Meanwhile, the sector began to bump up against the ceiling of the Infrastructure Investment and Jobs Act surge. WRDA kept greenlighting new Army Corps projects, but Infrastructure Investment and Jobs Act funding balances were clearly shrinking and the widening gap between “authorized” and “appropriated” hit hard for communities that had counted on federal money.

Demand-side pressures mounted. Western scarcity and stalled Colorado River talks left cities, irrigation districts and tribes stuck in a planning fog. AI-driven data center growth turned water into headline news in regions that typically don’t think about it. Hyperscale campus proposals ran headfirst into local worries about aquifer drawdown and wastewater capacity. Utilities found themselves adding data centers and climate risk to their long-range demand projections.

Owners didn’t sit on their hands. Many doubled down on collaborative delivery, progressive design-build, construction management at-risk, public-private partnerships and design-build-operate, trying to spread risk and accelerate complicated projects. Others rebuilt their funding stacks entirely, combining federal programs with state aid, local bonds and private capital. New partnerships around AI, reuse and resilience started taking shape.

With all that as backdrop, let’s look back on 2025. We’ll dig into the shifting permitting and WRDA/IIJA landscape, the ongoing tug-of-war over PFAS and WOTUS, Colorado River uncertainty, the emerging water-AI connection and the growing momentum behind collaborative delivery.

This year, permitting reform stopped being abstract. Arguments started colliding with reality. Water and wastewater owners found themselves asking a basic question: Could they still move critical projects from concept to construction on a timeline they could actually rely on?

Quietly, the Army Corps prepared its next generation of Nationwide Permits. These cover a huge share of routine water work: utility crossings, small restoration efforts, basic maintenance. Proposed changes to thresholds, mitigation requirements and special conditions looked technical on the surface. They landed hard in project risk registers. Which upgrades would still qualify for streamlined permits? Which would get pushed into individual review?

And layered on top of everything, new directives prioritizing permits for high-output energy projects raised an uncomfortable possibility. In some districts, drinking water and wastewater work might have to compete for staff attention against transmission lines and renewable installations.

What emerged was a permitting environment that looked faster on paper. In practice, it often felt less predictable. Many utilities responded by front-loading work, investing in feasibility studies, alternatives analysis and stakeholder engagement before formally triggering federal reviews. Others tried delivery models designed to absorb timing uncertainty. Progressive design-build. CMAR. Structures where design and permitting could move together, in parallel.

Did 2025 settle whether permitting reform would ultimately help or hurt the sector? No. But it forced water leaders to treat permitting strategy as core program management, not something to tack on after planning wrapped up.

For Clean Water Act purposes, 2025 was the year Sackett stopped being an abstract Supreme Court case and became the day-to-day rule of the road. In March, EPA and the Army Corps issued a joint “memorandum to the field” and Federal Register notice explaining how staff should apply the Sackett test—limiting jurisdiction to “relatively permanent” waters and wetlands with a “continuous surface connection” to those waters—under both the pre-2015 and amended 2023 WOTUS regimes.

In November, they went further, proposing a new WOTUS rule that would formally codify that approach by tightening the definition of tributaries, narrowing which adjacent wetlands count, and even dropping “interstate waters” as a standalone jurisdictional category. EPA’s own Regulatory Impact Analysis predicts that, if finalized, the rule will cut the number of Section 404 permits because many ephemeral and intermittent features will no longer be “waters of the United States,” with corresponding “cost savings” from fewer 404 and 401 reviews, but also “forgone benefits” where wetlands and small streams lose federal protection. Former EPA officials and outside analysts estimate that Sackett plus the proposed “Zeldin rule” could leave roughly half or more of U.S. wetlands and nearly all ephemeral streams outside Clean Water Act coverage, with especially large losses in arid western states.

States are reacting very differently: New York, for example, has moved to expand state-regulated wetlands by more than a million acres and lower size thresholds by 2028, prompting litigation from business groups, while others appear content to let newly excluded waters go unregulated beyond general “waters of the state” provisions. For owners, that means fewer federal permits and, in some places, faster paths for flood-control, green infrastructure, and restoration projects—but also a much patchier map of what needs a permit at all, and a higher premium on front-end siting and jurisdictional due diligence. In other words, the same “streamlining” that seems to simplify federal permitting can actually increase schedule and political risk, depending on which side of a state line a project falls.

Permitting debates shaped how projects get approved. But 2025 sharpened a different worry for Army Corps sponsors: Would federal dollars actually be waiting once authorization came through?

With the latest Water Resources Development Act signed early in the year, the Corps entered 2025 carrying a fresh wave of authorized studies and projects. For communities that had fought to get their projects into WRDA, this should have felt like the start of something big.

Instead, it felt like a sorting exercise.

The one-time surge from IIJA funding, the money that had supercharged the Corps’ construction program, was visibly being drawn down and redirected. Remaining balances kept high-priority projects moving. Other authorized efforts slowed or slipped into holding patterns. Appropriators made the message clear: not every WRDA authorization would translate into shovels in the ground. At least not on the timelines local sponsors had hoped for.

This put a spotlight on what many called the “2026 cliff.” IIJA authority runs through mid-decade. Congress will have to decide whether to renew that spending level, replace it with something smaller, or let investment fall back toward pre-IIJA baselines. By late 2025, reauthorization conversations had started. But nobody could guarantee the bipartisan coalition that delivered IIJA in 2021 would come back together in the same form.

For local governments and utilities relying on the Corps as a cost-sharing partner, the signal was impossible to miss. Authorized does not mean appropriated. And even appropriated does not mean fully funded to completion.

Many began reframing their USACE projects as part of larger funding stacks rather than standalone federal efforts. Corps participation paired with state revolving fund loans. WIFIA financing. Local revenue bonds. In some cases, private capital and long-term operation and maintenance arrangements.

The WRDA/IIJA moment was probably a high-water mark, not the new normal. Owners wanting their Corps-related water and wastewater projects to advance in the next decade now face pressure on multiple fronts. Get studies finished and projects “ready to build” while IIJA dollars still exist. Bring local match or complementary funding to the table. Push the upcoming WRDA cycle for more flexible financing and delivery options.

The federal partner remains. But it may not carry as much of the load as many hoped when IIJA first passed.

No story captured the tension between innovation and infrastructure strain in 2025 quite like AI-driven data centers. Until recently, these facilities were mostly framed as an energy grid problem. This year, they became a water story.

Hyperscale AI facilities spread across the country. Utilities started reckoning with their water footprint. Modern data centers can consume millions of gallons daily for cooling. Operators have grown more efficient in terms of water used per unit of compute. But sheer growth in capacity has overwhelmed those gains. In regions already dealing with scarcity, from the Colorado River Basin to fast-growing Eastern metros, each new project raised hard questions. Whose water is this? What tradeoffs are we willing to accept?

`Those questions spilled into public view. Residents in some communities pushed back on proposed campuses, citing concerns about aquifer drawdown, rising wastewater loads, or the climate implications of pairing water-hungry cooling with fossil-heavy power. ‘ Advocacy groups called for moratoria on new data centers in certain regions until there was clearer accounting of impacts. State legislators floated bills requiring site-level water use disclosure. In at least one case, a high-profile transparency bill advanced to a governor’s desk before being vetoed over industry concerns.

Inside the sector, 2025 forced a shift from hand-waving to hard numbers. Water utilities began insisting on detailed demand projections, peaking profiles and contingency plans from data center developers. Many drew a bright line between potable and non-potable uses. Could cooling loads be served with reclaimed water instead? Brackish sources? Air-cooled designs? Some utilities also revisited connection fees, rate structures and conditions of service for very large, very concentrated industrial customers.

The tech industry, meanwhile, worked to show it could be part of the solution. Several major players announced water-free or low-water cooling concepts, sited new facilities where ambient conditions made air cooling feasible, or signed agreements to anchor major water reuse projects. And in a notable institutional development, the Water Environment Federation, the Water Center at the University of Pennsylvania, Amazon and others launched the Water-AI Nexus Center of Excellence, focused explicitly on reducing AI’s water footprint while using AI to improve utility operations.

More utilities began experimenting with AI to optimize process control, energy use, leak detection, predictive maintenance and customer engagement this year. The emerging challenge and opportunity is to knit these strands together. Can the same companies building AI-intensive infrastructure also help fund and deploy AI tools that make water systems more resilient and efficient?

2025 didn’t answer that question. But it ensured water and AI will no longer be siloed conversations.

Collaborative delivery: The default for complex water work

Federal funding dynamics and regulatory volatility defined the “why” in 2025. Collaborative delivery models increasingly defined the “how.” Across the country, utilities that had spent decades relying on design-bid-build signaled that for complex, schedule-sensitive work, those days might be over.

State legislatures and agencies continued opening doors. More jurisdictions authorized or expanded progressive design-build and construction management at-risk for water and wastewater projects. Population thresholds and narrow pilot constraints that had limited use in the past often got removed. Guidance documents and model RFPs from industry groups made it easier for first-time owners to navigate procurement without reinventing the wheel. By mid-year, it was no longer remarkable to see mid-sized utilities, rather than just mega-programs, soliciting progressive design-build or CMAR teams.

On the ground, a growing roster of projects showed why. Upgrades at aging wastewater treatment plants. Advanced treatment for PFAS or reuse. Major conveyance renewals. All of these suited structures where owner and team could collaborate early, iterate on alternatives and align on a guaranteed maximum price only after design and permitting had matured. Under the old model, those same projects might have suffered from change-order battles, misaligned risk allocation and costly redesigns when regulatory or site conditions shifted.

P3 and design-build-operate structures also kept gaining traction, particularly where long-term operations expertise or private financing could unlock projects that otherwise would have waited years in the grant-and-loan queue. Smaller systems facing staffing shortages increasingly looked at regional or privately operated solutions for compliance-driven upgrades. Larger metropolitan utilities used P3 concepts more selectively, perhaps for specific assets like biosolids facilities, reuse plants, or desalination projects where performance guarantees and lifecycle cost focus were particularly valuable.

Two broader dynamics made 2025 feel like a tipping point. First, permitting and regulatory uncertainty pushed owners toward models that could flex as rules changed without blowing up budget and schedule. PDB, CMAR and similar approaches offered a structured way to manage uncertainty collaboratively rather than adversarially. Second, lingering effects of inflation and a hot construction market made early contractor involvement more attractive. Locking in materials strategies, phasing and risk contingencies with builders at the table offered better cost certainty than hoping a low-bid procurement would magically deliver savings later.

By year-end, it was common to hear water leaders say collaborative delivery was no longer “alternative.” It was simply the default choice for projects with high technical, regulatory, or stakeholder complexity. Design-bid-build won’t disappear; it still fits well for straightforward, repeatable work. But 2025 marked the moment when the sector, en masse, began organizing capital programs around matching project type to delivery model. Rather than forcing every job through the same funnel.

This is a great summary about the state of water infrastructure construction. I had no clue data centers were a drag on water resources and the Trump Administration’s attempt to streamline permitting is falling a bit flat. Federal agencies trying to obligate funds before the clock runs out but all the utility companies and engineers in America are resilient!