Lead Pipes Are A Health Risk. But Who Should Pay For Their Replacement In NJ?

The lead pipe replacement bill was penned by the committee chair, Sen. Troy Singleton, and would require utilities and other water providers to identify all lead lines in their systems and replace them within the next 10 years.

TRENTON — New Jersey lawmakers and advocates agree that lead pipes within the state’s multitude of water systems must be replaced in the interest of public health.

But who should pay for the replacement continues to be debated, even as legislation moves forward that would require all lead service lines to be replaced within the next 10 years in order to alleviate the danger of lead exposure from drinking water.

The legislation was one of five water infrastructure bills advanced by the Senate Community and Urban Affairs Committee on Monday by unanimous votes. The lead pipe replacement bill was penned by the committee chair, Sen. Troy Singleton, and would require utilities and other water providers to identify all lead lines in their systems and replace them within the next 10 years.

More than 161,000 lead service lines are believed to still be in place across some 104 water systems in New Jersey, including several operating in Burlington County. Replacing them all is expected to cost over $2 billion.

Who should bear the burden of those costs has generated disagreement among many stakeholders and lawmakers.

Service lines are the underground pipes extending from utility water mains to homes and buildings. Traditionally the portion of the pipe crossing the property line is considered the property owner’s responsibility. However, Singleton’s bill proposes making the utilities and service providers replace those portions as well and absorb the cost.

The bill specifies that water utilities, including investor-owned utilities like New Jersey American Water, would be permitted to recoup no more than 40% of its costs for replacing lead service lines from rate hikes on all its customers. The remaining 60% must come from either the utilities’ existing resources or from other sources, such as state or federal grants.

Gov. Phil Murphy has already called for the Legislature to approve placing a $500 million bond referendum on the 2020 ballot to provide funding for service line replacement. But advocates and legislators note that sum, while considerable, is well short of the total expense.

Lawmakers have also not taken up the proposed bond legislation.

The proposed 60-40% cost share is different from an earlier version of the legislation Singleton introduced last year. That version specified that only 25% of the expense could be passed on.

Singleton said the change was made in response to concerns brought by water utilities about their ability to find the money for the replacement without rate hikes.

Stephanie Brand, director of the state Division of Rate Counsel, which represents the interests of consumers in proceedings involving utilities, said the change was acceptable.

“It’s certainly our opinion that ratepayers shouldn’t have to pay anything, but we see this as a compromise,” Brand said during Monday’s hearing. “I imagine the utilities will not be particularly happy about this 40-60 split. But we are recognizing here that there’s a problem here that needs to get solved and that’s why we’re compromising.”

Others suggested utilities should be permitted to pass on the entire cost or that the state must provide funding, particularly for financially distressed municipal utilities.

“We are seeking a port of something to get started,” said Frank Marshall, of the New Jersey State League of Municipalities.

Sen. Declan O’Scanlon, R-13 of Little Silver, raised the issue of homeowners and other property owners who have already paid to replace lead lines on their property. If the legislation is approved, their utility rates will still be increased, effectively making them pay for others who have incurred the expense.

“We should have some substantial concern for the folks who have paid for their line replacement already. So now they’re paying twice,” O’Scanlon said. “It’s a tough thing.”

Brand concurred. “It is unusual. The normal course is that customers pay for the utilities’ side and property owners pay for their own side,” she said.

Singleton said he shares those concerns too but he also said the lead pipes still in service are a public health risk. Ideally, he said the state would provide a pool of funding to replace all the pipes’ at properties whose owners lack the financial means to pay. But he said the state also does not have the financial means to take on that burden.

“We’ve both struggled with this issue of inequity,” Singleton said, adding that the proposal was an attempt to balance all concerns.

“It’s one of those things that, at least from where I sit, because we had the chance to see and understand the magnitude of the problem. If we were truly to address it ... we would have to take it out of the whole utility and customer conversation and set a pool of money aside to do that. That is a significant undertaking in a state already challenged with affordability. So we’re trying to thread this needle and be as pragmatic as possible,” the senator added.

Other advocates spoke in favor of allowing utilities to recoup all costs, arguing that it was the only way to ensure that the lines are replaced.

“There’s nothing that’s perfectly fair. We think 100% rate recovery is the way to go. It allows utilities to go forward and require property owners to have lead service lines replaced without their permission,” said Chris Sturm, managing director of policy and water for New Jersey Future, a smart-growth advocacy group.

She cited ongoing work in Newark, where the city has begun replacing all lead service lines connecting homes and water mains with $120 million in bonds secured by Essex County in order to address elevated lead in many homes’ drinking water.

While Newark has received most of the attention, Murphy and other state officials have stressed that lead exposure is a statewide problem and that lead service lines are present in urban, suburban and rural communities.

The Bordentown City Water Department has also wrestled with lead contamination during the last two years, though the utility has said it has no lead in its source water or lead pipes and service lines in its distribution system.

The lead is believed to be from in-home plumbing materials and fixtures in certain homes, though the state Department of Environmental Protection has required the city to treat its water with “corrosion controls” in order to prevent lead from leaching from any pipes or fixtures.

The city has also provided free water testing for homeowners and worked with the Burlington County Department of Health to hold several free blood screening clinics for children.

The debate over how to fund replacing pipe replacement is expected to continue in the coming weeks. Though the legislation was advanced from committee, Singleton said it would likely be heard by the Senate Budget and Appropriations Committee next week. He said he welcomed more input before then or any floor vote but stressed that the bill was a priority for Senate leaders and would likely advance quickly.

The bill also must also be approved by the full Assembly and signed by the governor.

Original Article