EPA’s Office of Inspector General audited EPA’s disbursement of loans to states earmarked for drinking water projects in disadvantaged communities. The audit was designed to ensure that states are meeting their loan subsidy goals for disadvantaged communities and to identify any barriers preventing states from spending the maximum allowed on loan subsidies for those communities in their state drinking water revolving funds. EPA found two of the seven states audited (Alabama and Maryland) did not consistently meet their requirements to award loan subsidies to disadvantaged communities and other eligible recipients for state fiscal years 2017 through 2020. By 2019, Maryland completed corrective actions to address this issue. EPA identified two barriers to states meeting loan subsidies requirements: inadequate oversight by EPA regions and underuse of set-asides by states.