ENVIRONMENTAL PROTECTION AGENCY
                ENVIRONMENTAL FINANCIAL ADVISORY BOARD
                           STRATEGIC ACTION AGENDA
                                Fiscal Years 2007-2008
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 and 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, Office of Enterprise Technology
and Innovation.  The Chair of the Board is A. James Barnes, Professor of Public and Environmental
Affairs at Indiana University. EFAB's 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.

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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.

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

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•     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 objectives and input from the Agency, EFAB develops its Strategic Action
Agenda  describing the workgroup structure and listing completed, ongoing, and new projects.
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

      ^     Sustainable Watershed Financing:  Chaired by Langdon Marsh, National Policy
             Consensus Center, Portland State University, Portland, OR

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

      ^     Financial Assurance Mechanisms: Chaired by Mary Francoeur, Financial Guaranty
             Insurance Co., New York, NY

      ^     Expanded Definition of State Revolving Fund Finance:  Chaired by George
             Butcher, Goldman Sachs & Co., New York, NY

      ^     Environmental Management Systems: Chaired by Rachel Deming, Ciba Specialty
             Chemicals  Corporation, Tarrytown, NY

      ^     Leveraging:  Chaired by George Butcher, Goldman Sachs & Co., New York, NY

      if     Public-Private  Partnerships:  Chaired by John Boland, The  Johns Hopkins
             University, Baltimore, MD

      ir     Financial  Capability  Guidance:  Chaired  by  Andrew  Sawyers,  Maryland
             Department of the Environment, Baltimore, MD

      if     Sustainable  Finance Policy:  Chaired by  John Wise, Environmental Finance
             Consultant, Hidden Valley, CA
                         On-Going Projects FY 2007 - 2008
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1.     Captive Insurance as a Financial Assurance Mechanism
             EPA Strategic Goals: Land Preservation and Restoration and Compliance
                                and Environmental Stewardship
             Primary Customers: Office of Solid Waste and Emergency Response and Office
                                of Enforcement and Compliance Assurance

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2.     Environmental Management Systems
            EPA Strategic Goal: Cross-Cutting Strategy: Innovation
            Primary Customer:  Office of Policy, Economics and Innovation

3.     Innovative Environmental Financing Tools: SmartWay Upgrade Kit
            EPA Strategic Goal:  Clean Air and Global Climate Change
            Primary Customer: Office of Air and Radiation
                            New Projects FY 2007 - 2008

1.     Leveraging the State Revolving Funds
            EPA Strategic Goal: Clean and Safe Water
            Primary Customer: Office of Water

2.     Public-Private Partnerships
            EPA Strategic Goal: Clean and Safe Water
            Primary Customer: Office of Water

3.     Financial Capability Guidance
            EPA Strategic Goal: Clean and Safe Water
            Primary Customer: Office of Water

4.     Sustainable Finance Policy
            EPA Strategic Goal: Clean and Safe Water
            Primary Customer: Office of Water

STATUS OF EFAB PROJECTS
                           Completed Projects FY 2007
1.     Sustainable Watershed Financing, January 2007
            EPA Strategic Goals: Clean and Safe Water and Healthy Communities and
                               Ecosystems
            Primary Customer: Office of Water

2.     Expanded Definition of State Revolving Fund Financial Assistance, January 2007
            EPA Strategic Goal: Clean and Safe Water
            Primary Customer: Office of Water

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                            Completed Projects FY 2006
1.    Innovations in Watershed Financing: The Bay Restoration Fund Act, December 2005
             EPA Strategic Goal:  Clean and Safe Water
             Primary Customer:   Office of Water

2.    Financial Assurance in RCRA Programs, January 2006
             EPA Strategic Goals: Land Preservation and Restoration and Compliance
                                  and Environmental Stewardship
             Primary Customers:  Office of Solid Waste and Emergency Response and Office
                                 of Enforcement and Compliance Assurance

3.    Affordability Rate Design for Households, February 2006
             EPA Strategic Goal:  Clean and Safe Water
             Primary Customer:  Office of Water

4.    State Revolving Fund Loan Guarantees, May 2006
             EPA Strategic Goal:  Clean and Safe Water
             Primary Customer: Office of Water

5.    Useful Life Financing (Application to SRFs), May 2006
             EPA Strategic Goal: Safe and Clean Water
             Primary Customer: Office of Water

6.    Follow-up to EPA Response on Combined Operations of the SRF, June 2006
             EPA Strategic Goal: Safe and Clean Water
	Primary Customer: Office of Water	

•     This Strategic Action Agenda is a flexible planning tool and it will be updated during the
      fiscal year as needed. All revisions will be shown on the Board's home page at:
      http://www.epa.gov/efinpage/efab.htm

      The next meeting of the Full Board will be held March 19-20, 2007 in Atlanta, GA.  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
      current workgroup projects.

•     The summer meeting of the Full Board will be held August 15-16, 2007 in San Francisco,
      CA. The primary purpose of this meeting is to discuss progress with current workgroup
      projects and to develop an action agenda to direct the Board's future ongoing and new
      activities.

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EFAB members also contribute their time to assisting other EPA initiatives, most notably
the Environmental Finance Center (EEC) Network. The EEC Directors serve as expert
witnesses to the Board and provide key assistance to EFAB. The home page for the EEC
Network is: www.epa.gov/efinpage/efc.htm

Your comments are important and welcome. Please call or e-mail Vanessa Bowie,
Environmental Finance Program, at (202) 564-5186 or bowie.vanessa@epa.gov.

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