May 06, 2022

Water Associations Respond to US EPA Proposed Financial Capability Assessment Guidance

Water Environment Federation (WEF), the National Association of Clean Water Agencies (NACWA), and American Water Works Association (AWWA) provided comments and recommendations.

water industry

Water Environment Federation (WEF), the National Association of Clean Water Agencies (NACWA), and American Water Works Association (AWWA) released a joint statement opposing the U.S. EPA’s proposed 2022 Financial Capability Assessment Guidance.  

The Proposed 2022 Clean Water Act (CWA) Financial Capability Assessment (FCA) Guidance outlines strategies for communities to support affordable utility rates and investments in water infrastructure. These investments will support CWA implementation.  

The suggestion from the associations mentioned in the joint statement is for EPA to instead use the guidance proposed in 2020 that was released in 2021 because it: 

  • Provides two viable methodologies for assessing financial capabilities; 

  • Included the lowest quintile residential income indicator in a framework that supported meaningful decision-criteria; and

  • Represented a straight-forward evolution of current enforcement practices. 

NACWA also released a separate statement opposing the proposed 2022 Financial Capability Assessment Guidance. 

NACWA’s concerns include that affordability is an environmental justice issue and water policy issues should be guided by policy experts, not enforcement personnel.  

Specific issues brought to light by NACWA include that:  

  • The 2022 Proposed FCA guidance no longer considers financial impacts on low-income households; 

  • EPA has effectively abandoned the use of the Lowest Quintile Residential Indicator (LQRI) metric from the 2020 Proposed FCA Guidance that examined the costs of planned compliance measures on economically disadvantaged households; 

  • EPA’s request for public comment centers on the merit of these two approaches but does not seek comment on the more important question of whether it is appropriate to abandon the LQRI metric from the 2020 Proposed FCA Guidance; and 

  • The 2022 Proposed FCA guidance imposes a new requirement on utilities to conduct a Financial Alternatives Analysis.  

In AWWA’s separate statement regarding the proposed guidance, AWWA mentions that this proposed guidance is “inconsistent with EPA’s recently announced strategic plan and frequently spoken of focus on achieving environmental justice.” 

AWWA references a National Academy of Public Administration (NAPA) report that provides recommendations that would help revise the proposed guidance.  

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