Digging into New York City’s Current Proposal to Replace Lead Pipes
By Erica Galante-Johnson, Maureen Cunningham, & Denise Schmidt
New Yorkers could pay thousands out of their own pockets to replace lead pipes from their homes - or be faced with steep civil penalties. This will be the case for New York City property owners if legislation up for a City Council vote is adopted.
New York City’s proposed legislation is a departure from arguably more equity and public health-based approaches being adopted around the country. It is also out of step with what EPIC has proposed - which is full lead service line replacement at no cost to homeowners - in our recent comments on the proposed Lead and Copper Rule Improvements (LCRI), our comments on New York’s Intended Use Plan in 2023, and early principles developed with other advocates nationwide. Other cities in New York State (NYS) such as Newburgh and Troy have opted to cover homeowners’ costs regardless of income levels - realizing that, even without a local replacement mandate, this is an efficient, equitable, and health-based approach to comply with the EPA-proposed ten-year replacement window which may go into effect this fall. In Newburgh, NY, for example, an elderly resident paid for her lead service line replacement out of money she had put aside for her own funeral, but was fully reimbursed by the city when they launched their program.
The new bill in question was introduced in New York City on June 6, 2024, and will be the subject of a public hearing on June 18th. If passed, it would require lead service lines throughout the city to be replaced in ten years, something EPIC supports, especially for a city that is third in the country in terms of its lead pipe burden. Where we see cause for concern is this bill’s attempt to hold property owners financially responsible for the replacement of their portion of the service line within the ten-year timeline, with limited exceptions for childcare facilities and for those qualifying for financial assistance. To qualify, a property owner must be an individual “whose household has an annual gross income of no more than 50 percent of the area median income as adjusted for the size of such household.” The bill does not include details on the level of assistance available. And an additional cause of concern is the civil penalties associated for those who don’t or cannot comply, up to $1,000.
Service lines are the pipes that carry water from the main into the home and are commonly divided into two portions: the “public side” which typically runs under the street and is owned by a water utility and the “private side” which runs under private property. Replacing the full service line (i.e. both the public and the private side) costs $12,500 on average and up to $30,000 as in recent quotes coming out of Chicago. This is prohibitively expensive for property owners at many income levels. Even with financial assistance programs such as the one mentioned in this New York City bill, paying for replacement out of pocket - along potential penalties for failing to do so within ten years - could still pose a burden for New Yorkers.
The financial burden on property owners will, in all likelihood and even with some assistance, disproportionately affect minority and lower income individuals, potentially putting the city in violation of Title VI of the Civil Rights Act, especially if federal funds are used and given the US Environmental Protection Agency’s (EPA) guidance for federally-funded lead service line replacement projects. Such a complaint was filed against Providence Water for charging customers for private side replacement, alleging this practice disproportionately impacts Black, Latino, and Native American residents. In recent data released by the NYS Department of Health, New York City was in fact awarded $24 million from the first of five years of federal Bipartisan Infrastructure Law (BIL) funding for lead service line replacement. With President Biden’s recent announcement granting New York a 14 percent increase in BIL allotments for lead service lines over last year’s allotment, New York City - with the most lead pipes in the state - could end up with millions more in federal funds over the coming years.
To avoid dangerous partial replacements, New York City will also have to coordinate with property owners so that both the public and private sides of the line are replaced concurrently, which is not only more efficient but also the safer way to replace lead pipes. Disruptions to pipes during partial replacements can generate spikes in lead levels, putting residents at even greater risk. The New York City bill does not address the real possibility - and risk - that partial replacements might occur, which would be a failure to protect public health.
Some states have enacted legislation that mandate full service line replacement. Most recently, Indiana promulgated legislation requiring full service line replacement at no cost to homeowners. Unlike the direction New York City is taking, municipalities across the country are also adopting a variety of strategies to replace their service lines faster, stacking different funding and financing sources to cover costs. Detroit, for example, is utilizing a combination of federal and state funds to cover full replacement. Denver relies on customer rates, municipal bonds, sales of new connections to the system, hydropower production, and other sources to fund their program at no cost to homeowners, and also provides free Brita water pitchers, filters, and even replacement filters to those enrolled in their program. Milwaukee recently shifted from a cost-sharing program that required homeowners to contribute payments for private side replacements to the utility fully covering replacement costs, making use of its federal BIL funds to do so. New York’s capital city, Albany, established a grant program for private lead service line replacement using water and sewer rates and other funding.
Like many states, New York does have work to do to enable the use of ratepayer funds to pay for private-side lead service line replacement. In a convening earlier this year at the Rockefeller Institute of Government in Albany with an accompanying report, local and state government officials and policymakers discussed this issue extensively. One perceived hurdle for public utilities using ratepayer funds for private side replacement is a clause enacted in 1874 in the NYS Constitution that prohibits counties, localities, and school districts from making a gift or loan to an individual or private corporation or association, called the “Gift and Loan Clause.”(1) That said, this clause was enacted to prohibit gifts to railroad and canal companies, not to private individuals per se.(2) A 2019 report by Harvard Law School and Environmental Defense Fund (EDF) also looked into this issue of whether public utilities can use ratepayer dollars to cover private service line replacement and concluded that it is “likely” that New York State policy “would support using rate funds to replace lead service lines (LSLs) on private property based on public health and efficiencies of replacing the entire service line at one time.”(3) There is case law precedent, summarized in both the Rockefeller Institute and Harvard/EDF reports, enabling use of public resources to benefit private individuals - though none relating to lead service line replacement specifically.
In another twist of related water utility news in New York City, Mayor Eric Adams has recently proposed raising water rates to pay for other city budget items. New York City Councilman Jim Gennaro - the sponsor of the current lead service line replacement bill - has rightly raised concerns over these proposed rate hikes in the city, calling them “hidden taxes” and “backdoor taxes” to balance the city budget and arguing that they are a financial burden for low-income New Yorkers. Using rate hikes to pay for non-utility expenses leaves less room for a utility to use rate revenues for much-needed investment in critical water infrastructure, such as lead service line replacement.
Though municipalities should be able to use rate funds as one available tool for supporting necessary water infrastructure projects, this approach admittedly means ratepayers will be paying at least some of the costs of private service line replacement. Utilities are and need to be increasingly mindful of customer affordability. Therefore, a funding and financing approach that stacks different sources is a good strategy for municipalities like New York City and others in the state. The Harvard/EDF report summarizes the issue succinctly, stating that, “The use of ratepayer funds is not a panacea - the increased rates that will result, while spread more broadly, can still post a significant burden to low-income residents. Therefore, it is important that other sources of funding, including federal and state grants, still be considered. Nevertheless, the use of ratepayer funds - by spreading the cost over all ratepayers and across multiple years - is an important tool for ensuring the efficient and equitable replacement of full LSLs.”(4)
Fifth in the nation for its lead burden and also one of the few places in the country with both state and federal funds available, New York State may need to get a little creative when it comes to replacing its more than 500,000 lead pipes, especially if the ten-year timeline is enacted by the EPA this fall. As New Yorkers ourselves (two of us), we would love to see NYS municipalities, including New York City, lead the way with innovation, equity, and forward-thinking approaches. And for us, this includes full service line replacement using all available funding and financing tools that doesn’t place a financial burden - and worse, penalties - on homeowners and residents.
The New York City Council’s Committee on Environmental Protection, Resilency, and Waterfronts will hold a public hearing on this bill on Tuesday, June 18th at 10 am (EDT).
(1) Laura Rabinow, “Leading on Lead: Federal and New York State Policies, Funding, and Implementation of Lead Service Line Replacement”, pp 19-20. Rockefeller Institute of Government, October 2023. https://www.rockinst.org/issue-area/leading-on-lead-federal-and-new-york-state-policies-funding-and-implementation-of-lead-service-line-replacement/
(2) Ibid, p 20
(3) Shaun A. Goho, Marcello Saenz, and Tom Neltner, “Rates could fund lead pipe replacement in critical states:Laws in states with the most lead service lines support the practice” p 46. Emmett Environmental Law & Policy Clinic, Harvard Law School and Environmental Defense Fund. April 2019.
(4) Ibid, p 3