Funding and Financing Options for Full Lead Service Line Replacement
By Palencia Mobley, P.E., and Denise Schmidt
EPA’s 2024 Lead and Copper Rule Improvements (LCRI) require the replacement of all public and private portions of lead service lines (LSLs) by 2037—spurring urgent action from municipalities and utilities.
While the federal Infrastructure Investment and Jobs Act (IIJA) allocated $15 billion for lead pipe replacement, the estimated national cost of replacing more than 9.2 million LSLs may exceed $90 billion. Bridging that gap will require additional funding, especially for under-resourced communities that have long faced barriers to traditional infrastructure financing and have not received their fair share of federal resources.
Our policy brief synthesizes practices and policies from cities and utilities that are creatively combining traditional and non-traditional funding and financing mechanisms to overcome legal, financial, and logistical barriers to covering LSL replacement costs.
Key takeaways include:
State policies that clearly authorize the use of public funds for private side replacements reduce legal friction and facilitate efficient project delivery;
Cost-sharing programs are often less effective in high-poverty areas, prompting cities to absorb the full cost to ensure participation; and
Layered capital stacks—strategically blending federal, state, and local resources—can create scalable, resilient models for LSL replacement.
We also present a menu of creative funding and financing tools that can be tailored to fit the fiscal, legal, and political realities of different jurisdictions and address the unique challenges posed by LSL replacement, including:
Environmental Impact Bonds
Pay for Success contracts
Utility revenue leases
Local sales taxes
Value capture mechanisms
Ultimately, achieving full LSL replacement nationwide will require not only federal support but also bold, innovative action from states and localities to expand the pool of eligible resources, remove statutory barriers, and deploy capital in ways that prioritize public health, affordability, and environmental justice.