Op-Ed: Workable solutions to the replacement of lead service lines in NJ

Chris Daggett | February 18, 2021 | Energy & Environment, Opinion
‘There are two solutions that are both practical and efficient if public officials are committed to addressing the problem’
Chris Daggett

What if you knew of a statewide health problem that poisons at least 4,500 children each year, likely causing irreversible damage to their brain, kidneys, and nervous system? And, further, while there is no medical treatment, what if you knew how to avoid new cases, the cost of which is far exceeded by reduced expenses for medical treatment, special education and the full realization of earnings over a lifetime? What would you do?

We do know of such a problem. It’s lead exposure — from lead paint in older homes, lead service lines, indoor lead plumbing, and lead in soil. While attention has been given to each of these areas, lead service lines have received the most attention lately due to water crises in Flint, Michigan, and here in Newark, New Jersey.

An estimated 350,000 lead service lines are scattered across New Jersey, the fifth-highest total in the nation, and the projected cost of completely replacing them is $2.3 billion, a daunting cost given tight state and local budgets.

However, there are two solutions that are both practical and efficient if public officials are committed to addressing the problem. The first is found in water rates, the second in county bonding. In both cases, there is a complicating factor of the general prohibition on using public funds to improve private property when lead service lines are jointly owned by both the water utility and the property owner.

To move forward, we need to recognize the replacement of customer-owned lines as a special case: They form an integral part of a functioning water system and many low-income customers lack the financial means to pay for the work.

A water system’s rate charges provide revenue that is stable and sufficient to cover the cost to treat, store, and distribute high quality water to customers, as well as investments that ensure a state of good repair. Typical capital needs, such as upgrades to aging treatment plants, pipes and pumping stations, are financed by ratepayers because they are considered to be part of a unified system. Individual customers are not charged based on the benefit they specifically receive from each improvement.

Negative results from earlier law

Unfortunately, that is not the case for lead service line replacements. New Jersey’s 2018 legislation to address lead service lines (P.L. 2018, c.114), authorized localities to require property owners to pay $1,000 each to offset the cost of replacing customer-owned lines.

In the first two cities to act, Trenton and Newark, the $1,000 cost share triggered three negative results: decreased participation, a slow pace, and inefficiency. Absentee landlords often refused to pay, leaving many low-income tenants in limbo, and contractors skipped around neighborhoods as handfuls of property owners gradually decided to participate, driving up costs considerably — as much as 25% by some estimates.

By including the full cost of lead service line replacement in water rates, the burden is distributed across the entire service area and, if revenue is used to support water utility debt or federal loans, it is also spread over time. Combined with the fact that the planned work is staggered over several years, the typical cost to an individual ratepayer is often low. Since the improvements are one-time in nature, the rate adjustment can be eliminated once the expense is paid.

As highlighted in a joint study by the Environmental Defense Fund and Harvard University, many other states and cities have pursued this approach, including Michigan, Indiana, Pennsylvania, Missouri, Denver, and Lansing.

Besides maximizing efficiency, this approach is clearly the most equitable. Across the country, poor families in low-income areas struggle with lead poisoning long after more affluent residents have paid to address the problem.

County bonding is another solution

A second funding option is county bonding, particularly in those counties with excellent bond ratings. Newark’s line replacement has proved this concept. With money not available through rate increases, Essex County used its bonding strength to enable Newark to mandate lead service line replacements without requiring property owners to pay a cost share.

Lead service lines have been methodically replaced across entire neighborhoods, maximizing efficiency, and the pace of the program is unprecedented. Since early 2019, the city has replaced 93% of its 18,000 lead service lines. For most communities across the country, the job has taken 15 to 20 years. Newark is likely to complete the work in less than three years, while saving approximately 13% versus past service line projects.

The option of implementing full rate recovery for lead service line replacements, even when privately owned, should be authorized in state legislation. Fortunately, such legislation is advancing in the Legislature and easily could be amended to accomplish this goal.

The time has come to act. Please contact your state legislators and remind them that this problem has lingered for too long. We cannot expose another generation of children to the scourge of lead.