The Financing Lead Out of Water Act Allows Public Water Utilities to Issue Tax-Exempt Bonds to Fund Public and Private Lead Pipe Removal

Washington, D.C. — Today, U.S. Senators Michael Bennet (D-Colo.), Ben Cardin (D-Md.), Cory Booker (D-N.J.), Sherrod Brown (D-Ohio), Amy Klobuchar (D-Minn.), Dianne Feinstein (D-Calif.), and Chris Van Hollen (D-Md.) introduced the Financing Lead Out of Water (FLOW) Act. The FLOW Act would reduce exposure to lead in old water pipes by making it easier for cities and utilities to issue bonds to finance replacement projects.

“Coloradans deserve to know the water they and their children drink is safe,” said Bennet. “This legislation would not only help cut through red tape, but alleviate some of the financial burden that homeowners typically face when replacing their lead pipes. We should learn from the experiences of Denver Water and use innovative financing to help eliminate lead pipes completely across our communities.”

“Millions of households across America still have lead pipes delivering water to their homes. Access to low-cost financing is a common barrier for local communities in Maryland and elsewhere when considering projects to fully replace lead service lines and protect public health,” said Cardin. “Our bicameral legislation would make it easier for publicly owned water utilities to use tax-exempt bonds to get the lead out of our water infrastructure and provide safe, affordable drinking water.”

“It is vital that every American has access to safe, clean drinking water,” said Booker. “This legislation will reduce financial burdens on homeowners and cut through the administrative challenges localities face to replace the portion of lead service lines that are privately owned. Lead in drinking water is a national public health emergency, and I commend Senator Bennet for his leadership on this issue.”

“Families shouldn’t have to worry about whether or not the water coming out of the faucet is safe for their children to drink,” said Brown. “Because of the work we did in the American Rescue Plan and Bipartisan Infrastructure Plan, Ohio communities will be able to replace old pipes, using American-made materials and installed by American workers, and the FLOW Act will ensure that these investments reach even more Ohioans.”

“In California, at least 65,000 homes have lead water pipes, a particular danger for children whose brain growth and development can be inhibited. This bill will revise IRS rules to allow public water utilities to help pay to replace these dangerous pipes. We must address this problem now before more children are harmed,” said Feinstein.

“The use of lead service lines poses a constant threat to the health and safety of our communities, putting the well-being of our most vulnerable — including children and the elderly — at greater risk. This legislation will speed up the lead pipe replacement process and help communities access low-cost financing by cutting red tape that slows down local governments in modernizing our water infrastructure,” said Van Hollen.

According to the U.S. Environmental Protection Agency (EPA), between 6 to 10 million homes in the U.S. currently have lead water pipes, also known as lead service lines (LSL), that connect the main water line located underground to their home’s internal plumbing system. Although public utilities across the country are replacing their publicly-owned lead service lines, replacement projects have moved slowly for privately-owned pipes serving residences due to the costly financial responsibility of replacing these lines.

The FLOW Act provides an explicit guarantee in the tax code to allow public water utilities to issue tax-exempt bonds to help pay for the removal and replacement of both the publicly- and privately-owned lead service lines, resolving the full scale of the issue for residents in areas with lead pipes. This bill also helps funds for lead pipe replacement from the American Rescue Plan Act and the Bipartisan Infrastructure Law make a deeper impact on replacing the nation’s essential water infrastructure.

Bennet’s Financing Lead Out of Water (FLOW) Act draws on the experience of Denver Water, a public water utility that is financing the removal of all public and private lead service lines in its service area at no cost to its customers by issuing tax-exempt bonds. Denver Water found that issuing tax-exempt bonds for this purpose required a costly and time-consuming analysis of its service area as part of the ‘private business use test’ administered by the IRS to qualify for the tax exemption, adding months to its effort. The FLOW Act provides a solution to this issue for public water utilities.

“This legislation would serve as another significant step forward in protecting public health. I commend Sen. Bennet on his extensive efforts to develop this legislation and his recognition of its importance to the nationwide work to eliminate exposure to lead in drinking water. The senator continues to be a leader on this critical issue and we thank him for his ongoing focus,” said Jim Lochhead, CEO of Denver Water.

“Fully removing lead service lines is a priority of many drinking water systems, but red tape from the IRS can slow down the process when the utility seeks to finance these critical infrastructure projects with tax-exempt bonds. Federal policy should make it easier, not harder, to fully replace lead service lines, so AMWA strongly supports the FLOW Act and we commend Senator Bennet for his commitment to this issue. We look forward to passage of this important legislation,” said Tom Dobbins, CEO of the Association of Metropolitan Water Agencies.

“The FLOW Act is a commonsense policy that helps ensure all communities in Colorado can access safe and clean drinking water, especially our underserved communities who are disproportionately exposed to lead. The CO Water Resources and Power Development Authority fully supports Senator Bennet and his Senate colleagues’ work to remove burdensome hurdles to innovatively finance critical infrastructure projects,” said Keith McLaughlin, Executive Director of CWRPDA.

The bill text is available HERE. A one-page summary of the bill is available HERE.

Last week, Bennet welcomed $121 million in Bipartisan Infrastructure Law funds to repair and improve Colorado’s water infrastructure through the U.S. Environmental Protection Agency (EPA). The funding will help communities across the state access clean, safe, and reliable drinking water, prevent flooding, collect and treat wastewater to protect public health, and safeguard vital waterways.