Water Pollution

Pursuant to a congressional request, GAO reviewed: (1) the status of state efforts to develop State Revolving Funds (SRF) from Environmental Protection Agency (EPA) funds to finance construction of wastewater treatment plants; (2) key characteristics of SRF programs; and (3) issues concerning how certain requirements affect SRF ability to adequately meet the nation's wastewater treatment needs.

GAO found that: (1) states' efforts in developing their individual SRF programs varied; (2) all 50 states and Puerto Rico have developed their SRF statutory and administrative frameworks and have received at least one federal capitalization grant; (3) among the factors affecting states' rates for developing programs were their previous experience with revolving loan programs and their ability to secure state legislative authorization; (4) although states had a great deal of flexibility in setting up their funds, their use and structure of the funds were similar; (5) EPA expected greater diversity in SRF as states become more experienced with them, particularly with regard to financial management; (6) 40 states have supplemental programs to pay for ineligible costs and to assist disadvantaged communities that cannot afford a loan repayment; and (7) EPA and states identified several statutory and regulatory issues that could affect how efficiently and effectively SRF meet wastewater treatment needs.