United States

Environmental Protection

Agency

Office of Water

(4204)

EPA-832-R-01-002

March 2001

Integrated Planning and

Priority Setting in the

Clean Water State

Revolving Fund Program
March 2001

Integrated Planning

and Priority Setting

in the Clean Water

State Revolving

Fund Program
I. Introduction ..........................................................................................................2

II. Integrated Planning and Priority Setting ............................................................4

A. Overview ..........................................................................................................4

Identifying water quality priorities..................................................................4

Assessing the CWSRF role ..............................................................................4

Undertaking outreach efforts ..........................................................................4

Selecting priority projects ................................................................................5

B. Identifying Water Quality Priorities ................................................................5

Water quality information sources ..................................................................5

Using water quality information to establish priorities ................................8

C. Assessing the CWSRF Role ............................................................................8

D. Undertaking Outreach Efforts ........................................................................9

A comprehensive example ..............................................................................9

Targeted outreach efforts................................................................................10

E. Selecting Priority Projects ..............................................................................10

Integrated ranking systems............................................................................10

Establishing a draft ranking system ..............................................................11

Goal-based ranking systems..........................................................................15

Testing a project ranking system ..................................................................16

III. Development Processes for Integrated Planning

and Priority Setting Systems ..............................................................................17

Stakeholder involvement ..............................................................................17

Development timeline....................................................................................17

Cost ................................................................................................................18

IV. Conclusion ..........................................................................................................19

Appendix A: State Project Ranking Systems ..........................................................20

Table

of

Contents
Integrated Planning and Priority Setting

The Clean Water State Revolving Fund

(CWSRF) has implemented $26.1 billion in water quality improvement

projects since 1987. This state-run

program has greatly reduced point

source pollutants entering the nation’s

waters from municipal wastewater systems, and in recent years it has been

increasingly effective in addressing

polluted runoff from a variety of nonpoint sources. Through June 30, 2000,

state CWSRF programs have made

more than 2,100 loans for more than

$1.1 billion–which have funded more

than 9,000 nonpoint source and estuary projects.

The Clean Water Act stipulates that

states may use CWSRF funds for the

construction of publicly owned wastewater treatment systems, the implementation of nonpoint source management plans, or the development

and implementation of estuary comprehensive conservation and management plans. As part of the project

selection process, states are required to

rank potential municipal treatment

projects in priority order. States are

not required to include nonpoint

source and estuary projects on this

project priority list. Nor are states

required to select the highest priority

projects from this list for inclusion in

each year’s Intended Use Plan for

CWSRF funds.

As states began lending to a wide variety of nonpoint source and estuary

projects, some states wished to fund

projects with a primary purpose other

than water quality protection. For

example, some wished to fund new

municipal solid waste disposal facilities. Elements of these solid waste

disposal projects may protect water

quality, but their primary purpose is

waste disposal.

To address this issue, a state/EPA

workgroup engaged in a year-long dialogue to consider how states could

evaluate their environmental priorities

and develop an integrated list of priority projects appropriate for CWSRF

funding. The Clean Water State

Revolving Fund Funding Framework:

Funding to Solve Our Nation’s Water

Quality Problems (EPA 832-B-96-005,

October 1996) referred to hereafter as

the Funding Framework, outlines the

resulting policy and recommendations

of the workgroup.

The Funding Framework requires that a

state use an integrated planning and

priority setting system if it intends to

fund nontraditional projects (projects

with a primary purpose other than

water quality). As part of this agreement, if a state funds nontraditional

projects, it must offer funding to all

projects based upon their priority ranking. EPA does not require that a state

fund projects in strict priority order, but

funding decisions must be consistent

with this ranking. Despite the Funding

Framework’s focus on nontraditional

projects, it encourages all states that

fund nonpoint source and estuary projects to integrate their planning and priority setting systems–so that CWSRF

2

I.

Introduction
funds can most effectively target the

nation’s water quality problems.

The Funding Framework includes two

examples of integrated planning and

priority setting systems designed by

the state/EPA workgroup. Both examples are very similar, but diverge in the

method proposed for selecting projects. One example uses a goals

approach to select projects; the other

uses an integrated ranking system

designed to equally evaluate municipal

wastewater, nonpoint source, and

estuary projects. A state may use

either of these methods or it may

develop its own approach.

Showing a strong commitment to

integrated planning and priority setting, EPA established a goal under the

Government Performance Results Act

that by 2001 seventeen states will

implement integrated planning and

priority setting systems. In 2000,

twelve states used integrated systems

to develop their CWSRF Intended Use

Plan (IUP) [Table 1]. Many states had

systems in development.

State systems vary in terms of content,

structure, and complexity. Several

states have completely redesigned

their planning and priority setting systems, while others have made more

modest changes. This document cites

state systems throughout and contains

each cited system in its entirety in

Appendix A.

This document will explore the integrated planning and priority setting

concept and the process by which

states have developed these systems.

It will not attempt to establish a model

system. However, it should serve as a

reference tool for states that are evaluating and/or modifying their planning

and priority setting systems.

The main body of the document

discusses four key activities in these

systems:

• Identifying water quality priorities

• Assessing the CWSRF role

• Undertaking outreach efforts

• Selecting priority projects

A final section of the document

describes how states have established

development processes for integrated

planning and priority setting systems.

This section includes information

about stakeholder participation, development timelines, and resource

requirements.

Introduction

3

California

Delaware

Maryland

Montana

Nebraska

Nevada

New Jersey

New Mexico

New York

Ohio

Rhode Island

Washington

Table 1.

States with Integrated Planning

and Priority Setting Systems
Integrated Planning and Priority Setting

A. OVERVIEW

An integrated planning and priority

setting system is effective if it ensures

that CWSRF-funded projects address

high priority water quality problems.

Four actions are key to its success:

identifying water quality priorities,

assessing the CWSRF role, undertaking outreach efforts, and selecting priority projects.

Identifying water quality priorities

Water quality priorities provide a context for the activities of the CWSRF

program. CWSRF resources should

address these priorities in the most

efficient manner possible. State water

quality priorities also provide a valuable standard against which a state can

measure the success of its water quality programs, i.e., has the state used its

resources to address its highest water

quality priorities?

A state’s water quality program should

be the CWSRF’s major resource in

identifying the state’s water quality

priorities. A water quality program has

typically developed its understanding

of the state’s priorities by considering

water quality information from many

sources. Familiarity with these sources

of water quality information is also

useful to the CWSRF during the development of project ranking systems.

Assessing the CWSRF role

The CWSRF is one funding source of

many available to each state for water

pollution control. A state must determine the CWSRF’s role in addressing

the state’s water quality priorities. This

assessment will help to direct CWSRF

outreach efforts and project selection.

It will also enable the state to measure

the program’s success.

Undertaking outreach efforts

Outreach efforts are an often-overlooked component of integrated planning and priority setting systems.

Outreach efforts enable a CWSRF pro4

II.

Integrated

Planning

and Priority

Setting

Identifying

Water

Quality

Priorities

Assessing

the

CWSRF

Role

Undertaking

Outreach

Efforts

Selecting

Priority

Projects

Key Actions in an

Integrated Approach
gram to ensure that it attracts high priority projects. Finely crafted priorities

and ranking systems will only enable a

state to address its highest priority

water quality issues if the program has

attracted appropriate projects to the

program.

Many CWSRF programs have targeted

geographic areas and threats to water

quality in their outreach efforts. Some

have partnered with other state programs to more effectively recruit high

priority CWSRF projects.

Selecting priority projects

After a state has established water

quality priorities, defined the CWSRF

role, and developed a promising pool

of applicants, it then selects its highest

priority projects. As mentioned previously, the Funding Framework suggests

two methods of selecting projects–one

uses a goals approach, and the other

uses an integrated ranking system

designed to equally evaluate municipal

wastewater, nonpoint source, and

estuary projects. A state may use

either of these suggested methods to

select projects for its IUP or it may

develop its own method. To date, all

but one of the twelve states with integrated planning and priority setting

systems have chosen to prioritize projects with an integrated ranking system. If a state uses an integrated

ranking system, EPA does not require

that the state fund projects in strict

priority order. Funding decisions

should, however, be consistent with

this ranking.

B. IDENTIFYING WATER

QUALITY PRIORITIES

States have a variety of information

sources available for assessing their

water quality priorities. When establishing water quality priorities, states

use these information resources to

determine the location of the greatest

water quality problems, the causes of

those problems, and suitable actions

to address those problems. Later in

the planning and priority setting

process (see Section II(E): Selecting

Priority Projects), states will use these

same sources of water quality information to select projects for funding.

This section of the document highlights some of the most common

sources of water quality information.

Water quality information sources

Unified Watershed Assessments

and Watershed Restoration Action

Strategies

www.epa.gov/owow/uwa

The Clean Water Action Plan asked

states to coordinate with stakeholders

at all levels and develop an overall

statement of water quality. This

Unified Watershed Assessment (UWA)

brings together a broad array of existing information and assesses state

water quality to identify where

restoration activities and funding can

be most effectively targeted. Each

UWA divides a state’s watersheds into

four categories:

I. Restoration Needed–

watersheds needing additional

action to help meet clean waters

and other natural resource goals 

II. Meeting Water Quality Goals–

these watersheds still may need

preventive action to sustain water

quality and aquatic ecosystem

health

III. Pristine or Sensitive–

watersheds on federal land that

may need an extra measure of

protection.

IV. Insufficient Information–

not enough information is available

to make an assessment.

Integrated Planning and Priority Setting

5

Unified Water Assessment–Texas

Restoration Needed–Highest Priority

Restoration Needed

Meeting Water Quality Goals

Pristine or Sensitive

Insufficient Information

UWA Classifications
Integrated Planning and Priority Setting

States further identified a subset of

their Category I watersheds as priorities for watershed restoration. States

and tribes have been working with

federal, interstate, and local agencies,

watershed-based organizations, and

the public to develop watershed

restoration action strategies for these

watersheds. The watershed restoration

action strategies will provide plans for

addressing water quality problems in

each priority watershed.

National Water Quality Inventory

(Section 305(b) Report) 

www.epa.gov/305b

Section 305(b) of the Clean Water Act

requires each state to monitor and

assess all of its waters and report this

information to Congress every two

years. States do not use identical survey methods and criteria to assess

water quality, but they generally use

four types of water quality standards:

designated beneficial uses (e.g., fishable and swimmable), numeric water

quality criteria (e.g., measures of phosphorus, species richness), narrative

water quality criteria (e.g., free of substances toxic to humans, aquatic life,

and wildlife), and anti-degradation

statements (e.g., waters should be protected from water quality deterioration). States survey the health of surface waters, groundwater, and, in a

growing number of states, wetlands.

The state reports identify waters meeting and not meeting standards, and

EPA uses the reports to develop the

National Water Quality Inventory

Report to Congress. State 305(b)

reports are based upon a comprehensive collection of a state’s water quality

data and are therefore an invaluable

source of information for water

resource prioritization.

List of Impaired Waters (303(d)

List) and TMDLs 

www.epa.gov/owow/tmdl

The section 303(d) list is a prioritized

list of waters not meeting water quality

standards. In these priority waters,

point source, technology-based limits

are not sufficient to restore and protect

water quality. The 303(d) list will indicate how these waters are impaired,

and the sources of those impairments.

The list is developed by states every

two years.

A state is required to establish a Total

Maximum Daily Load (TMDL) framework for each of its listed waters. In

the TMDL process, the state calculates

the maximum amount of a pollutant

that a listed water can accept and still

6

1998 §305(b) Report–Minnesota

80%-100% Meeting All Uses

50%–79% Meeting All Uses

20%–49% Meeting All Uses

0%–19% Meeting All Uses

Insufficient Assessment Coverage

Basin Boundaries

(USGS 8-Digit Hydrologic Unit)

Percent of Assessed Rivers, Lakes, and

Estuaries Meeting All Designated Uses

1998 List of Impaired Waters–Oregon

Sedimentation

Nutrients

Pathogens

Multiple*

Other**

8-digit USOS Cataloging Units

Legend

* Any combination of sediments, nutrients,

and pathogens

** All other causes
meet water quality standards, and

then distributes that amount to the

pollutant’s sources. Priority on the

303(d) list is given to waters most in

need of TMDL development.

National Water Information Survey

www.water.usgs.gov

The U.S. Geological Survey’s National

Water Information System (NWIS) is a

comprehensive database for information on quantity and quality of surface

and ground water. The system contains

flow data from over 10,000 current and

historic streamflow gauging stations,

and water-quality data from over 3.5

million analyses. Sampling sites have

been selected for a variety of reasons;

their conditions range from pristine to

contaminated. This variation can present a challenge when trying to use

NWIS data to develop an overall picture

of water quality.

Natural Resources Inventory

www.nhq.nrcs.usda.gov/NRI

The Natural Resources Inventory (NRI)

is a compilation of natural resource

information on nonfederal land in the

United States–nearly 75 percent of the

total land area. Conducted by the

Natural Resources Conservation

Service (NRCS), this inventory captures data on land cover and use, soil

erosion, prime farmland, wetlands,

habitat diversity, selected conservation

practices, and related resource attributes at more than 800,000 scientifically

selected sample sites.

The NRI provides a record of trends in

natural resources over time and documents conservation accomplishments

as well. At each sample point, information is available for 1982, 1987,

1992, and 1997, so that trends and

changes in land use and resource

characteristics over a 15-year time

period can be examined and analyzed.

Nonpoint Source Assessment

Reports and Management Programs

(Section 319)

Section 319 of the Clean Water Act

requires that each state address nonpoint source pollution by developing

nonpoint source assessment reports

that identify nonpoint source pollution

problems and the nonpoint sources

responsible for those problems. States

are also required to adopt management programs to control the identified nonpoint source pollution.

In 1997, state and federal representatives of the nonpoint source program

identified nine key elements of

enhanced state programs. Element

number five stated that a state program should review currently available

information and identify waters

impaired or threatened by nonpoint

source pollution. The program should

also identify the primary categories of

nonpoint source pollution causing the

water quality impairments and threats.

At five-year intervals, the state should

update the identification of waters and

their watersheds impaired or threatened by nonpoint source pollution–

preferably as part of a comprehensive

state water quality assessment that

integrates reports required by sections

319(a), 305(b) (National Water Quality

Inventory, above), 303(d) (List of

Impaired Waters, above), 314(a) (Clean

Lakes Program) and 320 (National

Estuary Program, below) of the Clean

Water Act. To date, 46 states have

developed enhanced programs.

National Estuary Program

Comprehensive Conservation and

Management Plans (CCMPs)

Each National Estuary Program (NEP)

is charged with creating and implementing a CCMP that addresses all

aspects of environmental protection

for the estuary. In each NEP, a broadbased coalition of stakeholders develops a CCMP on the basis of a scientific

characterization of the estuary. The

CCMP establishes priorities for action,

research, and funding, and serves as a

blueprint to guide future decisions and

activities related to the estuary.

Index of Watershed Indicators 

www.epa.gov/iwi

The Index of Watershed Indicators

(IWI) is a compilation of information

on the condition of aquatic resources

in the United States. The IWI uses

data from several EPA programs, from

the U.S. Department of Agriculture,

the National Oceanic and Atmospheric

Administration, the U.S. Geological

Survey, the U.S. Army Corps of

Engineers, The Nature Conservancy,

and states, tribes, and other jurisdictions. The IWI is updated periodically.

Integrated Planning and Priority Setting

7
Integrated Planning and Priority Setting

Sixteen indicator maps and an overall

characterization map show the condition and vulnerability of each of the

nation’s watersheds. For example,

data from the National Water Quality

Inventory regarding designated use

attainment illustrates watershed conditions, and data regarding population

growth and agricultural runoff potential illustrates watershed vulnerability.

Other data sources

States have a variety of other water

quality data sources at their disposal,

many of which are maintained in EPA’s

STORET database. Chemical and bacterial monitoring of waterbodies is

most common. Other efforts monitor

bottom sediments, fish and macroinvertebrate tissue, or biological integrity. Field assessments of lakes, ponds,

and wetlands may contain valuable

information. Human health concerns

such as fish consumption advisories,

shellfish bed closures, drinking water

advisories and septic system failures

are also commonly tracked. Many of

these other data sources will prove

particularly useful when the state

selects priority projects for funding.

Using water quality information

to establish priorities

In establishing priorities, CWSRF programs must be adaptive to the realities

of their state water quality assessments. A comprehensive Unified

Watershed Assessment, taken together

with Watershed Restoration Action

Strategies for a state’s priority watersheds, would provide an ideal blueprint for addressing a state’s water

quality problems. This legacy of the

Clean Water Action Plan will eventually provide complete information about

each state’s water quality priorities.

However, many states may find that

these plans are not yet available.

Regardless, each state’s Unified

Watershed Assessment provides a

starting point–at a minimum, it identifies watersheds that the state has

deemed high priorities for restoration

or protection. A state may choose to

use TMDL priority (from a state’s

303(d) list) or the comprehensive state

map from the Index of Watershed

Indicators in a similar fashion.

States can go further to gain a more

complete understanding of the threats

to water quality in these watersheds. A

state’s section 305(b) report examines

water quality concerns statewide and in

individual stream segments. Other

data sources provide a wealth of information about rivers, streams, groundwater sources, and wetlands. Reports

from nonpoint source and estuary programs also provide valuable information relevant to those specific issues.

Quoting or citing from this information, a state can develop a brief summary of its water quality priorities. This

assessment provides context for the

activities of a state’s water programs,

including the CWSRF program, and

provides a valuable standard against

which the state can measure the success of its water quality programs.

C. ASSESSING THE CWSRF ROLE

The CWSRF is one funding source of

many available to each state for water

pollution control. Other sources of

funding include EPA’s Nonpoint

Source Grant Program and HUD’s

Community Development Block Grant

(CDBG) program. At the Department

of Agriculture, the Environmental

8

Index of Watershed

Indicators–Pennsylvania

Better Water Quality

(Low Vulnerability)

Better Water Quality

(High Vulnerability)

Water Quality Problems

(Low Vulnerability)

Water Quality Problems

(High Vulnerability)

More Serious Water Quality

Problems (Low Vulnerability)

More Serious Water Quality

Problems (Low Vulnerability)

Data Sufficiency Threshold

Not Met

Legend
Quality Incentives Program (EQIP) of

the Natural Resources Conservation

Service and the water and waste disposal grant and loan programs of the

Rural Utilities Service (RUS) are two of

many programs that provide significant funding assistance. State-funded

grant and loan programs also complement this assortment of funding tools.

A state should not view its CWSRF

planning and priority setting system in

a vacuum–all of these funding programs collectively impact a state’s

water quality. A CWSRF program

should clearly identify its role in

addressing state water quality priorities. This understanding is critical in

marketing the CWSRF program, in

selecting projects for CWSRF funding,

and in assessing the success of the

CWSRF program.

The CWSRF role can be affected in a

number of ways. Many states have

state-funded grant and loan programs

that adequately address specific water

pollution issues. For example, a large

state-funded grant program targeting

dairy best management practices may

address a significant state need without funding assistance from the

CWSRF. Dairy BMPs would not be a

CWSRF priority, and the CWSRF

would not need to market the program

to dairy farmers. CWSRF resources

would target the state’s other water

quality priorities.

Other states have established a “onestop-shopping”concept for assistance

programs. A state may develop one

planning and priority setting system

(and one application) for all of its

water quality funding programs. The

state would then fund its highest priority projects with resources from the

most appropriate program or programs.

In a “one-stop-shopping”scenario, the

CWSRF-funded projects would not

always match up perfectly with the

state’s water quality priorities. This is

not a concern if the sum of projects

funded by the state’s water quality

programs are consistent with the

state’s water quality priorities.

Washington

Washington State provides an example

of this last concept. The state addresses its water quality problems with

funding from three sources: the section 319 grant program, the

Centennial Clean Water Fund program, and the state’s CWSRF program.

The Centennial Clean Water Fund program is a state-funded program that

offers both loans and grants for water

pollution control.

Washington has integrated the three

funding programs. Potential water

quality projects submit one application

to the Department of Ecology. The

state develops a single priority list

using a ranking system, and financial

staff decide how to appropriately allocate resources from the three funding

programs to the highest priority projects. Based upon this analysis, the

Department of Ecology develops an

offer list, and the projects have one

year to accept the funding.

D. UNDERTAKING OUTREACH

EFFORTS

Effective outreach efforts are crucial to

the success of an integrated planning

and priority system. Finely crafted priorities and ranking systems will only

enable a state to address its highest

priority water quality issues if the program has attracted applications for

appropriate projects. To ensure that

the appropriate projects receive funding, state CWSRF programs will likely

find it necessary to modify and expand

their outreach efforts.

State CWSRF programs have an established relationship with communities

as a source of funding for municipal

treatment projects. Most state CWSRF

programs do not have the benefit of a

similar relationship with communities

or individuals where the CWSRF has

been used as a source of funding for

nonpoint source projects. For this reason, an expanded approach to outreach is necessary.

A comprehensive example

Washington provides an excellent

example. The state’s CWSRF program,

in coordination with its nonpoint

source grant program and a third state

grant and loan program, uses a threepart approach to reach potential borrowers. First, the CWSRF program has

an excellent internet website. The

website contains a variety of up-todate information, including schedules,

application forms, application instructions, and places to find additional

information.

Integrated Planning and Priority Setting

9
Integrated Planning and Priority Setting

As a second step, the Department of

Ecology holds application workshops

in its four regions during the time

period when the CWSRF is soliciting

applications. In addition, the department holds additional workshops to

assist applicants with the development

of their applications. In these application development workshops, potential

applicants receive one-on-one assistance from Ecology staff.

Finally, the Washington Water Quality

Financial Assistance Advisory Council

advises the Department of Ecology on

subjects related to the state’s assistance

programs. The council’s membership

includes representatives of irrigation

districts, conservation districts, county

and city governments, Indian tribes,

citizen groups, the Rural Utilities

Service and the Natural Resources

Conservation Service. These representatives provide a valuable link to their

constituents–potential borrowers for

the CWSRF program.

Targeted outreach efforts

Ohio’s CWSRF program envisions an

outreach approach that works with the

state’s Total Maximum Daily Load

process to further target the state’s

highest priority waters. While this idea

is in an early stage of development, at

present Ohio’s CWSRF program works

informally with state water quality personnel to identify waters that are

impaired or threatened–and where

there are opportunities to positively

impact water quality. After identifying

the threats to these priority waters, the

state uses this analysis to target marketing efforts for the CWSRF.

In West Virginia, the CWSRF program

has attempted to target a significant

water quality problem identified in the

state’s nonpoint source management

plan–agricultural nonpoint source pollution. West Virginia’s CWSRF program has worked with the state’s Soil

Conservation Agency, local soil conservation districts, and banking institutions experienced with agricultural

lending to develop a CWSRF-funded

loan program that targets agricultural

nonpoint source pollution. The Soil

Conservation Agency, local soil conservation districts, and banking institutions

have prior relationships with the agricultural community that enables the

program’s outreach effort to be very

effective. A program that began as a

pilot project in five counties has been

expanded statewide with great success.

E. SELECTING PRIORITY

PROJECTS

The Funding Framework suggests two

methods of selecting projects: one uses

a goals approach, and the other uses

an integrated project ranking system

that addresses both point source and

nonpoint source pollution. To date,

twelve states are using integrated

planning and priority setting systems,

and eleven of the twelve have developed integrated ranking systems.

For this reason, much of the analysis in

this section will focus on the composition of integrated ranking systems.

Integrated ranking systems

When a state develops a ranking system, two broad questions should

define the thought process. What are

the advantages and disadvantages of

different types of ranking systems?

What type of system would be best

considering available data and other

constraints? The following section

will examine the first question. The

next will provide examples of state

ranking systems and how they use

available data.

Evaluating ranking system

features/characteristics

Integrated systems vary greatly. When

developing its ranking system,

Washington considered eight alternative models for ranking systems. Ohio

considered six. The following six features and characteristics highlight

some of the major differences among

ranking systems.

Single-track/multiple track scoring

Single-track scoring systems evaluate

all projects with the same criteria.

Multiple-track scoring systems evaluate

different types of projects on the basis

of different criteria. The majority of

ranking systems use single track scoring. However, some states use multiple-track scoring because scoring criteria that are very relevant to the value of

some projects may be irrelevant to the

value of others. For example,

Montana’s ranking system uses different criteria to evaluate surface water

pollution and groundwater pollution,

uses the same criteria to evaluate proj10
ect effectiveness, and uses different criteria to evaluate a small number of

issues specific to point source or nonpoint source projects. Ohio considers

very different criteria when considering

projects that affect groundwater, wetlands, or streams, rivers and lakes.

Best professional judgment

If staff must use their own judgment

in completing the annual priority

ranking, the ranking may require more

staff time, be subject to inconsistency,

be less transparent to the public, and

appear partial. However, staff expertise may provide information not easily

quantified and a more accurate assessment of project priority. Rhode Island

chose to avoid the use of staff judgment in the annual ranking process.

Conversely, Montana’s system requires

staff to award points (within guidelines) in assessing water quality

impairment and a project’s effectiveness in addressing that problem.

Reserves

A ranking system may reserve funding

for some of its highest priority water

quality needs. This ensures that priority projects are encouraged to apply

and are then funded. For example,

West Virginia has reserved $3 million

in loan funding for projects that participate in its Agriculture Water Quality

Loan Program. Washington reserves

20 percent of its CWSRF funding for

nonpoint source and estuary projects.

Numerical/categorical scoring

Each project may be given a numerical

score or projects may be grouped into

priority categories. The majority of

ranking systems use a numerical scoring system. California and Nevada

use categorical systems. For example,

California divides all projects into five

broad classes for priority funding. The

state allocates CWSRF funding first to

Class A projects, then to Class B projects, and so on, until all available

funds are committed.

Priority watersheds/projects

A ranking system may place its

emphasis on impaired or threatened

watersheds and assign high priority to

projects that address pollution within

those watersheds. Conversely, a ranking system may prioritize projects

most likely to be effective in reducing

pollution, regardless of the watershed

affected. Most ranking systems consider both factors, but there are significant differences in emphasis.

Complexity

Ranking systems vary widely in complexity. A comprehensive system may

consume time and resources and be

confusing to the public. A simpler

system may be easy to implement,

inexpensive, and transparent to the

public, but it may not be as effective in

assessing the value of each project.

The categorical ranking systems used

in California and Nevada are relatively

easy to implement and understand.

Ohio’s ranking system is moderately

complex, as it can call upon a variety

of information sources to assess each

project’s priority. To address some of

the potential disadvantages of this

complexity, Ohio has automated a portion of the ranking process.

Establishing a draft ranking system

After assessing the advantages and

disadvantages of different types of

ranking systems, states have considered available data and established

ranking systems. While ranking systems vary widely in design, many have

attempted to measure three major factors: the value of the waterbody a project will address; the impairment or

threat to that waterbody; and the

effectiveness of the project in addressing the identified impairment or

threat. Other factors considered by

Integrated Planning and Priority Setting

11

Class A Public health problems

Class B Pollution of impaired waterbodies

Class C Compliance with requirements and water recycling projects

Class D Projects serving as preventative measures against additional water

quality degradation for impaired or unimpaired water bodies

Class E Other projects

California’s Categorical Ranking System
Integrated Planning and Priority Setting

states include planning considerations

and financial need. This section of the

document will provide examples of

how states have attempted to quantify

these factors in their ranking systems.

Water resource value

New York and Ohio take very different

approaches to measuring the value of

water resources. New York considers a

water resources’s public use, established by its state classification.

Ohio also values the public use of

water resources; projects that address

public health risks in drinking waters,

recreational waters, or fishing waters

receive highest priority. At a secondary

level, Ohio protects and remediates

high-quality ecosystems. For example,

Ohio prioritizes its rivers, streams,

inland lakes and Lake Erie with “aquatic life use designations”from state

water quality standards. Water

resources with the potential to support

a high diversity of aquatic organisms

are assigned a higher priority than

resources that can only support pollution-tolerant organisms. Ohio prioritizes wetlands in a different manner,

using information from a state wetland

assessment that notes wetland size,

diversity, and functionality.

Impairment/threat

A commonly used measure of waterbody impairment is its priority for

TMDL development. Both Montana

and Maryland, the examples in this section, assign a high value to waters that

are priorities for TMDL development.

Montana evaluates a waterbody’s

impairment on the basis of four factors: its priority for TMDL development; the number of classified uses

impacted by a particular source of pollution; the area impacted by the source

of pollution; and the period of time the

source of pollution impacts the waterbody. However, a waterbody’s priority

for TMDL development is by far the

most heavily-weighted factor.

Maryland evaluates surface water

impairments and threats with priorities

established by its 303(d) list and its

Unified Watershed Assessment.

12

Specially-protected high-quality drinking water and shellfish waters 8 pts

Other drinking water 6

Contact recreation 4

Other fishing 3

Other water uses 2

Impairment of environmental resource other than water 1

(For projects that have important non-water-quality impacts

such as odor, sludge disposal, etc.)

No resource is impaired 0

New York’s Water Resource Value Classification Factor

Total wetland area 0-8 pts

Wetland vegetation classes 0-10 

Plant species diversity 0-12 

Forested wetlands vertical structure diversity 0-5

Plant community interspersions 0-5

Habitat features 0-11

Wetland-stream water quality functions 0-8

Buffer features 0-6

Connection to other habitat areas 0-5

0-70

Ohio’s Wetland Resource Value Assessment
Maryland places higher priority on

restoration of impaired waters (TMDL

priorities, UWA category 1) than on

protection of threatened waters (UWA

categories 2 and 3).

Project Effectiveness

Ohio and Montana both attempt to

assess a project’s effectiveness in

addressing water pollution. Montana’s

measurement of this factor is very

simple. Montana’s staff must use its

best judgment to determine the likely

effectiveness of each project and

assign points according to an established scale.

Ohio’s assessment is more involved. It

considers two elements of project

effectiveness: the potential of the

waterbody for restoration, and the

likely effectiveness of a particular project in addressing the source of the pollution. The measurement of these elements varies by type of waterbody, but

the following examples show how

project effectiveness is considered in

stream segments.

Integrated Planning and Priority Setting

13

Unified Watershed Assessments

The State Unified Watershed

Assessments may be a useful tool in

evaluating projects. In completing a

Unified Watershed Assessment,

each state must consider both the

value of waters and the degree to

which they are impaired or threatened. Data from a comprehensive

Unified Watershed Assessment

could address both of these factors

in a project ranking system.

Surface water restoration

Project benefits a high priority TMDL waterbody 8 pts.

Project benefits a medium priority TMDL waterbody 6

Project benefits a low priority TMDL waterbody 4

Project indirectly addresses TMDL waterbody 2

Add 2 bonus points if project benefits Clean Water Action Plan

Category 1 Priority Watershed

Surface water protection

Project benefits a Clean Water Action Plan Selected

Category 3 Watershed 4 pts.

(“Selected”denotes a particularly pristine watershed)

Project benefits a Clean Water Action Plan Category 3 Watershed 2

Project benefits a Clean Water Action Plan Category 2 Watershed 1

Add 2 bonus points to projects that address a regional/local

watershed plan to benefit water quality

Maryland’s Assessment of Impairment/Threat (Surface Waters)

The project is expected to eliminate

all health hazards or restore the water

body to fully supporting all uses.

100% of points assigned for water

quality impairment

The project is expected to eliminate

some health hazards or restore

some of the uses for which the

water body is intended.

50% of points assigned for water quality impairment

The project is expected to reduce

health hazards or improve water

quality but will not fully restore

any uses.

25% of points assigned for water

quality impairment

The project is not expected to substantially improve water quality or

reduce health hazards.

0 points

Montana’s Assessment of

Project Effectiveness
Integrated Planning and Priority Setting

14

Part I–Stream Restoration Potential

Most restorable: extremely high or a fully attaining segment 8 pts.

Very high 7

High 6

Moderate-High 5

Moderate 4

Low-Moderate 3

Low 2

Very low 1

Essentially none 0

Intermediate Step–Pollution Source Ranking

High source 4 pts.

Moderate source 3

Threat 2

Slight source 1

Part II–Effectiveness of Action

71-100% 14 pts.

51-70% 12

41-50% 10

31-40% 8

21-30% 6

11-20% 4

1-10% 2

0% 0

Ohio’s Assessment of Project Effectiveness

In a hypothetical example, a nonprofit organization applies to Ohio’s

CWSRF for funding to purchase a

conservation easement along a

high-quality stream segment.

Ohio’s 305(b) report states that the

affected stream segment has a high

restoration potential. This adds 6

points to the project’s score.

The 305(b) report also states that the

stream segment is impacted by

runoff from nonirrigated crop production (high source–4 points),

runoff from feedlots (high source–4

points), and urban runoff (threat–2

points). The project will completely

address runoff problems from an

adjacent farm, but will not address

the threat of urban runoff from a

nearby housing development

(receiving 8 of the available 10

points). The project addresses 80

percent of the stream segment’s

sources of impairment and therefore

adds 14 points to its score.

Total points related to project

effectiveness:

6 points (restoration potential) + 14

points (effectiveness of action) = 20 pts.

Ohio’s Assessment of Project

Effectiveness: Example
Ohio’s 305(b) report rates stream segments based upon the likelihood that

aquatic life can be restored to a condition comparable to minimally impacted reference streams. This restoration

potential rating gives highest priority

to unaffected or highly restorable

water resources and lowest priority to

the least restorable water resources.

Ohio also considers the likely effectiveness of a project restoring a stream

segment. Ohio considers the sources

of impairment or threats to impairment and the degree to which the

project will address those sources.

Ohio’s 305(b) report identifies the

sources of threat and impairment for

each stream segment, and rates each

source either as a high, moderate or

slight source of impairment, or as a

threat. These ratings are converted

into points, but these points are not

used in the overall project ranking

score. Instead, these points are used

as an intermediate step in developing

an effectiveness of action score.

For each stream segment, these points

are summed and then divided by a

total of points for sources that the

project will address. If the project

does not completely address the

source, it receives partial values. This

percentage is converted into a point

value for the project ranking system.

Other Considerations

States may evaluate planning considerations and financial need in their

ranking systems. Both New York and

Washington assign priority to projects

that are consistent with local, state,

and federal planning efforts. New York

assigns twenty points (out of 317 overall) to projects that address problems

discussed in an approved watershed

management plan, the state’s nonpoint

source management plan, or a county’s

water quality strategy. The ranking

system assigns ten additional points to

projects that are consistent with a second group of water quality plans,

including the Peconic Estuary CCMP,

the New York City Watershed

Memorandum of Agreement, and the

Lake Champlain Management Plan.

Washington assigns points to projects

that are consistent with specific recommendations in a variety of recent

planning efforts: regional plans such as

the Puget Sound Action Plan or the

Interior Columbia Basin Ecosystem

management plan; local watershed

management plans; or sewer system

and stormwater comprehensive plans.

Projects may receive up to thirty points

(out of 1000 overall)–projects receive

points depending upon their degree of

consistency with these planning efforts.

Washington also allows local watershed groups to assign bonus points to

priority projects as determined by a

comprehensive and stakeholder-inclusive planning effort. Projects may

receive five to one hundred bonus

points in this fashion.

New York also considers financial need

in the ranking process. The state

assigns ten points to projects in communities with a Median Household

Income (MHI) that is below the

statewide MHI. This weighting

attempts to prioritize projects that

would not be completed without

CWSRF assistance.

Integrated Ranking System Summary

The factors examined in this section

are not the only ones used in project

ranking systems. However, taken

together, water resource value, water

resource impairment or threat, and

project effectiveness provide a reasonable measure of a project’s expected

effect on water quality. A state can

confirm and reinforce this initial

assessment by rewarding consistency

with other water quality planning

efforts. By considering financial need,

a state may ensure that CWSRF funding is targeted to projects that most

need the assistance.

Goal-based ranking systems

Although it has not been fully implemented in any state, the goals approach

described in the Funding Framework is

another viable option for project selection. A goals approach suggests that a

state CWSRF program establish specific

goals for targeting its available

resources–based on the state’s assessment of its water quality priorities and

its assessment of an appropriate

CWSRF role in addressing those priorities (as discussed in Section II(A-B)).

For a goals approach to be effective, it

should clearly target funding goals for

Integrated Planning and Priority Setting

15
Integrated Planning and Priority Setting

specific water quality problems. For

example, targets could be established

for nutrient reduction, habitat protection, or wetland restoration. These targets might specify funding goals (e.g.,

5 percent of available funds to address

nutrient and sediment runoff from

agricultural operations) or performance objectives (e.g., a 50 percent

reduction in the number of failing septic systems). These goals might address

statewide concerns or be targeted to

specific high-priority watersheds.

A state CWSRF program would then

select projects for its Intended Use

Plan that will help to achieve these

program goals. These selections might

also reflect considerations such as

cost-benefit analyses or assessments of

borrowers’ creditworthiness.

Delaware

Delaware uses a project ranking system that has many similarities to that

used by the Funding Framework’s

goals approach. The state’s nonpoint

source management plan identifies

nonpoint sources as a significant cause

of the state’s water quality problems.

For this reason, each year Delaware

considers using approximately 20 percent of its available CWSRF funding

for projects that address nonpoint

source pollution. Delaware establishes

reserve levels each year at the same

time that it prioritizes wastewater projects.

The state has developed programs that

target homeowners with failing septic

systems, poultry producers, dairy producers, and owners of leaking underground storage tanks. These programs

help to identify revenue streams that

can ensure the repayment of CWSRF

loans to private borrowers. Since

1994, Delaware has used more than six

percent of its funds to address nonpoint source pollution. The state has

funded 559 projects at a cost of more

than $4.9 million.

Testing a project ranking system

Once a state has developed a draft

ranking system, it typically tests the

system to determine the effectiveness

of the new design. States have

approached this task in different ways.

Because Ohio has funded a great variety of point source and nonpoint

source projects in its CWSRF program,

the state was able to select a wideranging sample of completed projects

and re-evaluate their applications with

the draft integrated ranking system.

Rhode Island does not have a similar

breadth of experience lending to nonpoint source projects. Therefore, staff

developed a variety of hypothetical

projects and evaluated them with the

draft system.

When analyzing the results, states are

able to investigate a number of questions: 

Where are the data incomplete? Ohio

found that a draft method of assessing

human health risks was difficult to

implement because of incomplete data.

Where are the data ineffective in capturing a project’s value? Ohio discovered that data sources in a draft system

were ineffective in assessing the value

of projects impacting the Ohio River,

Lake Erie, and Ohio’s inland lakes.

What factors in the ranking system are

inappropriately weighted? Rhode

Island found that a number of criteria

related to project planning favored

point source projects at the expense of

nonpoint source projects.

Can the system be consistently applied?

Washington found that its guidance for

project evaluation enabled a variety of

staff to score projects in a very consistent fashion. In addressing this question, New York and Ohio have developed comprehensive scoring handbooks showing how a variety of projects would be scored in their systems.

Testing is an important part of the

development process for an integrated

ranking system–it attempts to ensure

that a new system produces the

expected results. Most states have

made revisions to their ranking systems on the basis of this analysis.

Some have cycled through many periods of testing, analysis, and revision

before producing a final integrated

ranking system.

16
The previous section of this document

describes the integrated planning and

priority setting process in general, and

describes the systems designed by

states at the forefront of this innovation. This section will provide more

detail about a few aspects of the

development process: who should be

involved; how long does it take; and

how much does it cost?

Stakeholder involvement

As noted in this document’s overview

of the integrated planning and priority

setting process, an effective CWSRF

program is well integrated into a

state’s water quality program–the projects funded by the CWSRF should

reflect the state’s overall water quality

priorities. For this reason, input from

a variety of state water program personnel is critical to the development of

a CWSRF integrated planning and priority setting system.

In addition to CWSRF engineering and

financial staff, states have included

representatives from a variety of programs to take part in the development

of integrated planning and priority setting processes, including the following:

• Watershed planning

• Nonpoint source pollution

• Estuaries

• Wetlands

• TMDLs

• Permits and enforcement

• Soil and water conservation

• Health

• Transportation

The public is the most important

stakeholder for any government program, and states have involved the

public in this development process in

many different ways. Interested parties often include elected officials,

municipal personnel, tribal personnel,

representatives of public interest

groups, engineering consultants, and

general citizens. For instance,

Washington included representatives

from these groups on its development

committee. Committee staff conducted further interviews to solicit input

from the public about an initial set of

alternatives. Using a different

approach, Ohio convened a public

advisory group–separate from its

development committee–to provide

input into its development process.

Finally, many states have used public

meetings to discuss proposed changes

to the CWSRF project selection process.

EPA is also a participant in the integrated system development process.

States often seek input from EPA

regional offices. Washington even

included an EPA representative on its

development committee.

Development timeline

The development timeline is quite

variable. However, this variation can

often be explained by a few considerations: project scope, system uniqueness, and political sensitivity.

The development timeline for an integrated system will depend greatly on

the size of the task that must be

Development Processes

17

III.

Development

Processes

for

Integrated

Planning

and Priority

Setting

Systems
Integrated Planning and Priority Setting

accomplished. For example, a state

with clearly defined water quality priorities, an aggressive CWSRF outreach

program, and state water quality data

that can be easily quantified into a

project ranking system will be able to

complete this project faster than a

state without those advantages. The

complexity of the system developed

also impacts the size of this task. For

example, in designing its project ranking system, a state that uses a few

major indicators of water quality will

be able to design its system much

more rapidly than a state that tries to

use its water quality data more comprehensively.

Historically, states have emulated successful aspects of other CWSRF programs. States using this form of benevolent plagiarism in developing their

integrated planning and priority setting

systems have been able to shorten their

development timelines. For example,

by using Rhode Island’s project ranking

system as a starting point for its own

efforts, Maryland was able to develop

its system quite efficiently.

Many of the states that have developed integrated planning and priority

setting systems currently have funding

available for any eligible water quality

project–although funding shortfalls

may be expected in the future.

Because a revised planning and priority setting process does not threaten

the availability of project funding in

those states in the near future, the

development process has been relatively free of political tensions. In

other states, changes to the planning

and priority setting system will likely

affect the list of projects selected for

funding in the coming year. In those

states, the development process may

be slowed down considerably. For

example, Washington has dramatically

changed the system that it uses to

select projects for its priority list twice

in recent years.

As mentioned earlier in this document,

most states have focused their efforts

on revising their project ranking systems. Due to the variation in the

states’ situations, these efforts have

been completed in different periods of

time. For some states, this process has

been completed in a few months. For

others, a major revision has required a

year and a half of effort.

Cost

The major cost associated with the

development of an integrated planning

and priority setting system is staff

time. As with the development timeline, the cost of this effort is largely

dependent on the scope of the development process. Some states that

have developed integrated project

ranking systems were able to complete

these revisions largely through the

effort of one employee working parttime on the project for a few months.

Montana spent less than $10,000 revising its system. Others have accessed a

wide range of staff for longer periods

of time. Ohio spent about $80,000

developing an integrated project ranking system.

18
Twelve states are using integrated planning and priority setting systems in

their CWSRF programs. The planning

and priority setting systems vary widely–

therefore, this document does not

attempt to show a “model”system. It

does attempt to show some of the common issues that states have addressed

in the development of integrated planning and priority setting systems.

This document shows how states have

attempted to accomplish the four key

actions of an integrated planning and

priority setting system: identifying

water quality priorities; assessing the

CWSRF role; undertaking outreach

efforts; and selecting priority projects.

The innovation that characterizes these

state efforts provides examples that

will spur further innovation as states

continue to revisit their planning and

priority setting systems.

However, despite this great variety

among states, a state can evaluate the

success of its planning and priority

setting system with ease. A system is

effective if CWSRF projects help a

state address its highest water quality

priorities.

Conclusion

19

IV.

Conclusion
Integrated Planning and Priority Setting

CALIFORNIA

The following excerpt from California’s

“Policy for Implementing the State

Revolving Fund for the Construction of

Wastewater Treatment Facilities,”

amended in June 1998, describes the

ranking system that the State Water

Resources Control Board uses to select

projects for funding. As noted on page

10 above, California uses a categorical

scoring system to integrate stormwater, nonpoint source, and estuary projects with wastewater treatment plants.

All projects are divided into five broad

classes, and the classes are funded in

priority order. This type of ranking

system is relatively easy to implement

and to understand.

20

Appendix A.

State

Project

Ranking

Systems
Appendix A

21
Integrated Planning and Priority Setting

22
Appendix A

23
Integrated Planning and Priority Setting

24
MARYLAND

Maryland uses the following score

sheet to rank projects for CWSRF

funding. This numerical scoring system

is highlighted on page 13 in the text as

an example of a scoring system that

considers waterbodies’ TMDL priority

(from the state’s List of Impaired

Waters (303(d) list)) and Unified

Watershed Assessment category.

Appendix A

25
Integrated Planning and Priority Setting

26
Appendix A

27
Integrated Planning and Priority Setting

MONTANA 

Montana uses the following ranking

system to select projects for CWSRF

funding. This numerical scoring system is noteworthy for two main reasons. First, Montana’s ranking system

initially uses different tracks to assign

points to surface water projects and to

groundwater projects (noted on page

12, above). Second, Montana’s ranking system requires water program

staff to quantify each project’s expected effectiveness (highlighted on page

13, above).

28
Appendix A

29
Integrated Planning and Priority Setting

30
Appendix A

31
Integrated Planning and Priority Setting

32
Appendix A

33
Integrated Planning and Priority Setting

34
Appendix A

35
Integrated Planning and Priority Setting

NEW YORK 

New York uses the following scoring

criteria to rank projects in its CWSRF.

New York’s system is highlighted in the

text on page 12 to demonstrate a

method of considering a waterbody’s

resource value. This ranking system is

also noted in the text on page 15

because it awards points to projects

based on “other considerations”— a

community’s financial need and a project’s consistency with local, state, and

regional planning efforts.

36
Appendix A

37
Integrated Planning and Priority Setting

38
Appendix A

39
Integrated Planning and Priority Setting

40
Appendix A

41
Integrated Planning and Priority Setting

42
Appendix A

43
Integrated Planning and Priority Setting

OHIO 

The following excerpt, taken from the

Ohio Water Pollution Control Fund

FY2000 Final Program Management

Plan, describes the state’s project ranking system. Ohio’s project ranking

system is mentioned many times in

the above text. As noted on page 12,

Ohio uses different scoring systems

when considering projects that affect

groundwater, wetlands, or streams,

rivers and lakes. The relative complexity of the ranking system is noted on

page 11. Ohio’s valuations of water

resource value provide examples for

the text on pages 12-13. Finally, pages

14-15 of the above text highlight

Ohio’s method for determining a project’s effectiveness.

44
Appendix A

45
Integrated Planning and Priority Setting

46
Appendix A

47
Integrated Planning and Priority Setting

48
Appendix A

49
Integrated Planning and Priority Setting

RHODE ISLAND

Rhode Island uses the following scoring system in its CWSRF program.

Rhode Island’s ranking system is highlighted in the text on page 11 because

implementation of the scoring system

does not require the use of staff judgment. For this reason, the ranking

process is consistent, requires very little

staff time, and is transparent to the

public.

50
Appendix A

51
Integrated Planning and Priority Setting

52
WASHINGTON

As Washington’s application also

serves as its scoring system (see following), each applicant should be

knowledgeable about how a project is

scored. Washington’s system is noted

on pages 9-10 in the text as an example of a system that considers a project’s consistency with other planning

efforts.

Appendix A

53
Integrated Planning and Priority Setting

54
Appendix A

55
Integrated Planning and Priority Setting

56
Appendix A

57
Integrated Planning and Priority Setting

58
Appendix A

59
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Appendix A

61
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Appendix A

63
Integrated Planning and Priority Setting

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Appendix A

65
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66
Appendix A

67
Integrated Planning and Priority Setting

68
Appendix A

69