Insights

Paying for the inventory and plan with State Revolving Fund lead money

Published October 13, 2026 · Lead Inventory Desk

For many small systems the hardest part of the 2027 deadline is the budget, not the paperwork. Federal lead service line money can pay for the inventory and the plan, not only for digging. Here is what EPA says, and what to ask your state.

How much money, and how much does not have to be repaid

The Infrastructure Investment and Jobs Act set aside $15 billion for lead service line replacement through the Drinking Water State Revolving Fund (DWSRF). EPA says 49 percent of those funds go to communities as grants or principal forgiveness loans, and no state match is required (EPA, Identifying Federal Funding Sources for Lead Service Line Replacement).

In November 2025 EPA announced a further $3 billion for states through the SRF programs for lead in drinking water, plus $1.1 billion of unused lead funding redistributed to states that need it. EPA said allotments would follow the latest service line inventory data, and that states which had not used earlier funds must first submit a plan for using them (EPA news release, November 25, 2025).

What the money can pay for

To be eligible, a project must be DWSRF-eligible and be lead service line replacement or "an associated activity directly connected to the identification, planning, design, and replacement of lead service lines" (EPA funding page). EPA's SRF questions and answers are direct about inventories: they are eligible "regardless of whether lead service lines are found during the inventory," from either the loan fund or the state's set-asides (IIJA SRF Questions and Answers, question 9.13). States can also use set-aside funds for inventories and lead-related technical assistance.

That covers the work in an Inventory and Replacement Plan Kit: turning records into the baseline inventory, sorting unknown lines and drafting the replacement plan. Field verification of unknown lines, such as potholing, is identification work too.

Who can borrow

EPA says the DWSRF can assist publicly owned and privately owned community water systems, and nonprofit non-community water systems (EPA funding page). A town, a rural water district, a private water company or a nonprofit school can apply. A for-profit business that runs its own non-community system is not on that list.

Small systems have one more option. EPA's Small, Underserved, and Disadvantaged Communities Grant Program helps communities of fewer than 10,000 people that cannot take on enough debt to fund a Safe Drinking Water Act project (EPA funding page).

Every state runs its own program

The federal money flows through state programs, and each state has its own application procedure, its own list of projects in its Intended Use Plan, and its own definition of a disadvantaged community, which decides who gets the forgiven share (EPA funding page; SRF Questions and Answers). Ask early. Funding rounds and project lists run on the state's calendar, not the rule's.

The purchasing rules come with the money

How you are allowed to buy the work depends on the form of the help. EPA says that when a state lends from its revolving fund, "with or without principal forgiveness," the federal procurement rules in 2 CFR 200.317 to 200.327 do not apply; only state and local procurement rules do. When the state gives the help as a grant, it is a federal subaward, and the federal procurement rules apply (SRF Questions and Answers, grants management section).

Before you ask anyone for a quote, ask your SRF office which form your help will take and which purchasing rules follow from it. A fixed price and a written scope make either path easier.

Five questions for your state SRF office

1. Is our inventory and replacement plan work eligible under your lead service line funds?
2. Do we qualify as disadvantaged under your criteria, and how much would be forgiven?
3. When is the next application or project list deadline?
4. Will our help be a loan, a loan with principal forgiveness, or a grant, and which purchasing rules apply?
5. Do you require any particular firm, engineer or format for the work?