EPA Won't Regulate Rocket Fuel Toxic in Drinking Water Perchlorate, a toxic component of rocket fuel that contaminates drinking water at sites in at least 35 states, will not be regulated at the national level the U.S. Environmental Protection Agency has decided. The agency announced its preliminary decision not to regulate perchlorate in drinking water late Friday. Instead, the EPA said in a statement that it is "committed to working with states and localities to ensure public health is protected."