The U.S. Environmental Protection Agency says the American Samoa Power Authority loses up to 50 percent of its water through leaky pipes.
This is one of the findings in a recent sanitary survey of both village water systems and that provided by the utility.
The survey also found that water in some areas of American Samoa has high salt content, so encouraging people to drink untreated, and often e-coli contaminated, village water.
The EPA's Dean Higuchi says presence of e.coli is a sign of faecal contamination.
He says the activities of animals and humans at the surface, such as piggeries, cess pits, and stray dogs had contaminated many of the utility's wells, which is why a boil water notice was put in place.
The EPA says design limitations mean it's extremely difficult to perform maintenance, but Mr Higuchi says improvements need to be made to eliminate leaking pipes and the cross connection of pipes containing contaminated village water with the utility's pipes.