EPA to Revisit PFAS Drinking Water Standards Following Industry Challenge

WASHINGTON — The U.S. Environmental Protection Agency announced on May 18, 2026, that it will revisit its national drinking water regulation for six per- and polyfluoroalkyl substances (PFAS), initiating a new rulemaking process after facing a legal challenge from major water utility associations. The American Water Works Association (AWWA) and the Association of Metropolitan Water Agencies (AMWA), which jointly filed a petition for judicial review in 2024, welcomed the EPA's decision. In a joint statement, the two organizations said they share the agency’s goal of protecting people from potentially harmful levels of the chemicals, often called “forever chemicals,” in their drinking water. “We appreciate EPA’s careful review of the PFAS Rule and commend the agency’s intention to make improvements to the previous rulemaking process,” said AWWA CEO David LaFrance and AMWA CEO Tom Dobbins in their statement. The EPA’s move signals a significant shift in its approach to regulating the widespread contaminants. According to the announcement, the agency plans to issue a new proposed rule in the fall of 2025, with a finalized version slated for the spring of 2026. A key change will be the rescission of regulations that used a novel “hazard index” approach to set a standard for mixtures of certain PFAS, a method the water associations had heavily criticized. The original legal challenge from AWWA and AMWA centered on the argument that the EPA had departed from the foundational requirements of the Safe Drinking Water Act (SDWA). The associations contended that in its haste to regulate, the EPA truncated the standard rulemaking process, limited opportunities for public comment, and failed to incorporate the best available science. For example, the EPA finalized its initial regulation without waiting for new data on national PFAS occurrence that it was actively collecting through the Fifth Unregulated Contaminant Monitoring Rule. “Scientific process matters, especially when it will set precedent for how EPA develops future drinking water regulations,” the associations stated. “We strongly support the agency’s decision to rescind the regulations that used the novel hazard index approach and ensure future rulemakings respect the Safe Drinking Water Act process.” The SDWA, first enacted 50 years ago, provides a specific framework for the EPA to evaluate contaminants, incorporate public feedback, and conduct cost-benefit analyses. The water utilities argued that adhering to this process is critical for creating scientifically sound regulations that maximize public health benefits in a cost-effective manner. This ensures, they argue, that ratepayer dollars are directed toward the most pressing public health risks. While the associations praised the procedural course correction, they noted that the financial burden on communities remains a paramount concern. “While today’s announcement does not appear to substantially reduce the costs of the PFAS rule, it does acknowledge the very substantial challenges communities face in finding alternative sources of water or installing treatment,” their statement read. The costs of compliance are immense and compete directly with other urgent infrastructure needs. An AWWA report from 2012, “Buried No Longer,” estimated that water systems and their customers would need to invest over $1 trillion over 25 years simply to repair and expand existing drinking water infrastructure. The additional cost of sophisticated PFAS treatment technologies puts further strain on municipal budgets, which ultimately impacts local businesses and households through higher rates and taxes. The EPA’s new approach appears to recognize these financial realities. “We welcome EPA’s recognition that compliance will require additional time and flexibility, particularly for small systems and those facing affordability challenges,” the associations said. “Allowing communities time to make fiscally sound decisions based on thoughtful evaluation of compliance alternatives is simply good policy.” In our experience, regulatory shifts of this magnitude create significant financial uncertainty that extends far beyond municipal utility budgets. Small and mid-sized businesses will feel the impact directly through increased water rates and potentially new environmental compliance costs of their own. This is not just a public works issue; it is a critical business continuity and cost-management challenge. Companies need to proactively assess how these evolving standards will affect their operational expenses, supply chains, and even potential liabilities. Waiting for the final rule to be implemented is a reactive posture that can leave a business unprepared for sudden cost escalations. We advise clients to model these potential impacts now and develop strategies to mitigate them. This is a core component of the financial risk management services C&S Finance Group LLC provides to help businesses navigate complex regulatory environments. To understand your company's potential exposure, contact us at csfinancegroup.com. Looking ahead, water systems, municipalities, and affected industries will be closely watching the development of the EPA’s new proposal. AWWA and AMWA have pledged to continue providing data to the agency as the new rulemaking moves forward. The central focus will be on whether the forthcoming rule can strike a more tenable balance between achieving public health goals and managing the profound economic impact on communities across the country.