ENVIRONMENTAL PROTECTION AGENCY
       ENVIRONMENTAL FINANCIAL ADVISORY BOARD
                     STRATEGIC ACTION AGENDA
                            Fiscal Years 2005-2006
BACKGROUND

The nation has made huge investments in, and significant progress toward, controlling pollution
discharges and restoring environmental quality. Much of the credit for this success is due to EPA's
use of regulatory and enforcement tools, and to the transfer of significant resources from the federal
government to state and local governments to help construct environmental infrastructure.

Two trends challenge our ability to maintain and improve our standard of environmental quality.
First, needs and expectations for environmental protection continue to grow.  Second, federal
deficits, tax reduction  initiatives,  and growing overall  demands on state resources  constrain
traditional public sources of environmental funding. The result is an increasing tension between the
costs of environmental protection and the resources available to meet those costs.

To address these environmental and resource challenges in a sustainable manner, EPA will need to
consider the full range of finance-related alternatives available.  This effort will include traditional
regulatory and enforcement tools and federal assistance programs. It will also require innovative
projects and technologies, improved efficiencies, creative financing techniques, and leveraged
public-private partnerships.

The Environmental Financial Advisory Board (EFAB) and Environmental Finance Center (EFC)
Network look to be an integral part of this EPA effort.   EFAB is chartered under the Federal
Advisory Committee Act to advise EPA on environmental finance issues, options, proposals, and
trends.  EFAB seeks practical ways of lowering costs and increasing investments in public purpose
environmental facilities and services. The EFC Network consists of nine university-based programs
that deliver traditional and innovative financial outreach services to the regulated communities.

EFAB is supported by EPA's Office of the Chief Financial Officer. EFAB's Chair is Lyons Gray
of North Carolina.  Its Executive Director and Designated Federal Official is A. Stanley Meiburg,
Deputy Regional Administrator, Region IV.  EFAB's plans and operations are aligned with the
major environmental goals presented in EPA's strategic plan.

EPA GOALS AND EFAB ISSUES

EFAB's work is organized in support of the five major goals in EPA's Strategic Plan 2003-2008:

1.      Clean  Air and  Global Climate Change  Protect and improve the air so it is healthy to
       breathe and risks to human health and the environment are reduced. Reduce green house gas
       intensity by enhancing partnerships with businesses and other sectors.
2.      Clean and Safe Water  Ensure drinking water is safe.  Restore and maintain oceans,
       watersheds, and their aquatic systems to protect human health, support economic and
       recreational activities, and provide healthy habitat for fish, plants, and wildlife.

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3.      Land Preservation and Restoration Preserve and restore the land by using innovative
       waste management practices and cleaning up contaminated properties to reduce risks posed
       by releases of harmful substances.

4.      Healthy Communities and Ecosystems  Protect, sustain, or restore the health of people,
       communities, and ecosystems using integrated  and comprehensive approaches  and
       partnerships.

5.      Compliance and Environmental Stewardship  Improve  environmental  performance
       through compliance with environmental requirements, preventing pollution, and promoting
       environmental stewardship.  Protect human health and the environment by encouraging
       innovation and  providing incentives for governments, businesses, and the public  that
       promote environmental stewardship

In its own strategic planning process, EFAB annually applies these thematic EPA goals in the
context of the requirement in its charter to provide advice and recommendations on the following
issues:

       Reducing the cost of financing environmental facilities and discouraging polluting behavior;

•      Creating incentives to increase private investment in the provision of environmental services
       and removing  or reducing constraints  on private  involvement  imposed by  current
       regulations;

•      Developing new and innovative environmental financing approaches and supporting and
       encouraging the use of effective existing approaches;

       Identifying approaches specifically targeted to small community financing;

       Assessing government strategies for implementing public-private partnerships, including
       privatization,  operations  and  maintenance  issues,  and  other  alternative financing
       mechanisms;

•      Improving governmental principles of accounting and disclosure standards and how they
       affect environmental programs;

       Increasing the  capacity  of state  and local governments to carry out  their respective
       environmental programs under current Federal tax laws;

•      Increasing the  total  investment  in  environmental  protection  of public and  private
       environmental resources to help ease the environmental financing challenge facing our
       nation; and

       Removing barriers and increasing opportunities for the  U.S.  financial services  and
       environmental goods and services industries in other nations.

Based on these goals and obj ectives and input from the Agency, EFAB develops its Strategic Action
Agenda describing the workgroup structure and listing completed, ongoing, and new proj ects. Each
citation gives the project title, lead workgroup, the Agency's strategic plan goal, and the primary

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customer to be served. Given the number, scope, and nature of the issues, workgroups take the lead
in developing projects for consideration and approval by the Full Board.

CURRENT EFAB WORKGROUPS

      ^    Combined Operations of the State Revolving Fund Programs: Chaired by Sonia
            Toledo, Lehman Brothers, New York, NY

      *     Non-Point Source (Watershed) Financing: Chaired by Langdon Marsh, National
            Policy Consensus Center, Portland State University, Portland, OR

      *    Affordability Issues: Co-chaired by John McCarthy, Shelter For Life International,
            Oshkosh, WI and Dr. Andrew Sawyers, Maryland Department of the Environment,
            Baltimore, MD

      *    Innovative Environmental Financing Tools: Chaired by Michael Curley, The
            International Center for Environmental Finance, Lutherville, MD

      *    Preventing Future Non-Funded Abandoned  Sites (Financial Assurance): Co-
            chaired by  A. James Barnes, Indiana University, Bloomington, IN and Mary
            Francoeur, Financial Guaranty Insurance Co., New York, NY

      *    Useful Life Financing of Environmental Facilities: Chaired by George Butcher,
            Goldman Sachs & Co., New York, NY
STATUS OF EFAB PROJECTS
                         Completed Projects FY 2005

1.     Non-Point Source (Watershed) Financing
            EPA Strategic Goal: Clean and Safe Water, Healthy Communities and Ecosystems
            Primary Customer: Office of Water

2.     Useful Life Financing of Environmental Facilities
            EPA Strategic Goal:  Clean and Safe Water
            Primary Customer: Office of Water

3.     Combined Operations of the SRF Programs
            EPA Strategic Goal:  Clean and Safe Water
            Primary Customer: Office of Water

4.     Innovative Environmental Financing Tools
            EPA Strategic Goal: Clean and Safe Water and Land Preservation and Restoration
            Primary Customer:  Office of Water and Office of Solid Waste & Emergency
                                Response

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                           On-Going Projects FY 2005
1.     Affordability Issues
             EPA Strategic Goal: Clean and Safe Water, Compliance and Environmental
             Stewardship
             Primary Customer: Office of Water

2.     Preventing Future Non-Funded Abandoned Sites (Financial Assurance)
             EPA Strategic Goal: Land Preservation and Restoration and Compliance
                                 and Environmental Stewardship
             Primary Customer: Office of Solid Waste and Emergency Response and Office
                                of Enforcement and Compliance Assurance
       This strategic action agenda is a flexible planning tool and it will be revised and updated
       during the fiscal year as needed. Any revisions will be shown on the Board's home page at:
       http ://www. epa. gov/efmpage/efab .htm

       The summer meeting of the Full Board  is scheduled for August  15-16, 2005 in San
       Francisco, CA. The primary purpose of  this meeting is  to discuss progress with work
       products under EFAB's current strategic action agenda and to develop an action agenda to
       direct the Board's ongoing and new activities. The next winter meeting of the Full Board is
       scheduled for March 7-8, 2005 in Washington, DC.  The primary purpose of this meeting
       is to hear from informed speakers on environmental finance issues, proposed legislation,
       Agency priorities and, to discuss progress with work products.

       EFAB members also contribute their time to assisting other EPA initiatives, most notably
       the Environmental Finance Center (EFC)  Network. The  EFC Directors serve  as expert
       witnesses to the Board and 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,
       Environmental Finance Program, at (202) 564-5186 orbowie.vanessa@epa.gov.

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