United States
                       Environmental Protection
                     Office of Water
                     Washington, DC 20460
EPA 832-F-98-001
March 1998
Cleaning  Up Polluted  Runoff with  the
Clean  Water State Revolving Fund
What's In It For You?
 Based on the serious threats to water sources across the
country, EPA would like to see the SRF become a major
source of funding to address polluted runoff (nonpoint
source) problems. The 51 Clean Water State Revolving
Fund (CW-SRF) programs currently issue approximately
$3 billion in loans annually.  SRF loans are  issued at
below market rates  (0% to less than market), offering
borrowers significant savings over the life of the loan.

 In creating the CW-SRF, Congress ensured that it would
be able to fund virtually any type of water quality project,
including nonpoint source, wetlands, estuary, and other
types of watershed projects, as well as more traditional
municipal wastewater treatment systems.   The  SRF
provisions in   the Clean Water  Act  give  no more
preference to one category or type of project than any
                                  CW-SRF Buying Power
      The CW-SRF will invest 10% of its fund on
           polluted runoff projects by 2001
              --Clean Water Action Plan
Capacity of the CW-SRF
 The 51 SRF programs work like banks (each state and
Puerto Rico has one). Federal and state contributions are
used to capitalize or set-up the programs.  These assets
are used to make low-interest loans for important water
quality projects.  Repaid funds are then recycled to fund
other important water quality projects.

 The CW-SRFs have in excess of $24 billion in assets.
Currently, the SRFs are funding approximately $3 billion
in water quality  projects each year.  The funding  of
polluted runoff  projects  with  the  SRF is gaining
momentum.  Since 1989 the SRF program has funded
900 projects, investing more than $650 million  in
polluted runoff projects.

$1 .5

$ 3.0 Billion

                                      Nonpoint   Wetlands     CW-SRF Loan
                                       Source     Grants         Activity
                       Loans vs. Grants
                        Many people believe they would rather have a grant than
                       a loan.  Most state and local water quality officials are
                       more familiar  with  grants and,  consequently, many
                       misconceptions persist. In fact, a loan may be a better
                       deal. Why?

                       •First, No Cash Up-Front. Most grant programs require
                       significant cost shares (as much as 40% or more). An
                       SRF loan can cover 100% of project costs with no cash

                       •Second, Significant Cost Savings.  SRF loans provide
                       significant cost savings over the life of the loan. The total
                       cost of a 0% SRF loan will be approximately 50% less
                       than the same project financed by a commercial loan at
                       7.5%.  Additionally,  a 0% SRF loan is equivalent to
                       receiving a 50% grant (where the matching 50% is
                       financed at market rate).

                       •Third, Streamlined Federal Requirements. Financing
                       a  project  with an  SRF  loan  means  fewer  federal
                       requirements than with a federal grant. Plus, the 51 CW-
                       SRF programs are  experienced in helping applicants
                       through the loan application process and providing  a
                       variety of technical assistance. Also, it may be possible
                       to combine an  SRF loan with grant dollars from  other

sources.  Check with your state.
Who May Qualify
  Included in a long list of eligible loan recipients are
communities, individuals, citizens groups, and nonprofit
organizations. Since the program is managed largely by
the states, project eligibility may vary according to the
priorities within each state.  Contact your state's  SRF
program for details.

Polluted Runoff and the SRF
 Polluted runoff occurs when rainfall, snowmelt, or
irrigation runs over land or through the ground, picks up
pollutants, and deposits them into  surface  or ground
water.  For instance, polluted runoff from agricultural
sources is  the leading contributor to water quality
impairments in rivers, degrading over 60% of impaired
river miles.
 The CW-SRF can fund virtually any type or category
of polluted runoff that is included in a state approved
NFS management plan.

Here are a few examples of possible projects:
•4      Implementation   of  agricultural   BMPs  to
        prevent and reduce runoff
               • conservation tillage equipment
               • soil erosion controls
•4      Animal waste facilities
               • manure storage facilities
               • dead chicken composters
•4      Rehabilitation of streambanks, riparian
        corridors and buffers
•4      Stormwater  management  facilities  including
        sediment basins and constructed wetlands
•4      Septic system improvements and replacement

Sources of Repayment
 Many users of the CW-SRF have demonstrated a high
level of creativity in developing sources of repayments.
The source of repayment need not come from the project
itself.  Some possible sources include:
•       Property owner's or business's ability to pay
        (determined during loan application)
•       Dedicated portion of local, county, or state taxes
         or fees
•       Recreational fees (fishing license, park entrance
•       Stormwater management fees, wastewater user
•       Donations or dues made to nonprofit groups
Challenges Ahead
  We  need to make better use of the CW-SRF  for
important water quality projects. Greater understanding
of the tremendous buying power and advantages of SRF
loans should dramatically boost their use.
   How to Get More From the CW-SRF

  -       Share information on polluted runoff
         priorities with SRF managers
  •       Work to enhance SRF programs to include
         funding of polluted runoff projects
  •       Become involved in the annual SRF
         planning and priority setting process
  •       Help market the program and encourage
         loan applications
 The water quality community needs to work together to
increase  understanding of polluted runoff issues and
facilitate the use of the powerful resources of the SRF to
address these significant problems.
 EPA has been encouraging the states to open their SRFs
to the widest variety of water quality projects and to use
their SRFs to fund the highest priority projects in targeted
watersheds.   Those interested  in cleaning  up polluted
runoff  must  seek out their  SRF programs, gain an
understanding of how their  state program works, and
participate in the annual process that determines which
projects are funded.
  For more information, contact your Clean Water
 State Revolving Fund Program (listed on Internet)
                    or contact::
    The Clean Water State Revolving Fund Branch
        U.S. Environmental Protection Agency
         401 M Street, SW (Mailcode 4204)
              Washington, D.C. 20460
     Phone: (202) 260-7359  Fax: (202) 260-1827
     Internet: http://www.epa.gov/OWM/finan.htm