Drinking Water: The District of Columbia and Communities	 
Nationwide Face Serious Challenges in Their Efforts to Safeguard 
Water Supplies (15-APR-08, GAO-08-687T).			 
                                                                 
The discovery in 2004 of lead contamination in the District of	 
Columbia's drinking water resulted in an administrative order	 
between the Environmental Protection Agency (EPA) and the	 
District's Water and Sewer Authority (WASA), requiring WASA to	 
take a number of corrective actions. WASA also took additional,  
longer-term measures, most notably a roughly $400 million program
to replace what may be 35,000 lead service lines in public space 
within its service area. As in WASA's case, water utilities	 
nationwide are under increasing pressure to make significant	 
investments to upgrade aging and deteriorating infrastructures,  
improve security, serve a growing population, and meet new	 
regulatory requirements. In this context, GAO's testimony	 
presents observations on (1) WASA's efforts to address lead	 
contamination in light of its other pressing water infrastructure
needs, and (2) the extent to which WASA's challenges are	 
indicative of those facing water utilities nationwide. To address
these issues, GAO relied primarily on its 2005 and 2006 reports  
on lead contamination in drinking water, as well as other recent 
GAO reports examining the nation's water infrastructure needs and
strategies to address these needs.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-687T					        
    ACCNO:   A81686						        
  TITLE:     Drinking Water: The District of Columbia and Communities 
Nationwide Face Serious Challenges in Their Efforts to Safeguard 
Water Supplies							 
     DATE:   04/15/2008 
  SUBJECT:   Cost control					 
	     Decontamination					 
	     Environmental monitoring				 
	     Funds management					 
	     Groundwater					 
	     Groundwater contamination				 
	     Health hazards					 
	     Lead poisoning					 
	     Municipal governments				 
	     Potable water					 
	     Program management 				 
	     Public utilities					 
	     Regulatory agencies				 
	     Strategic planning 				 
	     Water pipelines					 
	     Water pollution					 
	     Water pollution control				 
	     Water quality					 
	     Water quality management				 
	     Water quality standards				 
	     Water treatment					 
	     Cost estimates					 
	     Program costs					 
	     Program implementation				 
	     Standards (water quality)				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-08-687T

   

     * [1]Background
     * [2]WASA Has Reduced Lead in Drinking Water But Faces Many Other
     * [3]WASA's Water Infrastructure Problems Mirror the Challenges W

          * [4]Comprehensive Asset Management Can Be an Effective Tool for

     * [5]Contact and Acknowledgements

          * [6]Order by Mail or Phone

This is the accessible text file for GAO report number GAO-08-687T 
entitled 'Drinking Water: The District of Columbia and Communities 
Nationwide Face Serious Challenges in Their Efforts to Safeguard Water 
Supplies' which was released on April 15, 2008.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to [email protected]. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Testimony: 

Before the Subcommittee on Federal Workforce, Postal Service, and the 
District of Columbia, Committee on Oversight and Government Reform, 
U.S. House of Representatives: 

United States Government Accountability Office:
GAO: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT: 
Tuesday, April 15, 2008: 

Drinking Water: 

The District of Columbia and Communities Nationwide Face Serious 
Challenges in Their Efforts to Safeguard Water Supplies: 

Statement of John B. Stephenson: 
Director Natural Resources and Environment: 

GAO-08-687T: 

GAO Highlights: 

Highlights of GAO-08-687T, a testimony before the Subcommittee on 
Federal Workforce, Postal Service, and the District of Columbia, 
Committee on Oversight and Government Reform, U.S. House of 
Representatives. 

Why GAO Did This Study: 

The discovery in 2004 of lead contamination in the District of 
Columbiaï¿½s drinking water resulted in an administrative order between 
the Environmental Protection Agency (EPA) and the Districtï¿½s Water and 
Sewer Authority (WASA), requiring WASA to take a number of corrective 
actions. WASA also took additional, longer-term measures, most notably 
a roughly $400 million program to replace what may be 35,000 lead 
service lines in public space within its service area. 

As in WASAï¿½s case, water utilities nationwide are under increasing 
pressure to make significant investments to upgrade aging and 
deteriorating infrastructures, improve security, serve a growing 
population, and meet new regulatory requirements. 

In this context, GAOï¿½s testimony presents observations on (1) WASAï¿½s 
efforts to address lead contamination in light of its other pressing 
water infrastructure needs, and (2) the extent to which WASAï¿½s 
challenges are indicative of those facing water utilities nationwide. 

To address these issues, GAO relied primarily on its 2005 and 2006 
reports on lead contamination in drinking water, as well as other 
recent GAO reports examining the nationï¿½s water infrastructure needs 
and strategies to address these needs. 

What GAO Found: 

With the introduction of orthophosphate to its drinking water WASA has 
consistently tested below the federal action level for lead. However, 
WASA is reevaluating its roughly $400 million, longer-term solution for 
replacement of what may be 35,000 lead service lines within its 
jurisdiction. In addition to the programï¿½s high cost, a key problem 
WASA faces is that, by law, it may only replace the portion of the 
service line that it owns; replacing the portion on private property is 
at the homeownerï¿½s discretion. Accordingly, WASA has been encouraging 
homeowners to participate in the program by replacing their own portion 
of the lead lines. Despite these efforts, however, homeowner 
replacement of lead service lines remains limited. Of the 14,260 lead 
service lines WASA replaced through the first quarter of fiscal year 
2008, there were only 2,128 instances in which the homeowner 
participated in private side replacement. Many questions remain about 
the benefits of partial lead service line replacement. In fact, some 
research to date suggests that partial service line replacement results 
in (1) short-term spikes in lead levels immediately after partial 
replacement and (2) little long-term reduction in lead levels. WASAï¿½s 
dilemma over this program is taking place within the context of its 
other staggering infrastructure needs. Most notably, WASA is 
undertaking a $2.2 billion effort to meet the terms of a consent decree 
with EPA requiring the utility to control its sewer overflow problems. 

WASAï¿½s challenges in addressing its lead contamination problems and 
other infrastructure demands are mirrored across the country, where 
infrastructure needs are estimated to range from $485 billion to nearly 
$1.2 trillion nationwide over the next 20 years. In particular, many 
utilities have had difficulty in raising funds to repair, replace, or 
upgrade aging capital assets; comply with regulatory requirements; and 
expand capacity to meet increased demand. For example, based on a 
nationwide survey of several thousand drinking water and wastewater 
utilities, GAO reported in 2002 that 29 percent of the drinking water 
utilities and 41 percent of the wastewater utilities were not 
generating enough revenue from user rates and other local sources to 
cover their full cost of service. GAO also found that about one-third 
of the utilities (1) deferred maintenance because of insufficient 
funding, (2) had 20 percent or more of their pipelines nearing the end 
of their useful life, and (3) lacked basic plans for managing their 
capital assets. Other GAO work suggests that the nationï¿½s water 
utilities could more effectively manage their infrastructure at a time 
when huge investments are needed. In 2004, for example, GAO cited 
ï¿½comprehensive asset managementï¿½ as one approach that could help 
utilities better identify and manage their infrastructure needs. While 
by no means a panacea to their fundamental fiscal challenges, water 
utilities can use comprehensive asset management to minimize the total 
cost of designing, acquiring, operating, maintaining, replacing, and 
disposing of capital assets over their useful lives, while achieving 
desired service levels. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-687T]. For more 
information, contact John B. Stephenson at (202) 512-3841 or 
[email protected]. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here to testify on the infrastructure challenges 
facing the District of Columbia's Water and Sewer Authority (WASA), 
highlighting its efforts to reduce lead exposure. In doing so, we will 
also put our comments in the context of the many fiscal challenges and 
competing demands facing all water utilities, including WASA. 

Media reports in early 2004 about lead contamination of the District's 
drinking water raised serious concerns about the health risks posed to 
its residents from existing lead service lines, and about how local and 
federal agencies were carrying out their responsibilities. WASA's lack 
of timely disclosure of this problem, and the subsequent confused 
effort by government agencies to inform the public on steps to protect 
itself, led to numerous congressional hearings and a June 2004 
administrative consent order between the Environmental Protection 
Agency (EPA) and WASA. WASA agreed to take a number of corrective 
actions, including improving its water sampling procedures and 
subsequent reporting of these results to EPA; enhancing its public 
education efforts; and developing a plan to identify additional lead 
service lines. In addition, orthophosphate was added to WASA's water 
supply in August 2004 to form a protective coating inside lead service 
lines and fixtures to prevent lead from leaching into drinking water. 

To address the problem in the long-term, WASA decided to undertake what 
it estimates to be at least a $400 million program to replace the 
public portions of all its customers' lead service lines (roughly 
35,000 lines) by 2016 and to also provide various incentives to 
encourage the replacement of lead service lines in private space. In 
the District of Columbia, homeowners are responsible for the portion of 
the service line that runs from the property line to the home. 
Homeowners may replace this portion of the line if they choose, but 
this replacement is not required. 

The lead problem in the District of Columbia also prompted EPA to 
review the adequacy of federal regulations on lead in drinking water. 
In October 2007, EPA made several changes to the monitoring and public 
notice provisions of the Safe Drinking Water Act's Lead and Copper 
Rule, the principal federal regulation protecting public water system 
consumers from exposure to lead and copper in drinking water. 

As important as the lead contamination problem has been to WASA and its 
customers, it is not the only issue with which the utility must 
grapple. Like many other large water utilities, WASA is also 
responsible for wastewater collection and transmission, including 
operation and maintenance of its wastewater treatment facility and 
sanitary sewer system. While the utility has sought to modernize many 
parts of its wastewater facilities, some components date back to the 
early 19th century. Like most utilities, WASA must provide for 
replacement or rehabilitation of its existing system, and construct 
extensions to this system for development and growth as needed. 

The federal government has had a significant impact on the nation's 
drinking water and wastewater infrastructure by (1) providing financial 
assistance to build new facilities or upgrade existing ones and (2) 
establishing regulatory requirements that affect the technology, 
operation, and maintenance of utility infrastructure. As the agency 
that regulates drinking water and surface water quality, EPA provides a 
significant amount of financial assistance for facilities that supply 
drinking water and treat wastewater. This assistance is primarily in 
the form of grants to the states to capitalize revolving loan funds, 
which are used to finance improvements to drinking water and wastewater 
treatment facilities. In addition to its financial investment, EPA has 
promulgated regulations to implement the Safe Drinking Water Act and 
Clean Water Act, which have been key factors in shaping water systems' 
capital needs and management practices. 

In my testimony today I will present observations on (1) WASA's efforts 
to address lead contamination in light of its other pressing water 
infrastructure needs, and (2) the extent to which WASA's challenges are 
indicative of those facing other water utilities across the nation. 

To address these questions, we are summarizing and updating reports we 
issued in 2005[Footnote 1] and in 2006[Footnote 2] on the lead 
contamination problem in the District of Columbia's drinking water 
supplies, and on the status of WASA's effort to address this problem. 
We are also highlighting some of the work we have recently completed 
that addresses the magnitude of the nation's water infrastructure 
needs, the problems utilities face in addressing them, and the 
strategies utilities can employ to help them best meet their needs. We 
prepared this testimony in April 2008, based on work performed over the 
last three years, in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

In summary: 

* The introduction of orthophosphate to its water supply has enabled 
WASA to consistently test below the federal action level for lead in 
drinking water, but the Authority is reevaluating its longer-term 
roughly $400 million program to replace what may be 35,000 lead service 
lines in public space. Importantly, this program only addresses the 
replacement of the public portion of customers' lead lines. Customers 
would need to finance replacement of their private portion of the lead 
lines (at a cost that could reach $2,500) on their own. Yet despite 
WASA's efforts to encourage homeowner participation, private side 
replacement of lead service lines remains limited. Of the 14,260 lead 
service lines WASA replaced through the first quarter of fiscal year 
2008, there were only 2,128 instances in which the homeowner 
participated in the private side replacement. Importantly, many 
questions remain about the benefits of partial lead service line 
replacement. Research suggests that short-term spikes in lead levels 
occur immediately after partial replacement, and little long-term 
reduction in lead levels may be achieved. WASA's reevaluation of this 
program is taking place within the context of its staggering 
infrastructure needs, most notably a $2.2 billion effort to meet the 
terms of a consent decree with EPA to address sewer overflow problems. 

* WASA's difficulties in meeting myriad fiscal demands are mirrored 
across the country: water infrastructure needs nationwide are estimated 
to range from $485 billion to nearly $1.2 trillion over the next 20 
years. In particular, many utilities have had difficulty raising funds 
to repair, replace, or upgrade aging capital assets; comply with 
regulatory requirements; and expand capacity to meet increased demand. 
For example, based on a survey of several thousand drinking water and 
wastewater utilities, we reported in 2002 that 29 percent of the 
drinking water utilities, and 41 percent of the wastewater utilities, 
were not generating enough revenue from user rates and other local 
sources to cover their full cost of service.[Footnote 3] We also found 
that about one-third of the utilities (1) deferred maintenance because 
of insufficient funding, (2) had 20 percent or more of their pipelines 
nearing the end of their useful life, and (3) lacked basic plans for 
managing their capital assets. Other GAO work suggests that the 
nation's water utilities could more effectively manage their 
infrastructure at a time when huge investments are needed. In 2004, for 
example, we cited "comprehensive asset management" as one approach that 
can help utilities better identify and manage their infrastructure 
needs.[Footnote 4] Though by no means a panacea for their profound 
fiscal challenges, comprehensive asset management can help water 
utilities minimize the total cost of designing, acquiring, operating, 
maintaining, replacing, and disposing of capital assets over their life 
cycle, and can do so in a way that achieves the level of service 
customers desire. 

Background: 

Lead contamination of drinking water is difficult and expensive to 
control. It seldom occurs naturally in source water supplies like 
rivers and lakes; therefore it cannot be treated at a centralized 
treatment facility. Rather, lead enters drinking water primarily from 
the corrosion of materials containing lead in the water distribution 
system and in household plumbing. These materials include lead service 
lines that connect a house to the water main, lead-based solder used in 
a house to join copper pipe, and brass faucets and other plumbing 
fixtures. 

The Safe Drinking Water Act is the key federal law protecting public 
water supplies from harmful contaminants.[Footnote 5] EPA's 1991 Lead 
and Copper Rule, promulgated pursuant to the Act, requires water 
systems to protect consumers against exposure to elevated levels of 
lead in drinking water by chemically treating water to reduce its 
corrosiveness and by collecting water samples from consumer taps and 
testing them for evidence of lead corrosion.[Footnote 6] EPA considers 
lead to be elevated (known as the "action level") when lead levels are 
higher than 15 parts per billion in over 10 percent of tap water 
samples taken. Because lead contamination generally occurs after water 
leaves the treatment plant, the Lead and Copper Rule requires testing 
for lead at consumers' taps. If elevated lead levels are found and 
persist after treatment to minimize the water's corrosiveness, the 
water system must annually replace 7 percent of the lead service lines 
that it owns. 

Implementation and enforcement of the Lead and Copper Rule in the 
District of Columbia is complicated because of the number and nature of 
the entities involved. The Washington Aqueduct, owned and operated by 
the U.S. Army Corps of Engineers, is responsible for water treatment 
(including corrosion control). WASA purchases water from the Washington 
Aqueduct and delivers it to District residents, and is responsible for 
monitoring tap water samples for lead. EPA Region III in Philadelphia 
has oversight and enforcement authority for the District's public water 
systems. 

Similar to many of the other approximately 400 largest drinking water 
systems in the United States (i.e., serving populations greater than 
100,000), WASA is also responsible for wastewater collection and 
transmission, including operation and maintenance of its wastewater 
treatment facility and sanitary sewer system. This water infrastructure 
in the District of Columbia, like in many older cities, is aging and 
will require substantial funding over the next several years for 
replacement or rehabilitation. 

WASA Has Reduced Lead in Drinking Water But Faces Many Other Challenges 
to its Water and Wastewater Infrastructure: 

A June 17, 2004, administrative order for compliance on consent between 
EPA and WASA required WASA to take a number of corrective actions that, 
by necessity, enhanced its coordination with EPA and the D.C. 
Department of Health. Among these actions were developing a plan to 
identify additional lead service lines, improving the selection of 
sampling locations and reporting of water testing results to EPA, 
developing a strategy to improve WASA's public education efforts, and 
collaborating with the D.C. Department of Health to set priorities for 
replacing lead service lines. Most importantly, with the introduction 
of orthophosphate to the drinking water supply, WASA met, and has 
continued to meet, federal standards for lead in drinking water. 
[Footnote 7] WASA's most recent report on lead levels in D.C. drinking 
water was delivered to EPA in January 2008. WASA reported that 90 
percent of the samples had lead levels of 11 parts per billion (ppb) or 
less, which is below EPA's lead action level of 15 ppb. This is the 
sixth monitoring period in a row that WASA has met the lead action 
level. 

To resolve its lead problem in the long-term, however, WASA decided 
that it needed to undertake a program to replace the public portions of 
all its customers' lead service lines (roughly 35,000 lines) by 2016. 
WASA estimates that its program to replace all the District's lead 
service lines will cost at least $400 million. Importantly, this figure 
reflects only the cost to replace the public portion of customers' lead 
lines. Customers would need to finance replacement of their private 
portion of the lead lines (at a cost that could reach $2,500) on their 
own. Through the first quarter of fiscal year 2008, WASA has spent $105 
million on the program, and expects to spend roughly another $300 
million by 2016. 

Perhaps the most important complication facing WASA's lead service line 
replacement program is that ownership of lead service lines in the 
District of Columbia is shared--WASA owns the portion from the water 
main to the property line, and homeowners own the portion from the 
property line to the home. Homeowners may pay to replace their portion 
of the lead service line at the same time as WASA replaces its portion, 
but are not required to do so. Figure 1 shows the configuration of a 
service line from the water main to a customer's home. 

Figure 1: Lead Service Line Configuration: 

[See PDF for image] 

This figure is an illustration of a lead service Line configuration. 
The following items are depicted: 

* Water main, connecting to: 
* Service line, connecting to: 
* Water meter, connecting to: 
* Water shutoff valve, connecting to: 
* Water line into property. 

Source: WASA. 

[End of figure] 

WASA established a program to encourage homeowners to replace their 
portion of lead service lines. This program included: 

* a low-interest loan program for low-income residents, offered through 
a local bank; 

* grants of up to $5,000 for low-income residents, offered by the 
District of Columbia Department of Housing and Community Development; 
and: 

* a fixed-fee structure for line replacement of $100 per linear foot 
plus $500 to connect through the wall of the home, to make pricing 
easier for homeowners to understand. 

Despite these incentives, D.C. homeowners have been reluctant to 
replace the private side of the lead service line. Through the length 
of WASA's lead service line replacement program, beginning in fiscal 
year 2003 and running through the first quarter of fiscal year 2008, of 
the 14,260 lead service lines replaced in public space, only 2,128 
homeowners replaced the private portion of their lead service line. 
[Footnote 8] 

These totals are particularly troublesome given the lack of information 
about the benefits of partial lead service line replacement. Indeed, 
experts disagree about the effectiveness of removing only part of a 
lead service line. Studies that EPA cited in the Lead and Copper Rule 
suggest that long-term exposure to lead from drinking water decreases 
when a service line is only partially replaced. However, after partial 
replacement of a lead service line, exposure to lead in drinking water 
is likely to increase in the short term because cutting or moving the 
pipe can dislodge lead particles and disturb any protective coating on 
the inside of the pipe. Some experts believe that lead exposure can 
increase after partial service line replacement because of galvanic 
corrosion where the dissimilar metals of the old and new pipes meet. 

A study presented at the 2006 American Water Works Annual Conference 
summarizing the experience of partial lead service line replacement by 
the Greater Cincinnati Water Works found that partial replacements of 
lead lines resulted in much higher lead levels in the water for up to 1 
month after replacement, even though the system was optimized for 
corrosion control.[Footnote 9] Even after this initial period, the 
sites with partial replacements had similar water lead concentrations 
as the sites in which the entire lead line was left in place-- 
indicating there would be little, if any, benefit of partial lead line 
replacement. In the study, only completely replacing the lead service 
line resulted in both short-and long-term water quality improvements in 
all of the sites tested. The authors also noted that the use of a 
Teflon sleeve, or some other method of treating the portion of the line 
remaining in service, may help to protect water quality, but that more 
needs to be done in this area. Recognizing the need for more research, 
EPA has partnered with the American Water Works Association Research 
Foundation on a study of the relative contributions of service lines 
and plumbing fixtures to lead levels at the tap. The projected 
completion of the study is November 2008. 

In light of these problems, WASA is now considering whether its current 
lead line replacement program should be restructured, particularly 
given its high cost and the competing demands on its budget. As a water 
utility serving a large metropolitan area, the lead problem has posed 
only one of several major infrastructure challenges for the utility and 
its customers. For example, approximately one-third of the District (by 
acreage) is served by combined sewers, which carry both sanitary waste 
from homes and businesses and storm water drainage. During storms this 
untreated sewage is discharged directly into the Anacostia and Potomac 
Rivers, adversely impacting the quality of these waters. To meet 
federal water quality standards, WASA will need to spend considerable 
sums of money to deal with the problem. Specifically, a March 2005 
consent decree between WASA and EPA requires WASA, by 2025, to 
implement WASA's long-term control plan, including construction of 
large underground tunnels to temporarily store excess flows until they 
can be treated at the Blue Plains Wastewater Treatment Plant and other 
measures, to significantly reduce combined sever overflows into the 
Anacostia River and other area waterways.[Footnote 10] WASA has 
estimated the cost of this effort to reach $2.2 billion dollars. 

WASA's Water Infrastructure Problems Mirror the Challenges Water 
Utilities Face Nationwide: 

WASA's challenges are mirrored across the country, where projected 
needs for investment in drinking water and wastewater infrastructure 
range from $485 billion to nearly $1.2 trillion over 20 years. The 
variation in these estimates reflects alternative assumptions about the 
nature of existing capital stock, replacement rates, and financing 
costs. EPA reported in its most recent Drinking Water Infrastructure 
Needs Survey (issued in June 2005) that drinking water utilities alone 
will need an estimated $276.8 billion for the 20-year period ending in 
December 2022.[Footnote 11] EPA's new estimate exceeds those from prior 
surveys by more than 60 percent, largely as a result of an increased 
emphasis on capturing previously underreported needs for infrastructure 
rehabilitation and replacement. According to EPA's report, current 
needs increased by about 50 percent, but future needs rose by over 100 
percent.[Footnote 12] EPA attributes the difference to a more complete 
assessment of the longer-term needs for addressing "aging 
infrastructure that is currently adequate, but will require replacement 
or significant rehabilitation over the next 20 years." 

Pipeline rehabilitation and replacement represents a significant 
portion of the projected infrastructure needs for water utilities. EPA 
estimates that underground pipelines account for about 75 percent of 
the nation's existing capital investment in drinking water and 
wastewater infrastructure. According to the American Society of Civil 
Engineers, U.S. drinking water and wastewater utilities are responsible 
for an estimated 800,000 miles of water delivery pipelines and between 
600,000 and 800,000 miles of sewer pipelines, respectively. However, 
several recent studies have raised concerns about the condition of the 
existing pipeline network. For example, in August 2002, based on a 
nationwide survey of large drinking water and wastewater utilities, we 
reported that more than one-third of the utilities had 20 percent or 
more of their pipelines nearing the end of their useful life. In the 
case of one in 10 utilities, 50 percent or more of the utility's 
pipelines were nearing the end of their useful life. Citing a "huge 
wave of aging pipe infrastructure," the American Water Works 
Association in 2001 predicted a significant increase in pipe breaks and 
repair costs over the next 30 years--even if utilities increase their 
investment in pipe infrastructure several fold.[Footnote 13] Other 
studies make similar predictions for the pipelines owned by wastewater 
utilities.[Footnote 14] 

Despite the looming problems facing utility pipelines, our nationwide 
survey found that pipeline rehabilitation and replacement was not 
occurring as desired, with over two-thirds of the utilities reporting 
that they have fallen short of their desired pace of rehabilitation and 
replacement. Specifically, we found that roughly half of the utilities 
actually rehabilitated or replaced one percent or less of their 
pipelines annually, even though an estimated 89 percent of drinking 
water utilities and 76 percent of wastewater utilities believed that a 
higher level of rehabilitation and replacement should be occurring. 
More generally, we found that many utilities had deferred maintenance, 
minor capital improvements, and/or major capital improvements due to 
insufficient funding. About one-third of the utilities deferred 
maintenance expenditures, and similar percentages of utilities deferred 
expenditures in the other categories. According to EPA's June 2005 
Drinking Water Infrastructure Needs Survey, the largest category of 
need is the installation and maintenance of transmission and 
distribution systems--accounting for $183.6 billion, or about 66 
percent of the needs projected through 2022. For wastewater systems, 
EPA's 2004 Clean Watersheds Needs Survey projected infrastructure- 
related needs for publicly-owned wastewater systems of $202.5 billion 
through 2024.[Footnote 15] 

Several factors have contributed to the nation's deteriorating water 
infrastructure over the years. The adequacy of the available funding, 
in particular, has been a key determinant of how well utility 
infrastructure has been maintained. However, according to our 
nationwide survey, a significant percentage of the utilities serving 
populations of 10,000 or more--29 percent of the drinking water 
utilities and 41 percent of the wastewater utilities--were not 
generating enough revenue from user charges and other local sources to 
cover their full cost of service. In addition, when asked about the 
frequency of rate increases during the period from 1992 to 2001, more 
than half the utilities reported raising their rates infrequently: 
once, twice, or not at all over the 10-year period. 

Our survey also raised questions about whether utility managers have 
enough information about their capital assets to effectively plan their 
future investment needs. We found that many utilities either did not 
have plans for managing their assets, or had plans that may not be 
adequate in scope or content. Specifically, more than one-fourth of the 
utilities did not have plans for managing their existing capital 
assets. Moreover, for the utilities that did have such plans, the plans 
in many instances did not cover all assets or did not contain one or 
more key elements, such as an inventory of assets, assessment criteria, 
information on the assets' condition, and the planned and actual 
expenditures to maintain the assets. 

Citing communities' funding difficulties, many have looked to the 
federal government for financial assistance. However, if budgetary 
trends over the past few years serve as any indication, federal funding 
will not close the gap. The key federal programs supporting water 
infrastructure financing include the Clean Water State Revolving Fund 
(CWSRF) for wastewater facilities, and the Drinking Water State 
Revolving Fund (DWSRF) for drinking water facilities. Under each of 
these programs, the federal government provides seed money to states, 
which the states in turn use to support revolving funds that loan money 
to qualifying localities within their jurisdictions for new 
construction and upgrades. However, the trends and overall funding 
levels associated with these programs, suggest that they will only have 
a marginal impact in closing the long-term water infrastructure funding 
gap. Federal appropriations for the CWSRF in particular have decreased 
by nearly 50 percent during the past five years--from $1.34 billion 
enacted for fiscal year 2004 to $689 million enacted for fiscal year 
2008. Funding for the DWSRF has remained virtually flat during the same 
period. 

Comprehensive Asset Management Can Be an Effective Tool for Managing 
Infrastructure and Optimizing Investments When Resources Are 
Constrained: 

Growing infrastructure needs, combined with local pressure to keep user 
rates low, make it imperative that utilities manage their resources as 
cost effectively as possible. While hardly a "silver bullet" for the 
water industry's massive shortfall in infrastructure funding, 
comprehensive asset management is one approach that has shown promise 
in helping utilities better identify their needs, set priorities, and 
plan future investments. Basic elements of comprehensive asset 
management include: collecting and organizing detailed information on 
assets; analyzing data to set priorities and make better decisions 
about assets; integrating data and decision making across the 
organization; and linking the strategy for addressing infrastructure 
needs to service goals, operating budgets, and capital improvement 
plans. At its most basic level, asset management gives utility managers 
the information they need to make sound decisions about maintaining, 
rehabilitating, and replacing capital assets--and to make a sound case 
for rate increases and proposed projects to their customers and 
governing bodies. 

Our 2004 report identified a number of asset management practices that 
could help water utilities better manage their infrastructure and 
target their investments to achieve the maximum benefit. Among other 
things, we found that collecting, analyzing, and sharing data across 
the organization helped utilities make informed decisions about which 
assets to purchase, optimize their maintenance practices, and determine 
how long to repair an asset before replacement becomes more cost- 
effective. Some utility managers, for example, have used risk 
assessments to determine how critical certain assets (such as 
pipelines) are to their operations, considering both the likelihood and 
consequences of their failure. This systematic evaluation has helped 
them to target their resources accordingly, with the most critical 
assets receiving preventive maintenance while other, less critical 
assets received attention on an as needed basis. 

Having better information on utility assets has not only allowed 
managers to identify and prioritize investment needs, but has also 
helped them justify periodic rate increases to their customers and 
governing boards to pay for needed improvements. In one case, for 
example, utility managers modeled information on pipe performance 
history and replacement costs and predicted the approximate number of 
pipe breaks at various levels of funding. By understanding the trade- 
offs between lower rates and higher numbers of pipe breaks, the 
governing board was able to make an informed decision about the level 
of service that was appropriate for its community. 

Whether the problem is replacing lead service lines, as is the case for 
WASA, meeting new regulatory requirements, or paying the price for 
years of deferred maintenance, many utilities are facing huge 
investments to add new capital assets and replace others that are 
reaching the end of their useful life. Comprehensive asset management 
is one approach that shows real promise as a tool to help drinking 
water and wastewater utilities effectively target limited resources 
and, ultimately, ensure a sustainable water infrastructure for the 
future. Accordingly, our report recommended that the Environmental 
Protection Agency take steps to strengthen the agency's existing 
initiatives on asset management and ensure that relevant information is 
accessible to those that need it. 

Mr. Chairman, this completes my prepared statement. I would be happy to 
respond to any questions you or other Members of this Subcommittee may 
have at this time. 

Contact and Acknowledgements: 

For further information, please contact John B. Stephenson at (202) 512-
3841. Individuals making key contributions to this testimony included 
Elizabeth Beardsley, Ellen Crocker, Steve Elstein, Tim Minelli, Nathan 
Morris, Alison O'Neill, and Lisa Turner. 

[End of section] 

Footnotes: 

[1] GAO, District of Columbia's Drinking Water: Agencies Have Improved 
Coordination, but Key Challenges Remain in Protecting the Public from 
Elevated Lead Levels, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
05-344] (Washington, D.C.: Mar. 31, 2005). 

[2] GAO, Drinking Water: EPA Should Strengthen Ongoing Efforts to 
Ensure That Consumers Are Protected from Lead Contamination, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-148] (Washington, 
D.C.: Jan. 4, 2006). 

[3] GAO, Water Infrastructure: Information on Financing, Capital 
Planning, and Privatization, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-02-764] (Washington, D.C.: Aug. 16, 2002). 

[4] GAO, Water Infrastructure: Comprehensive Asset Management Has 
Potential to Help Utilities Better Identify Needs and Plan Future 
Investments, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-461] 
(Washington, D.C.: Mar. 19, 2004). 

[5] 42 U.S.C. 300f-300j. 

[6] 40 C.F.R. pt. 141, subpart I. 

[7] Orthophosphate was introduced to the WASA's drinking water supply 
in August 2004 to form a protective coating inside lead service lines 
and fixtures to prevent lead from leaching into drinking water. 

[8] WASA has indicated that of the service lines currently replaced in 
public space, 3,408 are also considered "full" replacements because it 
found that the private portion of the service line was already non- 
lead. 

[9] Jeff Swertfeger, David J. Hartman, Cliff Shrive, Deborah H. Metz, 
Jack DeMarco, et al. "Water Quality Effects of Partial Lead Line 
Replacement." 2006 Annual American Water Works Association Conference, 
San Antonio, Texas. 

[10] WASA states that combined sewer overflows will be reduced by 96 
percent overall and by 98 percent in the Anacostia River. 

[11] U.S. Environmental Protection Agency, Drinking Water 
Infrastructure Needs Survey and Assessment, Third Report to Congress, 
EPA 816-R-05-001 (Washington, D.C.: June 2005). 

[12] EPA defines current needs as projects that a system considers a 
high priority for near-term implementation to enable a water system to 
continue to deliver safe drinking water. Future needs are defined as 
projects that water systems do not currently need but would expect to 
address in the next 20 years as part of routine maintenance or 
replacement of infrastructure because of predictable events, such as 
capital assets reaching the end of their useful life. 

[13] American Water Works Association Water Industry Technical Action 
Fund, Dawn of the Replacement Era: Reinvesting in Drinking Water 
Infrastructure (Denver, Colo.: May 2001). 

[14] For example, see Water Environment Research Foundation, New Pipes 
for Old: A Study of Recent Advances in Sewer Pipe Materials and 
Technology (2000). 

[15] U.S. Environmental Protection Agency, Clean Watersheds Needs 
Survey 2004 Report to Congress, (Washington, D.C.: January 2008). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, D.C. 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: [email protected]: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, [email protected]: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, [email protected]: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 
*** End of document. ***