Iowa municipalities could receive loans to replace lead service lines and assume statewide enforcement obligations for water-quality standards under a new Iowa Department of Natural Resources proposal.

The proposed rules, issued Jan. 17, allow the state’s Drinking Water State Revolving Fund—a fund that’s been operational since 2000—to lend Iowa communities money to replace privately owned lead service lines.

Revolving fund financing for private service lines is currently prohibited; the proposed rules specifically qualify lead service-line replacement as an...