Bridge Over Troubled Water: How the EPA Is Seeking to Bolster Water Security and Lower Costs Across Industrial Sectors by Reusing Water

The EPA’s Water Reuse Action Plan 2.0 (“WRAP 2.0”) is a non-regulatory federal initiative relaunched in April 2026. Its goal is to accelerate treated wastewater reuse across industries, such as the technology, agricultural, and energy sectors—while supporting local water supplies. It builds on the original 2020 WRAP, which produced 96 action commitments across 216 partner organizations.

For the energy industry, WRAP 2.0 aligns with its objective of energy dominance. WRAP 2.0 explicitly includes oil-and-gas-produced water as a potential reuse source instead of just for disposal. The EPA is exploring regulatory flexibility to allow produced water to be treated for industrial cooling, mineral extraction, and agriculture. This focus is consistent with efforts already implemented by some states. For example, in 2023 (HB23-1241), the Colorado legislature directed the development of rules to require a reduction in the use of freshwater in oil and gas operations—and a corresponding increase in the use of recycled produced water in downhole operations. WRAP 2.0 also aims to lower operational costs for energy companies by providing more predictable, treated water as a primary input for power generation.

For technology, including data centers and artificial intelligence, WRAP 2.0 presents water reuse as a solution to strengthen local freshwater and groundwater resources while delivering water for AI and data center operational and cooling needs. WRAP 2.0 highlights existing efforts by data centers and technology manufacturers around the country. By promoting the reuse of municipal and industrial wastewater, the plan provides a more reliable and consistent water source than traditional groundwater or municipal drinking water, which is increasingly prone to fluctuations and local restrictions.

For wastewater utilities, WRAP 2.0 essentially reframes utilities as economic development assets. This is consistent with a wastewater industry focusing on recovery of water, biosolids, and energy as resources for the community. When a utility can supply recycled water to a data center or semiconductor hub, it creates a new revenue stream, reduces pressure on drinking water supplies, and makes the region more attractive to high-water-use industries. The push for streamlined permitting and digital monitoring tools is directly aimed at lowering the operational burden on utilities trying to stand up these programs.

WRAP 2.0 is explicitly not a federal regulatory strategy: Instead, the federal role in WRAP 2.0 is to reduce administrative burdens where possible, create alignment around state permitting requirements for reuse, provide technical support, and share best practices. Consistent with the cooperative federalism inherent in many environmental laws, States and Tribes lead permitting. In the arid West, water reuse is recognized as a key tool for the water supply future, such as in the Colorado Water Plan. But reuse also requires consideration of state water law requirements and the potential to reduce return flows that downstream appropriators have historically relied on. Therefore, projects wishing to take advantage of opportunities presented by WRAP 2.0 will need a thorough understanding of state and local legal and regulatory requirements. In Louisiana, WRAP 2.0 will primarily accelerate industrial and rural water security by providing technical and financial pathways to scale exiting reuse models. It also created a collaborative environment for the Louisiana Department of Environmental Quality to modernize its permitting and infrastructure.

Key Takeaways from WRAP 2.0:

• The framework is designed to drive energy dominance and AI growth by securing massive water supplies needed for new data centers.
• The plan provides a path toward treated wastewater as a low-cost, reliable input for electricity generation and energy development.
• It creates a system for cooperative federalism and best practices for permitting processes across the United States.
• Using recycled water allows for the preservation of high-quality freshwater resources.
• The long-term goal is to provide a clean and reliable water source that is more predictable than traditional raw water sources.

If you have industrial water resources that you would like to repurpose or monetize under the framework of WRAP 2.0 and need legal advice as to how to navigate this new federal initiative, please reach out to Gabe Racz or Colleen Jarrott via e-mail at gracz@clarkhill.com and cjarrott@clarkhill.com.