ENVIRONMENTAL PROTECTION AGENCY
ENVIRONMENTAL FINANCIAL ADVISORY BOARD
STRATEGIC ACTION AGENDA
Fiscal Years 2003-2004
INTRODUCTION
The Environmental Protection Agency (EPA) can be justifiably proud of its accomplishments to control
pollution discharges and to restore environmental quality. Much of the credit for this success can be
attributed to implementation of regulatory and enforcement tools, and to the transfer of resources from the
federal government to help construct needed environmental infrastructure. These mechanisms will continue
for the foreseeable future, and will be supplemented by new tools such as: environmental management
systems; performance-based environmental regulation; market forces aligned to achieve environmental
outcomes; information and environmental education in support of voluntary measures; and expanded use
of traditional and innovative environmental finance techniques.
Environmental protection is a costly enterprise. America now spends roughly two percent of its GDP on
environmental controls, with increases proj ected as EPA engages in solving more complex and intractable
problems. Even as economic policy becomes more fully integrated into environmental policy, the costs will
be formidable. There is a clear need to sponsor innovative projects and technologies, improve efficiencies,
leverage resources, and apply techniques of finance in service of EPA's environmental portfolio.
A significant percentage of EPA's annual budget is dedicated to fund environmental infrastructure,
remediation and restoration of land, and grant assistance for capacity building in state and local agencies.
These annual appropriations are commonly viewed as expenditures or outlays; however, the efficient
employment of these funds is an investment opportunity because the utilization of finance tools and
techniques in conjunction with these funds can lead to sustainable financing systems.
The Environmental Financial Advisory Board (EFAB) and the Environmental Finance Center (EFC)
Network will be an integral part of EPA's evolving mission. EFAB is chartered under the Federal
Advisory Committee Act to provide advice and recommendations to EP Aon environmental finance issues,
options, proposals, and trends. The EFC Network consists of nine university- based programs that deliver
traditional and innovative financial outreach services to the regulated community.
Created in 1989, EFAB is dedicated to assisting the regulated community in identifying practical ways of
lowering costs and increasing investments in public purpose environmental facilities and services. EFAB
is supported by EPA's Office of the Chief Financial Officer, Office of the Comptroller, headed by Joseph
Dillon, Comptroller. EFAB's Chair is the Honorable Lyons Gray, of North Carolina. EFAB's Executive
Director and Designated Federal Official is A. Stanley Meiburg, Deputy Regional Administrator, Region
4 in Atlanta, Georgia. At the beginning of eachfiscalyear, EFAB updates its Strategic Action Agenda. The
process has evolved to a point where maj or environmental finance themes and issues have clearly emerged,
helping guide the identification and development of the specific projects outlined in this Agenda.
THEMES AND ISSUES
-------
EFAB's work is organized around five major themes:
• Education and Outreach
• Environmental Stewardship
• Cost-Effective Environmental Management
• Sustainable Environmental Finance
• International Initiatives
I. Education and Outreach. Information presented to the public and private sectors in accurate, useful,
and understandable ways will build broad acceptance and support for environmental programs and goals.
A well-informed regulated community will be more willing to accept the need for environmental protection
and be willing to support the necessary significant investments it takes. A fundamental purpose of EFAB
projects is to better inform the public and private sectors of the need and the cost of environmental
protection and at the same time, point to ways of lowering its costs and increasing environmental
investments.
II. Environmental Stewardship. Sound education and outreach foster both the ethic and practice of
stewardship. Without a commonly held and applied sense of the worth of environmental protection, no
amount of regulatory and enforcement actions will achieve success for EPA. The Board views stewardship
in a broad sense that ranges from traditional measures to preserve land and encourage responsible land
management practices on private property to incentives that promote the redevelopment of abandoned
inner city industrial areas and discourage the loss of valuable green spaces. The view extends as well to
corporate stewardship and the role of the commercial and industrial sectors in acting responsibly in their
management and utilization of environmental resources under their control and influence.
III. Cost-Effective Environmental Management. The goal of cost-effective environmental management
is to reduce the life cycle costs of environmental protection without sacrificing its benefits. The question
of how to pay for environmental facilities and services goes far beyond the basic question of how to raise
the money to pay. What is being purchased or financed, as well as when and how it is delivered or built
are critical cost issues. Many practical opportunities exist to lower the capital, operating, and maintenance
costs of environmental protection. Alternative procurement methods, expanded use of private activity
bonds, system optimization and consolidation, public-private partnerships, new techniques of asset
management based on life cycle costs, improved government accounting standards, and demand
management pricing policies are all excellent examples. EFAB has taken a special initiative to identify
useful (and in some cases innovative) ways for states and municipalities to practice cost-effective
environmental management.
IV. Sustainable Environmental Finance. Environmental finance is the art and practice of paying for
the capital costs and operation and maintenance expenses associated with providing environmental services.
As such, it focuses on ways to achieve and maintain the necessary level of public and private investment
consistent with the desired level of environmental protection. Sustainability has two dimensions. It refers
to the development of financial assistance mechanisms that will eventually operate as free-standing
enterprises, and it refers to building the financial capacity of local governments to permanently run their
environmental systems in compliance withapplicable state and federal standards. EFAB has a core interest
in the theme of sustainable environmental finance, beginning with the main source of capital - the bond
-------
market and the efficient use of tax-exempt bonds as the traditional means of paying for environmental
infrastructure. The Board is also interested in the impressive performance and potential of the State
Revolving Funds and in general, the creative use of financing mechanisms and subsidies that reduce costs
to affordable levels and promote the financial self sufficiency of state and local government environmental
programs.
V. International Initiatives. With the dramatic expansion of the global economy has come the
increasing realization that many serious environmental problems have international consequences. The
United States, by virtue of its longstanding regulatory programs to protect the environment, has a major
interest and role in encouraging the adoption of sound international environmental policies. Yet, the United
State has another role that is perhaps equally as important. Through its sophisticated system of
environmental finance, this country is in an excellent position to help emerging and even more advanced
nations with the tough issues of sustainable environmental finance. This obviously produces benefits for the
recipient nation and the environment, but less clearly understood is the economic boost given to US
businesses in the financial services and environmental goods and services industries and the strategic
support given to advancing US foreign policy objectives. As a consequence, EFAB has recently initiated
several advisory projects aimed at reducing financial barriers to environmental protection in other nations.
A new area EFAB will explore is finding creative funding for curbing global warming and contribute to the
development of policy to reduce CO2 and other greenhouse gas emissions.
Through its strategic planning process, EFAB annually considers and applies these themes in the context
of the following major environmental financial issues:
• Developing and delivering effective information and outreach to the regulated community, helping
it to build the financial and administrative capacity to own, operate, and maintain public-purpose
environmental systems;
• Making more effective the practice of stewardship in urban, rural, and corporate settings;
• Financing of the investment required for the prevention of nonpoint source pollution;
• Developing economic incentives that effectively encourage the conservation and restoration of
watershed lands and associated habitats, discourage the loss of valuable open space, and make
better use of already developed or abandoned properties;
• Developing and implementing cost-effective environmental management techniques and practices
to significantly lower the costs of environmental protection;
• Achieving the widespread adoption of asset management techniques by public and private
environmental utilities;
Helping define the federal role with respect to implementing sustainable financing systems and
providing financial assistance for public-purpose environmental infrastructure, including the
eligibilities, conditions, duration, types, and magnitude of funding;
-------
Making improvements to the federal tax code to improve the efficiency of tax-exempt bonds as a
means of paying for public purpose environmental infrastructure;
• Designing and providing states options for expansion and improvement to their State Revolving
Funds; and
• Designing and expanding the use of financing techniques that would be most effective in achieving
affordability and promoting financial self-sufficiency.
Based on these issues and input from the Agency, EFAB develops its Strategic Action Agenda describing
the workgroup structure and listing completed, ongoing, and new projects. Each citation gives the project
title, lead workgroup, the Agency's strategic plan goal, and the primary customer to be served. Given the
number, scope, and nature of the issues, four workgroups are taking on the maj ority of proj ects, while the
remainder are considered by the Full Board.
WORKGROUP STRUCTURE AND PROJECT LISTING
EFAB's Four Standing Workgroups
• Brownfields/Superfund. Chaired by Evan Henry, Bank of America, Irvine, California.
• Public Finance. Chaired by Sonia Toledo, Lehman Brothers, New York, New York.
• Cost-Effective Environmental Management. Chaired by Michael Deane, United
Water, Washington, DC.
• International/Energy. Chaired by Jim Tozzi, Multinational Business Services, Inc.,
Washington, DC
Completed Projects FY
2002
1. Small Business Innovate Research Program: Technologies for Stormwater Infrastructure.
Letter, December 2001
• Lead: Full Board
• Agency Strategic Goal: Sound Science, Improved Understanding of Environmental Risk,
and Grater Innovation to Address Environmental Problems
• Primary Customer: Office of Research and Development
2. Brownfields Clean-up and Redevelopment. Letter, March 2002
• Lead: Brownfields/Superfund Workgroup
-------
• Agency Strategic Goal: Better Waste Management, Restoration of Contaminated Waste
Sites, and Emergency Response
• Primary Customer: Office of Solid Waste and Emergency Response
3. Expanding Lending for Non-Point Source Projects. Report, April 2002
• Lead: Public Finance Workgroup
• Agency Strategic Goal: Effective Management
• Primary Customer: Office of Water
4. Public Sector Initiative Report. Report, April 2002
• Lead: Cost-Effective Environmental Management Workgroup
• Agency Strategic Goal: Sound Science, Improved Understanding of Environmental Risk,
and Greater Innovation to Address Environmental Problems
• Primary Customer: Agency
Completed Projects FY
2003
1. Financial Checklist for Consent Decrees. Consultation, February 2003
• Lead: Full Board
• Agency Strategic Goal: A Credible Deterrent to Pollution and Greater Compliance with
the Law
• Primary Customer: Office of Enforcement, Compliance and Assurance
Ongoing Projects FY 2003
1. Coordination of EPA, VSDA and HUD Water and Sewer Loan Assistance
• Lead: Public Finance Workgroup
• Agency Strategic Goal: Effective Management
• Primary Customer: Office of Water
2. Joint Operations of the SRF Programs
• Lead: Public Finance Workgroup
• Agency Strategic Goal: Effective Management
• Primary Customer: Office of Water
3. Financing Long-term Response Actions at Superfund Sites
-------
• Lead: Brownfields/Superfund Workgroup
• Agency Strategic Goal: Better Waste Management, Restoration of Contaminated Waste
Sites, and Emergency Response
• Primary Customer: Office of Solid Waste and Emergency Response
4. Environmental Management Systems
• Lead: Cost-Effective Environmental Management Workgroup
• Agency Strategic Goal: Sound Science, Improved Understanding of Environmental Risk,
and Grater Innovation to Address Environmental Problems
• Primary Customer: Agency
5. Governmental Accounting Standards Board (GASB) Statement No. 34
• Lead: Cost-Effective Environmental Management Workgroup
• Agency Strategic Goal: Sound Science, Improved Understanding of Environmental Risk,
and Greater Innovation to Address Environmental Problems
• Primary Customer: Agency
6. Financing Combined Heat and Power
• Lead: International/Energy Workgroup
• Agency Strategic Goal: Reduction of Global and Cross-Border Environmental Risks
• Primary Customer: Office of International Activities
New Projects FY 2003/2004
1. Reevaluation ofEFAB Projects
• Lead: Full Board
• Agency Strategic Goal: Various
• Primary Customer: Agency
2. Water Conservation Financing
• Lead: Public Finance Workgroup
• Agency Strategic Goal: Clean and Safe Water
• Primary Customer: Office of Water
3. Partnership & Collaboration of Non-Point source Financing
• Lead: Public Finance Workgroup
• Agency Strategic Goal: Clean and Safe Water
• Primary Customer: Office of Water
-------
4. Affordability
Lead: Public Finance Workgroup
Agency Strategic Goal: Clean and Safe Water
Primary Customer: Office of Water
Notes:
The strategic action agenda is a flexible planning tool and, occasionally during the fiscal year, it is
revised and updated. Any revisions will be shown on the Board's home page at:
http ://www. epa. gov/efinpage/efab .htm
The summer meeting of the Full Board is scheduled for August 4-5, 2003 at the Bankers Club, San
Francisco, CA. The primary purpose of this meeting is to discuss progress with work products under
EF AB' s current strategic action agenda and to develop an action agenda to direct the Board's ongoing
and new activities.
In addition to the above projects, EFAB members contribute their time to assisting other EPA
initiatives, most notably the Environmental Finance Center (EFC) Network. The EFC Executive
Directors serve as expert witnesses to the Board, and along with other experts, provide key assistance
to EFAB. The home page for the EFC Network is: www.epa.gov/efmpage/efc.htm
Your comments are important and welcome. Please call or e-mail Vanessa Bowie, EFAB Coordinator
at (202) 564-5186 or bowie.vanessa@epa.gov.
------- |