Issuers looking for help with PFAS

Finalized Environmental Protection Agency rules regulating what's commonly known as "forever chemicals," is inspiring water utilities lobbying Congress and alerts from attorneys.

"We are receiving inquiries from clients about what they should expect in 2026, and PFAS continues to be a contentious and evolving topic," said Aaron Goldman, an attorney with Nixon Peabody's affordable housing & real estate practice and a member of the firm's environmental team.

"Based on our experience with a dozen plus manufacturers with varied PFAS concerns, we believe a thoughtful and practical approach is warranted."

PFAS is an abbreviation of per- and polyfluoroalkyl substances that are regulated by the EPA's Comprehensive Environmental Response, Compensation, and Liability Act, also known as Superfund.

Concerns from manufacturers and bond-issuing water authorities are coming to a head as the Trump Administration's EPA finalized drinking water regulations which requires water utilities to complete initial PFAS monitoring systems by 2027 and install new treatment systems by 2029.

The water utilities believe the rule also makes them responsible for costly PFAS cleanups, despite their role as "passive receivers" of the chemicals, and puts them in legal peril.

"Water utilities do not manufacture, use, or profit from PFAS, yet recent EPA rulemaking exposes them to significant financial and legal liability under CERCLA," said Tracy Mehan, the executive director of government affairs, for the American Water Works Association.

"When utilities are forced to spend limited resources on litigation or cleanup costs, ratepayer funds must be diverted from replacing aging infrastructure, complying with Safe Drinking Water Act requirements, and performing other essential functions."

The quotes come from Mehan's testimony during a hearing before the U.S. House Committee on Energy and Commerce's Subcommittee on Environment in December.

AWWA contends the new rules will financially cripple local water utilities.

"While Congress provided $10 billion to help water and wastewater systems address PFAS through the Infrastructure Investment and Jobs Act, AWWA estimates that utilities will need to make capital investments totaling between $37-48 billion by 2029 in order to fully comply."

The chemicals can be removed by granular activated carbon, ion exchange, or reverse osmosis but the jury is still out on which is the most efficient method. The next problem is where do the chemicals go and who is responsible for their disposal.

The EPA originally certified the chemicals as hazardous in 2024 and made the rule retroactive, another pain point for water utilities.

"CERCLA's strict, retroactive liability framework will continue to apply, even as EPA recognizes the ongoing challenge of passive?receiver liability and indicates that durable relief likely requires Congressional action," said Goldman.

AWWA continues to lobby Congress for a return to the "polluter pays" principal by providing the industry with an exemption to liabilities that already exist for recyclers, landowners, lenders and pesticide users.

"These exemptions reflect consistent congressional judgement that CERCLA's strict, retroactive, joint and several liability scheme should target manufacturers and polluters," said Mehan.

The House already has a bipartisan bill bouncing between committees sponsored by Rep. Marie Gluesenkamp Perez D- Wash., that would provide water and wastewater utilities with a narrowly tailored exemption from PFAS liability except in cases of negligence or willful misconduct.

The future of the legislation remains uncertain as does the solution to the PFAS problem.

"At this nascent stage in the process, it would be premature to speculate on any specifics of a forthcoming rule or potential implications for members of the regulated community," said Goldman.

"From the EPA's September 17, 2025, announcement, it certainly seems as though the agency is concerned with this issue but also is mindful of the limits of its current authority and the need for new statutory provisions from Congress."