Fixing Bottlenecks in Lead Pipe Funding
By Erica Galante-Johnson and Janet Meissner Pritchard
Replacing the nation’s lead service lines (LSLs) is not just a long-term infrastructure goal—it’s a public health imperative. Every day that water flows through lead pipes, families are exposed to a toxic metal with no safe level of exposure. At the same time, the clock is ticking: federal funding from the Infrastructure Investment and Jobs Act (IIJA) is limited, and national mandates to eliminate all lead service lines make it critical to use the dollars already available as quickly and effectively as possible. How these funds are allocated will determine whether communities can accelerate replacement or remain stuck with dangerous delays.
IIJA included $15 billion for lead service line replacement (LSLR), with $3 billion appropriated each year over Federal Fiscal Years (FFY) 2022-2026. The first three years of funding have been allotted, but states are still waiting for the U.S. Environmental Protection Agency (EPA) to allot the FFY2025 LSLR funds. Previous allotments have come out much sooner. Regardless of when allotments are made available by EPA, states only have until the end of the federal fiscal year following the appropriation year (i.e., September 30, 2026, for the FFY2025 appropriations) to request funds. States then have one year to commit the funds to projects (see: EPIC’s State Revolving Fund (SRF) Flow of Funds explainer). The longer the allotment is postponed, the less time states have to utilize these funds.
After utilities submitted their initial service line inventories, EPA made the important decision to base the final two years of IIJA funding allotments on inventory data—a shift EPIC has championed. Using inventories—versus the previous assessment survey (see our explainer for details)—allows funding to be tied more closely to actual state needs. Still, challenges remain. The quality of the underlying data varies widely, the current allotment formula has shortcomings, and statutory constraints limit how EPA can distribute funds.
In the discussion that follows, we highlight several of the most pressing funding bottlenecks and explore potential strategies to address them. These examples are not exhaustive, but they reflect EPIC’s ongoing research and policy analysis aimed at improving how federal dollars flow to communities most in need. By examining both the barriers and possible solutions, we hope to spark conversation about how to make LSLR funding faster, fairer, and more effective.
Minimum Allotment Requirements Slow Down Funding
The first bottleneck in the flow of IIJA LSLR funds—the dedicated pot of money for identifying and replacing LSLs—stems from statutory limitations governing Drinking Water State Revolving Funds (DWSRFs). The Safe Drinking Water Act (SDWA) requires EPA to first guarantee that every state receives at least 1% of DWSRF funds, and that 1.5% is distributed across all U.S. territories, before distributing funding based on assessed needs. This means states with relatively few LSLs can receive far more funding than they require. While unclaimed or unused IIJA LSLR funds can eventually be reallotted to states with greater needs, this redistribution can only happen after a two-year availability period closes, leaving high-need states waiting while dollars sit idle.
This minimum allotment requirement slows the flow of federal funding, hindering the ability of heavily burdened states to act quickly on LSLR. Ensuring that LSLR funds can be deployed quickly is especially relevant, given the 10-year timeline imposed by the Lead and Copper Rule Improvements (LCRI) to achieve 100% lead service line replacement.
Congress is expected to reauthorize the DWSRF in late 2025 or in 2026, and that reauthorization could include a waiver of the minimum 1% allotment requirement for any remaining IIJA-funded LSLR dollars to be allotted or reallotted.
Congress should consider waiving the minimum allotment requirement for LSLR IIJA appropriations directed through the State Revolving Fund (SRF).
Mismatched Data Leads to Mismatched Funding
After minimum allotments are distributed, EPA allocates the remaining 48.5% of IIJA LSLR funds proportionally to each state’s estimated share of lead service lines (LSLs). However, gaps in inventory data as well as limitations in EPA’s LSL estimation methodology can lead to misalignment between state needs and funding.
While inventory data will offer more accurate and comprehensive nationwide LSL estimates over time, substantial data gaps remain in the early stages of inventory development. A large number of service lines are still categorized as “unknown,” and many systems have yet to submit their initial inventories. For example, one-third of New Mexico’s water systems missed the federal inventory deadline, and New York still has more than 935,000 unidentified service lines. This means that EPA will still need to rely on some degree of data extrapolation to account for these data deficiencies.
EPA’s current methodology assumes that the share of unknown and unreported service lines that are likely to be LSLs matches the proportion of reported (aka “known”) LSLs. For instance, if 20% of reported service lines are lead, then 20% of the unknown and unreported lines are assumed to also be LSLs. However, our previous analysis shows that this simple proportional approach can skew funding, disproportionately benefitting states with incomplete inventories. This is especially problematic when a few well-inventoried systems report high proportions of LSLs while large portions of other systems that are unlikely to contain lead lines remain incomplete.
While service line inventories are an important step in addressing lead exposure, devoting resources to identification in areas unlikely to contain LSLs—such as newer neighborhoods built after 1980—is inefficient. Requiring water systems serving such areas to prove the absence of LSLs diverts resources that could be better spent on actual replacements.
To address these challenges, water systems across the country have been relying on predictive models to develop their initial inventories. These models incorporate variables that are linked to the presence of lead plumbing (e.g., pre-1950s construction, proximity to other LSLs) to locate areas where there is a high likelihood of lead pipes.
Federal agencies such as the Department of Housing and Urban Development (HUD) and CDC already use similar methods to target high-risk areas for lead paint and soil exposure. EPA could adopt a similar approach to improve inventory guidance and resource allocation.
To ensure funding aligns more closely with actual need, EPA should consider adjusting its allotment formula. A weighted approach that accounts for inventory completeness and the likelihood of LSL presence—similar to the methodology used for deadline deferrals under the Lead and Copper Rule Improvements (LCRI)—could provide a fairer and more effective distribution of IIJA LSLR funds.
To better align funding with real needs, EPA should adjust the allotment formula to weigh both how complete a state’s inventory is and the probability that unknown lines are lead.
Slow and Steady Does Not Win the Race with Lead
The LCRI set a 10-year timeline to replace the nation’s lead service lines. While the rule represents a critical step to expand public health protections, it raises some important questions: How can we ensure available funding reaches those that need it most—and deploy it quickly enough—to achieve this goal, particularly in light of the “federal funding cliff” some are anticipating?
DWSRFs constitute an essential source of water infrastructure funding, but the flow of these funds sometimes feels more like a trickle than a stream. Many water utility staff we’ve spoken with say that applying for DWSRFs to finance LSLR can be slow and burdensome. In some instances, it can take up to 3 years from application to reimbursement from the state for a LSLR project.
Challenges are greatest for small and under-resourced water systems with limited capacity. DWSRF applications require significant upfront costs and time to prepare, requiring materials such as financial audits and detailed engineering plans to meet rigid readiness-to-proceed criteria. These requirements—originally designed for large infrastructure projects—can be unnecessary roadblocks for lead service line replacement.
Simplifying the application process could make a meaningful difference. Loosening or waiving requirements less relevant to LSLR projects—such as environmental permitting or detailed engineering plans—would lower costs, reduce reliance on outside consultants, and make it easier for all systems, including small and under-resourced ones, to access IIJA LSLR funds. This would help ensure more efficient distribution of resources and keep replacement efforts on pace with the LCRI timeline.
State SRF programs should consider waiving readiness-to-proceed requirements that are non-essential for lead service line replacement projects.
Looking Ahead
Meeting the LCRI mandate to eliminate all lead pipes within the next decade will require careful planning and substantial resources. The LSLR funds from IIJA will be available to states through 2028, with reallotted funds available through at least 2030. The $15 billion for LSLR from IIJA is only enough to cover a fraction of the estimated $72 billion to over $90 billion needed to replace the nation’s 9.2 million lead service lines, but so long as these funds are available, they present a continued opportunity to limit the cost impact of LSLR on residents that municipalities should pursue.
Congress, EPA, and state DWSRF administrators all have a role to play to ensure IIJA LSLR funds reach communities that need them the most—and faster. Congress can waive the 1% minimum allotment requirement, EPA can adjust the LSLR allotment formula, and states can reconsider which and to what extent readiness-to-proceed requirements apply to LSLR. In the meantime, elected officials and decision-makers at every level of government will need to adopt creative strategies, from stacking multiple funding sources to testing new financing mechanisms, to ensure replacement keeps pace with the mandate and the public health imperative.
At EPIC, we’ll keep exploring these issues and sharing insights as the dialogue continues.