Clean Water Act Financial Capability Assessment Guidance

• Request for Public Comment
• Current FCA Guidance

Request for Public Comment on CWA FCA Guidance on or before May 26, 2026

On March 26, 2026, EPA published an announcement in the Federal Register inviting public comment on its Clean Water Act Financial Capability Assessment Guidance. As part of the agency’s commitment to implementing CWA objectives in an effective manner, EPA continues to enhance understanding of the issues surrounding FCAs for communities and seeks ways to improve the guidance. The agency will use this input to determine whether updates to the guidance are necessary to provide clear recommendations that accurately identify a community’s financial capability.

• Federal Register Notice
• EPA's News Release

EPA requests public comment on the most recent FCA Guidance, specifically:

1. EPA seeks comment on the effectiveness of the LQRI and the LQPI methodologies at measuring the severity and prevalence of poverty and whether an alternative or additional analyses may better capture economic impacts to small and rural communities and low-income households.

2. EPA seeks public comment on whether the FCA Guidance should explicitly incorporate cost of living metrics. If yes, how should the analysis incorporate cost of living? What data sources are publicly available to consider cost of living? 
3. EPA seeks public comment on the current scheduling benchmarks for communities facing unusually high financial impacts associated with complying with CWA requirements. Any scheduling considerations need to be balanced with the need for the agency to ensure that CWA requirements are complied with in a timely manner. If commentors propose schedule benchmarks, EPA requests examples to support the basis for such benchmarks.
4. For purposes of WQS analyses, EPA seeks comment on what information or separate guidance would be helpful to determine whether and how states and authorized tribes could account for costs, such as asset management costs, stormwater costs and/or drinking water costs, when characterizing costs that communities are incurring or have made a commitment to invest in.
5. EPA requests comments on what, if any, additional perspectives or considerations relevant to the implementation of the FCA Guidance are not addressed by the focused questions above.

Comments may be submitted via the Federal eRulemaking portal, Docket ID No. EPA-HQ-OW-2026-1090, on or before May 26, 2026. All submissions received must include the Docket ID No. for this guidance. Comments received may be posted without change to the Federal eRulemaking portal (https://www.regulations.gov), including any personal information provided.

Current FCA Guidance

Communities, in consultation with regulators and the public, are responsible for evaluating and selecting pollution controls that will meet Clean Water Act (CWA) requirements. The U.S. Environmental Protection Agency (EPA) encourages communities to use integrated planning and innovative technologies, such as green infrastructure, to achieve CWA compliance in a timely, flexible, and cost-effective manner. After controls have been selected, a financial capability assessment (FCA) is used to assess a community’s financial capability as part of negotiating implementation schedules under both permits and enforcement agreements.

In addition, specific methodologies used for FCAs can be used to consider economic impacts to public entities when determining water quality standards (WQS) variances and antidegradation reviews. In appropriate cases, these methodologies also inform decisions about revisions to designated uses, subject to additional analyses.

The Financial Capability Assessment Guidance (FCA Guidance) is used by municipalities when devising plans to come into compliance with the CWA. During that process, municipalities and the EPA negotiate schedules with specific timeframes for implementation. The FCA Guidance describes the financial information and formulas the agency uses to assess a community's financial resources to implement control measures and timeframes.

The FCA Guidance replaces the Guidance for Financial Capability Assessment and Schedule Development (1997) to evaluate a community’s capability to fund CWA control measures in both the permitting and enforcement context. The FCA Guidance will also supplement the Financial Capability Assessment Framework for Municipal Clean Water Act Requirements (2014) and the public sector sections of the Interim Economic Guidance for Water Quality Standards (1995) to assist states and authorized tribes in assessing the degree of economic impact of potential WQS decisions.

The FCA Guidance 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, the EPA revised the version of the Clean Water Act Financial Capability Assessment Guidance (published in February 2023) making 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 development.
  • While the EPA made the correction to the Financial Capability Assessment Guidance document, the accompanying Fact Sheet and Question and Answer documents are still relevant. 
• EPA News Release
• Final Updated FCA Guidance: Federal Register Notice (pdf) (259 KB)
• Proposed 2022 FCA Guidance: Federal Register Notice (pdf) (237.42 KB)
• Financial Capability Assessment Guidance Fact Sheet (pdf) (158.59 KB)
• Financial Capability Assessment Guidance Questions and Answers (pdf) (129.28 KB)
• Financial Capability Assessment Framework for Municipal Clean Water Act Requirements (2014)
• Economic Guidance for Water Quality Standards
  • This website includes tools and spreadsheets to facilitate the evaluation of economic impacts for WQS decisions, such as WQS variances.

CWA compliance schedules should consider available subsidized funding and other financing arrangements as part of a financing plan to achieve compliance as soon as practicable. Determining costs and thoroughly planning how to fund and finance a project will help a community manage this process. Communities should also consider approaches that can reduce or mitigate the financial impact of water services on low-income households, while still allowing the community to complete critical infrastructure improvements within a reasonable schedule. The tools and resources listed below can help a community complete an FCA, including documentation of additional financing and funding considerations as part of a Financial Alternatives Analysis.

• ​ FCA Online Spreadsheet (xlsm) (554 KB)
  • The FCA Online Spreadsheet guides the user through the inputs and steps of developing a financial capability assessment to facilitate CWA schedule development.
  • For tools and spreadsheets used in WQS decisions, please visit the EPA's Economic Guidance for Water Quality Standards website.
• Financial Alternatives Analysis Checklist (Appendix C) (pdf) (4.5 MB) (page C-1)
• Financial Alternatives Analysis Example Worksheet (pdf) (4.5 MB) (page C-15)
• Water Technical Assistance
• Environmental Finance Centers
• For questions about Technical Assistance related to Infrastructure Investment and Jobs Act funding, email: WaterTA@epa.gov

Webinars

While the EPA made a correction to the Financial Capability Assessment Guidance document, the accompanying recorded webinars are still relevant.

• These webinar materials will help stakeholders and utilities understand the FCA Guidance:
  • Recording: Training on FCA Guidance for Schedule Development (ppsx)
  • Training on FCA Guidance for Schedule Development (pdf) (591.25 KB)
• This November 2023 recorded webinar provides an overview of the EPA's Financial Capability Assessment Spreadsheet Tool to support the Clean Water Act FCA Guidance. The FCA Spreadsheet Tool can be used to evaluate a community’s financial capability to fund CWA control measures for permitting and enforcement purposes.