2000 Computing Crisis: A Testing Guide (GAO/ AIMD- 10.
1. 21, November 1998)

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 39 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

31 Year 2000 Practices at Leading

Facilities (cont'd.)  Innovative practices observed:

 identifying and bar coding every piece of electronic equipment to
track Year 2000 status and ensure that all equipment is checked
for Year 2000 compliance

 scheduling every operator to practice running the facility
without electronic controls

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 40 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

32 Observations

 Insufficient information is available to assess and manage water
facilities' Year 2000 efforts.

 Few states have surveyed the Year 2000 status of water sector
facilities  Existing national surveys have low response rates
Information about the status of small and medium facilities is
limited

 Little additional information is likely to emerge under the
current regulatory framework.

 Few additional states plan to survey facilities' Year 2000 status
State regulators responsible for water facilities' compliance
under the Clean

Water Act and the Safe Drinking Water Act generally report they
lack specific responsibility for Year 2000 compliance of water
facilities' equipment  EPA officials say the agency lacks the
means to conduct mandatory

collection of data on facilities' Year 2000 status

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 41 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

33 Suggested Actions

 In order to reduce the risk of Year 2000- related failures of
drinking water or wastewater services and ensure that the public
has adequate information about what is being done to reduce the
risk of such failures, we suggest that

 the President's Council consider requesting that the water sector
associations publicly disclose the status of those facilities that
have responded to surveys, and identify those that have not
responded;

 in doing so, the Council may want to consider developing a
template for collecting and disclosing Year 2000 status
information;

 if the current approach of using associations to voluntarily
collect information does not yield the necessary information on
water facilities' Year 2000 readiness by June 1999, the Council
may wish to consider whether legislative remedies, such as
requiring facilities to disclose their Year 2000 readiness data by
September 1999, are feasible and should be proposed; and

Appendix I Briefing on the Year 2000 Status of the Water Industry

Page 42 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

34 Suggested Actions (cont'd.)

 the Council, EPA, and the states should determine which
regulatory organization should take responsibility for assessing
and publicly disclosing the status and outlook of water sector
facilities' Year 2000 business continuity and contingency plans.

Page 43 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

Appendix II Major Contributors to This Report

Appendi x I I

Accounting and Information Management Division, Washington, D. C.

Robert C. Reining, Evaluator in Charge Sharon O. Byrd, Senior
Auditor Christina M. Bower, Evaluator

Atlanta Field Office Glenda C. Wright, Senior Information Systems
Analyst

(511482) Let t er

Appendix II Major Contributors to This Report

Page 44 GAO/AIMD-99-151 Year 2000 Status of the Water Industry

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