EPA releases updated CWA Financial Capability Assessment Guidance

Feb. 2, 2023
The new guidance outlines strategies to build communities’ Clean Water Act compliance schedules while supporting affordable rates, though NACWA has expressed concerns with the final update.

The U.S. EPA has released its updated Clean Water Act Financial Capability Assessment (FCA) Guidance, which outlines strategies for communities to support affordable wastewater rates while making investments for Clean Water Act (CWA) compliance. However, the National Association of Clean Water Agencies has expressed disappointment with the guidance.

When a municipal wastewater treatment facility’s discharges violate CWA rules, the EPA negotiates a CWA compliance schedule for the municipality to address the discharges. This schedule can be determined by factors including public health, environmental health, and the community’s financial capabilities. The FCA Guidance provides the formulas and financial information that helps EPA determine the community’s financial capabilities.

“EPA is committed to ensuring all communities have access to clean water and critical water services. We also recognize that a growing number of people struggle to afford their water bills,” said EPA Assistant Administrator for Water Radhika Fox. “The updated FCA Guidance provides a better process to assess communities’ ability to afford water quality improvements, and also highlights a variety of tools, including assistance programs, grants, and subsidized loans, to help communities plan and pay for necessary water infrastructure improvements.”

EPA says that, for communities seeking extended CWA compliance schedules or changes to water quality standards, the updated guidance provides a process to demonstrate financial capability and ensure a financial strategy without overbearing ratepayers.

The updated guidance also provides a new process to determine a community’s ability to afford water service. This includes community-specific poverty factors available in census data.

“The new EPA guidelines offer a remedy for the two-tiered system now in place that lets wealthy communities enjoy safe sanitation and clean water but leaves low-income communities and communities of color stuck with second-class service that poses risks to their health and the environment,” said Larry Levine, Director of Urban Water Infrastructure and Senior Attorney for the Natural Resources Defense Council, in a statement.

NACWA’s Disapproval

The National Association of Clean Water Agencies (NACWA) expressed its disappointment with the new guidance in a press release/

The association says it has partnered with other water sector and municipal groups to advocate for an approach that “looks at the impacts of new CWA mandates and related bill increases on actual low-income households within an impacted community, as opposed to more broad-brush comparisons of community and national level metrics that often serve to mask the actual impact on individual households.”

“Unfortunately,” continued NACWA in a press release, “the new EPA FCA Guidance released today fails to take this household level approach, meaning that the true impacts on these households may not be fully considered and leaving them to continue paying a disproportionately higher amount of their income on clean water bills.”

The association had also published a breakdown of its issues with EPA’s earlier proposed FCA Guidance in April 2022. NACWA says that its criticisms of the 2022 draft remain in the final version, including a maximum timeframe for CWA mandate implementation and a requirement for complex economic analysis before a community can be considered for schedule extensions. NACWA also argues that EPA is using the guidance document to mandate the economic analysis, when the requirement should instead be subjected to a full rulemaking approval process.

In EPA’s announcement of the new FCA Guidance, the agency noted that the guidance is not legally binding, and should only serve as a starting point for negotiations: it instead provides ideas to broadly consider ways to minimize rate impacts on residents and to operate within legal boundaries.

“The FCA Guidance recognizes that a variety of factors should be included in CWA schedule negotiations and encourages communities to bring their individual circumstances to those discussions,” said EPA in its announcement press release. “If a community has additional information that justifies a longer schedule than the general schedule benchmarks, this information can be submitted to EPA. Where appropriate, this information can result in different schedules than those suggested by the baseline analysis in the FCA Guidance.”

About the Author

Jeremy Wolfe

Jeremy Wolfe is a former Editor for Wastewater Digest.

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