A ' '7: N0 LONGER LC “mg/4' PRCWERTY § amzxz E 73 039 E’; BRA Waahingtrxn urziuczrsiiy ! "132" ““"~'-”7‘="""x r¢:z:,~~~~- ..'.v£E':(‘--g{‘3"AVv , = ; 9 '5 #3 4 ‘X. . I“ . ., fl ‘A " "7 21, -r ’. ., E}! H V‘? S5116 116 pm; 1:: ‘—'—'-E-"‘ umbl ol 'a um 046 % ONGRESSIONAL 1 U RESEARCH 1 SW05 ||||||||| nive sit Iil fII»°1W°""iI 3 010- 03861 LIBRARY OF CONGRESS WATER RESOURCES: OPTIONS FOR RURAL WATER SYSTEHS ISSUE BRIEF NUMBER IB78039 AUTHOR: De Moncada, Christine Office of Senior Specialists Viessnan, Warren Jr. Senior Specialist, Water Resources Development THE IIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED DATE UPDATED FOR ADDITIONAL INFORMATION CALL 287-5700 06 24 ~ it comes to drinking water supplies, large cities ' reservoir storage allocations. CRS- 1 IB78039 upnamm-oa/2n/so I§§Q§-2§ElEl$£QE Based on a 1977 National Demonstration Water Project Study (NDWPS), as many as 30 million residents in rural communities experience some form of problem related to the quality or quantity of drinking water supplies or to the adequacy of waste water disposal systems. For many of these communities, designing and funding water supply and waste water disposal systems are beyond their financial and technical resources. This dilemma has been recognized as a public responsibility, but critics find current programs financed by while the are incommensurate to the task. Small water supply systems can be municipal, State or Federal loans, grants, or a combination of these, community or regional water supply projects are often financed through sale of bonds. Limited Federal grant funds and restrictive regulations issues that are attracting congressional attention. EAQEEBQQH2-A!Q_2QLl§I-AEALl§l§ Rural communities face tough odds compared to their urban neighbors. when usually possess adequate engineering and planning staffs, and are better able to raise needed funds. Although rural community needs are often less complicated than urban needs, internal support mechanisms are lacking; hence there are fewer avenues for assistance. This is a problem of national significance, exemplified by the fact that 92% of all (residences without running water and 63% without complete plumbing are found in rural areas. Funding and technical assistance are difficult for rural.residents to obtain despite the existence of several Federal grant and loan programs; and where funding does exist, it often insufficient for low—income areas. Significant programs are those of the Farmers Home Administration (FmHA), Department of Housing and Urban Development (HUD), Soil.Conservation Service (SCS), Corps of Engineers (CE), Economic Development Administration (EDA), and the Environmental Protection is Agency (EPA). These agencies have done much to improve and expand rural water systems in recent years but new regulations on water quality and changing public attitudes on water supply and waste water disposal have offset many of the gains. Programs of the CE and SCS promote the construction of water ,storage facilities, while those of EDA, FmHA, and HUD encourage the construction of water treatment and distribution systems. EPA can distribute grant funds for sewer system projects equalling up to 75% of project costs. The SCS has no funds set aside for municipal and industrial (HI) water supply, although HI may be a part of an SCS project. "This constrains The allocation problem might be handled by an amendment to the Water Supply Act of 1958, P.L. 85-500. HUD can fund water-sewer projects, but there are problems of eligibility and minimal funding for rural development. * The Economic Development Administration (EDA) Grant and Loan Program Luthorizes the awarding of grants (basic grants range up to 50% of project costs) needed to initiate long-term economic growth, but competition is high. The usefulness of this program is constrained by the matching requirement of 50% or more for project costs and the availability of funds. Financing could incorporate an EDA grant along with loans from other sources. cRs— 2 IB78039 UPDATE-06/20/80 Under FmHA's water and Waste Disposal Grant Program, guaranteed insured loans (no limit) and project grants (to 50%) are available. These funds, however, are in short supply and are earmarked for areas of high _punemployment. The bulk of financial support is generated by FmHA; rural representatives V» argue that the need for additional funds to support development of rural drinking water systems is evident. In 1966, FmHA grants totaled $18.7 million and loans were $112.8 million. In 1976, these figures were $106.9 ~ million in grants and $442.6 million in loans. This indicates that in 1976 grants had increased 8.5 times and loans by nearly 0 times their 1966 amounts. 1 FmHA is authorized to provide $300 million in grant funds each year, although no more than 50% of the cost of any ‘particular project may be covered by these. Assuming that FmHA made grants to the fullest extent possible under the law in a given year, and assuming a $2,000 per connection cost for water-sewer systems, the agency could only provide grant funds for 300,000 connections. At this rate, even if there were only 10 million people with inadequate facilities, it would take 10 years to meet the need. (gggal Ea:er_1ie!§. NDWP. 1977) 1 Aside from funding limitations, FmHAFs most significant constraints are its 1% rule, limiting grant funds to projects in which the debt service portion of the average user cost exceeds 1% of the median family income of the applicant community; the 50% grant rule, limiting project funding to 50% of eligible costs, allegedly placing undue burdens on low-income areas; ‘a questionable approach for ascertaining "reasonable" user rate costs; and lac_ of "front end" or initial planning funds. I The need for comprehensive and "front end" planning support for rural water systems has been documented by NDWP and other organizations. Provision for the latter could be assigned to the Rural Development Act of 1972, P.L. 92-H19. Additional funds could be authorized for this purpose or "front end" planning could be cited as eligible for support under existing grant and loan programs. The responsibility of FmHA might be extended to encompass la regional planning mission designed to assess mechanisms for achieving cost—effective, optimal rural water systems, with special attention focused on regional management authorities to achieve economies of scale. Additional funds for Title III of the Water Resources Planning Act of 1965 (P.L. 89-80) could be a second option. States could be assigned responsibility for the regional planning function, administration of "front end" planning grants, and arrangement of needed technical advice and assistance. This option has the merit of separating the planning function from a lending agency. state agencies involved in the Title III program are already embarked on comprehensive planning projects and many of these agencies have considerable a technical expertise relative to both water quantity and water quality issues. In addition to FmHA and the State Water Planning agencies supported by P.L. 89-80, the SCS could also be assigned specific responsibility to offer technical assistance on designing feasibility studies and preparing preliminary plans. Legislation authorizing rural water specialists in all States through the cooperative extension service, FmHA or State Water Planning agencies receiving Title III funds under P.L. 89-80 might be worth considering. Funding needs could be met by increasing the authorized levels for the cBs- 3 13730 39 upna 12-0 6/2'4/80 FmHA Water and Waste Disposal Systems Grant and Loan Program or by adding la funding amendment to the P.L. 83-566 Watershed Protection and Flood Brevention Frogram of SCS. Appropriate levels of financing could be determined by a special study, responsibility being delegated to tthe Water » Resources Council (WRC) in cooperation with FmHA and SCS, or the latter agencies could provide appropriate analyses related to the statutes affecting them. A other difficulties arise because of the requirement that full payment of costs for water storage systems must be made and because of the limited resources available under Federal programs to support such projects. Operation and maintenance costs are sometimes difficult for small systems to support, especially during the first few years of operation, and presently there are no programs to relieve these financial obligations. . i The Rural Electrification Administration, an agency in the U.S. Department of Agriculture, finances electric and telephone facilities in rural areas. The Rural Electrification Act of 1936 established REA as ?a lending agency with responsibility for developing a program for rural electrification. REA could, as one option, be expanded to include rural water systems or a new administration, using this model but including grants and planning and technical assistance, could be established. It has been shown that rural electric cooperatives can assist in the development of water supply programs. Operation, maintenance, and replacement (OHR) costs for rural water systems are needed. Once rural water systems are developed, many water listricts find it difficult to manage them during the first few years of operation. Such a program might supply up to 50% of the cost of operating and maintaining the system during the first year, and this level could gradually be lowered so that within five years the system would be self-sufficient. Operating costs for rural water systems may~ increase yr substantially in light of new requirements of the Safe Drinking Water Act (P.L. 93-523). This additional load would fall heavily on rural water users 1 P.L. 92-H19 could be amended to provide needed funds. E Congress might find it worthwhile to-commission several special studies related to: rural water systems and the mechanics and feasibility of reallocating storage in existing Bureau of Reclamation and CE reservoirs for HI water use; practical funding levels to support FmHA grant and loan programs, and SCS small watershed programs. Such studies should not overlook the capability of FmHA or other organizations to handle a substantially enlarged program; expansion of State roles and coordination and comprehensive planning of Federal programs supporting rural water systems; and special i‘ needs of rural communities and residents for technical aid and advice. The following legislation was passed by the 95th Congress and pertains to the rural water systems issue: . P.L. 95-217 (H.R. 3199). The Federal Water Pollution Control Act Amendments. This Act amends the Federal Water Pollution Control Act by extending various authorization through fiscal year 1978. The law provides for H% of State allotments for rural States to be used as alternatives to nconventional _sewage treatment. Grants for innovative or alternative cechnology_are now 85%. The measure became law on Dec. 17, 1977. P.L. 95-334 (H.R. 1150a). The Agricultural Credit Assistance Act of 1978. Section 105 ameds the Consolidated Farm and Rural Development Act so that CRS- Q IB78039 UPDATE‘06/2Q/80 the Secretary of Agriculture is authorized to make grants of up to $500 -- million (previously $300 million) annually. The amount of the grant can not exceed 75% of the development cost of the project (previously 50%). It was signed into law on Aug. 0, 1978. R President Carter's rural policy statement, which encompasses federal sewer and water systems programs, is expected to be announced sometime in late 9 August or early September, 1979. Coordination of present rural programs is expected to be a key point. L§§l§LA1lQH H.R. 2998 (Crane, P.) Amends the Housing and Community Development.Act of 1970 in order that :9 loans be made available to communities with water supply problems. Introduced Mar. 15, 1979; referred to Committee on Banking, Finance and Urban Affairs. 9 H.R. 3600 (Aucoin) Section 530 stipulates that water and waste loans and grants programs would be made available to rural community residents to ensure a safe water supply and waste disposal system. Introduced Apr. 10, 1979; referred to Committee on Banking, Finance, and Urban Affairs. ‘ H.R. 3683 (Jones, B., by request) Amends the Consolidated Farm and Rural Development Act to specify the principal amounts for water sewer facilities loans. Extends FmHA water and sewer loans to communities with populations of up to 20,000 (as opposed to the 10,000 population limit currently enforced). Introduced Apr. 20, 1979; referred to Committee on Agriculture. Reported (H.Rept. 96-153, Part I) May 15 and June 7 (H.Rept. 96-153, Part II). 6 H.R. 5006 (Abdnor et al.) Amends the Consolidated Farm and Rural Development Act and provides assistance to rural water systems. Introduced July 30, 1979; referred to more than one committee. 6 H.R. 6320 (Abdnor et al.) Authorizes funds for the WEB water system in North Dakota. Introduced Jan. 29, 1930; referred to Committee on Agriculture. 1 S. 670 (Leahy et al.) Amends the Rural Development Act of 1972. Instructs the Secretary of Agriculture to establish a rural develcpment policy management process in conjunction with State and Federal agencies. Allots $15 million to State and local entities in planning grants. Introduced Mar. 15, 1979; referred to 7‘ Committee on Agriculture, Nutrition and.Forestry. Reported (S.Rept. 96-187), with amendment, May 16, 1979. Passed Senate, amended, June 14, 1979. S. 728 (Culver et al.) K ~ Secretary of Agriculture could finance water UPDATE-06/24/80 CRS- 5 IB78039 The Small Community Water Supply and.Technical Assistance Act of 1979. incorporates water storage facilities construction on thin water supply development projects under an amended Water Supply Act of 1958. In addition, amends the Watershed Protection and Flood Prevention Act so that the storage placed in reservoirs created by this Act. Introduced Mar. 1979; referred to Committee on Environment and Public Works. 22. S. 892 (Leahy et al.) Amends the Rural Development Act of 1972, extending authorizations through FY82. Introduced Apr. 5, 1979; referred to Committee on Agriculture, Nutrition and Forestry. Reported (S.Rept. 96-188), with amendment, May 16, 1979. Passed Senate, amended, June 1n. Referred to House Committee on Agriculture June 18. Reported May 16, 1979 (S.Rept. 96-188). Passed Senate June 14, 1979. Passed House Oct. 28, 1979, in lieu of H.R. 3683. Conferences scheduled in both houses. ‘ S. 985 (Talmadge by request) and Rural Development Act by insuring Introduced Apr. 23, 1979; referred to Amends the Consolidated Farm authorized loans (Section 3Q6(b)(1)). Committee on Agriculture, Nutrition and Forestry. Reported with amendment (S.Rept. 96-168) May 15. Passed Senate, amended, Hay 23, 1979, thereby increasing loan allotments during the following 3 years. This affects farm operating, sewer facility, and industrial loans. Hrnnrues U.S. Senate Committee on Agriculture, Nutrition and Rural development oversight. Hearings, 95th Congress, June 16, 22, 1977. Washington, U.S. Govt. Print. 159 p. Congress. Forestry. 1st session, Off., 1977, U.S. Congress. Senate. Committee on Environment and Public Works. Federal Water Pollution Control Act Amendments of 1977. Hearings, 95th Congress, 1st sessixm. Part 5. June 2a, Washington, U.S. Govt. Print. Off., 1977. 16h p. 1977. ----- Federal Water Pollution Control Act Amendments of 1977. Hearings, 95th Congress, 2d session. Part 9. June 28-30, 1977. Washington, 0.5. Govt. Print. Off., 1977. 725 p. ---r Water supply needs of rural America. Hearings, 95th Congress, 2d session. Dec. 6, 1978. Washington, U.S. Govt. Print. Off., 1979: #5 p. B§2QB2§-AED-§QE§B§§§lQEAL-2Q§QEfifllé Agricultural Credit Assistance Act of 1978. In Remarks of senator Bellmon. Congressional Record [daily ed.) v. 12H, May 1, 1978: S6563. Concern for rural America. In Remarks of Sen. Abourezk, with submission of press coverage. Congressional record [daily ed.) v. 124, Feb. 6, 1978: S1279-S1285. rdfisk . CR5‘ 6 IB78039 UPDATE-06/2H/80 The money flow for rural water. In Remarks of Sen. Gravel. ~ Congressional record [daily ed.], v. 120, Jan. 23, 1978: 5269. Rural Development policy and coordination. In Remarks of Sen. Byrd. Congressional record [daily ed.], v. 126, June 10, 1979: S7661. Small Town Safe Drinking Water Assistance Act. In Extensions of Remarks by Cong. Anderson of I11. Congressional record [daily ed.) v. 120, Feb. 2, 1978: B380. U.S. Congress. House. Icomnittee on Agriculture. Consolidated Farm and Rural Development Act Amendments, to accompany H.R. 3683. may 15, 1979. Washington, 0.5. Govt. Print. Off., 1979. 28 p. (96th Congress, 1st session. House. Rept. no. 96-153, part I) ----- Consolidated Farm and Rural Develcmment Act Amendments, to accompany H.R. 3683. June 7, 1979. Washington, U.S. Govt. Print. Off., 1979. 5 p. (96th Congress, 1st session. House. Rept. no. 96-153, part II) Senate- Committee on Environemnt and Public Works. Clean Rater Act of 1977. Report on S. 1952. July 28, 1977. Washington, 0.5. Govt. Print. 01:15., 1977. 215 p. ’ (95th Congress, 1st session. Senate. Report no. 95-370) 0 .5 . Congress . §.BQE9.!-.Q§.Y.-Q.1i-'EVE§. 5 - H.R. 11501: became P.L. 95-3314. 08/04/78 - 05/02/78 -- S. 2146 was indefinitely postponed in the Senate; ~ H.R. 11500 passed in lieu of S. 2106. 12/17/77 -- H.R. 3199 became law, P.L. 95-217. 08/on/77 -- H.R. 3199 (P.L. 95-217) was passed in lieu of S. 1952. QDIILQEBL §EEE.§E.E§.13.-§-EB§E5 Coelen, Stephen P. The state and federalism in rural water supply and wastevater treatment. Rural Water Views, no. 6. 1976. Farmers Home Administration, U.S.D.A. Federal register. Part 1933, Subpart A — Community facility loans, v. 02, no. 194. Oct. 6, 1977. Washington, U.S. Govt. Print. Off., 1977: 54401. ---- Handbook of federal and state programs of financial assistance for water development. Assembly on Water, Eugene T. Gualco, Chairman. 1977, California. ----- Part 1823 - Development grants for community domestic water and waste disposal systems, v. 43, no. 35. Feb. 21, 1978. Washington, 0.5. Govt. Print. Off., 1977: 7200. Knofp, Bruce J.M., Janet E. McKinnon, and Raymond Burby. The tr-“N ,»~\ CRS— 7 IB78039 UPDATE-06/24/80 impacts of rural water systems in North Carolina: an exploratory study. University of North Carolina. Water Resources Research Institute. Chapel Hill, N.C. November 1979. National Demonstration Water Project. rural America. Washington, 1978: I Drinking water supplies in 164 p. . Sargent, Frederic 0-, and Blaine P. Sargent. Rural water planning. south Burlington, Vermont. 1979. U.S. Department of Agriculture. Rural clean water program. Federal Register, v. #3, no. 121. June 22, 1978: 267flO. Washington, U.S. Govt. Print. Off., 1978. U.S. General Accounting Office. Management of Farmers Home Administration's water and waste disposal program needs to be strengthened. GAO. Washington, U.S. Govt. Print. Off., Mar. 13, 1978. CED-78-61. 18 p. --~--- The President's budget for fiscal year 1977 and its implications for rural development. Staff paper prepared by the Office of Program Analysis, GAO. Washington, 0.5. Govt. Print. 0ff., Hay 5, 1976. 9 p. LIBRARY OF WASHINGTON UNIVERSITY ST. LQL__Jl?S - MO.