ENVIRONMENTAL PROTECTION AGENCY
                ENVIRONMENTAL FINANCIAL ADVISORY BOARD
                           STRATEGIC ACTION AGENDA
                              FISCAL YEARS 2013-2014
BACKGROUND

The  Environmental  Financial  Advisory  Board  (EFAB)  is  chartered  under  the  Federal  Advisory
Committee Act to advise EPA on environmental finance issues, options proposals,  and trends. EFAB
seeks ways of lowering costs and increasing investments in public purpose environmental facilities and
services. EFAB is supported by EPA's Office of the Chief Financial Officer, Center for Environmental
Finance.

EFAB's Designated Federal Official is Michael Shapiro, Deputy Assistant Administrator for the Office of
Water. EFAB's plans and operation 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 5 major goals in EPA's Strategic Plan:

1.     Taking Action on Climate Change and Improving Air Quality
2.     Protecting America's Waters
3.     Cleaning Up  Our Communities and Advancing Sustainable Development
4.     Ensuring the Safety of Chemicals and Preventing Pollution
5.     Enforcing Environmental Laws

In  its strategic planning process, EFAB  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  sustainable environmental  facilities,  discouraging  polluting
      behavior, and  encouraging stewardship of natural resources;

   •  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 cost-effective existing approaches;

   •  Identifying approaches specifically targeted to small community financing;

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

   •  Improving governmental principles  of  accounting  and disclosure  standards to help  improve
      sustainability of environmental programs;

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

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   •   Increasing the total investment in environmental protection and stewardship 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 objectives and input from EPA, EFAB develops a Strategic Action Agenda
describing its workgroup structure  and lists ongoing and completed projects. Given the number,  scope,
and nature  of the issues that EFAB addresses, its workgroups take the  lead in developing projects for
consideration and approval by the Full Board.

PROJECT SUMMARIES

Project Title: Clean Air Technology
EPA Client: Office of Air and Radiation
EPA Priorities: Taking Action on Climate Change and Improving Air Quality
Interim Report Date: January 2012
Anticipated Report Date: [Project  on hold pending Agency action]

Project Description: EPA has recently promulgated a regulation (a Maximum Achievable Control
Technology - MACT - standard) to limit the emissions of hazardous air pollutants from industrial boilers.
The regulation will remove hundreds of thousands of tons of pollution from the air providing very
significant public health benefits. Facilities will comply with this regulation by retrofitting existing boilers
or by installing next generation technologies.

EFAB  is examining incentives and financing that might encourage the owners of these boilers to consider
replacing them with newer cleaner technology that not only meets the emissions requirements of the
MACT regulation, but also lower green house gas emissions. Approaches being considered include
government bonds, federal subsidies, aggregated loans, green funds, securitization, revolving funds, tax
incentives, and corporate responsibility valuation.

The Board issued an interim report in January 2012 providing its preliminary findings and
recommendations of financing incentives for consideration by industrial facilities to change to newer,
cleaner technologies. The report can be viewed at:
http://nepis.epa. gov/Exe/ZvPURL.cgi?Dockev=P100E7CO.txt

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Project Title: Tribal Environmental Programs
EPA Client: Office of International and Tribal Affairs
EPA Priorities: Protecting America's Waters and Cleaning Up Our Communities and Advancing
Sustainable Development
Anticipated Interim Letter Date: April 2013

Project Description: EFAB is working to identify and evaluate approaches for sustainable funding by
tribes with environmental programs.  The Board plans to identify mechanisms tribes can use to fund
environmental program implementation on an on-going basis and to help reduce and/or eliminate the need
for permanent EPA capacity building investments. This project will help tribal governments improve their
financial capabilities to implement environmental programs and achieve a greater degree of independence
and self-reliance.

While working on this project, the Board learned that the Department of the Treasury had recommended
to Congress changes to  current law that denies tribal governments access to tax exempt municipal bond
markets in situations where state and local juristictions are permitted access. EFAB has approved a letter
to the Administrator urging EPA to support the Treasury Department recommendations as they would
ensure tax parity among tribes, states and municipalities, and help increase the supply of capital for tribal
environmental projects.

Project Title: Transit-Oriented Development for Sustainable Communities
EPA Client: Office of Policy
EPA Priorities: Cleaning Up Our Communities and Advancing Sustainable Development
Anticipated Draft Report Date: April 2013

Project Description: EFAB is exploring a range of public and private financing strategies and models
that could be used to address  a variety of transit-oriented development scenarios. The development
scenarios to be considered will vary from a single transit station, existing and planned, to multiple-station
transit lines, existing and planned. The Board plans to describe what entities (public, private, and/or
public-private) and what financing approaches would be best suited for each of the four scenarios. EFAB
plans to note any situations that might require legislation, state and/or federal that might be necessary for
successful implementation.

On May 24, 2012, the Board's Transit-Oriented Development Project Workgroup hosted a one-day
workshop which brought together government, industry, and finance experts with a wealth of real-world
experience in implementing transit-oriented development projects. The Board's goal was to collect expert
information and ideas with respect to financing transit-oriented development. All of the presentations and
relevant documents from the workshop can be viewed at:
http ://www2. epa.gov/envirofmance/todworkshop

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Project Title: Drinking Water Pricing and Infrastructure Investment
EPA Client: Office of Water
EPA Priority: Protecting America's Waters
Anticipated Draft Report Date: April 2013

Project Description:  Through legislation, public education and other means, the nation has largely
replaced old high-use water fixtures (toilets, shower heads, appliances, etc.) with new significantly more
water use efficient fixtures. An additional broad range of conservation efforts, e.g., education, pricing and
turf rebate programs, have successfully reduced outdoor water use. As a result of these efforts, per capita
water consumption has declined and the decline is well documented by water utilities across the country.

This exceptional success in achieving greater water use efficiency is creating a significant challenge to
water utilities as they seek to increase their revenue streams to support the accelerating repair and
replacement of infrastructure that has reached the end of its useful life. The Board is examining how water
utilities can ensure an adequate revenue base to meet their increasing capital investment needs, while also
providing a publicly acceptable level of service and achieving the goals of sustainable water infrastructure
management.

Project Title: Green Infrastructure (Water)
EPA Client: Office of Water
EPA Strategic Goal: Protecting America's Waters
Anticipated Report Date: Interim Report Spring 2013

Project Description:  Responding to a charge from the EPA Green Infrastructure Workgroup, the Board
is exploring ways to improve and expand financing options for implementing green infrastructure projects
at the community level. In this project, EFAB is working to determine the nature and the scope of the
green infrastructure financing challenge and will be examining a wide range of issues involved in
implementing local  green infrastructure solutions, including: (1) barriers,  both real and perceived, to
tapping into municipal financings; (2) the identification of additional EPA and other federal financing
opportunities and the determination of any barriers to accessing them; (3) the possibility of utilizing
insurance as a tool for mitigating green infrastructure technology risk and the identification of data needed
by insurance industry to do so; and (4) the availability of private sector environmental risk mitigation
tools or products other than insurance that could be tapped to facilitate and complement the public or
private financing of green infrastructure.

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Project Title: Energy Efficiency/GHG Emissions Reduction
EPA Client: EPA Region 1
EPA Strategic Goal: Taking Action on Climate Change and Improving Air Quality
Anticipated Draft Report Date: April 2013

Project description: Municipal Sustainability offices are routinely underfunded, lacking both staff
resources and funds to invest in energy efficiency initiatives for municipal fleets, buildings and
infrastructure (e.g., street and traffic lights) even when there is a short payback period. As a result,
municipalities are often only able to fund energy efficiency initiatives through ESCO agreements which
are often disadvantageous to the municipalities.  EFAB is examining possible incentives or financing
mechanisms to: (1) allow cities to fund full-time energy manager and/or operational support staff
positions; (2) fund municipal energy efficiency projects; and (3) use savings generated from successful
energy efficiency projects to fund future efficiency projects.
                                 Completed Reports FY 2012
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1.      Financing Incentives for Replacing Boilers with Clean Air Technology, January 2012
             EPA Strategic Goal: Taking Action on Climate Change and Ensuring Air Quality
             Primary Customer: Office of Air and Radiation

2.      Eliminating Barriers to Tribal Environmental Projects, July 2012
             EPA Strategic Goal:  Protecting America's Waters and Cleaning Up Our Communities
             and Advancing Sustainable Development
             Primary Customer: Office of International and Tribal Affairs

^     This Strategic Action Agenda is a flexible planning tool and is updated during the fiscal year as
       needed.  All revisions will be shown on CEFs home page at:
       http ://www2. epa.gov/envirofmance/efab

^     Your comments are important  and welcomed.  For additional information, contact Joseph Dillon at
       the Center for Environmental Finance at Dillon.ioe@epa.gov
                                                                                190B13001

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