May/June 2023 Issue

Also in this issue: State of PFAS in Wisconsin: Drinking Water Regulations and Testing Results     |     Wisconsin Court of Appeals Discusses Governmental Immunity for Personal Injury Claims in Non-Binding Decision

Coordinating Private Lead Service Line Replacement Programs to Maximize Impact

Lawrie J. Kobza | 06.01.23

Over the last several years, grant funding has been available from the Wisconsin Department of Natural Resources (DNR) for private lead service line (LSL) replacements. Wisconsin communities have been able to use this funding to assist their residents in replacing their private LSLs. Because of this DNR grant funding, municipalities have not needed to rely upon utility rates to fund private replacements. As a result, few municipal utilities have sought Public Service Commission of Wisconsin (PSC) approval to use utility rates to fund their private LSL financial assistance programs.

This changed in 2023. Beginning this year, funding for LSL replacements will be handled through the Safe Drinking Water Loan Program (SDWLP) with funds from the Bipartisan Infrastructure Law (BIL). Under the BIL, $48.3 million will be provided for state fiscal year 2023 and $81.2 million will be available for state fiscal year 2024. Funding is available for public and private LSL replacements, but the BIL requires that 49% of the funding be awarded as principal forgiveness to municipalities meeting Wisconsin’s disadvantaged criteria. Wisconsin’s disadvantaged criteria for LSL funding is set forth in Wisconsin’s draft 2024 SDWLP Intended Use Plan available on the DNR’s website.

Because of this 49% requirement, most municipalities will not be able to provide financial assistance for private LSL replacements without relying upon additional municipal or utility funds. If a municipality intends to look to its water utility to help fund a private LSL replacement financial assistance program, PSC approval of the utility program will be required.

Wisconsin statute § 196.372 provides that the PSC may not approve a utility’s private LSL financial assistance program unless any grants that are provided are limited to no more than one-half of the owner’s total cost to replace the private LSL. If a loan is available, it may not be forgiven. The utility program must also satisfy one of the following conditions:

• If financial assistance is provided as a percentage of the cost of replacing the customer-side water service line containing lead, that percentage is the same for each owner in the customer class; or
• If financial assistance is provided as a specific dollar amount, that dollar amount is the same for each owner in the customer class.

Municipalities are faced with the challenge of meeting conflicting policy requirements. The BIL seeks to direct funding to disadvantaged residents while Wis. Stat. § 196.372 seeks to ensure a utility’s program does not discriminate among ratepayers. One strategy for addressing these conflicting policies is to adopt two different financial assistance programs – a municipal program designed to meet the considerations behind the BIL and a utility program designed to meet the requirements of § 196.372.

The municipal program could be established to distribute the principal forgiveness funds received by the municipality under the SDWLP. Eligibility to participate in the municipal program could be based on justifiable public interest considerations, such as income or children in the home. A municipal program would not need to meet the legal requirements of Wis. Stat. § 196.372 and would not need PSC approval. No utility funds, however, could be used by the municipal program.

The utility program could be established to provide financial assistance funded by SDWLP loans and/​or utility revenues. The utility program would need to meet the legal requirements of Wis. Stat. § 196.372 and be approved by the PSC. The same eligibility requirements would have to apply to all customers in a customer class.

To ensure that the requirements of Wis. Stat. § 196.372 are not violated, participation in the programs should be resident/​customer driven. A resident/​customer could choose to participate in both programs or only one program. If a participant chooses to receive financial assistance though the municipal program, the participant should be able to choose to receive less financial assistance than is available under the utility program. A utility program is not discriminatory if the program is the same for all customers, but an individual customer chooses not to participate fully in an offered program.