U.S. EPA Releases Financial Capability Assessment to Aid Disadvantaged Communities

The U.S. EPA announced a proposal aimed at helping communities plan for water infrastructure improvements, particularly in communities with low income Sept. 15.

This proposal is titled the 2020 Financial Capability Assessment (FCA) for the Clean Water Act, and targets economically disadvantaged communities to help them provide clean water services. Clean water services are vital to public health, the environment and, as was noted in a recent US Water Alliance and American Society of Civil Engineers report, local economies.

Water and wastewater industry associations applauded this proposal following the announcement Sept. 15, including Water Environment Federation, American Water Works Association and the National Association of Clean Water Agencies. 

In the 2016 Appropriations, Congress directed the U.S. EPA to create a “community affordability” framework in cooperation with the National Academy of Public Administration. This direction resulted in a report with recommendations on previous iterations of the FCA, and those suggestions have been accounted for in the 2020 FCA proposal.

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

Below is an excerpt from that press release on the purpose and intent of the proposal:

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.

WEF President Jackie Jarrell and Interim Deputy Director for Charlotte Water said she and WEF look forward to working with the U.S. EPA on consistent implementation of the 2020 FCA.

“This newly proposed Financial Capability Assessment (FCA) will allow communities to better evaluate what they can afford to pay for water infrastructure and compliance with the Clean Water Act,” Jarrell said in a press release.

AWWA Chief Executive Officer David LaFrance praised the holistic approach that the U.S. EPA has taken with the 2020 FCA

“Drinking water and wastewater services are essential to protecting public health in our communities – and especially during a pandemic,” LaFrance said in a press release.

NACWA Chief Executive Officer Adam Krantz highlighted how the proposal takes into account the economic differences from the original document created in 1997.

“EPA’s new, more holistic FCA recognizes that economic realities have changed since 1997 and that regulators, utilities and local communities need a more rigorous methodology for evaluating the complex affordability challenges we face, especially in the wake of the Covid-19 pandemic,” Krantz said. “We are extremely grateful to EPA for working with the water sector to develop this new FCA.”

According to the U.S, EPA release, “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."

Read the full press release from the U.S. EPA on 2020 Financial Capabilities Assessment announcement.

Read the joint press release from WEF, AWWA and NACWA applauding the 2020 Financial Capabilities Assessment.