United States Environmental Protection Agency
Office of the Chief Financial Officer
Center for Environmental Finance
Meeting Summary of the
Environmental Financial Advisory Board (EFAB)
May 22 - 23, 2012
The Westin Hotel
Alexandria, VA
The minutes that follow reflect a summary of remarks and conversation during the
course of the meeting. The Board is not responsible for any potential inaccuracies that
may appear in the minutes. Moreover, the Board advises that additional information
sources be consulted in cases where any concern may exist about statistics or any other
information contained within the minutes.
EP A- 190-S-12-007
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EPA Environmental Financial Advisory Board
May 22 - 23, 2012
Contents
DAY 1: TUESDAY, MAY 22, 2012 3
INTRODUCTIONS AND OPENING REMARKS: MIKE SHAPIRO, DESIGNATED FEDERAL OFFICIAL: KAREN
MASSEY, ACTING CHAIR; AND JOE DILLON, DIRECTOR, CENTER FOR ENVIRONMENTAL FINANCE, EPA..
TECHNOLOGY INNOVATION: BARBARA BENNETT, CHIEF FINANCIAL OFFICER, EPA 3
REPORT OUT: TRIBAL ENVIRONMENTAL PROGRAMS: BILL COBB, WORK GROUP CHAIR, AND GAVIN
CLARKSON 4
ENVIRONMENTAL FINANCE CENTER NETWORK: SARAH DIEFINDORF, EFC PRESIDENT, AND HEATHER
HlMMELBERGER 8
REPORT OUT: IRAN SIT-ORIENTED DEVELOPMENT: PHIL JOHNSON, WORK GROUP CHAIR 9
SUMMARY OF DAY 1: KAREN MASSEY 10
DAY TWO: WEDNESDAY, MAY 23, 2012 11
OPENING REMARKS: MIKE SHAPIRO, DESIGNATED FEDERAL OFFICIAL 11
REPORT OUT: CLEAN AIR TECHNOLOGY: SHARON DIXON PEAY, WORK GROUP CHAIR 11
REPORT OUT: DRINKING WATER PRICING AND INFRASTRUCTURE INVESTMENT: SCOTT HASKINS,
WORK GROUP Co-CHAIR 13
IMPLEMENTING SUSTAINABILITY AT EPA: BICKY CORMAN, DEPUTY ASSOCIATE ADMINISTRATOR,
OFFICE OF POLICY, EPA 14
U. S.-BRAZIL JOINT INITIATIVE ON URBAN SUSTAINABILITY: SHALINI VAJJHALA, SPECIAL
REPRESENTATIVE, OFFICE OF THE ADMINISTRATOR, EPA 17
REPORT OUT: GREEN INFRASTRUCTURE (WATER): LINDENE PATTON & CHIARATRABUCCHI, WORK
GROUP Co-CHAIRS 21
REPORT OUT: ENERGY EFFICIENCY/GHG EMISSIONS REDUCTION: KAREN MASSEY & ANN GRODNIK,
WORK GROUP Co-CHAIRS 21
WATER TECHNOLOGY INNOVATION CLUSTER: JENNIFER ORME-ZAVALETA, DIRECTOR, NATIONAL
EXPOSURE RESEARCH, OFFICE OF RESEARCH AND DEVELOPMENT, EPA 22
PUBLIC COMMENT 24
SUMMARY OF DAY 2 AND CLOSING REMARKS: KAREN MASSEY & MIKE SHAPIRO, DESIGNATED
FEDERAL OFFICIAL 24
PARTICIPANTS 26
MEMBERS PRESENT 26
MEMBERS ABSENT 27
EXPERT WITNESSES 27
EXPERT WITNESSES ABSENT 27
SPEAKERS 27
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May 22 - 23, 2012
Day 1: Tuesday, May 22, 2012
Introductions and Opening Remarks: Mike Shapiro, Designated Federal Official:
Karen Massey, Acting Chair; and Joe Dillon, Director, Center for Environmental
Finance, EPA
Mr. Shapiro opened the meeting at 1:45, noting that this is the first in-person meeting
convened since the appointment of our new members (the previous one was virtual). He
welcomed the newest member, Eustace Uku, and invited participants to introduce
themselves. Karen Massey volunteered to serve as acting chair.
Ms. Massey welcomed everyone and thanked new members for volunteering. EPA needs
their voices and thoughts, but, she cautioned, this is a working board. She announced that
this meeting is Gregory Mason's last, as his membership term expires.
Mr. Dillon: Of the 24 members on the Environmental Finance Advisory Board (EFAB),
all but 2 are here. The fall meeting was convened via Webcast. He acknowledged the
university finance centers and their work on state and local issues. Representatives of
eight finance centers will be present today. Mr. Dillon thanked board members who
participated in the sustainability listening sessions, particularly regarding the direction
EPA should take in response to the recently released National Academy of Sciences
report, Sustainability and the U.S. EPA (2011). The work group on Transit-Oriented
Development (TOD) will meet in this room on Thursday. They have done a tremendous
amount of work to get 15 financing and advocacy consultants to present their findings
and opinions on how to pay for TOD. Mr. Dillon then introduced the first speaker,
Barbara Bennett, EPA's Chief Financial Officer.
Technology Innovation: Barbara Bennett, Chief Financial Officer, EPA
Ms. Bennett thanked EFAB participants and welcomed the new members. EFAB is an
important board for EPA, which seeks their counsel, advice, and viewpoint.
Environmental technology and investment in it are priorities of Administrator Jackson.
The EPA Roadmap can be found at . It will aid
EPA in making a plan to promote environmental innovation.
In 2010, the Administrator broached the idea of partnering with the private sector,
including the business community. We need dialogue on what EPA can do better. In the
regulatory sector, we want to be sure that sound environmental policies are driving
innovation.
Last week, EPA held its first environmental technology summit, the Technology Market
Summit. EPA tried to bring together leaders in government, academia, industry, and the
investment community. Not only did Administrator Jackson attend, but also Secretary of
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Agriculture Tom Vilsack, Secretary of Commerce John Bryson, and the U.S. Trade
Representative, Ambassador Kirk.
To maintain open dialogue, Deputy Administrator Bob Perciasepe and Ms. Bennett
convene quarterly conference calls, the next probably in July. EFAB members will be
invited to join in them.
Encouraging investment for good market returns is something different for the Agency;
the Roadmap creates a structure for the Agency to do it.
Q&A
• William Cobb asked whether the content of the quarterly conference calls would
be posted on Web site; Ms. Bennett will follow up.
• In response to Chiara Trabucchi, Ms. Bennett said the Summit had been video-
conferenced through 10 regional offices. Some offices convened side meetings,
e.g., one went off site to a particular company. The webcast can be viewed at
. Some regions are more active than
others. People were surprised that EPA did this sort of thing and that it wants to
engage with the private sector.
• Responding to Greg Mason, Ms. Bennett said she finds a lot of interest in what
EPA is doing, but one thing she hears is what a leader EPA is internationally—
foreign countries look to EPA when setting their own standards. Furthermore a
resounding theme last week—whether from investment banks, non-governmental
organizations (NGO), or corporate companies—was that they, too, are looking to
EPA to come out with these rules. The talks were not coordinated, but the same
themes emerged throughout. EPA is seen as a scientific organization and is
looked to as a standard bearer.
• Eustace Uku wondered whether EPA would assist companies in an aggressive
international environment, e.g., China. Ms. Bennett: The President announced a
joint initiative on this sort of thing last week. EPA must facilitate such initiatives
so that US companies have a fair chance. EPA also announced availability of a
portal.
Report Out: Tribal Environmental Programs: Bill Cobb, Work Group Chair, and
Gavin Clarkson
Mr. Cobb began by stating the importance of making tax-exempt bonds available to the
Tribes to finance municipal projects. A draft position statement will be distributed to
EFAB members for review. Mr. Clarkson pointed out that, while some are very wealthy,
many are not, and some are living below the poverty line. There are many unmet
infrastructure needs throughout the Indian nations, e.g., the Navajo Nation is the size of
West Virginia but has only 2000 miles of paved roads. A number of challenges are
unique, such as Congressional neglect or hostility. To get government projects done,
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governments sell bonds. Is a tribal bond the same as a municipal bond? According to the
Tribal Tax Status Act, Tribes, as sovereign governments, should be able to access the
same tax-exempt financing that other governments have. But acting on this has been
impeded by a Tribe-hostile congressman, and less than 1/10 of 1% of tribal money is tax-
exempt. An accessory problem is the nebulous nature of the Tribal Tax Status Act in
stating that tax-exempt bonds can only be issued if a government function is being done
by the taxing authority; there is no guidance on what that means. This is a major reason
the Tribes have such an infrastructure deficit. A project might be affordable at 6% but not
at 10%. The Internal Revenue Service (IRS) was to enforce this statute.
As part of the stimulus bill, the Department of the Treasury was asked to investigate this
issue. They declared it unfair and recommended that the function test be repealed. They
recommended that Tribes be treated the same as state and local governments so they can
get infrastructure financing. When Mr. Clarkson looked into the matter more closely, he
found that Tribes are 16 times more likely to be challenged on the use of bond money.
For example, a Tribe in eastern Oregon that wanted to increase its water-treatment
capacity was prohibited from selling what they didn't need, whereas state and local
governments often do this. The IRS decided that selling extra capacity was not a
government function and challenged the tax-exempt status of the bonds. In another
example, the Las Vegas Paiute built a golf course outside the city, but the IRS challenged
the tax-exempt status of the bonds used because it was too beautiful.
In sum, this is a $50 billion problem, and the need is great. It offers an opportunity for
EFAB to craft a letter to the Administrator supporting the Treasury's position. Mr.
Clarkson will distribute a one-page statement of the problem and the Treasury
recommendation, which has been endorsed by all 565 Tribes and other related
organizations. The Treasury's position was stated last Tuesday in the Senate Finance
Committee.
Mr. Cobb reported that the work group's second pending charge from the Agency—
financing for environmental projects - was deferred, although the tax-exempt-bond issue
is specific to that charge. Each member's packet contains the formal report for the
charge; however, it is now out of date, so the work group revised and improved it. This is
an update of what Mr. Cobb articulated in October. They are trying to survey nine tribes
to understand barriers and opportunities for financing environmental programs. They will
do a pilot project in Regions VI, IX, and VIII. Regional Finance Center representatives
will take the survey to the Tribes and return the results to the work group. If Tribes are
resistant or things emerge that indicate the need for rethinking or changing, the EFC
representatives will provide that information to the working group. By the fall session
they will have some results to report.
Mr. Cobb noted the need for more work group members; only four members remained.
Q&A
• Chiara Trabucchi wanted an opinion about whether making such
recommendations was within EFAB's purview. Articulation of the linkage to a
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specific charge would be quite important. Designated Federal Officer
Mike Shapiro will check with the Agency's lawyers. The Board has presented
letters to the Administrator, and this would not be novel, but it raises some
additional questions.
• Ms. Trabucchi stressed the need for the underlying objectivity in a letter like this.
In order to concur with the work group findings, she needs to know more about
the issue and what research and investigation has gone into it. EFAB members
need a report to review, so they don't accidentally counter other agencies. She
would like to slow the process a bit to understand the charge and analysis and
have the opportunity to ask questions to be sure the Board uses its power and
weight objectively. Such a letter must also be predicated on the how-to-pay issue
for any charges to EFAB. Mr. Clarkson: Discrimination against tribes actually
costs money, and repealing this law would increase revenue. In addition to the
one-page draft, he will send background material. Ms. Trabucchi doesn't
disagree; she just doesn't know enough about it. Mr. Clarkson noted that an
article has already been published, so the letter would be part of a larger entity.
• Heather Himmelberger thought a strong connection should be made for why this
topic is germane to the work of the Tribal Environmental Programs Work Group.
We should look for ways for Tribes to develop self-supporting, self-sustaining,
self-financing funding mechanisms. The work group was specifically asked to
examine barriers to those activities. Mr. Cobb: The work group had two charges:
they addressed the charge on environmental programs, and deferred the other that
deals with environmental projects. The letter is an interim step. Information is
available. The issue is that we don't have a year to analyze it.
• Mr. Shapiro: The process is that the work group circulates its analysis and the
recommendation. EFAB could start the process of getting a sense of participants'
opinions and whether they want to focus on this issue for the next several months.
We can decide whether to take up this issue based on the recommendation of the
work group and use a written process to discuss it over the next several months.
• Sharon Dixon Peay: As for the question of process, the report EFAB members
will see does not focus on this particular issue. The work group wants the board to
endorse the recommendation.
• Blanca Surgeon, a member of this work group, said they have been working on
this issue, which adds the timing factor. This is an opportunity to create revenue,
and the timing is now. To wait another year or 6 months would put people and
projects further behind. All Tribes and other agencies support the position, the
research has been done, and information and examples are available. It is not a
controversial issue; just a matter of members informing themselves.
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• Ms. Massey asked where the issue stands legislatively. Mr. Clarkson: The Senate
Finance Committee met last Tuesday; this is part of overall tax reform. Part of the
pilot was for Treasury to do the study and now the Senate Finance Committee is
taking it up. The report from Treasury resulted from stimulus finance legislation.
It is hoped that Congress will take up the legislation this summer. The work group
isn't asking that a letter be signed today but ultimately wants EPA's voice to stand
with Treasury's. The two pieces of supporting information are Mr. Clarkson's
article and Treasury's recommendation.
• Leanne Tobias agreed with Mr. Clarkson's position. Tribes, at the moment can
issue revenue debt, but not tax-exempt debt. Congress is talking about giving
Tribes parity with state and local governments, and this is something EFAB
should support. As for time frame, taking until August could render the group's
position irrelevant. At the same time EFAB members don't want to feel
railroaded. Could it be discussed by e-mail after the material has been circulated?
This is straightforward remediation of a long-standing inequity.
• Ms. Trabucchi was concerned about process. She wants to hear what legal counsel
thinks about the appropriateness of circulating such a letter. And, if timing needs
to be accelerated, do all board members have to concur? Congress undertook its
discussion last week and is engaged in it. We need to be careful about what EFAB
recommends and such recommendations should be based on objective research
and analysis. A draft letter should be circulated so we have something concrete to
look at. Mr. Shapiro suggested that these things be done in parallel. Furthermore,
because this is an election year, everything is likely to work more slowly, so if
EFAB takes more time, it may not be problematic. Mr. Clarkson reiterated that
the letter endorses Treasury's recommendation and is not a piece of legislation.
• In response to Wayne Seaton, Mr. Clarkson explained that the pilot program was
moderately successful but was not targeted toward environmental projects—only
"shovel-ready" municipal projects. Small amounts were allotted to many Tribes,
but many of those received less than 40% of what they anticipated. This failure
was more a function of the allocation process, which the Treasury Department
recognizes and is revisiting.
• Mr. Uku asked if it would be possible to have a draft that was as final as possible
to circulate to EFAB membership. Then a vote could be contingent on resolution
of the process issues. Mr. Clarkson has a one-page draft.
• Lindene Patton: According to EFAB rules, especially #5, this committee cannot
advocate to anyone outside EPA. We need legal advice about the legality of
circulating such a letter. If we wrote a letter to the Chief Financial Officer's
office, that office could send it to the Administrator, who could make the
recommendation for EPA to endorse the position or not. Mr. Shapiro reported that
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EFAB routinely sends letters to the Administrator and assured everyone that any
letter will be subjected to multiple reviews.
• Mr. Shapiro asked whether members agreed that we should proceed in parallel to
be sure we have the legal dimensions correct while the work group drafts a letter
and accumulates documentation. If there is no legal problem, the letter will be
circulated to the full EFAB. Timing will be driven by the time it takes to draft the
letter.
• Ms. Himmelberger noted that a few years ago EFAB was similarly asked to
comment on Better America Bonds. She suggested that EFAB find out how that
was done.
Environmental Finance Center Network: Sarah Diefindorf, EFC Resident, and
Heather Himmelberger
Ms. Diefendorf and Ms. Himmelberger are the longest sitting directors of the
Environmental Finance Center (EFC) network. They have been expert witnesses since
EFAB began, and each has served as president twice. Each EFC is connected to a
university and represents different programs at the universities—engineering, business,
public administration, public service, architecture, agriculture, social sciences—and they
represent all EPA regions. EFCs perform the on-the-ground work for the higher-level
discussions undertaken.
Ms. Himmelberger: Funding is a big issue for EPA. The EFC started in 1992. Now they
get core grant funding from EPA's Center for Environmental Finance, which is split
evenly among the EFCs. They leverage that money as much as possible. They work in
every environmental medium and at every level of government and can see all the
connections. This is a way to leverage funding with other activities. Core grant funding
opens new technologies and ways of doing things. The expertise at the table can access
many communities and can promote EPA tools. They are collaborative colleagues, so it's
a network instead of isolated groups doing the same thing. States still want to know
what's happening even though travel money for staff is limited, and EFC can bring
services to local governments that are disadvantaged. Core grant funding is investment
into broadening EPA's programs and other activities.
Ms. Diefendorf: EFAB has come full circle. The board started out looking at
environmental technology investment capital and, based on Ms. Bennett's presentation,
may do so again. Ms. Himmelberger noted that Joanne Throwe had leveraged $3.2
million in Smartway funds from EPA by going to terminals, state agencies, and private
companies offering truck replacement programs at ports if they would buy into it.
Ms. Diefendorf: Core grants allow us to work together, e.g., EPA teamed with the
Department of Housing and Urban Development (HUD) and the Department of
Transportation (DOT) to issue challenge grants to communities. They wanted capacity-
building intermediaries to submit grant applications, e.g., a water initiative. At a recent
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meeting, water was not on the agenda, but Ms. Throwe convinced them that it would be a
good addition.
Jeff Hughes thought a useful mechanism is to tell a small community they will be a case
study, and use core funds to help that particular community. Then go to a professional
association to distribute tools.
Ms. Diefendorf: In California, a small grant and an EPA core grant were matched so the
business community worked on reducing greenhouse gases. They brainstormed how to
make their city more environmentally sustainable—solar specialists for homes, windmills
in back yard, etc.
Ms. Himmelberger: When EPA needed a strategy for the Tribes in 1996, they convened a
meeting to talk about the set-asides, and representatives of 19 of 21 New Mexico Tribes
attended. They got small core grants for the Tribes to match. That grant is routinely re-
competed. Competition is open and the EFC is hired back only because they're the best
qualified. Ms. Diefendorf: One good thing about an EPA core grant is that it is not
prescriptive. It lets people become cutting edge by trying something they would not
ordinarily be able to try.
DavidEberle: Enterprise Server has developed a dashboard for sophisticated financial
tools for the National World Water Association. Rural communities can upload financial
documents via Excel (previously it was individual; the next generation allows access to
all drinking water systems in the state). It allows more efficient budgeting and develops a
better picture for public policy.
Sam Merrill: In southern Maine, they are working with base funds. The real university
asset is convening stakeholders to address a chronic or acute financial problem. They
focus on adaptation, particularly concerning sea-level rise and storm surge. Having
software to assess risk mitigation would give tremendous return on investment. We need
to know how much loss an activity is likely to prevent. Then include cost benefit and
community visualization efforts and state climate transportation activities, such as bridge
repair.
In New Mexico, where Ms. Himmelberger works, someone told her this is the best thing
EPA has ever done, and she hopes EPA will continue to support the EFC network; they
provide good value for EPA.
Report Out: Transit-Oriented Development: Phil Johnson, Work Group Chair
With tight budgets for everyone, the question is how to involve the private sector, e.g.,
leveraging pension funds, where managers are looking for long-term investments.
Washington, DC has about $20 billion in construction, transit-oriented development
(TOD), e.g., shopping centers are being torn down, and buildings are being replaced. We
need to bring together a key group of practitioners in finance development, real estate,
etc. to lay the groundwork for models developed and recommendations that emerge.
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Initial conversations indicate that creating sustainable communities is a key component.
But, the question of how to finance it remains. Could tax-exempt bonds be used, or new
instruments of financing?
EPA is involved in the process of smart growth, but it is a new era of financing and
sustainability, green technology and replacing old TOD projects, e.g., traffic is declining
in all cities (the economy is down, while gas prices remain high), so TOD will become
even more important. EPA is part of a federal task force, along with HUD and DOT,
established to look at the issue of sustainability of communities. But, the three agencies
have three processes and three sets of rules. The DOT Work Group will look at models
for how to coordinate the agencies and discuss the roles and responsibilities of project
participants, availability of funding, and incentives. We will try to incorporate what we
learn from tomorrow's workshop and create models.
The workshop will host presentations from some 20 TOD experts. It will be held
Thursday from 8:00 AM to 5:00 PM. Mr. Johnson invited EFAB members to participate.
Summary of Day 1: Karen Massey
Several points became evident:
• Ms. Bennett's talk indicates that EPA is putting money where its mouth is.
• Market-based solutions are exciting.
• The diversity of the work groups is reflected by the two work group report-outs.
• Process does matter. We need to be aware of how our mission as a board fits what
we do.
• We are passionate about our subjects.
• Some work groups need more people.
• Thursday's workshop promises to be good.
• EPA is funding EFC networks as an investment.
Mr. Shapiro reiterated Mr. Cobb's plea for additional volunteers for the Tribal
Environmental Programs Work Group, one of the most challenging areas. It illustrates
that, as a board, we have to reflect that issues arise beyond our control and the time
available.
Mr. Shapiro adjourned the day's session at 4:40 PM.
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Day Two: Wednesday, May 23, 2012
Opening Remarks: Mike Shapiro, Designated Federal Official
Mr. Shapiro opened the meeting at 9:19 and announced that Mr. Perciasepe, EPA's
Deputy Administrator, had to cancel his presentation today, so the agenda was revised to
make best use of the extra time.
Report Out: Clean Air Technology: Sharon Dixon Peay, Work Group Chair
Since the last meeting, the work group has completed a letter, which followed months of
collecting views of companies impacted by the boiler Maximum Achievable Control
Technology (MACT) standards. These followed work EPA was already doing with the
Department of Energy (DoE) and the University of Southern California (USC). A change
in the publication of the rule, so that it would have a different impact on the companies,
required a pause to clarify their task. The letter expressed concerns and recommended
things the Board thought EPA ought to do. The work group could continue to work on
recommendations for financial incentives. Boiler rules coming out would require closer
attention to compliance. There are some issues with rules being put in place and when
they were put in place. Many are privately owned companies, and it is important for EPA
to continue coordinating efforts with other agencies, e.g., DoE, to help companies
comply. Gina McCarthy, Assistant Administrator for EPA's Office of Air and Radiation
(OAR), thanked the work group, said OAR was looking at various solutions, and wants
the work group to continue to review financial incentives to get companies in compliance
with these rules. At that time, it was not known when these rules would be put in place;
after they are, the group could work on outreach.
The new rule was sent to the Office of Management and Budget (OMB), and the White
House is reviewing it. There is some movement on actual promulgation of the rule.
Joe Bryson is involved with EPA and DoE on outreach. They have done quite a bit of
analysis and have identified 400 companies that will need the most help to enable them to
comply. The work group has access to this body of information. Following discussion,
they plan to get information from DoE coinciding with the list of companies they have
already reviewed. Their work will likely enhance the work this group has already done,
which is quite detailed, including, e.g., the age of facility, cost of operating facility, and
comparison of DoE's three options to meet the new rules—combined heating, emissions
limits, or using natural gas. The work group discussed time to prepare one or two case
studies to review opportunities that relate to DoE's alternatives to reduce emissions and
comply with new rules. The rule is likely to appear at the end of June. All of this will
support their work in outreach, and they will contact the 400 companies.
Q&A
• In answer to Mr. Shapiro, Ms. Peay said DoE's outreach involves four regional
centers. They have resources to hire people to contact the 400 companies. Site
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visits will confirm that their information is correct. Analysis is to be used to help a
company narrow its choices to make a decision on a mechanism. The work group
is looking at that information and will help evaluate potential options. EPA has
decided that it is most efficient to partner with DoE, but the work group's client is
still EPA. Mr. Shapiro observed that financing analysis is part of the toolkit DoE
uses.
• Mr. Cobb: EPA is considering outreach; DoE has technical analysis, and EPA
has financial analysis. Our shift is, "Is there a financial solution?" OMB had
similar questions. Combining technical and financial information will result in
more effective outreach. Many companies are small and do not have sophisticated
technological or financial processes. Mr. Shapiro: DoE is already outreaching to
400 companies. Will EPA outreach separately? Ms. Peay: The primary, but not
the only, outreach will be through DoE because they have the resources and
infrastructure to progress from assessment to the actual project. It allows EPA to
move to the next level. We just need to marry the analysis with the financial side.
• Mr. Shapiro: If something looks like the better option, can you finance it? Is the
connection with DoE set up? Ms. Peay talked to Joe Bryson, who will talk to his
DoE contact. He indicated when and how the work group will get the information.
Once we have it, we will set up a call to discuss it with DoE. It should be possible
to have something drafted by the fall meeting and finished by the March meeting.
• Ms. Massey: This group has struggled to find its purpose. EPA and DoE have
undergone a good amount of coordination, and we can get the financial
information into their hands. Through EPA, a meeting should be set up with the
finance community, a secondary recipient of information.
• Thomas Liu: Information like this still requires a marketing effort. We are talking
about corporations, mom-and-pop shops, universities, etc., but financial
incentives can unite all these interests—it's low-cost money. Many companies are
also financially challenged. They are worried about survival, not just about
meeting new standards. Financial analysis has been conducted with some of the
companies, and the information the work group has already gathered will be
added to the DoE database.
• Ms. Peay: Once we receive information, we'll be able to produce something
fairly quickly. She thanked the EFAB support staff and the committee members.
This is Greg Mason'?, last meeting. Mr. Shapiro, noting that as a real-world practitioner
Mr. Mason had kept the EFAB grounded on what was being proposed, recognized his
contributions by presenting him with a plaque.
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Report Out: Drinking Water Pricing and Infrastructure Investment: Scott Haskins,
Work Group Co-Chair
The work group's charge acknowledged the background of declining per capita revenues,
aging infrastructure, and difficulty in dealing with the revenue gap as expenditures
increase and per capita water consumption declines. The work group had its first meeting
and several calls to shape the topic. They observed that what's different is not aging
infrastructure or regulatory issues, but the declining revenue gap. Other aspects are the
toolkit of leading practices on pricing and infrastructure, stakeholder communication,
capital planning and management, and lessons learned from other industries. They will
identify for EPA the kinds of alternatives available for the utilities, ongoing research
efforts, and the kind of role and opportunities EPA has to educate, communicate, and
guide on this issue.
Jeff Hughes is leading a water research project, which follows other research. Best
practices have been developed. This research aims to find new financial approaches and
paradigms, new methods of reducing risks of this revenue variability. The charge
addresses how water utilities can meet their increasing water requirements with declining
income and aging facilities. Risk management is critical. They want to give EPA a
product useful for education and training, but they are also interested in furthering a
recommendation on guidance. What will enable utilities to deal with the challenges?
Mr. Hughes asked for feedback. The Water Research Foundation engaged the University
of North Carolina to do similar work in parallel with EFAB, which involved
George Raftelis and the finance team. The Center for Economic Forecasting and Analysis
was engaged as a partner, and they began working with a few states on financial metrics,
with rating agencies acting as consultants. They talked about and shared databases and
partnered with utilities. The big concern is whether the revenue will be there when
needed. They are seeing significant per capita drops in water usage, so people are
concerned that they will have revenue to meet existing need. Pricing is the obvious
vulnerability. Much analysis will be done with the utilities, e.g., annual trends for
droughts. Many companies see 10 to 15% revenue swings from year to year, but fixed
cost structure, and this is expected to become more pronounced in the future. Other
concerns are pricing and finance policies—have the utilities identified metrics they want
to measure, get policy for, and perform against? Another is debt service coverage—do
those with a higher percentage of coverage have higher revenues? We need feedback
from stakeholders on how utilities do their pricing.
Mr. Hughes invited EFAB members to send information on pricing. Much has not
changed—they still sell water gallon by gallon, but do not pay costs dollar by dollar.
They find that 80 to 90% of revenues to utilities are gained by variable structures, but
90% of costs do not change. That rate structure is bound to change. Who would be
winners and losers? The work group will send out proposals and invite feedback.
Q&A
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• Eric Draper: Much is evolving from forms devised a few years ago. There is a
mixture of investor-owned and government (municipal systems, authorities, etc.)
entities. Any form depends on the operating environment of the government
structure. Then there's the customer base. Suburban water utilities have different
risk profiles than urban ones, so we need to consider customer profile, e.g., where
they pay a dividend, they have an incentive to increase prices.
• Mathilde McLean: How are bond-holders protected? Some utilities don't set their
rates annually. We need to review frequency of rate setting.
• Mr. Liu: The government perspective entails layers of approval, and many of
those officials are elected. But sometimes rates and charges tend not to be
attached to anything. Increases range from two to nine percent, so there may be no
political support for something that is double digit. But there may also be a
problem of perception. We also see rate increases over an extended period.
• Ms. Peay: There is a constraint on utilities for getting these things done. She was
not sure they were differentiating between normal and special rate increases for
capital improvement, or differentiating between government levels, e.g., tiny
authorities versus large ones. Both relate to reduction of revenue sources.
• Mr. Raskins: Co-chair Rick Giardina and he will revise the outline, get work
group approval, and distribute it to EFAB members for their input. A few people
have expressed interest in joining the work group. They expect to have a draft
ready by October, with interim milestones for the work group.
Implementing Sustainability at EPA: Bicky Corman, Deputy Associate Administrator,
Office of Policy, EPA
The Office of Policy reviews all EPA regulations and supports the Agency in economic
analysis and climate adaptation. It also contains offices that manage voluntary programs,
such as the Office of Sustainable Communities. They are now engaged in helping the
Administrator prepare a response to the National Academy of Sciences' Green Book. The
Green Book responds to the Administrator's request for a report in the fall of 2010. It
follows the Academy report called the Red Book, which provided recommendations to
EPA and other agencies on the use of risk assessment and a management framework for
all research and decision-making. The new report will determine whether it is time to
shift from risk assessment, and consider sustainability and other factors. A new approach
would recognize the fact that the more egregious environmental problems have been
remediated (e.g., rivers no longer catch fire). So, how do we, or should we, catch the
sustainability aspect and apply the new tools available? For finance, we are shifting to
other areas. How does it fit with other development planning and how do we engage it.
All agencies are under an Executive Order to consider sustainability in their operations:
How much energy is consumed by employees going to and from work? How much
energy is consumed in photocopying? How big is the external footprint? Regulations are
one way we interact with the external world, as well as with provisions of technical and
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financial assistance, partnerships, etc. So beyond EPA's own operations, how do we
figure out how best to engage or interact on sustainability with the rest of the world?
The Green Book said EPA should incorporate sustainability and offered 29
recommendations for how to do that. EPA has convened many consultations, including
EFAB and the National Advisory Council for Environmental Policy and Technology
(NACEPT). Through a stakeholder session on information disclosure, they found that
EPA should issue sustainability reports to inform investors and community members. The
Global Reporting Initiative is a voluntary system for companies to report how much
energy or water they are using. Meanwhile, companies are being drowned in requests
from buyers for this information. Stakeholders said that EPA needs to clarify vendor
information requests, so that it will help the companies be competitive.
Another example of areas for assistance is giving a better understanding of natural
capital. Now our tools do not address that sort of thing as robustly as they might. We
could provide information on our Web site that would be useful for investors. Interest in
this information is at corporate as well as facility level. What kind of support can be
offered for green infrastructure, e.g., SIMS Recycling Solutions (SRS), information on
how to access financing information. As for financing at the municipal level, in the
District of Columbia, Property Assessed Clean Energy (PACE) financing is used at the
commercial level. A huge issue is how to afford all the things we need and want to do.
One of the most powerful things at the EPA level is to "walk the walk." However, we
may not be availing ourselves of S codes, etc. as DoE does.
Q&A
• DavidEberle: The questions to struggle with at the local level include: If
sustainability is defined by regulations, what about the environment? What is the
definition of ecological sustainability? This is difficult to answer because the
environment doesn't have bounds. What is a sustainable ecosystem in an urban
environment? How do we articulate that in outreach efforts? We confront this in
local public hearings when we want to exclude humans from certain areas.
Ms. Gorman: That's one thing EPA will be working on. The definition of
sustainable used by the President in his Executive Order is: "using resources
today in a way that they will be available for future generations." Mr. Eberle:
This is more complex than time, value, or money in an ecosystem. How do we
explain to the public, why they can't build their house in a particular area or can't
put waste in the storm drains? We need support to explain why we implement
what we do. Ms. Gorman: Many others also want to know the best way to
communicate these things. Ultimately, it should make implementation more
efficient and reduce the number of regulations at each stage. At the community
level, we need to explain how this will improve people's quality of life—more
parks, shorter drive to work, etc.
• Cynthia Williams: Who wants better tools for valuing services? Companies are
drowning in requests for information. The Global Reporting Initiative (GRI) was
developed over many years. Investors want information in an aggregated
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company-by-company framework. It would make sense for the EPA and the
Securities and Exchange Commission (SEC) to work together. How has SEC
guidance affected EPA? Ms. Gorman: EPA's Office of Policy helped the SEC
write guidance on company disclosures. She agreed that this collaboration is a
good idea. Companies want more assistance in valuation when making internal
investments. And these comments are being heard as well from sister agencies
such as the U. S. Department of Agriculture (USD A) forest resource valuation
and the Organization for Economic Co-operation and Development (OECD).
• Sara Pesek: What does it mean that stakeholder partnerships are cut for EPA?
Ms. Gorman: 2 HUD grants are involved in partnership issues. USDA and DOT
are involved in robust partnerships. In stakeholder sessions, EPA was asked why
the Department of Health and Human Services (HHS) was not involved. But, now
we are talking to HHS and other agencies. We are working together to form the
National Prevention Council. Just because HHS is not a formal partner doesn't
mean we're not working with them. Ms. Gorman is also the EPA representative
for the Great Outdoors Initiative.
• Mr. Mason asked what the major milestones would be in a strategy to achieve the
29 recommendations. Ms. Gorman: EPA is still deciding whether to move
forward with sustainability, recognizing that they are not the first to enter the
sustainability arena, that corporations and municipalities are already there. EPA
wants to know how to add value to their initiatives. What do they need to do to
make it more coherent? How do we drive into our own culture a more rigorous
approach to sustainability? Sustainability is assumed to be voluntary, but we must
put that into a regulatory framework. It's not a one-off; this is part of our core. An
example of a success story is the Kendall Generating Station in Cambridge,
Massachusetts, which discharged hot water into the Charles River, potentially
harming fish. They built a pipeline to get the excess heat to Boston, which
lowered the temperature of the discharged water, cleaned the water, and improved
conditions for the fish. EPA can change its own performance and get training to
more broadly disseminate information.
• Mr. Hughes: The main question at the local government level is how to pay for
these improvements. It is fascinating to see what can be borrowed from the
federal government—there are exciting finance mechanisms, but they are few.
More typical for small government is grant financing. Sustainability is hoped to
be self-financing, but sometimes it is not, even though it makes economic sense.
Will sustainability be treated like safety and education, or like water and air? EPA
should not give an oversimplified view that sustainability will pay for itself.
Grant-financed projects are closing, and if communities are not willing to invest
public revenue, those projects will not continue. The general resource pots are not
flush now. Ms. Gorman: The District of Columbia did a lot with American
Recovery and Reinvestment Act (ARRA) money. Some 80 cities formed a
voluntary network for exchange, and at the next level down asked EPA support to
do the same. All asked what to do after ARRA funds disappeared. If a project is
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not self-sustaining, where does the money come from? We must show why
investments should be made.
• Philip Johnson: The EPA-DoE-USDA partnership is super-critical because they
are the critical agencies for biofuels. The biomass-to-ethanol process is still in its
infant stage technologically. The price of fossil fuels will make biofuel technical
processes more affordable. Emissions are only one issue. Programs are trying to
figure out the sustainability of growing crops for biomass and costs associated
with growing, harvesting, building a plant to convert biomass to biofuel, and
assessing emissions. All this has implications for the U. S. economy, and within 3
to 4 years, breakthroughs will occur in technology. These impacts have been
determined for the benefit of commerce, e.g., Honeywell has the technology to
create hydrocarbon fuel from wood, which implies that 40 million to 50 million
acres will be devoted to wood biomass, which will pit the energy industry against
the pulpwood industry. Such conflicts must be resolved. This is a critical issue, so
these partnerships will be very important. And, if we reduce the use of fossil fuel,
it will revolutionize the economy. Sustainability overall, as seen in this country, is
working with communities on these issues, where the partnerships are substantial.
To advance these ideas, we should get to the middle schools and involve the
educational process. Ms. Gorman stated that the NAS opined that the biofuel
legislation would have benefited from a sustainability analysis.
V. S.-BrazilJoint Initiative on Urban Sustainability: Shalini Vajjhala, Special
Representative, Office of the Administrator, EPA
In 2011, President Obama and Brazilian President Dilma Rousseff announced the U. S.-
Brazil Joint Initiative on Urban Sustainability (JIUS). This partnership started with the
cities of Rio de Janeiro and Philadelphia and reflects the priority both Presidents place on
investing in infrastructure and sustainability.
Rio de Janeiro has daunting infrastructure problems, beginning with the difficult terrain,
and including very poor coverage for water and sanitation services and high-levels of
electricity loss and theft. In the next 4 years the city expects to put in approximately $200
billion in infrastructure in preparation to host major events, including the 2014 World
Cup final and the 2016 Olympics. The push represents an opportunity to create a template
for investing in sustainable infrastructure. The city wants to scale up investments in
infrastructure that will continue to have value in the future for the residents, rather than
making short term investments only for the mega-events.
Because of the volume and diversity of infrastructure investments being planned, the City
of Rio has the opportunity to serve as a new model for financing large-collections of
small green infrastructure projects by bundling projects (either geographically or
sectorally) in ways that can be treated as a single portfolio by investors.
With increasingly constrained local budgets and resources, many cities face challenges
associated with leveraging private financing for energy, water, transportation, and other
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infrastructure systems. For example, the City of Philadelphia recently announced a plan
to replace their aging storm-water system with a 100% green storm-water system, but the
city still faces serious challenges associated with financing this new system over the next
20 years.
Through the JIUS, EPA, along with local partners in Philadelphia and Rio, has been
working to bring together and bundle sustainable infrastructure projects into large-scale
portfolios and to mobilize investment in cleaner greener infrastructure. Municipal
replacements, especially with green infrastructure, usually happen incrementally, but
investors want things done at once in a single package. JIUS serves as a bridge to
aggregate small, diffuse sustainable projects and create investable portfolios. To
document these efforts, JIUS participants have developed a "cookbook" for a green
economy with project recipes, finance mechanisms, and a menus of related policies (See:
www.epa.gov/jius).
The JIUS has also been working to address "value capture," one of the most important
potential aspects of financing sustainable infrastructure. For example, a portfolio of food
waste to energy projects can generate direct revenues but also reduce costs of waste
collection and water treatment where cooking oil and food are diverted from wastewater
treatment systems, thereby providing savings to the city. Neither the electricity
department nor the water department typically has the incentive to develop such projects
alone, but when a city bundles these types of electricity, water, and energy revenues and
savings, the projects can form a viable large-scale portfolio.
Similarly, Philadelphia has an annual budget to repair flooded basements when its water
mains break, but that money cannot be used for infrastructure replacement. By investing
in green infrastructure that reduces flood risk and clean-up costs, the City has the option
to capture the savings in its budget as an additional revenue stream. Value cannot be
captured when these projects are done small bits at a time.
Another example from Rio de Janeiro is investment in redevelopment of one of the
biggest landfills in the world, in which a community of some 1200 waste-pickers are
being displaced in the process of converting the landfill to a Clean Development
Mechanism financed methane capture project. By working with a wide range of partners,
the JIUS has connected partners to generate an investable masterplan for the entire
district, including components such as an electronic waste recycling facility and job
training center for the displaced wastepickers.
The JIUS platform (launched at Rio+20) highlights how government can work with the
private sector—knowledge partners, finance partners, and technical partners to take the
experience and knowledge from Rio and Philadelphia to other cities and facilitate the
development of new green infrastructure masterplanning approaches and financing
strategies. JIUS is just one example of the creativity within EPA and the importance of
collaborating with the private sector and communities to protect the environment while
promoting economic growth, especially for underserved communities.
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Q&A
• Mr. Uku: How does a city like Pittsburgh, with an annual operating budget of
$30 million to $40 million for sewer services, tap into such a thing? Ms. Vajjhala:
The JIUS is intended to serve as a model for cities like Pittsburgh by showing
what policy, finance, and project-level entry points are available to a city. For
example, you can start with where cities are losing money, e.g., traffic accidents
in Pittsburgh that involve the health sector in addition to the transportation sector
and stormwater management system, where additional investment in
infrastructure could help generate revenues and reduce costs/losses.
• Mr. Liu had heard similar concepts discussed in other states where they talk about
debt limits and recommend setting up a temporary special-purpose authority, e.g.,
New York City's authority to issue bonds during a past debt crisis. States can
fund everything from computers to police cars to wastewater treatment. But, when
you pool, how do you homogenize your credits? In the U. S., the benefit of
issuing bonds is their tax-exempt status, but internationally that is not true. Since
the financial credit crisis of 2008, investors are more critical but they don't have
time to analyze all relevant data, so EFAB could recommend making more
information available. Ms. Vajjhala: We've found many of these same issues in
our work on the JIUS. The biggest problem is that investors are looking for
project pipelines, but there is very limited capacity at the local levels for project
preparation and evaluation. They are all doing tiny projects with locally available
capacity and resources. We are talking about a model of portfolio finance on how
to link funds and projects, but also create the delivery mechanisms and
institutional structures for implementation. In the past, special-purpose authorities
have been established: in Rio de Janeiro, they restructured the major port with a
municipal corporation to issue bonds for 15-20 years. This new authority is
working with federal banks to manage concessional land transfers and
homogenize credits for new development. In many cases, there are no existing
authority structures for delivering green infrastructure systems with cross-sectoral
benefits, so we have been working with partners through the JIUS to identify the
legal and institutional opportunities for innovation. Risk can be mitigated through
government involvement. A large part of the risk is getting buy-in from
communities, developers, investors, and governments, and we are trying to find
the middle ground.
• Ms. Patten: The cost-saving theory is similar to privatization. She wants to
understand the more detailed components, such as interactive cost-saving
opportunities. Her experience in terms of insuring privatization is that to be
effective, we need contractual changes with the labor force and underlying
providers, but more important, we need a culture change. Implementation was the
killer. Ms. Vajjhala agreed that culture change is crucial. Reinsurance and climate
finance mechanisms offer models. JIUS partners have definitely encountered
some contractual and procurement issues, but they are tackling these issues
portfolio by portfolio. In Rio de Janeiro, the greatest potential benefits associated
with investment in water infrastructure are reduced landslide risk and incidence.
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Part of the Civil Defense budget goes to landslide mitigation and clean up, but if
they reinvest in water management, they can potentially reduce their most severe
risks.
• Mr. Eberle asked who in an office deals with bundling across states.
Ms. Vajjhala: Dan Carol, working with the Governor of Oregon, has a regional
investment model for bundling. Check out the West Coast Infrastructure
Exchange.
• Mr. Johnson seeks a contact for someone to help work with multi-nationals and
contracting opportunities. Ms. Vajjhala: Suggest reaching out to JIUS colleagues
at the International Trade Administration Brazil desk at the Department of
Commerce and the Select USA program.
• Sarah Diefendorf: California just finished a document for the United Nations
Development Business (UNDB), and in 100% of the 100 case studies, there had
to be capacity building to service the financial tool and reduce risk. People need
to buy into not having free energy, and then they need a payment structure to pay
if they're convinced. Ms. Vajjhala: There have been a good range of case studies,
e.g., local technical cases. In the JIUS, we have done capacity building at a few
levels, e.g., job training is a long-term value of portfolio that is building a core of
educated citizens who can continue the project. For example, the Inter-American
Development Bank gave the State of Rio de Janeiro a grant to hire a team of
people to develop the plans and financial models for a set of green districts. At the
community level, part of what is happening in Brazil can be explained by the
presence of its huge middle class. Therefore, electricity theft does not always
mean that residents can't pay. We have to assess the revenue potential on a
portfolio by portfolio basis—it's not one size fits all. And, we will only see
successes with the right mix of people involved.
• Mr. Raskins: How does what you're doing relate to EFAB and how might we
contribute? Ms. Vajjhala: Some of our biggest challenges are getting the
financial mechanism and institutional design mechanisms right. JIUS partners will
take all the help they can get. It's a big stretch before Rio+20 (the United Nations
Conference on Sustainable Development). We want to focus on economic and
social benefits, not just the financial portfolio, and guidance from EFAB could
have tremendous value.
• In response to Leanne Tobias, Ms. Vajjhala said they have engaged the
philanthropic foundation community. In fact, JIUS has been done with very little
direct financing or grants from EPA, and some limited funding from the State
Department. Instead, the government partners have served as catalysts to convene
partners and make policy priorities and projects visible. Much of the rest of the
work has been supported by foundations, including the Rockefeller Foundation,
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which provided a grant to a Brazilian Foundation to begin and facilitate the
initiative.
Report Out: Green Infrastructure (Water): Lindene Patton & Chiara Trabucchi, Work
Group Co-Chairs
Ms. Patton: The Agency asked them to look at financing options for green infrastructure,
and they began by trying to identify the limits for green infrastructure. The Agency is
primarily interested in green waste-water solutions for storm water, and the area where
the benefits of gray must be compared with green solutions. Documents were assembled,
including sourcing from federal, state, and NGO, and organized for full distribution in
preparation for the next scheduled call. In addition, the City of Philadelphia gave
additional information about their report—what they wrote about and didn't, what needs
to be done, special research needs:
1. Intersection of capital expenses versus operation and maintenance (green pushes).
With gray infrastructure, it is easy to ignore green. We need to understand the
legal and cultural barriers to arrive at long-term financing.
2. The impact of regulatory measures. Outline possible negative consequences of
what green infrastructure might do.
3. How this can be done in the context of storm-water management, highway
construction, and decision-making impacts, and how to adjust criteria for
expenditures.
4. The importance to integrate green solutions into master plans.
The work group agreed to circulate a revised outline and research material before the next
conference call (i.e., four to six weeks), and a draft document for the fall meeting.
Report Out: Energy Efficiency/GHG Emissions Reduction: Karen Massey & Ann
Grodnik, Work Group Co-Chairs
Ms. Grodnik: The work group received a charge from Region I asking for information
and guidance on finance for small and medium cities. Much information is available, but
there is no "silver bullet" in the financing realm. The approach thus far has been to
compile a checklist for each step in a retrofit process—implementation, financing,
maintenance. A quick payback retrofit might offer an opportunity to speak with elected
officials in the region; points were made about the lack of political will (This calls for
clarification with Region I). The work group's first step is to reconvene and determine
exactly who the audience is. We need to check in with the Region I contact; when we
have the charge we will update the draft and share it with EF AB in the fall and finalize it
for the spring meeting.
Ms. Massey: We have a preliminary draft and we need to compile the checklist. There is
much information, but we want to see where value can be added. We have an extensive
reference list and case studies to consider. It will be an evolving paper.
Q&A
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• Mr. Johnson: The District of Columbia created a Sustainable Energy Utility,
funding it with 20 per kwh. They went to 7,000 low-income apartments and
changed all faucets to lower water usage, upgraded lighting to LED, retrofitted
heating plants, and exchanged appliances to EnergyStar appliances. It is a
program to work with homeowners, who pay $100 for these services. There are
implications for reduction of water and energy use. About 30% of electricity in
Washington comes from energy-renewable sources, e.g., solar. In future, only
renewable sources inside the city's border can be used. This involves energy,
building materials, etc. for overall energy use in private, commercial, and
residential buildings.
Water Technology Innovation Cluster: Jennifer Orme-Zavaleta, Director, National
Exposure Research, Office of Research and Development, EPA
The Water Technology Innovation Cluster (WTIC) is an effort captured in the Water
Program. The Agency's research needs far exceed what can be done alone, so the agency
is trying to build a partnership with other agencies, the community, etc. to accomplish
goals. This started with the Small Business Administration (SBA). We need more cost-
effective technologies, especially for small systems. To deal with these problems, we
can't use the same mindset that got us here in the first place.
Administrator Jackson and SBA Administrator Karen Mills announced 18 months ago
the formation of the WTIC in the Cincinnati Region. EPA was to be a catalyst, wanting to
spur economic development and create jobs; SBA wanted to help developing companies.
EPA cannot continue the same level of support forever, so the question becomes how
WTIC can take greater ownership and be more self-sustaining. The goal is to look at how
they can solve water problems and create economic opportunities at the same time. This
effort is consistent with several internal frameworks, e.g., EPA Technology Roadmap, the
Office of Water's New Drinking Water Strategy, and the Office of Research and
Development (ORD) Safe and Sustainable Resources and Sustainable and Healthy
Communities research plans. We are trying to build it into the culture and what is being
done with research programs and partnerships. EPA forged a partnership between EPA
research talent in the Cincinnati region and outside people. EPA is also getting a number
of EPA groups to work together more closely.
In the first year, EPA used a Small Business Innovation Research (SBIR) proposal to
convene the Water Challenges Workshop, hold monthly meetings of the WTIC board,
begin a website and branding effort, and deal with international attention, e.g., France,
China, Israel, Singapore. WTIC interacts with many universities, corporations, start-up
companies, support groups, and state, local, and federal governments. Governing has
evolved to a part-time executive director with a small staff, and Confluence has been
established as the brand.
They started with the Cincinnati region because EPA already has had a research presence
there since the late 1970s, and there is a cadre of expertise in the region. The effort has
received praise from water companies. It addresses how to better develop new
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technologies and facilitate the process of moving from idea to market. This year, an
internal ORD solicitation was designed to foster researcher relationships with start-up
companies in the Cincinnati region and commercialization of EPA-developed
technologies. It focuses on water treatment, monitoring, and IT issues.
Possible future opportunities might be EPA further leveraging WTIC to investigate
technology push language in regulatory packages or using innovative SRF approaches.
Upcoming WTIC and EPA actions include: policy technology discussion at the U. S.-
Africa Business Conference in June, release of a STAR Grant Solicitation in FY2012/13,
announcement of EPA-sponsored research, and a conference, "100 Years of Federally
Sponsored Water Research" in May 2013. Other cluster activities include collaboration
for environmental sustainability of southern New England, applying a systems
approach—economy, society, environment—on nutrient loadings (both point and
nonpoint), life cycle assessment, and water use for chemical manufacturing.
Q&A
• Mr. Raskins: One aspect is helping small business and local economy regionally
and then forming other clusters regionally or more nationally.
Ms. Orme-Zavaleta: This initial effort is regional, but it's open, e.g., Philadelphia
is very interested.
• Ms. Surgeon asked about international efforts and whether there was technology
exchange with other countries, e.g., Israel, South Africa, China.
Ms. Orme-Zavaleta: Some discussion has been begun, but the Office of
International and Tribal Affairs also has established such channels, e.g., Australia
has quantity technology and looks to us for quality technology. Many tools are
available to us.
• Donna Ducharme: How did you decide this was the right strategy for this region?
If you have a template, can you share it? Milwaukee also has a strong focus on
water. Ms. Orme-Zavaleta: Serendipity led us to begin in the Cincinnati region
because people with the needed expertise were already there. Sally Guiterrez
(EPA/ORD Sustainable and Healthy Communities Program) and she want to lay
out the approach and business plan in a generic mode so other regions and
interests can use it. Mr. Shapiro: Much of the work for 100 years of water
research was done in Cincinnati, and the city shared its facilities with EPA, so it
was a de facto partnership to use as a natural core to expand upon.
Ms. Orme-Zavaleta: They are working with the Office of Water to produce a
how-to guide.
• Ms. Tobias: Will things from the Cincinnati area be useful in the forthcoming
New England effort? Ms. Orme-Zavaleta: Some efforts are underway and she
would welcome information on any cross-links.
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• Ms. Massey asked about the "technology push" in regulatory issues. Mr. Shapiro
would say, rather, that they are looking at new regulations from a broader
perspective to see how, by shaping regulations, they can encourage innovation
and provide running room for different technologies. Most regulations are based
on the assumption that we picked the best technology. We usually operate around
performance standards, rather than picking a particular process. Ms. Massey: SRF
is a great opportunity, but states are defensive about putting new requirements on
the SRF. Here is an opportunity for pilot studies; SRF administrators would
probably be willing to showcase their work.
• Ms. Diefendorf, as a former reviewer, observed that products chosen seem to be
the unique rather than the economically viable. Ms. Orme-Zavaleta wants a blend
of both cool and innovative products with practical and economically viable ones.
• Ms. Peay echoed the need for further collaboration. One thing they are striving for
is additional flexibility to deploy. It is important to enhance collaboration.
Mr. Shapiro will follow up and work with WTIC.
Public Comment
There were no comments.
Summary of Day 2 and Closing Remarks: Karen Massey & Mike Shapiro, Designated
Federal Official
Mr. Shapiro: Good information was shared even where they didn't have complete
agreement. Follow-up items include:
• The Tribal Environmental Programs Work Group will draft a letter of support for
the Administrator to work with the Treasury Dept to approve use of tax-exempt
bonds for the Tribes. The letter is to be drafted with two key supporting
documents. In parallel, due diligence will be conducted with the General
Counsel's office to be sure such a letter falls within the scope of EFAB's role.
• The Transit-Oriented Development workshop will convene tomorrow, where they
will collect insights and information, etc.
• The work groups on Drinking Water Pricing and Infrastructure Investment,
Energy Efficiency, GHG Emissions Reduction, Green Infrastructure, and Clean
Air Technology are all committed to having drafts for the next meeting.
The next meeting will be held in the fall, but no date has been selected. Preferred dates
will be identified. The current plan is to have another version of the video teleconference
format, but those who are planning to be in Washington, DC, anyway may be able to
meet. A sub-option is the use of teleconference clusters.
The discussion on JUIS partnership, as well as cluster activity, suggested that EFAB may
have an opportunity to work with sponsors of those projects. We will continue to work
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with Ms. Orme-Zavaleta and Ms. Vajjhala, but first we must finish some projects already
underway. Everyone is facing financing challenges. Mr. Shapiro was impressed with the
work the EFCs are doing; there is an opportunity for EFCs and EFAB to support each
other's efforts.
Ms. Massey thanked participants for their work on water pricing, facilitating getting new
technologies on the market, and engaging the private sector, among others.
Vanessa Bowie will send out possible fall meeting dates early in June.
Ms. Bowie reported that EFAB is actively recruiting for new members (now 23 with the
loss of Mr. Mason), including a chair; the charter calls for 30. This will be announced in
the Federal Register, but Ms. Bowie asked members to suggest people.
Ms. Peay thanked Ms. Massey for being willing to act as chair until a new one can be
found, and Mr. Shapiro and the team for putting together a good meeting. She favors
face-to-face rather than virtual meetings.
Mr. Cobb thanked Ms. Peay and Mr. Rittner for volunteering to serve on the Tribal
Environmental Programs Work Group. He, too, favors a face-to-face meeting.
Ms. Tobias also favors face-to-face meetings because they facilitate discussion, and she
and other members would be willing to help staff overcome barriers to convening them.
Ms. Surgeon thought having a workshop meeting the day after a board meeting was an
excellent idea and thought other work groups should do this, too.
Mr. Shapiro adjourned the meeting at 3:15 PM.
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Participants
Members Present
Helen Akparanta, Assistant Attorney
General/Senior Counsel
Office of the Attorney General
Maryland Department of Environment
Baltimore, MD 21230
Gavin Clarkson, Associate Professor
University of Houston Law Center
Houston, TX 77204-6060
William Cobb, Vice President,
Environmental Services and Sustainable
Development
Freeport-McMoRan Copper & Gold Inc.
Phoenix, AZ 85004
Eric Draper, Executive Director
Audubon of Florida
Tallahassee, FL 32303
Donna Ducharme, Executive Director
Delta Institute
Chicago, IL 60604
Rick Giardina, Vice President
Malcolm Pirnie
Denver, CO 80206
Ann Jennifer Grodnik, Senior
Associate, Finance
Center on Wisconsin Strategy
University of Wisconsin
Madison, WI 53706
Scott Haskins, Vice President, Global
Water Business Group
CH2M Hill
Belluvue, WA 98004-4505
Philip Johnson, President/CEO
Green Terra Energy Corporation
Washington, DC 20036
Thomas Liu, Managing Director
Merrill Lynch, Pierce, Fenner, and
Smith, Inc.
New York, NY 1003 6
Gregory Mason, Chief Operating
Officer
Georgia Environmental Finance
Authority
Atlanta, GA 30303
Karen Massey, Deputy Director
Missouri Environmental Improvement
and Energy Resource Authority
Jefferson City, MO 65102
Mathilde O. McLean
Treasurer, New York City Water Board
NYC Department of Environmental
Protection
Flushing, NY 11373
Lindene E. Patton
Chief Climate Product Officer
Zurich Financial Services
New York, NY 10003
Sharon Dixon Peay, Financial
Administrator
Office of the State Treasurer
State of Connecticut
Hartford, CT 06106-1773
Tobias Rittner, President and CEO
Council of Development Finance
Agencies
Columbus, OH 43215
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EPA Environmental Financial Advisory Board
May 22 - 23, 2012
27
Wayne Seaton, Managing Director
Government and Institutional Banking
Wells Fargo Securities
New York, NY 10152
Blanca Surgeon, Rural Development
Specialist
Rural Community Assistance
Corporation'
Santa Fe, NM 87505
Leanne Tobias, Principal
Malachite, LLC
Bethesda, MD 20816-1248
Chiara Trabucchi, Principal
Industrial Economics, Inc.
Cambridge, MA 02140
Eustace Uku, President
Exico, Inc.
Pittsburgh, PA 15222
Cynthia Williams, Professor of Law
University of Illinois College of Law
Champaign, IL 61820
Michael H. Shapiro, Deputy Assistant
Administrator and EFAB DFO
US Environmental Protection Agency
Washington, DC 20460
Members Absent
James Gebhardt
Chief Risk Officer
The BondFactor Company LLC
New York, NY 1003 6
Steve Thompson, Executive Director
Oklahoma Dept. of Environmental
Quality
Oklahoma City, OK 73101-1677
Expert Witnesses
Sarah Diefendorf, San Rafael, CA
David Eberle, Boise, ID
Heather Himmelberger, Albuquerque,
NM
Jeff Hughes, Chapel Hill, NC
Sam Merrill, Portland, ME
Kevin O'Brien, Cleveland, OH
Sara Pesek, New York, NY
Joanne Throwe, College Park, MD
Speakers
Barbara Bennett, Chief Financial
Officer, EPA
Bicky Gorman, Deputy Associate
Administrator, Office of Policy, EPA
Jennifer Orme-Zavaleta, Director,
National Exposure Research, Office
of Research and Development, EPA
Shalini Vajjhala, Special Representative,
Office of the Administrator, EPA
Expert Witnesses Absent
Jan Beecher, Cleveland, OH
Angela Buzard, Wichita, KS
Lauren Heberle, Louisville, KY
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