2026 Lead Pipe Funding: What the Final Round of IIJA Reveals
In May 2026, EPA announced the final round of Drinking Water State Revolving Fund (DWSRF) Lead Service Line Replacement (LSLR) state allotments. This marks the fifth and last annual funding round under the Infrastructure Investment and Jobs Act (IIJA), which dedicated $15 billion to identifying and replacing LSLs nationwide. The announcement also included the second reallotment distribution of unspent federal fiscal year 2022 (FFY22) funds.
This final round offers a clearer picture of how federal lead pipe funding has been distributed over the past five years. Here I break down what changed, what stayed the same, and where major funding gaps still remain as communities work toward the federal 2037 replacement deadline.
FFY26 Snapshot
Great Lakes and Northeastern states, where the national lead burden is concentrated, continue to receive the largest shares of federal funding. The top five recipient states were:
Illinois (10.76%)
Ohio (7.35%)
New York (6.75%)
Michigan (5.23%)
Indiana (4.69%)
Together, these states received roughly 35% of total FFY26 funding. Meanwhile, 31 states once again received the minimum 1% allotment
Figure 1: Federal fiscal year 2026 (FFY26) state allotments (x-axis) shown as millions of dollars ($M).
What Changed?
One state received more funding
Georgia was the only state receiving an allotment increase in FFY26, gaining $2M (6%) compared to the previous funding round.
Most states received less funding
All other states experienced minor allotment decreases, ranging from $1.2 to $14 million. The largest decreases included:
Illinois: -$14M (-5%)
Pennsylvania: $-9.3M (-7%)
Iowa: -8.9M (-16%)
Wisconsin: -7.1M (-7%)
New York: -6.4M (-3%)
Figure 2: Allotment decreases by states between Federal Fiscal Year 2025 (FFY25) and FFY26. Funding decreases (x-axis) per state shown as millions of dollars ($M) and percentage increases in parentheses.
Funding Gaps Still Persist
As EPIC had previously projected, large funding gaps remain in the most heavily burdened states. For these states, IIJA LSLR funding is expected to only cover 15%-21% of total estimated replacement costs.
Some of these gaps will eventually shrink through the reallotment of excess funding from lower burdened states. However, the reallotment process is slow, delaying funding from reaching communities that need it the most. Even then, while helpful, this additional funding is unlikely to meaningfully close gaps.
One policy change that could substantially reduce overallocations and direct funding to more quickly and efficiently is removing the minimum 1% allotment requirement. While it could also improve the reallotment of remaining funds, it would make the biggest impact if applied to future LSL funding.
Figure 3: Estimated percentage of LSL replacements that can be completed per state funded exclusively through IIJA LSLR funds FFY22–FFY26. Diagonal shading indicates states that have declined IIJA LSLR funds at least once over the previous funding cycles. I assumed an average cost of $12,500 per service line replaced, as reported by Kutzing et al. (2023)to calculate the percentage of service lines each state could replace.
What Comes Next?
With the final IIJA allotments now distributed, we are officially entering a period of constrained LSL funding. Funding will not disappear overnight as reallotments are expected to continue through at least 2028. However, as the flow of funds begins to trickle, water utilities should prepare for the potential water funding cliff.
DWSRF reauthorization could provide an opportunity for additional investments in LSL replacement. But that path seems unlikely amid proposed federal budget cuts and growing concerns from EPA that states have struggled to deploy existing funds quickly enough.
While deployment challenges are real, our research suggests the issue is not a lack of need, but rather strained capacity and resources, outdated processes, and overly burdensome requirements that limit access to funding. Even if Congress provided additional funding in the future, existing bottlenecks would continue to slow LSL replacement. In upcoming analyses, I will explore how reallotments will help close funding gaps and retrospectively examine how policy decisions could have deployed funding faster and more efficiently.
