Water: Clean Water State Revolving Fund
How the CWSRF Program Works
With the passage of the Amendments to the Clean Water Act (CWA) in 1987, the U.S. Congress ushered in a new era in clean water financing. Under Title VI, the new CWA called for the replacement of the long-standing federal Construction Grants program with an innovative Clean Water State Revolving Fund (CWSRF) program. The CWSRF program is available to fund a wide variety of water quality projects including all types of nonpoint source, watershed protection or restoration, and estuary management projects, as well as more traditional municipal wastewater treatment projects.
Through the CWSRF program, each state and Puerto Rico maintain revolving loan funds to provide independent and permanent sources of low-cost financing for a wide range of water quality infrastructure projects. Funds to establish or capitalize the CWSRF programs are provided through federal government grants (click for federal funding levels) and state matching funds (equal to 20 percent of federal government grants). Today, all 50 states and Puerto Rico are operating successful CWSRF programs. Total funds available to the program since its inception exceed $77 billion.
CWSRF programs operate much like environmental infrastructure banks that are capitalized with federal and state contributions. CWSRF monies are loaned to communities and loan repayments are recycled back into the program to fund additional water quality protection projects. The revolving nature of these programs provides for an ongoing funding source that will last far into the future.
The CWSRF is a far more flexible program than its predecessor the Construction Grants program. Under the CWSRF, states have a wide range of options. States may choose from a variety of assistance options, including loans, refinancing, purchasing, or guaranteeing local debt and purchasing bond insurance. States can also set specific loan terms, including interest rates—from zero percent to market rate—and repayment periods—up to 20 years. States have the flexibility to target resources to their particular environmental needs, including contaminated runoff from urban and agricultural areas, wetlands restoration, groundwater protection, brownfields remediation, estuary management, and wastewater treatment.
States may also customize loan terms to meet the needs of small and disadvantaged communities. In 2009, 77 percent of all loans (23 percent of funding) were made to communities with populations less than 10,000. In addition, some states provide specialized assistance for communities that are disadvantaged or experiencing financial hardship. These states might offer lower or no-interest loans to provide greater subsidies for disadvantaged communities.
For more information about the progress and innovative uses of the CWSRF, see the report, Clean Water State Revolving Fund 2009 Annual Report. Additional information about the types of projects eligible for CWSRF funding is available from the many Fact Sheets and Other Publications. Specific examples of creative state uses of the CWSRF can be found under Local Successes and Innovations.