🔒New regulations that limit ‘forever chemicals’ will cost water utilities hundreds of millions, while raising concerns for businesses

Connecticut’s water utilities are bracing for the U.S. Environmental Protection Agency’s new limits on PFAS, short for per- and polyfluoroalkyl chemicals, which are at the center of lawsuits, health problems and, what some say is an environmental crisis.

Known as “forever chemicals” due to their durability and resistance to biodegradation, PFAS have been used for more than a half-century in the production of consumer products, such as nonstick cookware and stain-resistant material.

When PFAS-containing byproducts leach into the ground, they can contaminate drinking-water sources, including wells and above-ground reservoirs, creating a public health risk so severe that the EPA is setting a new drinking water contaminant limit for the first time in 26 years.

A spokesperson for the EPA said in early March that the regulations are undergoing an interagency review. It has been widely reported that the regulations are expected to be finalized this month.

Last year, the EPA released proposed maximum contaminant levels of 4 parts per trillion (ppt) for two of the most common types of PFAS. While about 14,000 varieties of PFAS compounds exist, the EPA’s proposed standards only address six of them.

Even still, the new regulations could be costly to water companies, and have other far-reaching impacts, including further industry consolidation, experts said.

Connecticut’s water companies are planning major infrastructure investments to comply with the anticipated regulatory threshold.

Bridgeport-based Aquarion, a subsidiary of Eversource Energy, which serves about 750,000 people in 72 municipalities in Connecticut, estimates that it will cost $250 million to $300 million to comply with the EPA’s requirements.

However, the cost will depend on whether the federal agency raises or lowers the proposed limits.

“That (estimate) may very well change by the time the standards are finally issued, but the numbers that were shared in the proposal — treating to a level of 4 ppt — is really what’s driving and increasing that level of investment,” said Aquarion President Donald Morrissey in a recent interview with the Hartford Business Journal.

He said the company is looking for grants and low-interest loans to help finance the projects, but that increased costs ultimately will be passed on to customers in the form of rate hikes.

“The reality is, it’s going to require some effort, and it’s going to require some money to address these issues, both from the standpoint of putting in place the capital infrastructure needed, the treatment systems and whatnot, but also the ongoing maintenance of those new treatment processes,” Morrissey said.

[ RELATED: CT lawmakers propose new restrictions on private industry’s use of PFAS ]

Aquarion owns more than 86 public water systems across Connecticut, Massachusetts and New Hampshire, and began voluntary testing for PFAS in 2019.

Morrissey said the company has identified about 50 systems across its network that will require PFAS removal. It has proactively installed mitigation systems in some locations, he added.

Technology challenges

The level of 4 ppt is too small for many laboratories to detect, which creates a technological challenge, said attorney Lee D. Hoffman, chair of law firm Pullman & Comley, where he practices in the areas of environmental and energy law.

“Because there isn’t a level (of PFAS) that has been deemed safe, that means that the regulations are going to be based on, in some instances, values that our laboratories can’t even detect yet,” Hoffman said. “… And so, it makes it a little bit difficult for the regulated community to prove compliance with them.”

Aquarion says it has the technology to remove PFAS. The company will install treatment systems that remove the toxic compounds by running water through granulated activated carbon, Morrissey explained.

Also, water companies will be required to conduct frequent monitoring to ensure levels remain below the EPA’s limits, and to notify the public when those limits are exceeded.

Clinton-based Connecticut Water Co., which serves about 350,000 people in 60 Connecticut towns and cities, said it’s preparing to invest roughly $120 million in filtration to remove PFAS.

“In preparation, we’re currently working with a consultant on an overall strategy for PFAS mitigation, so that figure will be refined as we work through the plan,” Connecticut Water President Craig Patla said in a written statement. “We expect to complete the plan soon.”

When the company began voluntarily testing for PFAS in 2019, Connecticut Water found three water sources with PFAS levels exceeding the state Department of Public Health Action Level. It decided to remove those sources from operation, Patla said.

The state’s action level limits are less strict than the limits proposed by the EPA.

Connecticut Water has identified 40 water sources that are above the EPA’s proposed maximum contaminant level, according to Patla.

“We have absolutely begun planning for treatment of those sources and will be ready to move quickly once a regulation is established,” Patla said.

Finding solutions

For Aquarion, another hurdle is the small public water facilities it owns, including some with 100 or fewer customer connections. In certain cases, the company believes it may be more cost-efficient to shut down those water sources and connect them to a larger system, rather than remove PFAS.

That’s because the proportional cost of mitigation is much higher for a small system, Morrissey said.

Another concern is that, as the nation’s water companies rush to meet the EPA’s deadline, demand for PFAS-removal goods and services will spike, putting pressure on the supply chain that could lead to procurement delays.

Morrissey said Aquarion will triage its PFAS-removal installations, prioritizing them based on an assessment of their need.

“We’re trying to hit those systems that have the highest PFAS levels, if you will, the highest grade ones that are most important, and knock those out,” Morrissey said.

Legal action

PFAS, discovered in 1939, were first used as the nonstick agent in Teflon. They have since been added to numerous consumer products to make them resistant to heat, water, oil and corrosion, according to the New York Times.

Exposure to PFAS has been linked to a number of health problems, including cancer, liver deficiencies, thyroid issues, birth defects, kidney disease, decreased immunity and other serious health issues.

While there is evidence that manufacturers, such as DuPont, knew PFAS were toxic to the body as early as 1966, according to the New York Times, the wide range of health problems they can cause weren’t documented until recently.

It wasn’t until 2021 that the EPA released a “roadmap plan” for curtailing PFAS contamination.

[ RELATED: CT lawmakers propose new restrictions on private industry’s use of PFAS ]

PFAS are also being targeted at their source — the manufacturing companies that created them.

Stamford law firm Silver Golub & Teitell recently filed a class-action suit against Texas-based manufacturer Kimberly-Clark Corp., seeking more than $5 million in damages for the alleged release of PFAS into the drinking water in New Milford, where the company has a plant that produces facial tissues.

Kimberly-Clark says it has phased out the use of PFAS chemicals.

In January, Connecticut Attorney General William Tong announced he was filing PFAS lawsuits against 3M, DuPont and more than two dozen other companies that produce firefighting foam.

Many states, including Connecticut, have partial bans on PFAS use.

Water utilities’ burden

In the meantime, water companies are tasked with cleaning up contamination caused by other entities.

“I think that’s a really important point: this is a problem that we did not create,” Morrissey said. “We don’t use PFAS. We’re trying to remove it from the environment. We did not put it in the environment.”

But water companies are being targeted by law firms, too.

Silver Golub & Teitell has filed class-action suits against both Aquarion and Connecticut Water, alleging the companies knowingly sold unsafe drinking water containing PFAS to customers.

In its guidance to investors, Eversource said in its 2023 annual report that compliance with PFAS and lead requirements will require it to “incur significant costs relating to environmental permitting, monitoring, maintenance and upgrading of facilities, remediation and reporting.”

But the company said the regulatory risk on PFAS is not a significant worry to financial analysts because the costs of providing safe drinking water are already baked into being a regulated water company.

Recently, Eversource said it’s exploring the possible sale of Aquarion to help cover its need for $1.3 billion in equity.

Morrissey said the potential sale is not linked to PFAS.

There has been a nationwide trend of water company consolidations. Recently, Connecticut Water’s owner — San Jose, California-based SJW Group — announced that one of its subsidiaries was seeking to acquire a 270-customer water system in Texas.

There are about 50,000 public water systems across the country, about half of which serve fewer than 500 customers, according to Patla.

“Even prior to the recent conversation around PFAS mitigation, partnerships and system consolidation are critical means of expanding access to high-quality, reliable water service across the country,” Patla said. “Small systems unable to invest in infrastructure, technology and treatment can benefit from the economies of scale associated with consolidation with a larger water company.”