H.R. 3892: Financing Lead Out of Water Act of 2025

This bill, titled the Financing Lead Out of Water Act of 2025 or the Flow Act, aims to modify the tax rules regarding bonds used for replacing lead service lines in public water systems. Specifically, it changes the definition of what constitutes private business use for these bonds. The key points are as follows:

Modification of Private Business Use Requirements

The bill amends the Internal Revenue Code to clarify that proceeds from certain bonds issued for the replacement of lead service lines will not count as private business use. This is significant for the following reasons:

• Qualified Lead Service Line Replacement Use: The bill defines "qualified lead service line replacement use" to mean the use of bond proceeds for replacing privately-owned portions of lead service lines connected to a public water system. This is intended to help ensure compliance with national drinking water regulations regarding lead.
• Definitions: The bill provides clear definitions for terms such as "lead service line," "public water system," and what constitutes compliance with national primary drinking water regulations for lead as outlined in existing federal legislation.

Effective Date

The changes made by this legislation would apply to bonds issued after December 31, 2025, which means it would not have retrospective effects on bonds issued prior to that date.

Purpose of the Bill

The overall intent of the bill is to facilitate the replacement of lead service lines by providing more favorable bond financing conditions. By removing the burden of private business use classification, it could make it easier for public water systems to secure the necessary funding to replace lead service lines and thus improve public health and safety regarding drinking water quality.

Relevant Companies

None found