This research addresses the impact of New Federalism, as defined by the Reagan administration, on the ability of states to implement and administer a major national environmental program. Based on data collected from two national studies of the Clean Water State Revolving Fund (CWSRF) program, the research seeks to link the sufficiency of initial state resources with the inclusion of private sector actors in CWSRF administrative structures. Both survey data and case study data support the hypothesis that states which lack resources to implement the CWSRF program rely more heavily on private sector actors in the decision making processes of the program. The paper explores the implications of this relationship, and suggests that the net result of New Federalism may not be a devolution of authority to state governments, but to private sector agents of the states.