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Public clean water utilities say new Financial Capability Assessment (FCA) Guidance fails to address Environmental Justice concerns, masking the true impact EPA-mandated spending has on low-income households that already pay disproportionately more of their income on water and sewer bills than more affluent households.

WASHINGTON, D.C. (February 1, 2023) – The National Association of Clean Water Agencies (NACWA) today expresses its disappointment at the outcome of a nearly five-year process that started with so much promise to seriously overhaul the U.S. Environmental Protection Agency’s (EPA) Financial Capability Assessment (FCA) Guidance and meaningfully address the growing ratepayer affordability gap.

The initial FCA Guidance, issued in 1997, is a critical document designed to gauge how much a community can afford to pay to meet increasing compliance requirements under the Clean Water Act (CWA). Over the decades it became clear that the 1997 Guidance was outdated and seriously flawed in how it determines the impact of CWA spending on individual low-income households, and multiple entities including Congress have called for meaningful revisions. 

NACWA and its utility members, who work directly on the ground with low-income households, have partnered with other water sector and municipal groups in recent years to advocate for a new approach that looks at the impacts of new CWA mandates and related bill increases on actual low-income households within an impacted community, as opposed to more broad-brush comparisons of community and national level metrics that often serve to mask the actual impact on individual households.

Unfortunately, the new EPA FCA Guidance released today fails to take this household level approach, meaning that the true impacts on these households may not be fully considered and leaving them to continue paying a disproportionately higher amount of their income on clean water bills. 

Even more concerning, many of these same households are in Environmental Justice (EJ) communities.  By failing to be fully transparent regarding the impacts of EPA-mandates on individual low-income households, a greater financial burden will ultimately fall on these EJ communities.

EPA’s action today leaves the Nation’s public utilities, who do the actual environmental work to ensure clean and safe water for all, with less options to address priority environmental concerns. It also has the opposite effect of the Biden-Harris Administration’s stated goal and commitment of addressing disadvantaged communities and their affordability and environmental justice challenges.

Tom Sigmund, NACWA President and Executive Director of NEW Water in Green Bay, Wisconsin, said: “Today’s action by EPA ensures that low-income households across the United States, in both urban and rural communities, will continue to unfairly bear the brunt of increasing clean water rates – and will have to continue to make difficult choices about paying their water and sewer bill or other basic expenses.

It is particularly concerning that this new guidance can hamstring communities as they seek to make investments in other environmental priorities like lead pipe removal and climate resiliency. EPA’s action repeats the mistakes of the past, locking communities into rigid spending regimes that ultimately place low-income and disadvantaged communities in the untenable position of being unable to afford their water and sewer bills.”

Additional elements of the FCA Guidance that were roundly criticized by NACWA and other water sector and municipal groups in the EPA’s 2022 draft remain in the final version, with only minor changes that do not address the Association’s concerns. These include an arbitrary cap on the amount of time communities may be allowed to implement CWA mandates and a new requirement for communities to complete a complex economic analysis before regulators will consider providing extended compliance schedules. Both these elements will make it much more difficult, and expensive, for communities to address affordability challenges for their low-income residents. Also of concern is EPA’s use of a guidance document to mandate this additional economic analysis. Such requirements must be subjected to a full notice and comment rulemaking process before being considered.

NACWA and its public clean water utility members are committed to their primary mission of protecting public health and the environment, but also preventing water affordability challenges now and in the future. NACWA urges Congress to review the new FCA Guidance with a clear understanding that the impacts on low-income water customers must be fully considered in any assessment of financial capability, and that the new FCA Guidance fails to meet that core objective.

NACWA looks forward to working with EPA and Congress to address the shortcomings in the FCA Guidance issued today and to create a new document that will truly address the unfair economic burden facing low-income households across the nation.

EDITOR’S NOTE

As the federal share of water utility investment has declined, income inequality has skyrocketed. For the top one percent of Americans, household income has more than tripled since 1979. However, for 90 percent of families, income has just increased by roughly one percent per year over the past 40 years. 

NACWA issued a report in December 2022 that examined pathways for Congress to address these issues through low-income water customer assistance funding. Long-standing federal programs help American families to afford groceries and home energy bills, but there has never been a permanent program for water assistance. The Infrastructure Investment and Jobs Act (IIJA) authorized funding for a low-income assistance pilot program carried out by the Environmental Protection Agency (EPA), but no funding has been allocated.

To access the full NACWA fact sheet issued today on low-income water affordability challenges, visit: https://www.nacwa.org/docs/default-source/resources---public/nacwa-affordability-report_dec22.pdf?sfvrsn=1ab5c761_2.

ABOUT NACWA

For over 50 years, the National Association of Clean Water Agencies (NACWA) has been the nation’s recognized technical, economic and advocacy leader on the full spectrum of clean water issues. NACWA represents public wastewater and stormwater agencies of all sizes nationwide. Our unique and growing network strengthens the advocacy voice for the public clean water sector and helps advance policies to provide affordable and sustainable clean water for all.  Our vision is to advance sustainable and responsible policy initiatives based on sound science and economic viability that help to shape a strong and sustainable clean water future. For more information, visit us at www.nacwa.org.

CONTACT: Nathan Gardner-Andrews for more information or to arrange interviews with NACWA and its members at 202-833-3692 or ngardner-andrews@nacwa.org.  

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