Bureau of Reclamation: Water Reuse Grant Program Supports Diverse Projects and Is Managed Consistently with Federal Regulations

Population growth and drought are among the factors that have placed increasing demands on the U.S. water supply, particularly in the arid West. The reuse of wastewater can help address water management challenges by treating water that is typically unusable and then reusing it for beneficial purposes, such as irrigation, according to the Environmental Protection Agency. Reclamation's Title XVI program awards grants for the study and construction of water reuse projects in 17 western states and Hawaii. From fiscal years 1992 through 2009, Congress individually authorized some Title XVI projects. In 2016, Congress amended the Title XVI program to allow grants to be awarded to additional water reuse projects.

GAO was asked to review the Title XVI program. This report describes, among other things, for the Title XVI program (1) grants Reclamation has awarded for projects and studies and remaining projects that are eligible for grants, (2) the types and locations of projects and studies that have received grants, and (3) Reclamation's process for selecting projects and studies and its consistency with federal grant regulations as well as how the program's evaluation criteria have changed since 2011. GAO reviewed relevant laws, regulations, and agency guidance; analyzed financial data for fiscal years 1992 through 2017; compared documents related to the project selection process against federal grant regulations; and interviewed agency officials and nonfederal project sponsors with different types of projects.

The Bureau of Reclamation, within the Department of the Interior, awarded about $715 million in water reuse grants for 46 construction projects and 71 studies under the Title XVI Water Reclamation and Reuse Program (Title XVI) from fiscal year 1992 through fiscal year 2017, according to agency documents. Most of the Title XVI funding—about $703 million—has been awarded for construction projects. Some construction projects remain eligible for Title XVI grant funding. About $464 million in eligible Title XVI grant funding not yet awarded remains for projects that Congress individually authorized; for projects eligible under the 2016 amendments to the Title XVI program, about $513 million remains.

Title XVI projects and studies cover various uses for reused water. For example, many projects GAO reviewed produce reused water for landscape and agricultural irrigation, as well as water that may later be extracted for drinking water, as shown in the figure. Title XVI projects are located in western urban and rural areas, with California accounting for 36 construction projects.

Reclamation's process to select Title XVI projects and studies to receive grants involves announcing the funding opportunity, establishing criteria to evaluate potential projects, and reviewing applications to make award decisions, according to agency documents GAO reviewed. GAO found that Reclamation's grant award process is consistent with relevant federal regulations for awarding grants. For example, the Title XVI funding opportunity announcements GAO reviewed contained information required by the regulations, such as the criteria used to evaluate applications. In recent years, Reclamation has changed the criteria it uses to evaluate projects, eliminating or adding some criteria and changing the weighting of others. Reclamation officials said that these changes were made in part in response to statutory changes.

Population growth and drought are among the factors that have placed  increasing demands on our nation’s water supply, particularly in the arid  West. The reuse and recycling of water helps address water management  challenges by treating wastewater or other water that is typically unusable  and then reusing it for beneficial purposes, such as irrigation, according to  the Environmental Protection Agency. The Bureau of Reclamation, within  the Department of the Interior, administers the only active federal  program focused on water reuse, reclamation, and recycling—the Title  XVI Water Reclamation and Reuse Program (Title XVI). This program  helps states and communities create supplemental water supplies by  identifying opportunities for the reuse of municipal, industrial, domestic,  and agricultural wastewater and impaired ground and surface waters.

The Title XVI program provides grants for the study and construction of  water reuse projects in the 17 western states under Reclamation’s  purview and Hawaii. Reclamation is responsible for awarding and  monitoring Title XVI grants to nonfederal project sponsors, who are  involved in the planning, designing, and constructing of these projects.  Title XVI grants generally require a cost share from the project sponsor.  For example, federal funding for construction projects under the Title XVI  program is generally limited to 25 percent of total project costs—up to $20  million in federal funding—and requires a 75 percent nonfederal cost  share from the project sponsor. Reclamation generally awards Title XVI  grants for construction projects to project sponsors in installments over  multiple years before the federal funding maximum for each project is  reached. As a result, some projects may have remaining project costs  eligible for federal grant funding under Title XVI.

The Title XVI program was established by the Secretary of the Interior in  response to the enactment in 1992 of the Reclamation Wastewater and  Groundwater Studies and Facilities Act, which authorized several studies  as well as the construction of 5 wastewater reuse projects—4 in California  and 1 in Arizona. From 1992 through 2009, Congress authorized a total  of 53 water reuse projects for construction under the Title XVI program. In  December 2016, the act was amended through Section 4009 of the Water  Infrastructure Improvements for the Nation Act (WIIN Act), which  authorized the Secretary of the Interior to provide grants for water reuse  projects with agency-approved feasibility studies. The WIIN Act  authorized Interior to award grants for projects that had not received  specific statutory authorization from Congress.

You asked us to review the Title XVI program for water reuse construction  projects and studies. This report describes for the Title XVI program  (1) grants Reclamation has awarded for projects and studies and  remaining projects that are eligible for grants, (2) the types and locations  of projects and studies that have received grants, (3) Reclamation’s  process for selecting projects and studies and its consistency with federal  grant regulations as well as how the program’s evaluation criteria have  changed since 2011, and (4) Reclamation’s process for monitoring grants  and its consistency with federal grant regulations.

For the first objective, we reviewed relevant laws, budget justifications,  and financial data maintained by Reclamation from fiscal years 1992  through 2017—the most recent data at the time of our review. We  selected this time period to cover funding from the inception of the  program through the most current data that were available at the time of  our review. To determine the reliability of Reclamation’s financial data, we  reviewed agency documents, compared publicly available information to  Reclamation’s Title XVI financial data, and interviewed agency officials.  We determined that the data were sufficiently reliable for the purpose of  our review. To determine the amount Reclamation has awarded to Title  XVI studies and projects, we analyzed the agency’s financial data. To  determine remaining project costs for individually congressionally  authorized projects, we further analyzed the financial data to determine  the federal share of remaining costs. For individually authorized projects  that have not received the full federal funding share, we verified with  project sponsors the status of projects in terms of planned construction.  To determine remaining project costs for Title XVI projects eligible under  the WIIN Act, we reviewed relevant feasibility studies to calculate the  federal share of remaining costs.

For the second objective, we reviewed documents from Reclamation and  project sponsors that describe the types of projects and studies funded  under the Title XVI program. We analyzed the information to categorize  each Title XVI project by the purpose or use of the reused water, such as  irrigation, commercial and industrial uses, and indirect-potable reuse. This  information was independently verified to confirm the categorization of  each project. To learn more about the types of Title XVI projects and  studies funded, we interviewed project sponsors from all 17 of the  individually authorized projects that Reclamation documents listed as  being ongoing at the time of our review, as well as all 3 of the WIIN Act- eligible projects that Reclamation selected for grants in fiscal year 2017.  We also interviewed a nonprobability sample (11 of 25) of project  sponsors of projects that had been completed, or had already been  awarded their full federal cost share. We selected project sponsors from  different Reclamation regions and with a variety of project sizes (i.e.  amount of water to be delivered) and types. Because this was a  nonprobability sample, the views of the sponsors we spoke with are not  representative of the views of all Title XVI project sponsors but provide  illustrative examples of the views of project sponsors for a range of Title  XVI projects. We conducted some of our interviews with project sponsors  by telephone and others in person. This included interviews conducted  during site visits to 14 Title XVI projects—selected to understand different  purposes and types of projects—in central and southern California in  March and April 2018. In addition to project sponsors, we also spoke with  representatives from eight nongovernmental organizations that sponsor  research, have an interest in water reuse, or represent water or  wastewater districts. We identified nongovernmental organizations to  interview through research and interviews with agency officials, project  sponsors, and other nongovernmental organizations.

For the third objective, we reviewed relevant federal grant regulations and  agency documents related to the project selection process, including  funding opportunity announcements for fiscal years 2011 through 2018  that describe Reclamation’s funding opportunities to applicants and  documentation related to Reclamation’s scoring of applications and final  selections. We selected this time frame because 2011 was the year that  Reclamation introduced a competitive selection process for annual Title  XVI grants. To assess the extent to which Reclamation’s process for  selecting projects is consistent with relevant federal grant regulations, we  compared the process Reclamation uses to select projects against the  Office of Management and Budget’s (OMB) Uniform Administrative  Requirements, Cost Principles, and Audit Requirements for Federal  Awards (Uniform Guidance). For this comparison, we selected relevant  provisions from the Uniform Guidance that pertain to the project selection  process. To determine how evaluation criteria have changed since  2011, we analyzed the criteria listed in Reclamation’s funding opportunity  announcements for fiscal years 2011 through 2018 and discussed the  reasons for changes to the criteria with Reclamation officials. To identify  project sponsors’ views on the process and changes to the criteria, we  interviewed project sponsors and reviewed relevant documentation,  including letters project sponsors sent to Reclamation.

For the fourth objective, we reviewed relevant federal grant regulations  outlined in OMB’s Uniform Guidance as well as agency guidance related  to the monitoring process. To assess the extent to which the monitoring  process is consistent with relevant federal grant regulations, we  compared the process Reclamation uses to monitor grants against  relevant sections of OMB’s Uniform Guidance. We analyzed financial  and performance reports related to all 56 Title XVI grants that were active  at the end of fiscal year 2017 using a standard document review tool to  determine the extent to which these reports contained information  required by the Uniform Guidance or Reclamation. For financial reports,  we determined whether project sponsors submitted required reports by  their due dates and whether they submitted these reports on the form  required by the agency. For performance reports, we determined whether  project sponsors submitted reports by their due dates and whether these  reports contained information on progress made toward constructing the  Title XVI project. We also analyzed Reclamation documentation related to  site visits conducted by agency officials and compared it against  requirements outlined in agency guidance. In our interviews with project  sponsors, we also asked for their perspectives on Reclamation’s  monitoring process.

We conducted this performance audit from October 2017 to December  2018 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.

As Interior’s primary water management agency, Reclamation’s mission  has been to manage, develop, and protect water and water-related  resources in 17 western states since 1902. Reclamation has led or  provided assistance in the construction of most of the large dams and  water diversion structures in the West for the purpose of developing water  supplies for irrigation, municipal water use, flood control, and habitat  enhancement, among others. Reclamation is organized into five  regions—Great Plains, Lower Colorado, Mid-Pacific, Pacific Northwest,  and Upper Colorado—and the agency’s central office in Denver  provides technical and policy support. Each regional office oversees the  water projects, including Title XVI projects and studies, located within its  regional boundaries. The types of projects eligible under the Title XVI  program include, among others, construction of water treatment facilities,  pipelines to distribute reused water, and tanks and reservoirs to store  reused water.

The Title XVI program is one of several programs under Interior’s  WaterSMART (Sustain and Manage America’s Resources for Tomorrow)  Program. The WaterSMART program is implemented by Reclamation and  the U.S. Geological Survey within Interior. According to an Interior  document, the WaterSMART program focuses on identifying strategies to  help ensure sufficient supplies of clean water for drinking, economic  activities, recreation, and ecosystem health. Reclamation carries out its  portion of the WaterSMART program by administering grants, including  Title XVI grants for water reuse, conducting research, and providing  technical assistance and scientific expertise. Reclamation offers three  types of grants to project sponsors under the Title XVI program:  construction projects, which are projects to plan, design, or construct  infrastructure for the treatment and distribution of reused water;  feasibility studies, which are documents that generally identify specific  water reuse opportunities, describe alternatives, and incorporate other  considerations, such as the financial capability of the project sponsor;  and  research studies, which are studies to help states, tribes, and local  communities establish or expand water reuse markets, improve  existing water reuse facilities, or streamline the implementation of new  water reuse facilities.

Acre-foot of water: about 326,000 gallons  generally identify specific water reuse  opportunities; describe alternatives; and  incorporate other considerations, such as  the financial capability of the project  sponsor.

Federal awards for construction projects under the Title XVI program are  generally limited to 25 percent of total project costs—up to $20 million in  federal funding—and require a 75 percent nonfederal cost share from the  project sponsor. Federal funding for feasibility studies under the Title XVI  program is generally limited to 50 percent of the total study costs, up to  $450,000, and federal funding for research studies is generally limited to  25 percent of the total study costs, up to $300,000. Reclamation  generally awards Title XVI grants for construction projects to project  sponsors in installments over multiple years before the federal funding  maximum for each project is reached, whereas it generally awards the full  amount for feasibility and research study grants in a single year.

Potable: water that is suitable for drinking.

Project sponsors: water districts,  wastewater or sanitation districts,  municipalities, tribes, and other entities  that develop projects or studies eligible for  Title XVI grants.  tribes, and local communities establish or  expand water reuse markets, improve  existing water reuse facilities, or  streamline the implementation of new  water reuse facilities.

From fiscal year 1992, when the Title XVI program was established,  through fiscal year 2009, Congress authorized 53 Title XVI projects.  Each of these projects was subject to a cap on the federal cost share. In  fiscal years 1992 through 2010, Congress generally directed funding for  these specific authorized projects each year. Starting in fiscal year  2011, Congress began appropriating funding for the Title XVI program  without directing specific funding to individual projects. As a result,  Reclamation started using a competitive process to award Title XVI  grants to projects and studies, through which project sponsors with  authorized projects applied for Title XVI grants. Only the 53 projects  that were already authorized by Congress were eligible to apply for  grants for construction projects. Section 4009(c) of the WIIN Act,  enacted in December 2016, authorized an additional $50 million to be  appropriated for water reuse projects. To be eligible to receive Title XVI  grants under the WIIN Act, projects must submit a completed feasibility  study to Reclamation, and Reclamation must review the study to  determine whether, among other things, the project is technically and  financially feasible and provides a federal benefit in accordance with the  reclamation laws. Reclamation is then to submit a report with the results  of its review to Congress, and projects determined to be feasible are then  eligible to apply for grants under the competitive grant program  established by the WIIN Act. Each feasibility study identifies an  estimated project cost. Like most projects individually authorized prior to  the WIIN Act, the federal share of this cost is generally capped at 25  percent, up to $20 million. In addition to construction projects,  Reclamation began awarding Title XVI grants to project sponsors for  feasibility studies in fiscal year 2011 and for research studies in fiscal  year 2016. Figure 1 shows a timeline of the Title XVI program.

With water reuse, water that is typically unusable, such as municipal or  industrial wastewater, undergoes additional treatment to make it suitable  for certain purposes. For example, municipal wastewater typically  undergoes primary and secondary treatment before it can be discharged  into a river, stream, or other body of water. With water reuse,  wastewater generally undergoes further (tertiary) treatment to remove  additional nutrients and suspended solids and to disinfect the water. The  treated water can then be reused for nonpotable uses, such as landscape  or agricultural irrigation or industrial uses. In some cases, wastewater  undergoes additional, advanced treatment—such as microfiltration and  reverse osmosis—and may then be suitable for potable uses, such as  injection into a groundwater basin or reservoir where it may later be  extracted for drinking water. Figure 2 shows some of the typical  treatment processes that may be applied to reused water, and figure 3  shows some of the typical uses of reused water.

Several reports have shown that water reuse could offer significant  untapped water supplies, particularly in coastal areas facing water  shortages. For example, in a 2012 report on municipal wastewater reuse,  the National Research Council of the National Academies estimated that  U.S. municipalities discharged about 12 billion gallons of treated  municipal wastewater each day into coastal waters. They estimated that  reuse of these coastal discharges could directly augment available water  sources by providing the equivalent of 27 percent of the municipal supply.  Municipalities discharge another 20 billion gallons each day to inland locations. While reuse of inland discharges has the potential to affect the  water supply of downstream users by decreasing the amount of water  available to them, we previously found that at least some of this volume  could also be beneficial. Even with such potential uses, the  Environmental Protection Agency reported in 2012 that only 7 to 8  percent of municipal wastewater was being intentionally reused in the  United States.

In our past work, we have highlighted the importance of awarding  competitive grants in a fair and transparent way and monitoring grants.  In recent years, OMB has taken actions to help improve the effectiveness  and efficiency of grantmaking across the federal government. In  particular, in December 2014, OMB’s Uniform Guidance became effective  for new grant awards after adoption by federal grantmaking agencies,  including Interior. The Uniform Guidance requires, among other things,  that federal agencies provide public notices of funding opportunities, and  these notices are to contain information, such as key dates and the merit  and other criteria that the agency will use to evaluate applications. The  Uniform Guidance also requires certain monitoring activities for federal  grants, such as generally requiring grant recipients to submit financial  reports.

Reclamation Awarded About $715 Million for Title XVI Projects and Studies, and Some Construction Projects Remain Eligible for Title XVI Grants

From fiscal years 1992 through 2017, Reclamation awarded about $715  million for 46 construction projects and 71 studies under the Title XVI  program, based on our review of agency documents. Most of this  funding—about $703 million—went toward construction projects, while  the remaining awards were for feasibility and research studies. Some  construction projects remain eligible for Title XVI grants. Specifically,  about $464 million in grant funding not yet awarded up to the federal  ceiling remains for individually congressionally authorized Title XVI  construction projects, and about $513 million remains in total estimated  projects eligible for Title XVI grants under the WIIN Act, as of August  2018.

Most of the $715 Million Reclamation Awarded Was for Title XVI Construction Projects

Across the three different types of grants offered under the Title XVI  program—construction projects, feasibility studies, and research  studies—Reclamation awarded about $715 million from fiscal years 1992  through 2017, according to agency documents. This $715 million  awarded under Title XVI leveraged more than $2.8 billion in nonfederal  cost share. Reclamation awarded most of this Title XVI funding for  construction projects, as shown in table 1.

Overall, Reclamation awarded about $703 million under Title XVI to 46  construction projects from fiscal years 1992 through 2017. Of these 46  construction projects that received awards, 43 were individually  congressionally authorized construction projects and 3 were construction  projects that were eligible for Title XVI grants under the WIIN Act,  according to agency documents we reviewed. Additionally, Reclamation  made awards for 71 studies—58 feasibility study grants since fiscal year  2011 and 13 research study grants since fiscal year 2016.

Some Construction Projects Remain Eligible for Title XVI Grants

Based on our review of Reclamation financial data, some construction  projects remain eligible for Title XVI grants. Eligible project costs fell into  two categories: (1) grant funding not yet awarded up to the federal ceiling  for individually congressionally authorized Title XVI construction projects,  and (2) the federal share of estimated costs identified in feasibility studies  for projects eligible for Title XVI grants under the WIIN Act. About $464  million in not-yet-awarded funding remained for 28 individually  congressionally authorized Title XVI construction projects as of August  2018. Also, about $513 million remained in estimated project costs for the  40 construction projects that were eligible under the WIIN Act, as of  August 2018, as shown in table 2 below.

As of August 2018, of the 53 individually congressionally authorized  construction projects, more than half—28 projects—had remaining project  costs eligible for Title XVI grants.

The 13 ongoing congressionally authorized projects had about $233  million in project costs that had not yet been awarded. Some project  sponsors told us that they were in the process of designing or  constructing projects. Others told us that while they were not currently  designing or constructing projects, they had plans to pursue additional  Title XVI grant awards in the future. More than one-third of the $233  million in remaining eligible project costs was for two projects— located in San Diego and San Jose, California—that were two of the  projects authorized when the Title XVI program was created in 1992.

The 15 congressionally authorized projects with no planned  construction had remaining project costs of about $231 million eligible  for Title XVI grants. Project sponsors identified several reasons why  they were not planning to apply for further grant awards. Specifically,  several project sponsors said they had faced challenges in applying  for further grants because language in the statutes authorizing the  projects limited the scope of their projects. For example, one project  sponsor told us that it was interested in expanding its water reuse  demonstration facility but that it was not eligible to apply for additional  Title XVI grants because the statute that authorized the project  specifically authorized a demonstration facility. In addition, one project  sponsor stated that its project authorization had already reached its  sunset date, which means the project can no longer apply for Title XVI  grants. Some of the project sponsors with no construction planned  said that they may consider applying for additional Title XVI grants  under their existing authorizations in the future, should they decide to  move forward with construction. However, others said that they had  decided not to move forward with authorized projects and had no  plans to apply for Title XVI grants in the future. For example, one  project sponsor said that it had determined that its project was no  longer financially feasible.

In addition, as of August 2018, 40 projects had Reclamation-approved  feasibility studies that had been transmitted to Congress, based on our  review of agency documents, and were therefore eligible to apply for Title  XVI construction grants under the WIIN Act. A total of about $513 million  in project costs across these 40 projects remained eligible for Title XVI  grants. Of the 40 projects, 20 applied for Title XVI grants in fiscal year  2017, and Reclamation selected 3 for awards. These 20 projects had  about $269 million in project costs that remained eligible for Title XVI  grants. Twenty projects did not apply for Title XVI grants in fiscal year  2017 and had about $244 million in project costs that remained eligible for  these grants, as of August 2018.

Title XVI Projects and Studies Vary in Their Uses of Reused Water and Include Urban and Rural Areas

Title XVI projects and studies for fiscal years 1992 through 2017 cover  various uses for reused water and include both urban and rural areas  throughout the West, based on our review of agency data as well as  documents from and interviews with project sponsors. For example, Title  XVI construction projects produce both nonpotable and potable reused  water for a variety of purposes, such as landscape and agricultural  irrigation, habitat restoration, and extraction as drinking water. The  projects and studies funded by the Title XVI program include both urban  and rural areas throughout the West, with California accounting for 36  construction projects and about 90 percent of total Title XVI funding.

Title XVI Projects Are Generally Large-Scale Infrastructure Projects that Produce Nonpotable and Potable Reused Water for a Variety of Purposes

Title XVI construction projects are generally large-scale infrastructure  projects, such as water reuse treatment plants and pipelines, that  produce, store, and distribute reused water for a variety of purposes, both  nonpotable and potable. Since the inception of the Title XVI program,  Reclamation has awarded Title XVI grants to construction projects that  cumulatively provided nearly 390,000 acre-feet of reused water in 2017.  According to Reclamation data, the projects funded by Title XVI  individually delivered between 38 acre-feet of reused water and more  than 100,000 acre-feet of water in fiscal year 2017. Most of these  construction projects provided reused water for nonpotable uses across  four main categories: (1) landscape irrigation, (2) agricultural irrigation,  (3) commercial and industrial use, and (4) habitat restoration.

Landscape irrigation. Landscape irrigation—including irrigation of golf  courses, road medians, school grounds, parks, sport fields, and other  green spaces—is the most common use of reused water produced by  Title XVI projects, with 29 Title XVI projects producing reused water for  this purpose, based on our analysis of documents from Reclamation and  project sponsors. The reused, nonpotable water produced by such  projects is generally distributed through purple-colored pipes, to denote  that the water is not for drinking purposes. For example, the Title XVI  program provided grants to Eastern Municipal Water District—a water  district located in Southern California—to help build water reuse infrastructure, including pipelines, pumping stations, and storage tanks.  With this added storage capacity, the district has the ability to store more  than 2 billion gallons of reused water, which is used to irrigate sports  fields, golf courses, parks, school grounds, and medians, according to the  project sponsor. By maximizing use of its reused water, the project  sponsor noted that the district is reducing its dependence on water piped  in from other parts of the state or region. Similarly, the Title XVI program  provided grants to help build pipelines and reservoirs to distribute and  store reused water for landscape irrigation and other purposes in other  parts of California (see fig. 4).

Agricultural irrigation. Reused water produced by Title XVI projects is also  used to irrigate a variety of agricultural products, including fruits and  vegetables, flowers, and vineyards. For example, the North Valley  Regional Recycled Water Program is helping to provide a reliable water  source for the Del Puerto Water District, which provides water to  approximately 45,000 acres of farmland in California’s San Joaquin  Valley, according to the project sponsor. The Del Puerto Water District  has encountered water shortages in recent years, which have created  economic hardships on growers in the area, according to the project  sponsor. Title XVI grants provided under WIIN Act authority helped the  district expand its reused water supply and distribution infrastructure and  ensure a reliable, drought-resistant water supply, according to the project  sponsor. In addition, reused water produced by the Watsonville Area  Water Recycling Project near Watsonville, California, is used to irrigate  strawberries and other fruits and vegetables as well as flowers. The  groundwater basin that serves the coastal region where Watsonville is  located has been overdrafted for a long time, causing groundwater  elevations to drop below sea level and leading to seawater intrusion that  makes the groundwater unusable in certain areas, according to the  project sponsor. This sponsor noted that Watsonville’s Title XVI project  helps reduce demand on the overdrafted groundwater basin, which in turn  helps to protect against further seawater intrusion and also provides a  reliable, drought-tolerant water supply to help protect the region’s  agricultural economy. Figure 5 shows flowers in a greenhouse that are  irrigated with reused water from Watsonville’s Title XVI project.

Commercial and industrial use. Reused water produced by Title XVI  projects is used for cooling towers at power plants and data centers, oil  production, toilet flushing in university and commercial buildings, and for  other commercial and industrial purposes, according to project sponsors.  For example, some of the reused water produced by the Southern  Nevada Title XVI project is used for power plant cooling, and reused  water from San Jose’s Title XVI project is used for cooling at data centers  in California’s Silicon Valley. In addition, reused water from the Long  Beach Area Reclamation Project is injected into the ground after oil is  extracted, which helps prevent the ground from sinking, according to the  project sponsor. Having access to a secure source of reused water can  attract data centers and other businesses that require large amounts of  water to areas that can guarantee access to reused water, according to a  project sponsor and representatives from a nongovernmental water reuse  organization we interviewed.

Habitat restoration. Some Title XVI projects use reused water to restore  wetlands or supply water to recreational lakes. For example, in  California’s Napa Valley, reused water from the North Bay Title XVI  project is being used to restore the Napa Sonoma Salt Marsh. Some  threatened and endangered species, such as the Chinook Salmon, have  started returning to the area since the restoration began, according to the  project sponsor. Reused water from this Title XVI project also provides  other habitat benefits. For example, wineries in the area that irrigate with  reused water do not need to divert as much water from streams, which  leaves more water for fish, according to the project sponsor. In addition,  the North Valley Regional Recycled Water Program in California’s San  Joaquin Valley supplies reused water to wildlife refuges and wetlands, in  addition to agricultural lands. This area has the largest remaining  freshwater marsh in the western United States, which provides critical  habitat for migratory birds as well as other species, according to the  project sponsor (see fig. 6).

There are also several potable projects that have been funded by Title  XVI. These projects generally fall into two categories: (1) indirect-potable  reuse and (2) desalination.

Indirect-potable reuse. Title XVI has provided grants for indirect-potable  projects, in which wastewater undergoes advanced treatment to obtain  potable-quality water. The water is then injected into an environmental  buffer, such as a groundwater aquifer, where it is left for a certain amount  of time before it is extracted. The water is treated again before it is  distributed as drinking water. One use for highly-treated reused water is  for seawater barriers, where water is injected into the ground to prevent  the intrusion of high-salinity water into groundwater aquifers. Indirect- potable reuse has been gaining prominence, according to some project  sponsors and representatives from nongovernmental water reuse  organizations, with Title XVI grants going to several project sponsors for  both the construction of facilities as well as research into optimal  treatment methods. For example, the Groundwater Replenishment  System in Orange County, California, which was partially funded by Title  XVI, takes highly-treated wastewater that would have previously been  discharged into the Pacific Ocean and purifies it using an advanced  treatment process. The water is then injected into a groundwater aquifer  and is later extracted as drinking water that serves more than 800,000  people, according to the project sponsor. Figure 7 shows reused water at  several different points in the treatment process and reverse osmosis  treatment equipment at Orange County’s Groundwater Replenishment  System.

Desalination. Title XVI has provided grants for projects that treat brackish  groundwater—water that has a salinity above freshwater but below  seawater—and then feed it directly into potable water distribution systems  or into a groundwater aquifer or surface water reservoir. For example,  the Mission Basin Groundwater Purification Facility in Oceanside,  California, desalinates brackish groundwater using reverse osmosis and  other treatment methods. The reused water supplies about 15 percent of  the city’s water needs, according to the project sponsor.

In addition to Title XVI construction projects, Reclamation’s feasibility and  research studies also vary in their planned uses of reused water. For  example, one feasibility study project sponsor we interviewed was  awarded a Title XVI grant to investigate the feasibility and potential  impacts of reusing produced water from oil and gas operations in  Oklahoma. The study plans to investigate possible dual benefits of  reusing produced water, including (1) providing a new source of water for  irrigation and other purposes and (2) reducing the disposal of produced  water as a possible means for addressing increased seismic activity  associated with oil and gas operations, according to the project sponsor.  Another feasibility study project sponsor we interviewed from a rural,  landlocked community in Washington State is investigating the feasibility  of creating a virtual zero discharge system that would eliminate all  wastewater disposal by reusing the wastewater. Similar to feasibility  studies, Title XVI research studies address different topics. For example,  one project sponsor we interviewed was researching how to optimize  filtration of reused water using membrane filtration, which is a critical  treatment process to reduce contaminants in water. Another project  sponsor was researching impediments and incentives to using reused  water for agricultural irrigation.

Title XVI Projects and Studies Include Western Urban and Rural Areas

Based on our review of agency documents, project sponsors in 12 of the  18 states eligible to participate in the Title XVI program were awarded at  least one type of funding under Title XVI since the inception of the  program in 1992, as shown in table 3.

From fiscal year 1992 through fiscal year 2017, Reclamation awarded  about $640 million—or about 90 percent of total awarded Title XVI  funding—to projects in California, the majority of which was for  construction projects. The concentration of projects in California reflects  the early emphasis of the Title XVI program on Southern California and  reducing its reliance on water provided by the Colorado River, as well as  the high level of interest in the program in the state, according to a 2010  Congressional Research Service report. Overall, project sponsors in 9  states were awarded feasibility study grants, sponsors in 4 states were  awarded research study grants, and sponsors in 8 states were awarded  construction grants (see fig. 8).

Title XVI projects and studies include western urban and rural areas. In  particular, many Title XVI projects are sponsored by entities in urban  areas that serve a large population base. For example, the main part of  the Los Angeles Area Water Supply Title XVI project is sponsored by the  West Basin Municipal Water District, which has a service area of nearly 1  million people in 17 cities and unincorporated areas in Los Angeles  County. This Title XVI project produces five different types of reused  water to meet the unique needs of West Basin’s municipal, commercial,  and industrial reuse customers, according to the project sponsor.  Similarly, the City of San Diego, which has a population of about 1.4  million, was awarded Title XVI grants for a number of projects, including  an indirect-potable reuse project anticipated to provide one-third of San  Diego’s water supply by 2035, according to the project sponsor. Other  Title XVI projects are sponsored by entities in rural areas and small cities.  For example, the Hi-Desert Water District project serves a rural and  economically disadvantaged community in the town of Yucca Valley,  California, that has a population of about 20,000. This Title XVI project  will fund facilities to collect, treat, and reuse treated wastewater, thereby  eliminating degradation of the local groundwater supply and helping  ensure a safer, reliable water supply for this community, according to the  project sponsor. Similarly, the city of Round Rock, Texas, which has a  population of about 120,000, sponsored the Williamson County Title XVI  project. This project produces reused water for landscape irrigation, most  of which is used to irrigate a 650-acre park, according to the project  sponsor.

Some Title XVI projects are sponsored by regional partnerships  composed of different local entities. For example, in the late 1990s, 4  entities in Northern San Diego County—Carlsbad Municipal Water  District, Leucadia Wastewater District, Olivenhain Municipal Water  District, and San Elijo Joint Powers Authority—formed a coalition to  leverage their water reuse programs; the coalition has since grown to 10  entities. This coalition sponsored an individually congressionally  authorized Title XVI project, the North San Diego County project, and  applied for a Title XVI grant for a new project eligible under the WIIN Act  in fiscal year 2017. Similarly, in the northern part of the San Francisco  Bay Area, 10 local agencies formed a regional partnership covering 315  square miles across Sonoma, Marin, and Napa Counties to sponsor the  North Bay Water Reuse Program. According to the project sponsors  involved in this regional partnership, using a regional partnership  approach to water reuse projects provides an economy of scale;  maximizes the ability to obtain local, state, and federal funding for the  projects; and allows smaller, local entities to access funding and expertise  for projects that would be out of reach without regional collaboration. See  appendix I for more detailed information on specific Title XVI construction  projects.

Reclamation’s Project Selection Process Is Consistent with Relevant Federal Grant Regulations, and Its Evaluation Criteria Have Changed in Recent Years

Reclamation’s process for selecting projects and studies to award grants  under the Title XVI program involves announcing the funding opportunity,  establishing criteria to evaluate potential projects, and reviewing  applications to make award decisions. We found that this process is  consistent with relevant federal grant regulations outlined in OMB’s  Uniform Guidance, based on our review of agency documents and federal  grant regulations. The criteria Reclamation uses to evaluate Title XVI  projects have changed in recent years, with the elimination or addition of  some criteria and changes in the weighting of others.

Reclamation Publicly Announces Funding Opportunities and Has a Merit Review Process for Applications, which Is Consistent with Relevant Federal Grant Regulations

To start its selection process, Reclamation announces funding  opportunities by developing annual funding opportunity announcements  (FOA), which are publicly available on its website and on  www.grants.gov. These FOAs contain information for applicants to  consider prior to applying, including the types of eligible projects and  studies, estimated funding available, information on the application review  process, the application due date, and the criteria that Reclamation will  use to score applications.

Project sponsors submit applications for Title XVI grants to Reclamation  in response to the FOAs, according to Reclamation officials. Reclamation  officials then review the applications to ensure the projects are eligible  and that applications are complete, according to agency officials we  interviewed and documents we reviewed related to the selection process.  Next, an application review committee scores eligible applications. The  application review committee is composed of Reclamation staff  representing the five regions and other staff with technical expertise.  Committee members individually review and score each Title XVI  application based on the evaluation criteria in the FOA. After the  individual scoring, the application review committee meets collectively to  discuss the scores; this meeting is generally facilitated by Title XVI  program staff from Reclamation’s central office in Denver. If there are any  outliers in the scores—e.g., if a committee member scores an application  significantly higher or lower than the other members—then they are to  discuss and may adjust the score to help ensure fairness and consistency  in how the applications are scored relative to the evaluation criteria,  according to agency officials. Following this discussion, Reclamation  averages the members’ scores for each application and then ranks the  applications based on the average scores. Reclamation creates a list of  recommended projects and funding amounts for these projects, based on  the rankings and congressional direction on the amount of funding for the  Title XVI program in any given year.

Reclamation’s process for selecting projects and studies to fund under  the Title XVI program is consistent with relevant federal grant regulations  outlined in the Uniform Guidance. Based on our review of Title XVI FOAs  from fiscal years 2011 through 2018, all FOAs met the requirements  prescribed by the Uniform Guidance. Specifically, the Uniform Guidance  requires that grant funding opportunities be publicly announced and  contain certain information, such as the evaluation criteria, key dates, and  the process used to evaluate applications. Based on our review of  FOAs, Reclamation’s FOAs were publicly announced and contained this  information.

Many project sponsors we interviewed said that Reclamation’s Title XVI  application selection process is generally clear and well-managed and  that Reclamation officials, at both the regional level and central office in  Denver, were responsive and transparent throughout the selection  process. Several project sponsors noted that Reclamation offered to  debrief with Title XVI applicants after it made its grant selections; further,  Reclamation officials provided constructive feedback to applicants to  improve their applications in future years.

Some project sponsors raised concerns about how long it takes WIIN Act- eligible Title XVI projects to be awarded grants. In particular, the WIIN Act  provides that WIIN Act-eligible projects can only receive funding if an  enacted appropriations act designates funding by project name, after  Reclamation has recommended specific projects for funding and  transmitted its recommendations to Congress. Given the timing of  Reclamation’s FOA process, WIIN Act-eligible projects selected in a given  fiscal year generally need to be included in the subsequent fiscal year’s  appropriations act. For example, congressional direction in May 2017  provided that $10 million of the total Title XVI funding was to go to Title  XVI WIIN Act-eligible projects, and Reclamation sent Congress its fiscal  year 2017 selections for WIIN Act-eligible projects to fund in November  2017. However, according to Reclamation officials, Reclamation could not  begin awarding fiscal year 2017 funding to selected projects until March  2018, after enactment of the fiscal year 2018 appropriations act, which  listed the selected projects by name. One project sponsor noted that this  two-part process created challenges related to the project timeline and  budget. Reclamation officials said that project sponsors have also  expressed concerns to Reclamation about how any resulting delays may  affect the ability of projects to move forward. Reclamation officials noted  that this is a statutory requirement and that they had discussed this  process with project sponsors to make them aware of the timing for the  grants.

Criteria Used to Evaluate Projects Have Changed in Recent Years

Reclamation has changed the evaluation criteria it uses to select projects  to fund under the Title XVI program since it began using a competitive  process in fiscal year 2011. Reclamation first developed criteria for the  annual Title XVI project selection process in 2010, which it applied  starting in fiscal year 2011. Prior to that, Congress generally provided  project-specific funding direction for individually authorized Title XVI  projects. According to agency officials, Reclamation developed the initial  evaluation criteria for the annual Title XVI selection process based on  (1) the language in the Reclamation Wastewater and Groundwater  Studies and Facilities Act, as amended; (2) Reclamation goals and  priorities for the program; and (3) the criteria Reclamation used to select  projects to fund under the American Recovery and Reinvestment Act of  2009. Reclamation sought and incorporated public comments on the  criteria in 2010. After that, Reclamation’s evaluation criteria for Title XVI  construction projects generally remained unchanged from fiscal years  2011 through 2016.

In fiscal years 2017 and 2018, Reclamation eliminated some criteria in  the Title XVI FOAs for construction projects, added some new criteria,  and changed the weighting of some criteria, based on our review of FOAs  for those years. For example, in 2017, Reclamation more than doubled  the weight of the economic criterion for the fiscal year 2017 FOA for WIIN  Act-eligible projects, making it worth 35 percent of the points as  compared to the previous 13 percent. Reclamation officials told us that  these changes were made in response to the language of the WIIN Act— which listed a number of criteria for projects, including projects that  provide multiple benefits—and comments they received from OMB during  the review process for the revised criteria. In March 2018, Reclamation  proposed further revisions to the evaluation criteria for the fiscal year  2018 Title XVI program and held a public comment period to solicit input  on the proposed changes. The proposed FOA contained one set of  criteria applicable to both types of eligible Title XVI construction  projects—individually congressionally authorized and WIIN Act-eligible  projects. Reclamation received 21 comment letters on the criteria and,  after analyzing the comments, officials said that they made additional  changes to some of the criteria before issuing the final fiscal year 2018  FOA on May 30, 2018. For example, Reclamation added clarification to  the economic criteria. See appendix II for a more detailed description of  the final fiscal year 2018 Title XVI criteria, as well as changes to the  criteria in fiscal years 2017 and 2018.

Several project sponsors noted that changes to the evaluation criteria  may affect which projects are more competitive in Reclamation’s  application scoring and project selection process. In particular, several  project sponsors and representatives from nongovernmental  organizations we interviewed told us they believed that recent changes— particularly the increased weight on economic criteria, including cost  effectiveness—may disadvantage small projects. Others said increasing  the weight on cost effectiveness may disadvantage new projects that are  just beginning construction of costly new treatment facilities versus  projects that are expanding existing facilities. Reclamation officials we  interviewed stated that the economic criteria take into account the extent  to which projects would provide multiple benefits—not just cost  effectiveness. They also pointed out that they clarified in the fiscal year  2018 FOA that there are a number of ways to provide information on  project benefits in Title XVI applications, including by describing benefits  in a qualitative manner. They added that feedback from project sponsors  had been positive on the additional changes Reclamation made in  response to earlier stakeholder comments on the economic criteria for the  final fiscal year 2018 FOA. Furthermore, Reclamation’s increased  emphasis on economic criteria is consistent with federal principles on  federal spending for water infrastructure projects, which states that  federal infrastructure investments are to be based on systematic analysis  of expected benefits and costs.

Reclamation’s Process for Monitoring Title XVI Grants Is Consistent with Relevant Federal Grant Regulations

To monitor Title XVI grants, Reclamation reviews financial and  performance reports submitted by project sponsors, regularly  communicates and visits with project sponsors to obtain information on  the status of the projects, and collects information on the amount of water  Title XVI projects deliver each year, which is included in Interior’s annual  performance report.

Financial and Performance Reports. In its financial assistance  agreements for Title XVI grants, Reclamation generally requires  project sponsors to submit financial and performance reports.  Specifically, Reclamation generally requires that project sponsors  submit financial and performance reports at least once per year and  sometimes more frequently, as determined by the risk that each  project poses, according to agency officials. Based on our review of  reports, the financial reports list transactions related to Title XVI  grants, such as expenditures, and the performance reports provide  updates on the status of the Title XVI projects. Reclamation  delineates its monitoring requirements, which generally include  requirements for financial and performance reports, in the financial  assistance agreements for Title XVI grants that each project sponsor  agrees to prior to receiving funding. In our review of documents  related to Reclamation’s monitoring process for Title XVI construction  grants active in fiscal year 2017, we found that project sponsors  submitted all but one financial and performance reports that  Reclamation had required, and submitted all but two by their due date  or within 2 weeks of this date. We found that Reclamation’s  requirements are consistent with relevant federal grant regulations in  OMB’s Uniform Guidance, which provide that federal awarding  agencies, including Reclamation, generally are to collect financial  reports from project sponsors at least annually.

Ongoing Communication and Site Visits. To further monitor the  performance of Title XVI grants, Reclamation officials communicate  regularly with project sponsors via telephone and email and conduct  site visits to obtain information on the status of the projects, according  to Reclamation officials and project sponsors. Based on our review of  agency guidance, Reclamation generally is to conduct at least one  site visit per year for projects with significant on-the-ground activities,  such as construction projects. During the visits, agency officials  generally are to receive updates on progress made on the project and  determine if it is on schedule and meets the scope of work identified in  the financial assistance agreement. Reclamation generally requires  officials to document these visits and other monitoring activities in  project files, according to agency documents. Through the site visits  and other communication with project sponsors, agency officials may  also provide information on program requirements and respond to  project sponsors’ questions about the Title XVI program. For example,  during site visits, Reclamation officials have responded to project  sponsors’ questions about the status of payments and allowable  project costs and clarified requirements for financial and performance  reports, according to our review of agency documents and interviews  with project sponsors. In our review of Reclamation’s Title XVI  construction grants active in fiscal year 2017, we found that  Reclamation generally conducted annual site visits for Title XVI  construction projects that year. We found that this is consistent with  federal grant regulations in OMB’s Uniform Guidance, which state that  federal awarding agencies may make site visits as warranted by  program needs.

Data Collection. Reclamation also annually collects data on the  amount of water delivered from each Title XVI construction project, as  well as projected water deliveries for the coming year. Reclamation  analyzes the water delivery data, compares projected data to actual  deliveries, and follows up with project sponsors to understand any  discrepancies, according to agency officials. For example, actual  water deliveries could be lower than projected deliveries if  communities implement water conservation measures that result in  projects having less wastewater to treat and deliver for reuse.  According to Reclamation officials, information on the amount of  reused water delivered from Title XVI projects helps them to monitor  progress on Title XVI projects and helps demonstrate the benefits and  accomplishments of the Title XVI program. These data are  consolidated and included in Interior’s annual performance report to  demonstrate how the agency is meeting Interior’s objective of  achieving a more sustainable and secure water supply. Collecting  data on Title XVI water deliveries is consistent with the Title XVI  program’s purpose of supporting water supply sustainability by  providing financial and technical assistance to local water agencies for  the planning, design, and construction of water reuse projects.

We provided a draft of this report to the Department of the Interior for  review and comment. The Department of the Interior provided technical  comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of the Interior, and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or fennella@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix III.

Appendix I: Information on Construction Projects Eligible under the Title XVI Water Reclamation and Reuse Program

This appendix provides information on construction projects that are  individually congressionally authorized under the Bureau of Reclamation’s  Title XVI Water Reclamation and Reuse Program (Title XVI), as well as  projects to which Reclamation awarded grants under the Water  Infrastructure Improvements for the Nation Act (WIIN Act) funding  opportunity in fiscal year 2017. Figure 9 below provides information on  the 53 construction projects that have been individually authorized by  Congress under the Title XVI program. The projects are ordered by the  total amount of Title XVI funding each was awarded from fiscal years  1992 through 2017, from highest to lowest.

Figure 10 below provides information on the three construction projects to  which Reclamation awarded grants under the Title XVI WIIN Act funding  opportunity in fiscal year 2017. The projects are ordered by the total Title  XVI funding each was awarded in fiscal year 2017—the first year that  grants were awarded under the WIIN Act—from highest to lowest.

Appendix II: Information on the Evaluation Criteria Used to Select Projects to Award Grants under the Title XVI Program

This appendix provides detailed information on the evaluation criteria the  Bureau of Reclamation used to select projects to award grants under the  Title XVI Water Reclamation and Reuse Program (Title XVI). The six  evaluation criteria Reclamation used to select construction projects to  fund in fiscal year 2018 are as follows (points are out of a total of 110  points).  1.  Water Supply (35 points)  a.  Stretching Water Supplies (18 points): Points will be awarded  based on the extent to which the project is expected to secure and  stretch reliable water supplies. Consideration will be given to the  amount of water expected to be made available by the project and  the extent to which the project will reduce demands on existing  facilities and otherwise reduce water diversions.  b.  Contributions to Water Supply Reliability (17 points): Points will be  awarded for projects that contribute to a more reliable water  supply.  2.  Environment and Water Quality (12 points): Points will be awarded  based on the extent to which the project will improve surface,  groundwater, or effluent discharge quality; will restore or enhance  habitat for nonlisted species; will address problems caused by  invasive species; or will provide water or habitat for federally listed  threatened or endangered species. Indirect benefits of the project will  also be considered under this criterion.  3.  Economic Benefits (35 points)  a.  Cost Effectiveness (10 points): Points will be awarded based on  the cost per acre-foot of water expected to be delivered upon  completion of the project and how the cost of the project  compares to a nonreclaimed water alternative.  b.  Economic Analysis and Project Benefits (25 points): Points will be  awarded based on the analysis of the project’s benefits relative to  the project’s costs.  4.  Department of Interior Priorities (10 Points): Points will be awarded  based on the extent that the proposal demonstrates that the project  supports the Department of the Interior priorities, such as utilizing  natural resources and modernizing infrastructure.  5.  Reclamation’s Obligations and Benefits to Rural or Economically  Disadvantaged Communities (8 points)  a.  Legal and Contractual Water Supply Obligations (4 Points): Points  will be awarded for projects that help to meet Reclamation’s legal  and contractual obligations.  b.  Benefits to Rural or Economically Disadvantaged Communities (4  Points): Points will be awarded based on the extent to which the  project serves rural communities or economically disadvantaged  communities in rural or urban areas.  6.  Watershed Perspective (10 Points): Points will be awarded based on  the extent to which the project promotes or applies a watershed  perspective by implementing an integrated resources management  approach, implementing a regional planning effort, forming  collaborative partnerships with other entities, or conducting public  outreach.

Reclamation changed some of its evaluation criteria in fiscal years 2017  and 2018. The fiscal year 2017 changes were made in response to  requirements in the Water Infrastructure Improvements for the Nation Act  (WIIN Act)—which listed several criteria for projects, including projects  that provide multiple benefits—and comments from the Office of  Management and Budget, according to Reclamation officials. The fiscal  year 2018 changes were generally made in response to comments  Reclamation received during the formal comment period it held in March  and April 2018 to solicit input on the criteria, according to Reclamation  officials. The changes to the criteria are shown in table 4.

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the individual named above, Elizabeth Erdmann (Assistant  Director), Lesley Rinner (Analyst-in-Charge), Margaret Childs, and Sierra  Hicks made key contributions to this report. Ellen Fried, Timothy Guinane,  Thomas M. James, John Mingus, Patricia Moye, Anne Rhodes-Kline,  Sheryl Stein, and Sara Sullivan made additional contributions.

Population growth and drought are among the factors taxing the U.S. water supply, particularly in the West. Reuse or recycling of wastewater that is typically unusable can help boost supplies. Water can be treated and then put to work in many ways, including irrigating parks and farms, and cooling power plants.

A Bureau of Reclamation program awards grants to water districts and other project sponsors seeking to reuse water and add to supplies. From 1992 through 2017, it awarded about $715 million for 46 construction projects and 71 studies. Nearly all of the funding—about $703 million—went for construction projects that recycled water.