Waste discharges from municipal sewage treatment plants into inland and coastal waters are a significant source of water quality problems throughout the country. Pollutants associated with municipal discharges include nutrients (which can stimulate growth of algae that can deplete dissolved oxygen or produce harmful toxins), bacteria and other pathogens (which may impair drinking water supplies and recreation uses), and metals and toxic chemicals from industrial and commercial activities and households. The collection and treatment of wastewater remains among the most important public health interventions in human history and has contributed to a significant decrease in waterborne diseases during the past century. Funding these systems continues to be of interest to federal, state, and local officials and the general public. The Clean Water Act (CWA) establishes performance levels to be attained by municipal sewage treatment plants in order to prevent the discharge of harmful quantities of waste into surface waters and to ensure that residual sewage sludge meets environmental quality standards. It requires secondary treatment of sewage (equivalent to removing 85% of raw wastes), or treatment more stringent than secondary, where needed to achieve water quality standards necessary for recreational and other uses of a river, stream, or lake. Although the nation has made considerable progress in controlling and reducing certain kinds of chemical pollution of rivers since the 1972 CWA amendments, the U.S. Environmental Protection Agency (EPA) and others argue that continued infrastructure improvements are necessary to maintain and expand these achievements. The total population served by sewage treatment plants that provide a minimum of secondary treatment increased from 85 million in 1972 to 234 million in 2012, representing 74% of the U.S. population at that time. About four million people are served by facilities that provide less than secondary treatment, but, according to EPA, these facilities have CWA conditional waivers from the secondary treatment requirement. About 21% of households are served by on-site septic systems, not by centralized municipal treatment facilities. Despite improvements, other water quality problems related to municipalities remain to be addressed. A key concern is "wet weather" pollution: overflows from combined sewers (sewers that carry sanitary and industrial wastewater, groundwater infiltration, and stormwater runoff that may discharge untreated wastes into streams) and sanitary sewers (sewers that carry only sanitary waste). Untreated discharges from these sewers, which typically occur during rainfall events, can cause serious public health and environmental problems, yet costs to control wet weather problems are high in many cases. In addition, toxic wastes discharged from industries and households to sewage treatment plants cause water quality impairments, operational upsets, and contamination of sewage sludge. Although Congress has provided more than $104 billion in CWA assistance since 1972, funding needs for wastewater infrastructure remain high. According to the most recent estimate by EPA and the states, the nation's wastewater treatment facilities will need $271 billion over the next 20 years to meet the CWA's water quality objectives. This estimate includes $197 billion for wastewater treatment and collection systems, which represent 73% of all needs; $48 billion for combined sewer overflow corrections; $19 billion for stormwater management; and $6 billion to build systems to distribute recycled water. These estimates do not include potential costs, largely unknown, to upgrade physical protection of wastewater facilities against possible terrorist attacks that could threaten water infrastructure systems, an issue of significant interest since September 11, 2001. Needs for small communities represent about 12% of the total. The largest needs in small communities are for new conveyance systems (e.g., pipes), secondary treatment, system repair, and advanced treatment. Five states—New York, Pennsylvania, Kentucky, Texas, and Alabama—accounted for 30% of the small community needs. In addition to prescribing municipal treatment requirements, the CWA authorizes the principal federal program to support wastewater treatment plant construction and related eligible activities. Congress established this program in the Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500), significantly enhancing what had previously been a modest grant program. Since then, Congress has appropriated approximately $104 billion to support compliance with the act and achievement of the overall objectives of the act: restoring and maintaining the chemical, physical, and biological integrity of the nation's waters. Title II of P.L. 92-500 authorized grants to states for wastewater treatment plant construction under a program administered by EPA. Federal funds were provided through annual appropriations under a state-by-state allocation formula contained in the act. The formula (which has been modified several times since 1972) was based on states' financial needs for treatment plant construction and population. States used their allotments to make grants to cities to build or upgrade categories of wastewater treatment projects, including treatment plants, related interceptor sewers, correction of infiltration/inflow of sewer lines, and sewer rehabilitation. Amendments enacted in 1987 ( P.L. 100-4 ) initiated a new program to support, or capitalize, Clean Water State Revolving Funds (CWSRFs). States continue to receive federal grants, but now they provide a 20% match and use the combined funds to make loans to communities. Monies used for construction are repaid to states to create a "revolving" source of assistance for other communities. In FY1989 and FY1990, Congress provided appropriations for both the Title II and Title VI programs. The CWSRF program fully replaced the Title II program in FY1991. However, during the transition from Title II to Title VI, Congress began to provide earmarked water infrastructure grants to individual communities and regions. In subsequent years, the earmarked funds accounted for a significant amount of the total appropriation. General opposition to congressional earmarking stopped the practice in FY2011. Special project appropriations since that time have supported Alaska Native Village and U.S.-Mexico Border projects. Federal contributions to CWSRFs were intended to assist a transition to full state and local financing by FY1995. CWSRFs were to be sustained through repayment of loans made from the fund after that date. The intention was that states would have greater flexibility to set priorities and administer funding in exchange for an end to federal aid after 1994, when the original CWA authorizations expired. However, although most states believe that the CWSRF is working well today, early funding and administrative problems plus remaining funding needs (discussed below) delayed the anticipated shift to full state responsibility. Congress has continued to appropriate funds to assist wastewater construction activities. Figure 1 illustrates the history of EPA wastewater infrastructure appropriations in both nominal dollars and constant (2018) dollars. The increase in FY2009 is due to a $4.0 billion increase in supplemental funds under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). As the figure indicates, the funding level remained relatively stable during the past seven fiscal years. In both FY2016 and FY2017, Congress provided $1.394 billion for the CWSRF program. However, funding for the CWSRF program increased by about 22% in FY2018. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided $1.694 billion to the CWSRF program. The CWSRF program represented a major shift in how the nation finances wastewater treatment needs. In contrast to the Title II construction grants program, which provided grants directly to localities, CWSRFs are loan programs. States use their CWSRFs to provide several types of financial assistance to communities, including project construction loans made at or below market interest rates, refinancing of local debt obligations, providing loan guarantees, and purchasing insurance. States may also provide additional loan subsidies (including forgiveness of principal and negative interest loans) in certain instances. Loans are to be repaid to the CWSRF within 30 years beginning within one year after project completion, and the locality must dedicate a revenue stream (from user fees or other sources) to repay the loan to the state. States must agree to use CWSRF monies first to ensure that wastewater treatment facilities are in compliance with deadlines, goals, and requirements of the act. After meeting this "first use" requirement, states may also use the funds to support other types of water quality programs specified in the law, such as those dealing with nonpoint source pollution and protection of estuaries. The CWA identifies a number of types of projects and activities as eligible for CWSRF assistance. The Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121 ) amended the list by adding several projects and activities. The current list includes wastewater treatment plant construction, stormwater treatment and management, replacement of decentralized treatment systems (e.g., septic tanks), energy-efficiency improvements at treatment works, reuse and recycling of wastewater or stormwater, and security improvements at treatment works. States must also agree to ensure that communities meet several specifications (such as requiring that locally prevailing wages be paid for wastewater treatment plant construction pursuant to the Davis-Bacon Act). In addition, WRRDA amended the CWA to require that CWSRF recipients must use American-made iron and steel products in their projects. As under the previous Title II program, decisions on which projects will receive assistance are made by states using a priority ranking system that typically considers the severity of local water pollution problems, among other factors. States also evaluate financial considerations of the loan agreement (interest rate, repayment schedule, the recipient's dedicated source of repayment) under the CWSRF program. All states have established the legal and procedural mechanisms to administer the loan program and are eligible to receive CWSRF capitalization grants. Some with prior experience using similar financing programs moved quickly. Others had difficulty in making a transition from the previous grants program to one that requires greater financial management expertise for all concerned. More than half of the states currently leverage their funds by using federal capital grants and state matching funds as collateral to borrow in the public bond market for purposes of increasing the pool of available funds for project lending.