Colorado’s Bennet is trying to reduce Americans’ lead exposure using U.S. tax code

U.S. Sen. Michael Bennet is leading the charge on a legislative effort to curb Americans’ exposure to lead – starting with the water pipes used by their homes.

On Thursday, the Democratic lawmaker from Colorado is set to introduce a bill that would attempt to soften the financial blow faced by homeowners when they take steps to replace their privately-owned lead water pipes, or service lines.

The country was hit with the reality of the toxic metal’s dangers when, beginning in 2014, residents of Flint, Mich., were exposed to it through their water supply. But, Coloradans aren’t immune to the health hazard.

Public utilities – which provide the population with electricity, gas and, in this case, water – are in the process of changing out publicly-owned lead service lines nationwide. Denver Water, Colorado’s oldest and largest water utility, is doing the same with its Lead Reduction Program, which kicked off in January 2020.

The agency serves lead-free water to 1.5 million people in the Mile High City and surrounding areas, but it can become contaminated when moving through lead-containing household fixtures, plumbing and service lines.

Denver Water is “financing the removal of all public and private lead service lines in its service area at no cost to its customers by issuing tax-exempt bonds,” according to Bennet’s office. Tax-exempt bonds are a means typically used by state and local governments to fund public projects.

The Internal Revenue Service has slowed Denver Water’s efforts, though, with a “costly and time-consuming analysis of its service area as part of the ‘private business use test’” that’s necessary to qualify for the tax exemption, Bennet’s office said.

The proposed solution lies in a change to the nation’s tax code. The measure would ensure bonds issued by public water utilities are tax-exempt if the entities are replacing privately-owned lead service lines to comply with a National Primary Drinking Water Regulation for lead.

“Coloradans deserve to know the water they and their children drink is safe,” Bennet said. “This legislation would not only help cut through red tape but alleviate some of the financial burden that homeowners typically face when replacing their lead pipes. We should learn from the experiences of Denver Water and use innovative financing to help eliminate lead pipes completely across our communities.”

There are about 64,000 to 84,000 lead service lines in Denver Water’s system – all of which are privately owned, said CEO Jim Lochhead. The agency agreed to remove those lines over a period of 15 years, with the program currently in year No. 3.

Denver Water is obligated to remove about 4,500 lines annually, he said. “This is a public health problem that needs to be solved.”

Lochhead called Bennet’s bill “extremely beneficial” because this specific type of bond is usually designed for transit projects, stadiums, airports and other uses. “It really helps us and other utilities across the country with additional flexibility on a way forward to more affordably get at this problem.”

The U.S. government prohibited the use of lead pipes in public water systems in 1986, but homes constructed before 1951 are more likely to have such lines, according to Denver Water. Residents of the Mile High City and the surrounding areas can find out the likelihood of a lead service line linked to their property on the agency’s interactive map.

Keith McLaughlin, executive director of the Colorado Water Resources and Power Development Authority, backed Bennet’s bill, calling it “a common sense policy that helps ensure all communities in Colorado can access safe and clean drinking water, especially our underserved communities who are disproportionately exposed to lead.”