WASHINGTON, D.C. — Today, U.S. Reps. Mike Kelly (R-PA-16), Chairman of the Ways & Means Committee’s Subcommittee on Tax, and Dan Kildee (D-MI-08), Member of the Ways and Means Committee, today introduced the Financing Lead Out of Water (FLOW) Act, bipartisan legislation that will remove federal red tape to help more communities finance the removal of lead service lines.
The FLOW Act, would allow bonds issued by public water utilities to finance the replacement of private lead service lines to bypass the U.S. Internal Revenue Service’s (IRS) “private business use test.” Streamlining this process in the tax code will help more communities access low-cost financing for lead service line replacement. This becomes more important as laws regulating lead in drinking water are being updated around the country.
“Access to clean, affordable drinking water is essential. Unfortunately, clean water is out of reach for millions of American households due to aging infrastructure and costly red tape. By cutting expensive federal red tape and removing financial barriers, the FLOW Act will help ensure more U.S. communities can afford to remove lead pipes so that more American families have clean drinking water when they turn on their faucets whether in rural Alaska or on Mainstreet Pennsylvania,” said Rep. Kelly.
“What happened to my hometown of Flint should be a wake-up call for communities across America. We need to get serious about removing lead from our drinking water,” said Congressman Kildee. “My new bipartisan legislation cuts through federal red tape to make it easier for communities to support water infrastructure projects, remove lead pipes and ensure their residents have access to clean drinking water.”
Lead service lines are unique pieces of infrastructure that are often owned by both the local government and private citizens. Removing them is costly but can be financed by issuing tax-exempt bonds. However, under current law, if a water utility issues bonds to finance the replacement of lead service lines buried on private property, the utility must prove the bond proceeds won’t mainly benefit private businesses. Providing this documentation to the IRS requires a long and costly analysis, delaying these infrastructure projects. The FLOW Act would remove this costly and time-consuming barrier.
Reps. Kelly and Kildee introduced this legislation with fellow members of the House Ways and Means Committee, Representatives Claudia Tenney (NY-24), Gwen Moore (WI-04) and Bill Pascrell (NJ-09).
The FLOW Act is supported by the Association of Metropolitan Water Agencies, American Water Works Association, Government Finance Officers Association, U.S. Water Alliance, Children’s Environmental Health Network, National Rural Water Association, National League of Cities and the National Association of Counties.
WHAT THEY’RE SAYING
“Millions of Americans are at risk of being exposed to contaminated drinking water due to outdated lead pipes, but the process to install new pipes is often filled with unnecessary and costly roadblocks for municipalities. The FLOW Act removes the federal red tape that prevents too many of our communities from affordably tapping into the investments they need to provide affordable, clean drinking water. I was honored to join my colleagues in introducing this bill to support water infrastructure programs and address hazardous lead pipes,” said Congresswoman Tenney.
“Lead is a toxin that causes irreversible harm to our most vulnerable—our children. As long as lead pipes stay in our communities, including in my district, our nation’s children remain exposed to this poison every day. We need to continue working to make lead pipe replacement projects feasible in every city across the country. Proud to join my Ways and Means colleagues in supporting this initiative to build on the tools we have available to meet our goal of lead-free communities,” said Congresswoman Moore.
“A civilized society provides clean water to all its citizens. It is one of our foundational responsibilities. The continued existence of lead pipes in our communities is an enduring threat to the well being of millions of lives, especially children. This legislation will give communities flexibility to remove lead pipes without facing an undue financial burden on their ledgers. Government must do all it can to encourage lead pipe removal and this thoughtful bill is step in that direction,” said Congressman Pascrell.
“Tax-exempt bonds offer the lowest interest rates when communities are financing water infrastructure projects, but red tape from the IRS can slow down the process when a water system is attempting to use the funds to fully replace lead service lines. The FLOW Act would solve this problem, and we commend Congressman Kildee 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 will simplify the process by which water utilities finance lead service line replacement with tax-exempt bonds by removing unnecessary barriers that can add months of paperwork and delays,” said Tracy Mehan, executive director for government affairs of the American Water Works Association.
“We are pleased to support the FLOW Act sponsored by Congressman Kildee. This legislation would allow issuers to directly and effectively address drinking water lead remediation efforts all the way to the home. The FLOW Act tackles a thorny administrative challenge to providing clean, safe drinking water to communities across the country,” said Emily S. Brock, director of the Government Finance Officers Association Federal Liaison Center.
“Communities have been fighting to get the lead out of their water for decades. Thanks to champions like Congressman Kildee and President Biden, historic federal funding is now available thanks to the Bipartisan Infrastructure Law,” said Mami Hara, CEO of U.S. Water Alliance. “The FLOW Act builds on these efforts by eliminating needless administrative roadblocks and ensuring this funding can be make an even bigger and more equitable impact, helping millions of Americans.
“With funds from the American Rescue Plan and the Bipartisan Infrastructure Law supporting local efforts to replace lead service lines, it is just as important to reduce administrative burdens on cities, towns and villages to help these investments go further in communities. We thank Congressman Kildee and Congresswoman Tenney for recognizing the challenges in financing lead pipe replacement, particularly privately owned lines, and for sponsoring this bill that will ease administrative and cost burdens on local governments as they work toward compliance with the Lead and Copper Rule,” said Clarence E. Anthony, CEO and Executive Director of the National League of Cities.