The state Public Service Commission issued a scathing report on the Magoffin County Water District on Wednesday and warned the district's commissioners to shape up or ship out.
But Magoffin County Judge-executive Charles "Doc" Hardin, who appoints the water commissioners, said they had made significant progress since the PSC completed its investigation last summer.
"The current board has been working very diligently toward making significant improvements," said Hardin, who added that he and the water commissioners looked forward to a meeting with the PSC to bring them up to speed.
PSC spokesman Andrew Melnykovych said the PSC was willing to meet with Magoffin officials to discuss the issue of a safe and adequate water supply.
Magoffin County, in Eastern Kentucky, has had water supply problems for years.
The problems came to a head in the fall of 2008, when the supply was extremely low for weeks.
The Licking River, the main source of water for Salyersville and Magoffin County, stopped flowing because of a drought that gripped the region. Residents were asked to use water only for health and sanitary purposes. School children filed through lunch lines with paper plates and cups instead of their usual washable lunch trays and plates.
Local officials asked Gov. Steve Beshear to declare an emergency. Lexington-based Kentucky American Water sent in a 1,000-gallon tanker truck filled with water. Anheuser-Busch, the maker of Budweiser beer, donated 4,000 cases of 12-ounce cans of water.
Shortly after that happened, the PSC launched an investigation. It included a hearing in 2009, with the final requests for information coming in last June.
The report on that investigation released Wednesday said that less than three weeks after the emergency was declared, Salyersville and Magoffin officials were denying there was a problem.
"If Salyersville had always provided adequate water to Magoffin District, as they claimed, there would have been no need to send the joint letter to the governor," the PSC said.
The PSC said it was troubled with the handling of $900,000 in state money to pay for a connection to the Paintsville water system. The connection was halted in 2007, just 48 feet short of completion.
The PSC said Magoffin water officials told the state the connection had been completed, and spent the rest of the money on other projects.
The PSC ordered Magoffin water officials to make the pipe to Paintsville "fully functional," to take steps to get water from the Morgan County Water District, and to get the required releases from Salyersville water officials to allow those other connections to happen.
The PSC noted Magoffin already had arranged for an emergency water supply from Prestonsburg.