ENVIRONMENTAL PROTECTION AGENCY
                     ENVIRONMENTAL FINANCIAL ADVISORY BOARD
                               STRATEGIC ACTION AGENDA
                                  FISCAL YEARS 2008-2009
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 infrastructures.

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 that 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 (EFCN)
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, National
EPA Liaison, Center for  Disease Control.  EFAB's plans and operation are aligned with the major
environmental goals presented in EPA's strategic plan.

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EPA GOALS AND EFAB ISSUES

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

      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.

      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.

      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.

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

      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 costs  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 government principles of accounting and disclosure  standards and how
       they affect environmental programs;

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      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
       nations; 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 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

       ^     Incentives for Air Emission Reduction: 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

       ^     Environmental  Management Systems: Chaired by Rachel Deming, Scarola Ellis, LLP,
             New York, NY

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

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

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      1.    Sustainable Watershed Financing
                   EPA Strategic Goals:  Clean and Safe Water and Healthy Communities &
                                       Ecosystems
                   Primary Customer:   Office of Water

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

      4.    Incentives for Air Emission Reduction
                   EPA Strategic Goals:  Clean Air and Global Climate Change
                   Primary Customer:   Office of Air and Radiation

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

      6.    Public-Private Partnerships
                   EPA Strategic Goal: Clean and Safe Water
                   Primary Customer:  Office of Water
STATUS OF EFAB PROJECTS
                              Completed Projects FY 2008
I
      1.    Innovative Finance Programs for Air Pollution Reduction, November 2007
                   EPA Strategic Goal: Clean Air and Global Climate Change
                                Primary Customer: Office of Air and Radiation

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                         Completed Projects FY 2007
I
1.     Sustainable Watershed Financing, January 2007
             EPA Strategic Goals: Clean and Safe Water and Healthy Communities &
                                 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
3.      Captive Insurance as a Financial Assurance Mechanism, March 2007
             EPA Strategic Goal:  Clean and Safe Water
             Primary Customer:  Office of Water

4.      Support for Private Activity Bonds Proposal, April 2007
             EPA Strategic Goal:  Clean and Safe Water
             Primary Customer:  Office of Water

5.      Combined Sewer Overflows  Guidance for Financial Capability Assessment and
       Scheduled Development (1997), May 2007
             EPA Strategic Goal:  Clean and Safe 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/efmpage/efab. htm

The spring meeting of the Full Board will he held March 10-11, 2008 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 current workgroup
projects.

EFAB members also contribute their time to assisting other EPA initiatives, most notably the
Environmental Finance Center (EFCN) 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:
http://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.bowie@epa.gov

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