Getting the Lead Out: Midwest Cities Take Different Tacks

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By Stephen Joyce

Cities across the Midwest are pushing to increase protections for their drinking water from lead contamination as federal and state regulators work on new rules to strengthen standards.

But the Trump administration’s proposal to delegate more regulatory authority to the states while simultaneously cutting grants to help them run their environmental programs could hamper those efforts.

Madison, Wis., was the first city in the nation to replace its drinking water supply lines in an effort to combat lead contamination. This action came more than a decade before the discovery of widespread lead contamination in the drinking water of Flint, Mich., propelling the issue to national prominence in 2016 and prompting the question of whether the Environmental Protection Agency’s 1991 drinking water standards for lead were strong enough.

Midwestern cities, especially those with aging water infrastructure, are wrestling with how to pay for drinking water improvements in light of EPA plans to update its lead and copper rule by the end of 2017. Passing on the cost of improvements to ratepayers is one option. Raising taxes, selling municipal bonds, and obtaining state or federal low-interest loans or outright grants and other awards are other tools cities have at their disposal.

The cost of upgrading drinking water infrastructure is high: In just one state, Michigan, the cost could reach into the billions of dollars, Bryce Feighner, Michigan Drinking Water and Municipal Assistance Division director, told Bloomberg BNA.

“It’s not going to be something that’s fixed overnight. Even a fairly gallant effort across the nation would take a decade or more,” he said.

And assistance from the federal government may be in jeopardy under the Trump administration’s budget proposal, which would reduce the EPA’s budget by more than 30 percent, including critical grants to states. Trump has called for a dramatic increase in infrastructure spending, however, which has given some localities hope.

Establishing Laws, Rules

Lead contamination typically doesn’t occur in water treatment plants or even in the main lines distributing water to the neighborhoods. It happens mostly in the lead service lines that carry water from distribution mains in the street to individual houses and buildings. It also can leach into drinking water from lead soldering and plumbing fixtures inside a building.

In the early 20th century, municipalities commonly relied on service lines made from lead because the metal is a malleable yet dependable material to get water into houses without leaks. Large buildings or multifamily units such as big apartment complexes typically use steel or another non-lead materials in their service lines.

Cities such as Chicago continued to install lead services lines until the Safe Drinking Water Act prohibited their use after June 1986. The EPA then published its Lead and Copper Rule in 1991 requiring communities to take action if more than 10 percent of the tested water taps in a community had lead levels of more than 15 parts per billion (ppb, 0.015 mg/L). The new EPA rule coming out later this year is expected to tighten that standard.

Tens of Millions Exposed

Despite the rule, the possibility for lead leaching into drinking water in communities across the nation is an ongoing concern.

“Our estimate is that between 15 million and 22 million people drink water that comes through lead pipes,” Rob Moore, Natural Resources Defense Council senior policy analyst, told Bloomberg BNA. “And of those 15 million to 20 million people who are potentially exposed, it’s a vanishing percentage that have any idea they are drinking water that has gone through a lead pipe that potentially exposes them and their children to lead.”

Such was the case in Flint, where excessive levels of lead were identified after the city switched its water source to save money. Flint Mayor Karen Weaver declared a state of emergency in December 2015, followed by a similar declaration from Gov. Rick Snyder (R) Jan. 5, 2016, and then President Barack Obama Jan. 16.

“While Flint may be a dramatic case of lead exposure, it’s a more pervasive problem across the U.S. than commonly understood,” Moore said. “You find this on the West Coast, you find this in the Southwest, you find this in the Southeast. It’s pretty well distributed.”

Mobile Phones to the Rescue

Following the release of the EPA Lead and Copper Rule in 1991, two Midwestern cities announced their intention to replace all their lead service lines. Madison, Wis., became the first U.S. city to do so after testing in the 1990s showed drinking-water samples “were just barely over” the EPA 15 ppb limit, even though the city stopped installing lead service lines in 1927 and never used lead components in its water mains, Tom Heikkinen, Madison Water Utility general manager, told Bloomberg BNA.

“We had to do something,” he said.

The utility wanted to pay for the work, which can cost several thousand dollars for each service line, through a surcharge on ratepayer bills. That idea, however, was rejected by the Wisconsin Public Service Commission. Innovation and creativity provided a solution: The water utility began leasing space on its water towers to mobile telephone companies, which installed their cellular antennas on the towers, and used that money to finance the service-line replacements.

Homeowners, who typically bear the responsibility for the portion of the distribution system that runs from the street to the dwelling, still had to pay up to $1,000 for the service-line replacements, but the remainder of the cost was absorbed by the Madison utility using cash from the cellular-antenna leases.

Ratepayers Foot Bill

Lansing, Mich., the second city to replace all its lead services lines, faced its own funding challenge with a twist: the Lansing Board of Water & Light owned the entire service line—onto private property to the outside wall of property owners’ building. That meant the work and pipe upgrade essentially would provide a private benefit to homeowners, and spending public money for those private improvements had legal and taxpayer implications.

The city nevertheless pushed ahead with its plan, replacing 12,125 lead service lines at a cost of $144.5 million over about 12 years, with work completed in 2016. The utility funded the project out of its year-to-year operating expenses. Nothing on the bill notified customers part of their payment was funding the lead pipe replacement project.

“The increase was incremental over the course of years. It was ratepayer-financed, if you will, with no special assessments or special bonding,” Stephen Serkaian, Lansing Board of Water & Light executive director, told Bloomberg BNA.

The cities had to deal differently with recalcitrant homeowners who refused to allow utility workers on their property. In Madison, where a city ordinance ordered the pipe replacements, property owners were referred to the state prosecutor’s office, Heikkinen said.

“We did have a handful of property owners who refused to comply with Madison’s lead service replacement ordinance (I believe it was fewer than five), and they ultimately had judgments filed against them,” utility spokeswoman Amy Barrilleaux told Bloomberg BNA in an email. “The penalty for non-compliance was a fine of $50-$1000 per day.”,In Lansing, homeowners had their water shut off until they cooperated.

Other Financing Options

Other funding options available to communities include raising taxes or borrowing the money by issuing municipal bonds.

“I think a lot of people think about infrastructure spending as roads, bridges, trains, planes and automobiles, and they forget about the issue with drinking water and wastewater. And we think this is probably one of the most significant areas of focus for infrastructure spending and makes a lot of sense,” Dan Heckman, U.S. Bank senior fixed income strategist, told Bloomberg BNA.

Communities with AA or AAA bond ratings may favor this option because the interest rates are competitive and the money can be borrowed relatively quickly, Heckman said.

“We think the gap in spending on water and wastewater facilities has got wider and is in the billions of dollars in terms of need,” he said. “It will take years to make the necessary repairs,if not decades.”

State and federal governments are helping.

The EPA’s Drinking Water State Revolving Fund, a lending program offering low-interest rates and the possibility of principal or loan forgiveness for economically distressed communities, is administered by state agencies and involves a state match. In fiscal 2015, the amount of funding appropriated in the EPA budget for the Drinking Water SRF program was about $860 million; each state receives at least 1 percent of that total based on an agency survey of state needs.

Galesburg, Ill., a city with a population of about 30,000 located halfway between Chicago and Kansas City, Mo., received a $4 million loan from the SRF, replete with 100 percent principal and interest forgiveness. The Illinois Environmental Protection Agency, which administers the federal loan program for the state, offers loans for lead service-line replacement that can be at least partially forgiven to cities with median household incomes that are less than 70 percent of the state average.

Galesburg tried for the loan because it had trouble meeting the requirements in EPA’s Lead and Copper Rule when it it took effect in 1991 and came into compliance only in 2010—nearly 20 years after the rule was made final. In 2015, it fell out of compliance again.

Wayne Carl, the city’s director of planning and public works, told Bloomberg BNA that he doesn’t know how many of the town’s 3,000 lead services lines will be replaced before proceeds from its $4 million loan are depleted, but he’s hoping it’s as much as 70 percent. Priority will be given to homes that have exceeded the EPA lead limit in prior testing plus to low- to mid-income families with children younger than 6, Carl said. Construction first begins on 409 lead services lines in June.

A new federal funding mechanism, EPA’s Water Infrastructure Finance and Innovation Act, is designed to partially finance larger water infrastructure projects. The EPA estimates that the program will help finance up to $2 billion in projects. Applications for the first wave of WIFIA loans are due April 10.

After Flint’s drinking water crisis gained national attention, the city was finally able to secure—after significant lobbying by the Michigan congressional delegation—$100 million in supplemental funds authorized by the Water Infrastructure Improvements for the Nation Act (Pub. L. No. 114-322) to help in its pipe replacement program. Michigan provided $20 million in matching funds, bringing the total to $120 million for water infrastructure improvements, including $58 million for the city’s water plant.

Relying on Corrosion Control

Some cities aren’t replacing pipes at all, but are pursuing other strategies to mitigate the lead problem.

Chicago, where about 280,000 of the city’s approximately 500,000 services lines contain lead, decided not to replace any service lines but instead focus on an optimized corrosion control treatment added to drinking water and tailored to its chemical characteristics. The treatment coats the insides of pipes, including pipes and fixtures inside homes and buildings, and aims to prevent lead from leaching into the water right up to the tap.

“Really, the only way to protect the water from metal incursion, lead incursion, is through corrosion control. Lead doesn’t just stop at the service line; you can have lead pipes within your home, you can have lead-soldered joints, you can have low-lead brass that up until about 2012 had about 9 percent lead in it,” Barrett Murphy, Chicago Department of Water Management commissioner, told Bloomberg BNA.

“Our approach has been, the only safe way to protect the water from the time it leaves the plant to the time it comes out of the tap is through corrosion control. That has been our approach, and that continues to be our approach,” said Murphy, whose department is responsible for delivering safe drinking water through a system with more lead service lines than any other Midwestern city.

The city’s water utility delivers drinking water to residents of Chicago and 125 surrounding communities—about 42 percent of all Illinois residents—and is making investments in its physical water infrastructure. In 2012, it announced a 20-year program to replace 880 miles of water mains that are up to 100 years old. The city is replacing about 90 to 100 miles of main pipes each year at a cost of about $2.5 million a mile.

New Standard Envisioned

Midwestern cities are working to maintain or improve the safety of their drinking water as the EPA works on revising its Lead and Copper Rule, which will likely tighten the standard.

Some political leaders say the lead issue is too dangerous to wait for EPA action; Michigan’s Snyder, for instance, said March 16 that his state will craft its own lead rule, which in part will have an action limit of no more than 10 ppb—more than 30 percent lower than the current EPA standard.

Grand Rapids, Mich., continuously feeds an orthophosphate blend that allows the municipality to comply with the EPA standard. The city also replaces lead service lines that are exposed during construction projects or where there’s a leak, Joellen Thompson, Grand Rapids Water System manager, told Bloomberg BNA in an email.

Thompson, like many other municipal water officials, said her city isn’t waiting for the EPA to issue its revised rule before taking action on the lead issue. Property owners can get a 10-year financing deal for private property service-line replacement, and the city is contemplating loan forgiveness to make the upgrade even more appealing. St. Paul, Minn., property owners can finance the upgrade through their tax bill, paying it off over time instead of at once.

“We are doing this proactively in anticipation of regulation/rule changes that will require the entire line to be replaced whenever it is disturbed, not just a portion of the line,” Thompson said.

While a Trump administration proposed budget released March 16 includes drastic cuts to the EPA, and Administrator Scott Pruitt has called for shifting more authority over environmental protections to the states, Midwestern city officials and environmental specialists said they expect the EPA to continue funding drinking water infrastructure projects and to make final a revised and stricter lead rule.

“I think lead is such a hot-button public health issue that I’d be surprised if [the rule] is delayed by the administration. I would be surprised, but it’s not impossible. This is the one public health issue I don’t think anyone wants to be accused of playing politics with,” Tommy Holmes, American Water Works Association legislative director, told Bloomberg BNA.

To contact the reporter on this story: Stephen Joyce in Chicago at sjoyce@bna.comTo contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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