Among its missions, the EPA allocates federal funds to help local governments replace water pipes with LEDs. It conducts state-by-state surveys to help figure out how much is being allocated. The EPA inspector general found flaws in the latest survey. The flaws likely resulted in the misallocation of hundreds of millions of dollars. Julie Narimatsu, Oversight Program Analyst in EPA’s Office of Inspector General, shares more about Federal Drive with Tom Temin.

interview transcript:

Tom Temin Give us some background on the program here. This was something in the infrastructure bill allocated to the EPA for this specific purpose.

Julie Narimatsu Correct. And in 2021, Congress passed the Infrastructure Investment and Jobs Act and gave the EPA $15 billion to distribute to states to address service lines run from those states. So our team specifically looked at that $15 billion.

Tom Temin All right. And the EPA is conducting a survey to decide how to allocate that money to the states. And you found a flaw in the survey. Let us know how it should work and what went wrong.

Julie Narimatsu So the Safe Drinking Water Act requires the EPA to collect data every four years on a state’s water infrastructure needs, which states basically absorb into the costs they need to provide safe drinking water to their residents . The last one was done in 2021 and it was the seventh time they conducted that survey. And it’s called the Drinking Water Infrastructure Needs Survey and Assessment (DWINSA) in 2018 that Congress asked EPA to assess the total cost of replacing lead service lines in each state. And so EPA did this in the seventh with the main service line questionnaire. It was a pretty simple spreadsheet that just asked the states to estimate how many lead services they had, how many water lines they knew didn’t have lead, and then how many were unknown to the state. So the major service line questionnaire was fulfilling the mandate given by Congress in 2018. In 2021, Congress passed the Infrastructure Investments and Jobs Act, which appropriated the $15 billion that I referred to. So at that point, they decided to use the data they got from that top line survey to allocate that $15 billion. For context, in FY2022, they didn’t have that data from the 7th DWINSA and so they used the 6th DWINSA to allocate the FY22 IIJA main service line money. And so it was just based on the general infrastructure, the water infrastructure needs, rather than any kind of estimation of the lead service lines in each state.

Tom Temin Correct. Therefore, you may have come up with the idea that you may not have really known what the exact amount was in each state that needed to be replaced.

Julie Narimatsu Sure. Correct. So lead service lines are very difficult for water systems and states to identify because they are underground. So it’s a difficult problem. And in 2021, a lot of water systems and states still don’t know what problems with main service lines look like. As I said, funding for the main line of services will only cover a fraction of what states will need. And so every dollar really counts when it comes to EPA allocating that money to the states. And what we found, what our team found, is that EPA did not have sufficient internal controls in terms of administering the main service line questionnaire under the seventh DWINSA. And that has led to significant gaps in data reliability.

Tom Temin Correct. In other words, what the ratio of states might change over time, even if the pipelines didn’t change just because they won, did states gain more knowledge about their own infrastructure?

Julie Narimatsu Exact. And the EPA, through two different roles in the past two years, most recently in 2024 in October, has passed improvements to the lead and copper rules. So they’re asking states to replace lead service lines. And also in the last month, in the review of the lead and copper rules, they required the states to provide an inventory to the EPA. And so that inventory was supposed to be submitted to the states by the water systems last month, in October.

Tom Temin We’re talking to Julie Narimatsu. She is an oversight program analyst in EPA’s Office of Inspector General. And so tell us how you came up with what was the misallocation estimate that you came up with and how did you get that?

Julie Narimatsu So with the misallocations, we’re looking at two states in particular, and that was Florida and Texas. And Texas, that was basically a data error. The Houston Public Water System had reported 300,000 lead supply lines and they wanted that to go in the unknown column. So they didn’t know what material those lines were. This accounted for nearly 99% of all reported service lines in Texas. And they were able to update that number for FY22 for IIJA funding. And so that resulted in a reduction of $117 million for fiscal year 2024 compared to fiscal year 2023. Florida was a little bit of a different issue; Florida used a contractor to develop a methodology to estimate their states main service lines, which is perfectly fine and dandy. And the problem we found with that was that the methodology that was articulated to us by Florida and its contractor was not applied consistently across all of Florida’s water systems. And we found that if this methodology had been applied consistently, there would have been 33% fewer primary service lines reported. Even more problematic is that no one could really tell us, whether it was the EPA or the state of Florida, what that other pattern represented or how that methodology was conducted. And the other problem that we found in Florida was that we specifically contacted eight water systems. And those water systems basically told us that they didn’t think what was sent on their behalf reflected what they knew about their service lines in their water systems. And those eight systems actually accounted for nearly 40 percent of all reported lead service lines in Florida. So, ultimately, it was very concerning to us that, one, the methodology was not applied consistently; and second, what Florida reported did not truly reflect what some of the systems knew about their main service line problem.

Tom Temin Correct. So the money was basically out based on wrong data. Is there any way to get the money reallocated? I mean, can Florida or Texas give some of it back? And then it goes to the states that actually have a demonstrable number of leadership lines?

Julie Narimatsu Correct. So we are working on it. So EPA gave states a one-time update opportunity to submit new data in 2023. And so they used that new data to inform their FY 2024 allocations and then based their 2025 and 2026 fiscal years on that data . And so we’ve already discussed the $117 million that the EPA has adjusted for Texas for fiscal year 2024, and then for Florida, we’re working with the agency on the actions that are available to them to try to get that money back. And so we are still in the discussion phase to resolve the recommendations that they had.

Tom Temin In the meantime, do you give them recommendations to fix that survey?

Julie Narimatsu So the recommendations are specifically about developing a process to identify any other problematic data that might be in the data set that they have for the service line questionnaire and then using that. If they find other problematic data, then they try to adjust that data, identify actions to adjust that data, and adjust allocations as needed.

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