Water utilities warn PFAS rule will cost billions, lead to higher rates

A new first-of-its-kind environmental rule that lays out a path to reducing so-called “forever chemicals” in U.S. drinking water would cost municipal water systems up to $40 billion in capital costs and billions more in annual compliance costs.

That’s the potential price tag floated by industry groups representing publicly-owned water systems after the Environmental Protection Agency Wednesday released a final rule regulating the drinking water contaminants. Groups like the American Water Works Association and the Association of Metropolitan Water Agencies said they agree with the need to regulate and reduce exposure to per- and polyfluoroalkyl substances, so-called forever chemicals because they do not easily biodegrade and which have been linked to cancers and damage to immune systems and children’s development.

But the new standard — the EPA’s first-ever legally enforceable PFAS standard — amounts to a “multi-billion unfunded mandate” that will mean higher water bills across the country, the industry warned.

The AWWA commissioned a report last year from engineering firm Black & Veatch that estimated the cost of compliance at $3.8 billion annually and capital costs at up to $40 billion. The Biden administration has put annual costs around $1.5 billion.

“The final regulation for several PFAS will prove exceedingly costly for the communities and ratepayers across the country that are already struggling to replace lead service lines, address water scarcity, and upgrade aging infrastructure,” said the AMWA, which represents the nation’s largest publicly owned water systems, in a statement.

“There simply are not enough federal funds to offset the large increases in water bills that will be required to support utilities’ operational and capital investments and EPA’s growing list of mandates.”

PFAS have been found in 45% of drinking water in the U.S., according to a 2023 U.S. Geological Survey report.

In announcing the new standard Wednesday, the Biden administration said it would send states and territories $1 billion from the Infrastructure Investment and Jobs Act to cover the cost of testing and treatment. The money is part of $9 billion provided in the IIJA for PFAS treatment.

The EPA estimates that only between 6% and 10% of the 66,000 public drinking water system may find PFAS that exceed the new limit, said Mae Wu, the EPA’s deputy assistant administrator in a White House call Wednesday.

The U.S. Conference of Mayors has estimated 46,000 water systems may be affected by the new standards.

Systems have three years to complete initial monitoring and inform the public of PFAS levels. If the chemicals exceed the standard, systems have an additional two years to tackle the problem, Wu said. The rule, which Wu said included input from states and water groups, is flexible on how systems fix the problem, with current solutions ranging from reverse osmosis to ion exchange systems and granular activated carbon.

The U.S. Conference of Mayors in a May 2023 letter to the EPA urged the agency to require PFAS manufacturers to help cover costs, saying local water systems “neither caused nor contributed to the pollution.”

The letter was one of 120,000 comments the agency said it received during rulemaking.

“We urge EPA to adhere to the polluter pays model and provide sufficient direct funding to comply with this regulation,” said the group.

Utilities could see some money from settlements with PFAS manufacturers. Roughly 12,000 water systems are in line to see a piece of a potential $12.5 billion settlement with 3M Co. A $1.1 billion settlement with DuPont de Nemours Inc.  and other companies would send additional funds to thousands of other utilities.

In its letter, AMWA said more federal funds will be necessary to limit exposure, even when including $21 billion in the IIJA for drinking water improvements that can be used for PFAS.

Congressional Republicans have also voiced disapproval of the rule. “For years, I have urged multiple administrations to issue a safe drinking water standard that is scientifically sound, based in reality, and does not unfairly burden our local communities,” Sen. Shelley Moore Capito, R-W.Va., ranking member of the Environment and Public Works Committee, said in a statement. “Unfortunately, the standard set today by the administration doesn’t meet any of this criteria and takes the wrong approach, which will result in increased costs for local water systems and ultimately, ratepayers.”