Among its missions, the EPA allots federal funds to help local governments replace led water pipes. It conducts state-by-state surveys to help figure out how much gets allotted. The EPA inspector general found flaws in the most recent survey. The flaws likely led to misallocation of hundreds of millions of dollars. Julie Narimatsu, supervisory program analyst in the EPA’s office of inspector general, shares more on the Federal Drive with Tom Temin.

Interview transcript:

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

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

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Tom Temin All right. And the EPA conducts a survey to decide how to allocate that money to the states. And you found a flaw in the survey. Tell us 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 basically the states are assuming in the costs they need to provide safe drinking water to their residents. The last one was conducted in 2021, and that 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 required the EPA to assess the total cost of replacing lead service lines in each state. And so the EPA did this in the seventh with the lead service line questionnaire. It was a pretty basic spreadsheet that just asked states to estimate how many lead service they had, how many water service lines that they knew were not lead, and then how many were unknown to the state. So the lead service line questionnaire was fulfilling the mandate made by Congress in 2018. In 2021, Congress passed the Infrastructure Investment and Jobs Act, which allotted the $15 billion I referred to. So at that time, they decided to use the data that they received from that lead service line questionnaire in order to allot that $15 billion. For context, in fiscal year 2022, they did not have that data from the seventh DWINSA and so they used the sixth DWINSA in order to allot the FY22 IIJA lead service line money. And so that was just based on general infrastructure, water infrastructure needs rather than any kind of estimate of lead service lines in each state.

Tom Temin Right. So therefore, you were able to come up with the idea that they may not have really known what the exact amount was in each state that needed to be replaced.

Julie Narimatsu Sure. Right. So lead service lines are really difficult to identify for water systems and states, because they are underground. So it’s a difficult problem. And in 2021, a lot of water systems and states do not yet know what their lead service lines problems look like. Like I said, the lead service line funding will only cover a fraction of what states will need. And so every dollar really counts in terms of the EPA allotting that money to the states. And what we found, what our team found is that the EPA lacked sufficient internal controls with respect to the administration of the lead service line questionnaire within the seventh DWINSA. And that resulted in significant data gaps in data reliability.

Tom Temin Right. In other words, what the states report could change over time, even though the pipes haven’t changed simply because they gain, the states gained more knowledge about their own infrastructure?

Julie Narimatsu Exactly. And the EPA, through two different roles in the last couple of years, one most recently in 2024 in October, they passed the lead and copper rule improvements. So they’re requiring states to replace the lead service lines. And also in the past month they in the lead and copper rule revisions, they were requiring states to provide an inventory to the EPA. And so that inventory was required to be submitted to states by water systems in this past month, in October.

Tom Temin We’re speaking with Julie Narimatsu. She’s a supervisory program analyst in the EPA’s Office of Inspector General. And so tell us how you came up with what was the estimate of misallocation that you came up with and how did you derive that?

Julie Narimatsu So with the misallotments, we look specifically at two states, and those were Florida and Texas. And Texas, that was basically a data error. The city of Houston’s public water system had reported 300,000 lead service lines, and they had meant that to go into the unknown column. So they didn’t know what material those those lines were. That accounted for nearly 99% of Texas’s total reported service lines. And they were able to update that number for FY22 for IIJA funding. And so that resulted in a $117 million reduction for fiscal year 2024 as compared to fiscal year 2023. Florida was a little bit of a different issue; Florida used a contractor to develop a methodology to estimate the lead service lines in their states, which is perfectly allowable and fine. And the issue we found with that was that the methodology that was articulated to us by Florida and by its contractor was not consistently applied amongst all the water systems in Florida. And we found that, had that methodology been consistently applied, there would have been 33% fewer reported lead service lines. Even more problematic is that no one really could 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 issue we found in Florida was that we reached out to eight water systems specifically. And those water systems basically told us that they didn’t think that what was submitted on their behalf reflected what they knew about their service lines in their water systems. And those eight systems actually accounted for nearly 40% of Florida’s total reported lead service lines. So ultimately, it was really concerning for us that, one, the methodology wasn’t applied consistently; and two, what Florida reported did not really reflect what some of the systems knew about their lead service line problem.

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Tom Temin Right. So the money was basically going out based on flawed 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 demonstratable numbers of lead lines?

Julie Narimatsu Right. So we’re working on that. So the EPA did provide a one-time update opportunity for states to submit new data in 2023. And so they used that new data to inform their fiscal year 2024 allotments and then they base fiscal years 2025 and 2026 on that data. And so I already discussed the $117 million that the EPA adjusted for Texas for fiscal year 2024, and then for Florida, we are working with the agency on actions that are available to them to try to get that money back. And so we’re still in the discussion stages of resolving the recommendations they had.

Tom Temin In the meantime, are you giving them recommendations to fix that survey?

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

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