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GAO discussed: (1) the Environmental Protection Agency's (EPA) State Revolving Loan Fund (SRF) Program's key characteristics; (2) issues concerning SRF ability to meet the nation's wastewater treatment needs; and (3) whether SRF could serve as a permanent source of funding for the nation's wastewater needs. GAO noted that: (1) all 50 states created SRF programs and received at least one capitalization grant, but many were still developing program details; (2) the state programs are similar in structure but will become increasingly different as states become more experienced with the programs and adopt financial plans to meet their particular needs; (3) only 16 states indicated that they would use SRF assistance for non-point-source pollution projects in the next 5 years; (4) states and others maintain that several legislative changes will increase the SRF Program's effectiveness, including allowing land not directly used in the treatment process to be eligible for SRF assistance; (5) most states favor the termination of federal oversight requirements after capitalization grants end in 1994; (6) over the next 10 years, SRF will only meet about one-third of states' wastewater treatment needs and will not generally meet the needs of disadvantaged communities; and (7) by 2001, states could face over $50 billion in wastewater treatment needs.

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