Consideration of Affordability and Flexibility: Is EPA Really Committed?


Earlier this month, the U.S. Environmental Protection Agency (EPA) issued a memo to its regional offices tentatively outlining a plan to consider how much a community can actually afford when assessing their efforts to meet Clean Water Act obligations. EPA issued the memo, in part, in response to pressure from communities across the United States that are struggling to meet their CWA obligations due to pressing economic issues. In addition, NACWA and the U.S. Conference of Mayors have been outspoken critics of EPA’s approach to assessing financial capability and its implementation and enforcement methods.

In the memo, EPA says it recognizes “these challenging conditions” and that it is “working with states and local governments to develop and implement new approaches that will achieve water quality goals at lower costs and in a manner that addresses the most pressing problems first.” 

EPA’s current approach to CWA obligations has placed an increasing financial burden on communities and ratepayers, sometimes without regard to other less expensive alternative approaches that may be more effective and with little opportunity to prioritize spending to minimize that financial burden. EPA’s June 2012 Integrated Planning Framework is intended to help communities prioritize and better sequence clean water investments to address some of these concerns.

The Framework’s reliance on financial capability considerations, however, underscored the need to update and refine the outdated approaches outlined in EPA’s 1997 guidance for financial capability. Although the new memo to EPA’s regions will hopefully lead to meaningful guidance and more consistent implementation, it stops short of committing to a wholesale revision of the 1997 guidance—something NACWA has advocated for since 2005. In fact, EPA states that the 1997 guidance “will continue to be a valuable guide”. 

The memo outlines several potential areas of discussion for this ongoing work:

  • How to expand the use of benchmark indicators of household, community and utility affordability, such as increasing arrearages, late payments, disconnection notices, service terminations, and uncollectable accounts;
  • How to meet the obligations of the CWA by using flexibilities in the statute and implementing regulations to prioritize necessary investments;
  • How rate structures present both limitations and opportunities; [EPA would like to encourage the use of lower rates or subsidies for lower income customers]
  • How innovative financing tools, including public private partnerships, are related to affordability;
  • How to facilitate consistent policy implementation at EPA Regional offices; and
  • How other community specific factors, including obligations under the Safe Drinking Water Act, should be considered in developing appropriate compliance schedules

Next Steps

While there were no surprises in EPA’s memorandum—much of what the document covers has been stated before in previous Agency communication—the commitment to an ongoing dialogue and additional guidance is an important step forward. 

To that end, NACWA will participate in the dialogue with EPA and the U.S. Conference of Mayors as the plan for consideration of financial capability is crafted. But NACWA also will continue its legislative efforts on financial capability, including work to help reintroduce and move Senator Sherrod Brown’s (D – Ohio) Clean Water Affordability Act.  NACWA has been an outspoken supporter of this legislation which, among other things, would require EPA to undergo a comprehensive revision of the 1997 financial capability guidance.

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