Pipe ID

Any idea what the pipe that T's off of the main before it enters the house is?

Usually for irrigation (sprinkler manifold)

I'm going to look at this today for my buddy. Is there a reason it started leaking? Can I cap it? He mentioned something being spring loaded.

You should not cap it.

It is a thermal expansion valve, designed and installed to relieve the excess pressure that is created when a water heater heats the water in it's tank and the water expands. If it releases a shot of water as the water heater is operating, and at no other time, than it is doing it's job. If it is dripping continuously, then it is possible that the spring is weakening, or the rubber seal inside of it is deteriorating. It could also be a problem with the water heater.