Strategic Financial Solutions for Addressing 1,4-Dioxane Contamination

Imagine settling into your new home, only to discover cracks in the foundation. The repairs are costly but unavoidable; there’s no alternative to keeping your house stable. At a community meeting, you learn from neighbors that quarry activity nearby is causing the land to shift. Suddenly, you feel the burden to restore the foundation isn’t solely yours to bear.

Water utilities may feel the same way when discovering a new contaminant in their water source. As federal and state regulators scrutinize 1,4-dioxane’s widespread presence in groundwater, water utilities and their ratepayers might be asked to foot the bill to remediate the pollution when chemical manufacturers are the contamination culprits.

To simultaneously protect ratepayers from carcinogenic pollutants and rate hikes, some water utilities are pursuing alternative funding strategies to raise the capital needed to meet drinking water regulations. This includes taking major polluters to court when their activities can be linked to local water contamination.

Understanding 1,4-Dioxane Contamination

1,4-Dioxane is a colorless liquid primarily used to stabilize a variety of industrial products. A highly flammable chemical, its aversion to being absorbed by soil and its high solubility in water make it pervasive in groundwater. 1,4-dioxane does not stick to wastewater sludge, soil sediment, or carbon filters, allowing it to flow through water and wastewater treatment plants untouched.

Though chemically different, 1,4-Dioxane is sometimes labeled as a “forever chemical” alongside PFAS due to its bio-persistence, solubility in water, and resistance to evaporation, requiring specialized treatment technologies to remove them from drinking water. After decades of improper discharge to water bodies from industrial processes and landfill leachate, it can be found in groundwater nationwide.

Widespread 1,4-dioxane contamination is particularly concerning due to its carcinogenic classification. The EPA recently estimated that daily consumption of 1,4-dioxane via drinking water can result in more than one cancer case per one million people over a lifetime. Beyond cancer risks, research has shown that prolonged exposure to 1,4-dioxane can adversely affect organ function, including the liver, kidneys, and central nervous system.

Water Contamination Costs

State environmental and public health agencies discovering 1,4-dioxane contamination in their jurisdictions are beginning to regulate the chemical ahead of federal agencies like the EPA. However, local municipalities affected by the contamination – and resulting regulations - are footing the bill at great expense.

In Long Island, New York, communities like Great Neck North were forced to raise water bills by $10 per month to anticipate an annual $1.2 million increase in operations costs to remove PFOS, PFAS and 1,4-dioxane from their drinking water. The Town of Hempstead, which serves 120,000 customers, has reported needing at least $40 million to remove 1,4-dioxane from its drinking water. The Long Island Water Conference estimates that the region faces $840 million in operations and capital expenses to remove 1,4-dioxane from 185 drinking water wells. This estimate is almost three times the $300 million cost predicted by New York’s Department of Health when it enacted the rule.

To cover contamination clean-up cost, utilities may have to consider increasing their rates and delaying other critical community projects in the process.

Regulatory Evolution and Current Landscape

New York became the first state to set a maximum contaminant level for 1,4-dioxane in drinking water in 2020, equal to a maximum of one part per billion. In addition to its water regulation, the State also banned the sale of contaminated cosmetics, household cleaning, and personal care products since the end of 2022. New Jersey and California are following suit, proposing a recommended limit of 0.33 ppb, and a response level of 35 ppb, respectively. As public perception and awareness of this widespread contamination goes national, the chemical’s regulatory path may follow that of PFAS.

The Cost of PFAS Detections: What We Can Learn

In 2013, under the Unregulated Contaminant Monitoring Rule (UCMR3), the EPA conducted a nationwide monitoring program to track unregulated contaminants in drinking water, including six PFAS chemicals and 1,4-dioxane. This study sampled water from thousands of public water providers across the country to better understand the presence of these emerging contaminants.

Fast forward to 2024, the EPA finalized its Federal drinking water regulations for six PFAS chemicals, informed in part by data gathered during UCMR3. The estimated cost of implementing these new National Primary Drinking Water Rules is significant—$15 billion over ten years, according to EPA estimates. These include $1 billion in annual operations and maintenance costs. However, drinking water trade associations argue that the real cost is likely much higher, estimating a figure at least three times the EPA’s projection. They contend the EPA has underestimated the costs of PFAS treatment systems and the number of affected water systems.

A similar trajectory may be unfolding for 1,4-dioxane. As state-level regulations for this contaminant of emerging concern gain momentum, water providers face the likelihood of significant financial burdens to design, implement, and maintain treatment solutions. If this regulatory path mirrors that of PFAS, the associated costs—potentially under-anticipated at this stage—could also be passed on to consumers, raising affordability concerns for many communities.

Financial Strain on Tight Municipal Budgets

As municipalities are spread thin by competing initiatives and needs, the costs associated with meeting regulatory standards for water contamination can place sudden and heavy financial strain on both the water agency and the municipality’s overall budget.  

Limited resources may even force agencies and municipalities to take on debt or hike utility rates to cover the cost of compliance. For instance, the village of Hempstead’s board voted to issue a $55 million bond to pay for its new 1,4-dioxane treatment facility. This has led a number of public agencies affected by 1,4-dioxane contamination to seek funding in the court room. Dozens of communities in Long Island have filed lawsuits against the companies responsible for the contamination of their water sources.

Leveraging Litigation: Beyond Remediation

Traditional approaches to funding water works, such as bonds and rates, may not be enough to continually cover the cost of removing synthetic contaminants of emerging concern like PFAS and 1,4-dioxane. Increasingly, public water providers are turning to litigation as a path to meet stringent state and federal water regulations while sparing their customers from bearing the costs.  

We have a comprehensive look into all things 1,4-dioxane when it comes to water contamination and logistics surrounding remediation and beyond. To learn how litigation can help your organization fund contamination clean-up costs by holding polluters accountable, schedule a consultation with SL today.