Michigan's Drinking Water State Revolving Fund Fails to Address the Water Affordability Crisis in Environmental Justice Communities

In 2018, Michigan significantly revised the State’s Lead and Copper Rule, the primary regulation controlling lead in drinking water. The Rule, which is regarded as the strongest in the nation, was widely lauded by drinking water advocates as a necessary response to address the shortcomings of the federal lead and copper rule, which were exposed during the course of the Flint Water Crisis.

One of the key requirements of Michigan’s revised Rule is that it requires every community water system to replace the entire portion of all lead service lines by 2041, or on another schedule approved by the Department of Environment, Great Lakes, and Energy. While this is the only way to effectively eliminate the risk of lead in drinking water, it comes with costs. While estimates vary, the cost to replace lead service lines generally ranges from $3,000 to $5,000 per line. With an estimate of 460,000 lead service lines in the State, the costs can quickly become daunting. This is of particular concern in environmental justice communities, which generally have high numbers of lead service lines, and which are already struggling with unaffordable water bills. Access to affordable and safe drinking water in many of Michigan’s cities, including Detroit and Flint, is tenuous and, for many residents, already non-existent. As such, it’s important that creative financing solutions are developed to remedy the existing and continuously growing crisis of access to affordable and safe drinking water.

The primary source of federal funds for drinking water infrastructure is the Drinking Water State Revolving Fund program. Established under the Safe Drinking Water Act, this program provides states with federal capitalization grants to fund drinking water infrastructure projects, so long as the state matches 20% of the federal grant. The state fund is generally used to issue low-interest loans to local water suppliers to pay for infrastructure upgrades. Historically, only “disadvantaged communities” have been eligible to receive grants instead of loans.

Michigan has recently published a draft of its “Intended Use Plan” for fiscal year 2020, which describes how the State plans to utilize its Drinking Water State Revolving Fund to pay for drinking water infrastructure upgrades. Particularly for environmental justice communities, these funds are more important than ever. However, the State’s Intended Use Plan leaves a lot to be desired:

  • The Plan proposes to provide grants for drinking water infrastructure improvements to wealthy communities, such as Lake Orion. Historically, grants have only been provided to “disadvantaged communities” that are struggling with water affordability issues. Providing these grants to wealthy communities fails to direct funding to the communities with the greatest need.

  • The Plan only provides 15% of its funds to “disadvantaged communities” in the form of grants. Both Illinois and Ohio have proposed to provide 55% of its funds in the form of grants.

  • Historically, Michigan has provided a single, flat interest rate for all communities regardless of economic status. Every other Great Lakes states, provide some type of discounted interest rate for environmental justice communities, some offering interest rates as low as 0%.

  • Michigan determines which cities qualify as a “disadvantaged community” by primarily relying on median annual household income. The American Water Works Association has stated the use of median annual household income for this purpose is “seriously flawed” and fails to accurately measure affordability.

Submit Your Comment On Michigan’s 2020 Intended Use Plan

How: Submit comments via email to Karol Patton at pattonk@michigan.gov

When: Comments must be submitted by 5:00pm Wednesday, 8/28

Link to 2020 Intended Use Plan: https://www.michigan.gov/documents/egle/egle-fd-mfs-DWRF-draft-DWiupppl2020_661272_7.pdf