Economic Guidance for Water Quality Standards

Clean Water Act Financial Capability Assessment Guidance

The Financial Capability Assessment Guidance (FCA Guidance) updates the consideration of economic impacts to public entities when making water quality standards (WQS) decisions on revisions to designated uses, WQS variances, and antidegradation reviews for high-quality waters. This updated guidance will help minimize financial impacts to vulnerable households while planning investments in water infrastructure that are essential for protecting clean water.

The FCA Guidance (2024 revision) supplements the public sector sections of the 1995 Interim Economic Guidance for Water Quality Standards: Workbook (pdf) (2.29 MB, March 1995, EPA-823-B-95-002) (1995 WQS Guidance) to assist states and authorized tribes in assessing the degree of economic and social impact of potential WQS decisions. The FCA Guidance (2024 revision) does not revise the recommended methodology in the private sector sections of the 1995 WQS Guidance. The FCA Guidance (2024 revision) also replaces the 1997 Combined Sewer Overflows - Guidance for Financial Capability Assessment and Schedule Development to evaluate a community’s capability to fund CWA control measures in both the permitting and enforcement context. 

The FCA Guidance document is not legally binding and is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.

• Clean Water Act Financial Capability Assessment Guidance (2024 Revision) (pdf) (1.19 MB)
  • In March 2024, EPA revised the version of the Clean Water Act Financial Capability Assessment Guidance published in February 2023 to make an editorial correction to Section III.d.5., second paragraph on page 41. The corrected statement is now:  An appropriate economic justification for a WQS variance, revision of a designated use, or lowering of water quality associated with an antidegradation review should demonstrate that implementation of feasible financial alternatives under current or reasonably expected future economic conditions (including consideration of future debt capacity) would still result in substantial economic impact that would preclude the designated use from being attained³⁷ or would justify lowering water quality to accommodate important economic or social development.
  • While EPA made the above correction to the Financial Capability Assessment Guidance itself, the fact sheet and Q&A document below are still relevant.
• FCA Guidance Press Release
• Financial Capability Assessment Guidance Fact Sheet (pdf) (158.59 KB)
• Financial Capability Assessment Guidance Questions and Answers (pdf) (129.28 KB)
• Final Updated FCA Guidance: Federal Register Notice (pdf) (259 KB)
• Proposed 2022 FCA Guidance: Federal Register Notice (pdf) (237.42 KB)
• Financial Alternatives Analysis Checklist (Appendix C)(pdf) - (page 76)
• Financial Alternatives Analysis Example Worksheet (pdf) - (page 90)
• Water Technical Assistance
• Environmental Finance Centers

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Tools to Evaluate Economic Impacts

Public Sector

EPA intends for the FCA Guidance (2024 revision) to supplement the public sector portion of the 1995 WQS Guidance. Specifically, the FCA Guidance (2024 revision) supplements the calculations and analyses in the public sector portion of the 1995 WQS Guidance with additional analyses, an Expanded Economic Impact Matrix, and recommendations to consider when making WQS decisions. EPA intends the FCA Guidance (2024 revision), together with the public sector sections of the 1995 Guidance, to guide states and authorized tribes in evaluating the economic impact of potential WQS decisions related to financial capability. The spreadsheet tools below help the user perform the initial calculations and analyses recommended in the FCA Guidance (2024 revision). EPA may update these tools in the future.

• UAAs and Variances – Public Sector (xlsm)  This updated spreadsheet may help users conduct the analyses recommended in the EPA’s FCA Guidance (2024 revision) to demonstrate substantial and widespread economic and social impacts associated with attainment of designated uses by public sector entities. This updated spreadsheet includes the analyses in the public sector portion of the EPA’s 1995 WQS Guidance as well as the additional analyses, Expanded Economic Impact Matrix, and recommendations to consider when making WQS decisions that are recommended in the FCA Guidance (2024 revision).
• Antidegradation – Public Sector (xlsx) (196.14 KB)  This spreadsheet may help users conduct some but not all of the analyses recommended in the EPA’s FCA Guidance (2024 revision) to demonstrate that lower water quality is necessary to accommodate important economic or social development in the area in which the waters are located. This spreadsheet currently performs only those analyses recommended in the EPA’s 1995 WQS Guidance. The EPA will later update this spreadsheet to perform all the analyses recommended in the EPA’s FCA Guidance (2024 revision).

Private Sector

The purpose of these private sector spreadsheets is to help states, tribes, and stakeholders implement the recommendations in the 1995 WQS Guidance for the private sector. The spreadsheets supplement the guidance for the private sector by guiding the user through the necessary calculation steps to successfully implement the guidance recommendations.

• UAAs and Variances – Private Sector (xlsx) (234.63 KB) These spreadsheets provide suggested information and methods to conduct an analysis of potential substantial and widespread economic and social impacts of attainment of designated uses when private sector entities must meet certain water quality standards.
• Antidegradation – Private Sector (xlsx) (173.15 KB) These spreadsheets provide suggested information and methods to conduct an analysis of potential interference with an important economic and social development when private sector entities must maintain high-quality waters.