New 'Flow Act' Eases Financing for Lead Pipe Removal, Targeting Home Connections After 2025

The “Financing Lead Out of Water Act of 2025,” or the “Flow Act,” is a short but mighty piece of legislation focused on clearing a major financial hurdle for water infrastructure projects. Simply put, this bill changes federal tax rules to make it easier and cheaper for public water systems to finance the replacement of lead pipes, especially the part that runs onto private property.

The Tax Rule That Slowed Down Safe Water

Here’s the deal: When public entities, like a city water department, issue tax-exempt municipal bonds, they get a lower interest rate, which saves taxpayers money. However, those bonds come with strict rules, primarily that the money can’t be used too much for “private business use.” Historically, replacing the section of a lead service line that runs from the curb into your basement—the privately-owned section—was often considered private use. That meant water systems couldn't use tax-exempt bond money for the whole job without risking the tax-exempt status of the bond issue.

Section 2 of the Flow Act cuts through this red tape. It clarifies that using bond money for “Qualified lead service line replacement use”—which is defined as replacing the private section of a lead pipe to help the water system meet national lead drinking water standards—will not count as private business use for tax purposes. This is a huge win for public health infrastructure.

What This Means for Your Water Bill and Home

Think of it this way: Before this change, a city might have been able to afford to replace the main water line under the street, but they would have hit a financing wall when it came to digging up your front yard to replace the pipe leading into your house. This created a problem where only a partial replacement was done, which can sometimes temporarily make the lead problem worse. The Flow Act removes that financial barrier, allowing water systems to finance the full replacement, curb-to-house, using the most affordable financing tool available.

For homeowners, this means two things. First, it accelerates the timeline for getting lead out of your drinking water, which is a major public health benefit, especially for families with young children. Second, it shifts the financial burden of replacing that expensive private section of pipe away from the individual homeowner and onto the public utility, financed through these low-cost bonds. The bill requires that this replacement work must be tied to helping the public water system comply with the federal rules for lead in drinking water, ensuring the funds are used where they are needed most.

The Fine Print: When and Who Pays

This change applies to bonds issued after December 31, 2025. So, it’s not an immediate fix, but it sets up the financial framework for future infrastructure projects. While the bill itself is designed to lower costs for public water systems and, by extension, the communities they serve, it does rely on those systems actually choosing to issue these bonds and undertake the replacement work.

This is a smart, targeted use of tax policy to solve a complex infrastructure problem. It doesn't create a new grant program; it just makes the existing rules work better for public health. It recognizes the reality that the lead problem can't be solved unless the private side of the connection is addressed, and it gives water systems the most efficient financial tool to do it.