EPA Proposes 2020 Financial Capability Assessment for Water Services in Disadvantaged Communities

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U.S. Environmental Protection Agency (EPA) announced its proposed 2020 Financial Capability Assessment (FCA) for the Clean Water Act, which will help communities plan for water infrastructure improvements.Through the 2020 FCA, EPA is seeking to support water utilities that serve economically disadvantaged communities and provide vital clean water services that support public health, the environment and local economies. This is the first time in more than 20 years this document has been updated.

“EPA is working to ensure that all Americans—regardless of their zip code—have clean water for drinking and recreation,” said EPA Assistant Administrator for Water David Ross. “With this action, the agency is supporting wastewater utilities to help them better serve disadvantaged communities that have financial challenges.”

The 2020 FCA proposal explores how customers’ ability to pay for service impacts planning for capital expenditures and operation and maintenance needed to support Clean Water Act compliance. This guidance is used to evaluate the financial capability of a community when developing a schedule (i.e., plan) for water infrastructure improvements. EPA’s proposed FCA 2020 guidance includes new metrics to inform a community’s implementation schedule, including indicators that more accurately reflect how much low-income communities can afford to pay for water infrastructure upgrades.

“It has been a long time since the 1997 Guidance for Financial Capability Assessment and Schedule Development reflected EPA’s actual practices when reviewing the affordability of Clean Water Act control measures,” said EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine. “I am glad we finally are providing transparency regarding the tools available to communities to inform EPA enforcement decisions and how we use that information.”

“The Conference of Mayors has been working with the US EPA since the 1990s outlining the growing burden of financial impacts that unfunded Clean Water Act mandates have on our poorest and most vulnerable citizens. This new affordability guidance provides greater transparency and additional tools to allow cities to work in conjunction with EPA to find solutions that protect public health in a more affordable manner. We appreciate EPA’s willingness to listen to our concerns and work with us to develop solutions,” said U.S. Conference of Mayors Chief Executive Officer and Executive Director Tom Cochran.

“Affordability is a pressing concern for water and wastewater utility customers, even more so in this time of pandemic. The American Water Works Association (AWWA) is pleased that EPA has released this proposal for public review and comment. It is a genuine effort to ensure that clean and safe water is affordable for low-income customers,” said AWWA Executive Director of Government Affairs G. Tracy Mehan.

“NACWA applauds EPA’s hard work over the past several years to advance a proposed financial capability assessment that strives to better account for potential impacts on low-income populations,” said NACWA CEO Adam Krantz. “This has never been more important than now as utilities and ratepayers struggle with the financial impacts caused by the ongoing pandemic.”

“WEF is excited to see EPA move forward with the proposed 2020 Financial Capability Assessment for the Clean Water Act,” said WEF President Jackie Jarrell. “We believe this new guidance, when finalized and implemented, will help utilities across the country to more accurately ascertain how much their customers and communities can afford to pay for compliance with Clean Water Act requirements, particularly by considering household-level affordability that better reflects the financial situation for lower-income ratepayers.”

When finalized, the 2020 FCA will support negotiations of schedules for implementing Clean Water Act requirements for municipalities and local authorities. Upon publication in the federal register, EPA will accept comment for 30 days via the Federal eRulemaking portal at http://www.regulations.gov/, referencing Docket ID No. EPA–HQ– OW–2020–0426.

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