What Water Utilities Need to Know about Funding Lead Service Line Projects
Ways to take action and get ahead on LCRR projects
Posted on April 20, 2021 Erica Walker
Erica Walker & Marcus Hagberg
The network of drinking water pipes below our feet has been neglected for far too long–but the tide is changing. According to the ASCE, the majority of existing drinking water distribution and collection networks will have to be either repaired or replaced by 2040. Without significant Federal support, the operational and capital costs associated with this “replacement era” are expected to be shouldered by local utilities and their customers.
Perhaps better than any other piece of drinking water infrastructure, the continued existence of Lead Service Lines (LSLs) clearly highlights the need for investment–not because service lines are more important than a water treatment plant or a water main, but because the public can easily understand that no one should be drinking from a leaded straw. The U.S. is finally on a path to replacing all LSLs, with the Federal government poised to invest in water infrastructure upgrades at proportions not seen in generations. Just two weeks ago, the Biden administration asked congress to make $45 billion available in grants for LSL replacement as part of the American Jobs Plan. To this end, the Biden administration seeks to remove all LSLs in 8 years.
In order to fully take advantage of these investments utilities will need to prepare and position their data. For example, as part of the Lead & Copper Rule Revisions (LCRR), over 70,000 drinking water systems across the country will be required to create and manage LSL inventories, add locations with known LSLs to their tiered sites list as a part of LCR compliance events, and may need to replace LSLs if compliance issues arise. Utilities who complete an inventory will be in the best position to take advantage of federal funding and will be more prepared for the new requirements. To facilitate and expedite action on finding and replacing LSLs, we’ve consolidated some of the most useful Federal funding avenues below.
Types of Federal Funding for Lead Service Line Projects
The Federal government has taken emergency action to support State and Local governments through the State and Local Fiscal Recovery Fund, part of the American Rescue Plan, which provides $350 billion in funding for state, local, territorial, and Tribal governments. The intended use of this funding is targeted, and one such target is to “make necessary investments in water [and] sewer infrastructure.”
$175 B (half) of the funding will be disbursed directly through the U.S. Treasury to State and local governments by mid-May 2021, with the remaining half of the funds scheduled to be disbursed by mid-May, 2022. The funds received by different government entities are required to be spent by December 31, 2024. An inventory is an important first step for utilities interested in using these funds for LSL management. Given the tight time frame, eligible infrastructure projects should be designed and scoped to a sufficient degree before the end of 2021 to be considered eligible for receipt of these funds. Standards, processes, and applicability will vary by State.
Federal funding sources for LSL management include grants and low interest loans. The Federal government, primarily through federal agencies (i.e., EPA, HUD, USDA), has established various programs through which funds are channeled to support drinking water infrastructure projects, including LSL replacement; these include but are not limited to:
- Drinking Water State Revolving Funds (SRFs)
- An EPA-administered federal-state partnership to provide financial support for drinking water and wastewater infrastructure projects as well as other water quality related projects (e.g, lead sampling in schools and childcare facilities).
- SRFs are the primary vehicle for LSL inventory and replacement funding and Congress is expected to continue to renew SRF funding.
- State legislatures can also add additional funding to SRFs for LSL replacement work and have a decent track record of doing so.
- Water Infrastructure Finance and Innovation Act (WIFIA)
- An EPA-administered federal loan program that funds regionally- and nationally-significant water infrastructure development projects.
- These loans are project-oriented and application-based, with certain criteria based upon community size (threshold is 25K population).
- For example, closed infrastructure project sizes range from $20M – $300M+ with State, county, municipal, and utility borrowers.
- Water Infrastructure Improvements for the Nation Act (WIIN)
- The WIIN grant program is the primary funding source for lead sampling in schools and child care facilities.
- All 50 states utilize these funds and Congress is expected to continue to renew WIIN funding.
- Community Development Block Grants
- Distributed by HUD, grant funding is provided for projects that specifically benefit communities with higher proportions of low- and moderate-income residents and who are exposed to conditions that negatively impact their health or wellbeing (e.g., LSLs).
- There are several grant types available to utilities and communities.
- Rural Development Fund
- The USDA administers various grant and loan programs that support rural communities and utilities in financing infrastructure repair and replacement projects, including LSL replacement.
Congress’ clear directive to increase funding to the SRF and WIIN grants is a welcomed development considering State and local governments are familiar with these processes and it builds upon substantial success to date.
Five Ways your Utility Can Take Action
In summary, there are several funding avenues available for utilities interested in finding and replacing LSLs and even more support from the Federal government is anticipated. These resources help utilities manage toward meeting the changing legislative and regulatory landscape, the most impactful being the multi-year steps needed in preparation for LCRR compliance. Below are five actions your utility can take to better prepared to secure funding for LSL replacement projects.
- Ask your SRF – Ask your State Revolving Fund if they provide grants or low interest loans for LSL inventories or replacement. A recent 120Water poll suggests SRFs commonly provide resources for these types of projects.
- Conduct a LSL Inventory – Conduct an inventory of LSLs and pay careful attention to your data management plan so that this information can be used in your asset management activities long term.
- Review Funding Avenues – Look for EPA grants (e.g., WIFIA, WIIN) and grants from other federal agencies (e.g., HUD,USDA) to support your LSL replacement work.
- Communicate with Residents – Be transparent with your customers about locations with unknown or confirmed LSLs by posting the LSL inventory online and communicating early and often with your customers about all that you are doing to protect their public health.
- Build a Coalition – Talk about the benefits associated with getting lead out of your community to galvanize collective action! For example, the Minnesota Department of Health estimated $10 in health benefits for every dollar a community spends on LSL replacement.