Combined Operations of the Clean Water and Drinking Water State Revolving Loan Fund (SRFs)


                  UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                 WASHINGTON, D.C. 20460
'% PRO*'
                                                                              OFFICE OF
                                                                         CHIEF FINANCIAL OFFICER
        Headquarters Library
   Room 3340 EPA West Building
   MC: 3404T
   Washington, DC  20460

   Dear Sir/Madam:

          Enclosed are two copies of the Environmental Financial Advisory Board's (an
   EPA Federal Advisory Committee), report titled, "Combined Operations of the Clean
   Water and Drinking Water State Revolving Loan Fund (SRFs)" for your records. If you
   have any questions, please call me at 202-564-5186.
                                     Vanessa Y. Bowie, Director
                                     Environmental Finance Staff
    Enclosures
                                  Internet Address (URL) • http //www epa gov
          Recycled/Recyclable • Printed with Vegetable Oil Based Inks on 100% Postconsumer, Process Chlorine Free Recycled Paper

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ENVIRONMEI TAL FINANCIAL ADVISORY BOARD
Chair. 3.i(Jnt
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Julie rn!.aqa
John Hul tid
George Ililicher
Donald Cone!!
Pflchael Curlc
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belly Do..nard
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&incenl Girardy
June 12, 2006
Honorable Benjamin Grumbles
Assistant Administrator for Water
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue NW.
Washington, DC 20460
Dear Mr. Grumbles:
As you suggested in your letter of July 21, 2005, members of the Combined
Operations Workgroup of the Environmental Financial Advisory Board (EFAB)
presented our advisory paper on joint Clean Water and Drinking Water State
Revolving Fund (SRF) perations to the State/EPA Work Group on November 2,
2005, in Chicago. Your office had forwarded the paper to the Work Group for
comment, and we appreciated the opportunity to meet with them to present the
results of the Board’s work.
Sine Grossman
Jennifer Ilernander
Stein ‘1ahfood
Langdon .‘lai5h
John ‘IcCarth)
Cherle Rice
helen Sahi
Andre.. Sa . .ycrs
Jim Smith
Greg S.. a liz
Sonia Tolv’dn
Following the presentation, a lively discussion ensued. The majority of the
Work Group found ment in the concept as set out in the advisory paper.
Spcc fica1ly, the Work Group adopted a motion that EPA “...undertake an
examination of what opportunities and advantages exist across a broad array of
alternatives for combined SRF operations, including but not limited, td the
combination of both funds into one single fund.”
Many States at the Work Group meeting reported that they have fGund
benefits and efficiencies through combining some aspects of fund operations. The
Board is gratified by the positive action of the Work Group and strongly reaffirms
its view that there are significant benefits to be achieved by moving, however
incrementally, toward joint operations of the two SRF programs. The potential for
these efficiencies is even more important given the reduced capitalization
contributions for the two programs in recent years and because budget constraints
have become more apparent throughout the federal government.
Jill, S 0111
— Mu /i Jii:n r - -
1. .
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Siji, ‘lciburg
.. ,igualL I i( a.i O,a’kJ ’!
We appreciate that questions, and some apprehension, remain about the
onc .pt of coAr. ’in1LIg opeiat’ons. As we aLknowledged ii our--Adviso y, we
believe that this area would benefit from a more intensive analysis that goes beyond
the anecdotal e idence provided in the EFAB report. We concur with the Stite/
EPA Work 3roup recmmendation that EPA undertake an in-depth study of
pofentia! benefits cf combining certain aspects of the operations of the two loan
. r’ grams. and to the eAtent possible, attempt to quantify them. Such an analysis
should also strive to explicitly adoress the real orperceivèd barriers to combining
Providing Advke on “110w To Pay” For Eni ironmcntal Protection

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Ideafly, the analysis would be undertaken by a neutral organi ation chosen
by EPA with a reputation for analytical skill and objectivity, and would proceed
.ith the active input of the State/EPA Workgroup. Ultimately, we hope the study
would descnbe and quantify the financial implications of joint Slate Revolving
Fund operations in the areas of fund investment, management. leveraging,
accounting and reporting, loan generation, loan monitonng, legal review and other
areas EPA and the States consider important.
Thank you again for your referral to the State/EPA Workgroup and for your
continued interest in this Important area. EFAB continues to strongly support the
concept that potential benefits and efficiencies could accrue from the expanded use
of combined operations. We would be pleased to lend our expertise to support
efforts to promote combined operations in any way you think useful
Sincerely,
i2 zu2 (
A. Stanley Meiburg
Executive Director
cc. James Hanlon, Office of Wastewater Management
Cynthia Dougherty, Office of Drinking Water and Ground Water
Lyons Gray, Chief Financial Officer

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