grants built for big utilities

Problem statement

Roughly 50,000 community drinking-water systems and 16,500 public wastewater systems serve the United States, the great majority of them small, and the ones most exposed to floods, wildfire, and storms are disproportionately small and under-resourced. The federal money meant to harden them — FEMA's Building Resilient Infrastructure and Communities (BRIC), Flood Mitigation Assistance, and Hazard Mitigation Grant programs, alongside EPA's state revolving funds and USDA's rural water programs — is administered through application, cost-share, benefit-cost, and environmental-review requirements calibrated to applicants with engineers, grant writers, and reserves. GAO's 2025 audit found the predictable result: small systems cannot complete FEMA's benefit-cost analysis or reach its cost-effectiveness threshold, cannot raise the local match ("the cost share for a million-dollar infrastructure project could be more than the entire annual operating budget of a small town"), wait through environmental and historic-preservation reviews that can take more than a year, and then withdraw — and FEMA "did not systematically track how many subapplicants withdrew from the programs prior to obligations being made or their reasons for withdrawal." As of March 2025 FEMA had obligated only 22 percent of BRIC award amounts selected from fiscal years 2020–2023 and 30 percent for Flood Mitigation Assistance. The unsolved problem is a program architecture whose eligibility and process rules structurally select against the utilities the money is for, inside a multi-agency system that cannot see who is falling out or where the money lands.

Why this matters

Between fiscal years 2014 and 2023 the federal government provided about $35 billion in grants (22,000+ projects) and $29 billion in direct loans for water infrastructure; how those dollars are distributed determines which communities have working water after the next disaster. GAO's analysis of EPA's Drinking Water State Revolving Fund found communities with higher shares of non-white or Hispanic residents received about $50,000 (5 percent) less assistance on average, and agencies themselves reported that "limited data about the geographical areas served by drinking water and wastewater utilities made it difficult to accurately assess who benefited from their programs" — a water system's service area may differ from the municipality's boundary and both may differ from the boundaries of the vulnerable community. Money that is selected but never obligated protects no one; a utility that withdraws after a year of review has spent scarce staff time for nothing and is unlikely to try again.

What’s been tried and why it hasn’t worked

FEMA lowered its cost-effectiveness threshold in 2022 for projects benefiting disadvantaged communities, but told GAO in June 2025 that "this lower threshold had been discontinued." FEMA rules allow USDA rural-water assistance to be used to meet the local cost share in certain cases — a real workaround for a small town with no reserves — but FEMA's 2016 cost-share guide "does not mention using assistance from USDA programs for water infrastructure projects," and GAO found FEMA "has not adequately communicated" the option. EPA released, in July 2024, a mapping tool with service-area boundaries for community water systems covering around 99 percent of the population served, exactly the data needed to target and evaluate assistance — but "FEMA officials and USDA program leaders said they did not use EPA's drinking water mapping tool because they were not aware it existed." EPA is building a network of technical-assistance providers and USDA helps rural communities identify projects, yet most federal assistance excludes routine operations and maintenance from eligible uses, so the small system that most needs help with the recurring cost of resilience cannot get it. Every one of these fixes was made inside a single agency's program; none changed the fact that the applicant-facing burden (BCA, match, environmental review, timeline) is set by rules and statute that assume capacity the target population lacks, and none created the cross-agency data flow needed to see the outcome.

What would unlock progress

Two changes would move the problem: a program design that shifts capacity burden off the small applicant — pre-computed or simplified benefit-cost methods for standard water-resilience project types, bundled or state-aggregated applications, automatic cost-share pairing with USDA funds, and eligibility for O&M — and a shared measurement layer that uses EPA's service-area boundaries to tell FEMA, USDA, and EPA which populations their money actually reaches and which applicants drop out and why. GAO's eight recommendations (FEMA to track withdrawals and reasons and to communicate the USDA cost-share option; FEMA, USDA, and EPA to use and guide states on the service-area tools) are the agency-level version of this; the design question — what a resilience grant would look like if it were built for a 500-connection water system — is open.

Entry points for student teams

An engineering-economics team could build an open, simplified benefit-cost calculator for the most common small-system resilience projects (backup power, well-head flood protection, treatment relocation) that meets FEMA's methodology but needs only inputs a small utility has, and test it against real applications. A data/GIS team could join EPA's public service-area boundaries with FEMA/EPA/USDA award data for one state to show who received assistance versus who is most vulnerable — the assessment the agencies say they cannot do. A policy-design team could prototype a "small-system track" for BRIC-type programs (aggregated applications through a state or circuit-rider, automatic USDA cost-share pairing, tracked withdrawals) and estimate its effect on the 22 percent obligation rate. Relevant skills: civil/environmental engineering, benefit-cost analysis, GIS, public administration.