Hi Dan —
Here’s a quick answer to your question about using SRF to replace lead service lines. Under the federal SRF program,
SRF funds can be used to replace lead service lines on both public and private property. (We don’t know if Michigan
rules allow for the use of SRF funding on private property, but presumably you know whether that’s the case.) If you
have additional questions, your staff can follow up with Steve Marquardt, Chief of the R5 Water Division State and Tribal
Program Section. His number is 312-353-3214.
Please keep me posted on the time for the event later this week.
Thanks,
Susan
Susan Hedman
Region 5 Administrator/Great Lakes National Program Manager
U.S. Environmental Protection Agency
77 West Jackson Blvd - 19th Floor
Chicago, Illinois 60604-3590
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xxxEND_PAGE:treasury01_b41_7622_7971_312
TEC STATES ENVIROPIVENTAL PROTECTION AGENCY
Vass * uN ie
MEMORANDUM
SUBJECT: — Etigibiliry of Replacement of Lead Service Lines on Private Property Under the
DWSRPF.
FROM: Joanne Hogan ~ se
Attormey- Advisor | pe al
Civil Rights and Financial w Office
Office of General Counsel
THROUGH: Wendel Askew “a4
Assiaunt General Counsel.
Civil Rights and Financial Law Office
Office of General Counsel
Ken Redden ae
Deputy Associate General Counsel
Civil Rights and Financial Law Office
Office of General Counsel
TO: Peter Shanaghan
Team Leader
Drinking Water State Revolving Fund Team
Office of Ground Water and Drinking Water, Office of Water
Question Presented,
You have asked whether financial assistance from a State’s Drinking Water State Revolving
Loan Fund can be used by eligible entities to fund projects that involve replacing lead service
lines that may be on private property and that connect to private dwellings.
Brief Answer
We believe that lead service line projects, regardless of the ownership of the property on which
the pipe is placed, may be funded by a State’s DWSRF so long as the loans are made to an
eligible entity and all other requirements of the DWSRF are met.
xxxEND_PAGE:treasury01_b41_7622_7971_313
Analysis
The statute and the regulatory provisions governing the use of State DWSRF funds, though
defining which entities may receive funds, do not require the Public Water System to have
control over all portions of a project that is funded by the DWSRF. Congress gave EPA's
Administrator the clear authority to determine which projects would be eligible under §1452:
“Financial assistance... may be used. . . only for expenditures of a type or category which the
Administrator has determined, through guidance, will facilitate compliance with national
primary drinking water regulations.” PHSA §1452 (a)(2). The only broad statutory limitations
on the types of projects that cannot be funded are projects which include monitoring, operation,
of maintenance expenditures. or projects for the acquisition of real property unless the purchase
is made from a willing seller and the acquisition is integral to the project.
40 CFR §35.3520 (b}{2) sets forth the categones of projects that can be funded by a DWSRF.
This provision includes the transmission and distribution of water to be a category of eligible
projects. Specifically, the regulation provides examples of such projects to include:
“installation or replacement of transmission and distribution pipes to improve water pressure to
safe levels or to prevent contamination caused by leaks or breaks in the pipes.” See 40 CFR
§35.3520 (2yii).
Lead pipes can contaminate water at any point, including on its way to a private home. Allowing
a public water system to use its funds tu replace such pipes is consistent with this allowable
category of projects, and is similarly consistent with the overall health protections of the Safe
Drinking Water Act. See PHSA 1452 (a)(1)(A). Note that ifa Public Water System wishes to
purchase and retain an easement so that it maintains control of such infrastructure, that purchase
is authorized as Well: “Funds shall not be used for real property or interests therein unless the
acquisition is integral to the project authorized... and the purchase is from a willing seller. . .”
PHSA 1452(a}(2).
This determination that replacement of lead pipes on privately owned property is an eligible
project cost so long as it otherwise complies with the PHSA is consistent with prior approved
eligible projects, such as water efficiency projects, that do not require all elements of a project to
be under the control of a Public Water System. In a Memorandum dated July 25, 2003, then
Assistant Administrator for Water G. Tracy Mehan III informed Water Division Directors in the
regions that projects such as the installation or retrofit of plumbing fixtures and appliances,
installation of water meters, and implementation of incentive programs to conserve water, such
as rebates or conservation rate structures were all eligible projects under the DWSRF. Therefore.
so long as the assistance is given to an eligible entity, and the project otherwise meets the
tequirements of the DWSRF, the project may be funded regardless of ownership or control of the
resulting infrastructure.
xxxEND_PAGE:treasury01_b41_7622_7971_314
Stanton, Terry A. (Treasury)