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Federal Allocation Formulas Could Affect Lead Service Line Replacement

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Gary Brune, Senior Policy Manager, New Jersey Future

As Congress debates various proposals to increase federal aid to address the problem of lead-contaminated drinking water, it is important to consider potential allocation formulas, as different choices may drastically alter New Jersey’s share.

New Jersey is estimated to have 350,000 lead service lines (LSLs), the fifth highest total in the country, which would cost an estimated $2.3 billion to replace. These figures are based on a 2016 analysis sponsored by the American Water Works Association (AWWA) and assume an average cost of $6,700 per LSL replacement. Federal aid to offset these costs is vital, particularly for fiscally distressed cities with a high incidence of lead contamination.

Given the $45 billion recommended in the American Jobs Plan, President Biden’s infrastructure investment proposal, listed below are three examples of how this aid might be distributed:

1. Drinking Water State Revolving Fund (SRF) 

Based on New Jersey’s 1.7% share of federal SRF grants for drinking water projects, distribution of LSL replacement funds through this program would yield $765 million to the state. (As noted in the Jersey Water Works blog post, the state’s share of federal drinking water grants has declined over time and is significantly smaller than it should be.)  

2. Population

New Jersey accounts for 2.7% of the national population, which would result in $1.2 billion of federal aid.

3. Share of Lead Service Lines

Based on AWWA’s estimate of a total of 6.1 million LSLs across the country, New Jersey’s estimated portion (350,000 LSLs) represents 5.7% of the national total, which would result in $2.6 billion of federal aid.

New Jersey would obviously benefit from a formula that emphasizes the number of known and suspected LSLs in each state. Additionally, cities such as Newark, which recently invested local and state funds to completely remove LSLs as a public health measure, should be eligible for reimbursement from the federal aid provided.

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