Latest Trends in U.S. Water Utility Automation and Digital Connectivity - Regulatory Frameworks and Funding Initiatives

Policy and regulatory developments are increasingly shaping the push for digital connectivity in the water sector:

Federal Infrastructure Funding: 

The 2021 Bipartisan Infrastructure Law (Infrastructure Investment and Jobs Act) injected an unprecedented $50+ billion into water infrastructure improvements1. While much of this funding targets replacing aging pipes, lead service line removal, and treatment plant upgrades, it also creates opportunities for modernization. State Revolving Funds (SRFs) – which will distribute the bulk of the money – can fund “intelligent water systems” as part of eligible projects. In fact, EPA encourages states to use a portion of SRF dollars (the Green Project Reserve) for innovative, energy- or water-saving technologies2. This means a utility replacing water mains could at the same time install pressure sensors or smart valves and have it financed through the same loan/grant. Some states have explicitly promoted digital projects: for example, the Oklahoma Water Resources Board has financed over 20 projects since 2015 that included smart controls and telemetry, as part of an effort to boost water efficiency statewide3. In short, the wave of federal investment is not only fixing old infrastructure but also bringing digital upgrades into the mix, especially where they improve efficiency or climate resilience.

EPA Regulations and Cybersecurity Requirements: 

The U.S. Environmental Protection Agency, which oversees drinking water systems, has started integrating cybersecurity into its regulatory framework. Under the 2018 America’s Water Infrastructure Act, larger water utilities must assess risks (including cyber) and develop response plans. In 2023, EPA went further by issuing a memorandum interpreting that states must evaluate cybersecurity as part of routine sanitary surveys of public water systems4. This effectively treated cyber protections as a regulatory requirement under the Safe Drinking Water Act. However, this move met pushback – a group of states (Missouri, Arkansas, Iowa) sued, calling it federal overreach that would burden small systems5. The rule was put on hold by a court, and EPA ultimately withdrew the mandate in October 2023 amid the legal challenges6. Instead, EPA is now encouraging voluntary cyber assessments by states and offering technical assistance to utilities7. Despite the withdrawal, the direction is clear: regulators expect water systems to improve cyber defenses. In early 2024 EPA signaled it will step up enforcement of existing laws to prod utilities on cybersecurity, even hinting at civil or criminal penalties if critical systems are left insecure8. This comes after alarming findings – e.g. many utilities still had default passwords and single shared logins – and a series of cyber incidents (including an attempted poisoning via hacked controls in Oldsmar, Florida in 2021). The EPA, along with the White House, is developing a broader water sector cybersecurity strategy (as directed by a 2021 national security memorandum)9. We can expect new guidance and possibly legislation that compels even small systems to meet minimum cyber standards in the near future10. In the meantime, industry groups like AWWA and the WaterISAC have published cybersecurity best practices (e.g. the Water Sector Cybersecurity Risk Management Guidance and the 15 Fundamental Cybersecurity Measures for water utilities) to help utilities self-improve.

Standards and Data Sharing Initiatives: 

Other regulatory frameworks and standards also influence digital connectivity. For example, the EPA has water quality monitoring rules that are increasingly easier to meet with digital sensors (e.g. continuous chlorine or pH monitors) and automated reporting systems. The American Water Works Association (AWWA) publishes guidelines that support digital adoption – from instrumentation (Manual M2) to data management and cybersecurity roadmaps. AWWA’s newest standards (like an upcoming standard for smart metering systems) and its “Water 2050” initiative point to digital solutions as key to sustainability. Additionally, federal programs are pushing open data and interoperability: the EPA’s WaterReuse and watershed programs encourage utilities to share data on platforms, and the Department of Energy’s Water Security Grand Challenge has spurred development of low-cost sensors for small systems. While not mandates, these initiatives create a collaborative environment (often grant-funded) for testing technologies such as digital twins, remote sensors, and AI in real-world utility settings.

Funding for Small & Rural Systems: 

Recognizing the gap in resources, targeted funding and technical programs focus on smaller utilities. The USDA’s Rural Development arm provides grants for rural water tech, and EPA recently announced $49 million for technical assistance to help rural and tribal communities adopt modern solutions11. Congress has also eyed legislation to bolster small system cybersecurity (e.g. a bipartisan bill to fund cyber tools and training for rural water utilities)12. Many states offer asset management grants that can cover software and GIS mapping – stepping stones to digital transformation. This policy landscape is evolving, but the overall trend is more support and more expectations: utilities that proactively adopt smart technologies may have an edge in compliance and funding, whereas those that do not may face heightened scrutiny on issues like cybersecurity, water loss, or emergency preparedness.

Endnotes

1. https://epa.gov ↩

2. https://epa.gov ↩

3. https://epa.gov ↩

4. https://uswatercorp.com ↩

5. https://uswatercorp.com ↩

6. https://uswatercorp.com ↩

7. https://uswatercorp.com ↩

8. https://cybersecuritydive.com ↩

9. https://gao.gov ↩

10. https://uswatercorp.com ↩

11. https://epa.gov ↩

12. https://smartwatermagazine.com ↩