It has been a busy month for federal developments concerning per- and polyfluoroalkyl substances (“PFAS”). On April 19, the U.S. Environmental Protection Agency (“EPA”) made headlines again, announcing the prepublication version of its final rule designating two PFAS compounds—perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), including their salts and structural isomers—as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” or “Superfund”).
These are the first two PFAS compounds designated as hazardous substances, although more PFAS designations are likely coming.
PFAS have gained public attention over the past several years due to increased understanding of their human health and environmental impacts; some have been linked to a wide array of health effects. They are stable and persistent compounds developed to withstand extremely harsh environments, making them useful for applications such as aqueous film-forming foam (“AFFF”) used to suppress flammable liquid (Class B) fires. PFAS compounds are also used extensively in a wide variety of consumer products, including waterproof clothing, non-stick cookware, personal care products and food packaging because of their unique properties. The wide variety of PFAS applications result in many pathways by which PFAS are introduced to the environment.
After years of administrative review, EPA recently published the following:
This most recent final rule under CERCLA invokes the statute’s “polluter pays” principle to address PFOA and PFOS in the environment and promises to significantly expand the scope of CERCLA cleanup activity and liability for sites where they are present. The designation also triggers additional release reporting rules, requirements for the transfer of government property, Department of Transportation (“DOT”) hazardous waste transport rules, and transport and storage requirements. The rule will be effective 60 days after publication in the Federal Register.
EPA’s PFOA and PFOS Hazardous Substance Designation
CERCLA defines hazardous substances by cross-referencing hazardous and toxic substances listed under several other environmental statutes. Further, CERCLA Section 102(a) (42 U.S.C. § 9602(a)) authorizes EPA to designate additional hazardous substances. EPA’s CERCLA designation of PFOA and PFOS as hazardous substances are the first PFAS compound designations under Section 102(a) and significantly expands the regulatory reach over both new and existing cleanup sites. In the agency’s words, the designation “will allow EPA to utilize all CERCLA’s authority, which will enable EPA to address more sites, take earlier action and to expedite eventual cleanup.” EPA also notes the rule will allow it to focus cleanup efforts on communities with environmental justice concerns, furthering the administration’s focus on disproportionately impacted communities.
This “hazardous substances” designation is notable because it allows EPA to utilize a much broader array of CERCLA tools than if the agency had relied on just its authority to address “pollutants or contaminants” more generally. These tools include the ability to address releases without demonstrating an imminent and substantial danger, to seek cost recovery and to compel potentially responsible parties (“PRPs”) to pay for response work. In addition, entities now must report any release of PFOA or PFOS that meets or exceeds the reportable quantity of one pound within a 24-hour period.
The new rule also addresses federal entities that transfer or sell land, requiring notice about the storage, release or disposal of PFOA or PFOS on the property. And consistent with current CERCLA obligations, federal entities must also guarantee that any PFAS have been cleaned up or indicate how cleanup will occur. Finally, the rule requires DOT to list and regulate PFOA and PFOS substances under the Hazardous Materials Transportation Act.
In short, the scope and effect of EPA’s action in the final rule is very broad and substantial and will implicate numerous existing Superfund sites, yet-to-be-named sites, and a vast array of industrial and other manufacturing sources and waste handling activity. In light of its newfound authority under CERCLA, along with the final rule, EPA also announced an enforcement discretion and settlement policy (discussed further below).
Where PFOA and PFOS Have Been Used and Released into the Environment
EPA has found PFOA and PFOS throughout the environment—in the air, surface and groundwater, and in surface and subsurface soils—including in remote locations throughout the United States. EPA attributes these occurrences to a variety of historical uses and increasingly less-frequent current uses. Based on EPA’s required monitoring efforts, PFOA and PFOS have been found around chemical compound production facilities and around facilities that use and handle PFOA and PFOS.
EPA also identifies in its prepublication rule seven broad categories of entities that may have PFOA or PFOS in and around their facilities or may have otherwise contributed PFOA or PFOS to the environment through operations and be subject to CERCLA liability. EPA lists several potentially affected entities based on 6-digit NAICS codes, including NAICS codes for certain mining and oil and gas facilities; wastewater treatment plants; mills and manufacturing facilities; waste collection and management facilities; automotive repair services; fire protection activities; and national security operations. The seven broad categories and a table of specific listed entities based on NAICS codes can be found in section II(C) in the prepublication rule.
EPA’s Enforcement Discretion and Settlement Policy
EPA released a PFAS Enforcement Discretion and Settlement Policy Under CERCLA on April 19, 2024. Under the policy, EPA will not “pursue entities where equitable factors do not support seeking response actions or costs under CERCLA” for PFAS contamination. Instead, EPA will focus on holding parties that have played a significant role in releasing or exacerbating the spread of PFAS into the environment, such as PFAS manufacturers and those that have used PFAS in manufacturing.
The policy expressly states that EPA does not intend to pursue response actions or costs from community water systems, publicly owned treatment works, municipal separate storm sewer systems, publicly owned/operated municipal solid waste landfills, publicly owned airports, publicly owned fire departments, and farms where biosolids are applied to land. The policy is consistent with recent agency statements under the Biden administration that enforcement efforts will be aimed at manufacturers of PFAS. (See our prior client alert: https://www.bhfs.com/insights/alerts-articles/2023/epa-pushes-forward-with-final-pfas-reporting-regulations). Notably, however, EPA intends to pursue federal agencies or facilities responsible for contamination in addition to major PRPs that have caused, contributed to or exacerbated the release of PFOA and PFAS. To effectuate this focus on significant contributors, EPA indicates that in settlements, it will ask major PRPs to waive contribution rights against entities that satisfy the discretionary factors.
For other similarly situated parties, EPA will apply equitable factors to determine whether to utilize enforcement discretion, including whether the party is a public entity, performs a public service and was ever engaged in the manufacturing of PFAS, and the degree to which it is involved in the use, storage, treatment, transport or disposal of PFAS. Where factors permit, the policy allows EPA to provide contribution protection from third-party claims through settlements.
EPA states this policy will not disrupt the CERCLA framework and is limited to CERCLA only. Importantly, EPA further reserves the right to change the scope of the policy based on emerging science or regulatory requirements. The policy is therefore subject to case-specific consideration and change. Additionally, third-party contribution claim protection is only afforded in the context of a settlement with EPA.
Potential Congressional Action
Public agencies that provide drinking water, treat wastewater and convey stormwater have pushed Congress for years to provide more certain protection from liabilities under a CERCLA PFAS designation. In 2023, Sen. Cynthia Lummis (R-WY) proposed S. 1430, a bill that would exempt public water systems from PFAS liability under CERCLA. On April 17, 2024, Reps. John Curtis (R-UT) and Marie Gluesenkamp Perez (D-TX) proposed a bipartisan companion bill, H.R. 7944—the Public Utility PFAS Liability Protection Act—that would expressly exempt public utilities in compliance with all applicable laws at the time PFAS contaminated material was handled and disposed. The intent of these bills is to protect ratepayers and taxpayers from paying for PFAS pollution and related CERCLA litigation.
Implications of the PFAS Hazardous Substance Designation
- Potential for the public to bear costs under CERCLA. A variety of PRPs have argued they should not be subject to strict and joint and several liability for PFAS. Their arguments are based on the premise that the CERCLA liability scheme would ultimately require the public and other unsuspecting parties to pay for remediation rather than the polluter. These PRPs include:
- Public water suppliers, municipal separate storm sewer systems and other wastewater systems. Water suppliers and wastewater systems have long been on notice of their potential liability for PFAS flowing through their systems from industrial, commercial and residential connections. For example, EPA released a PFAS Strategic Roadmap in October 2021 summarizing a broad approach to PFAS research and regulation. In December 2021, EPA published the Fifth Unregulated Contaminant Monitoring Rule requiring all large and certain smaller public water systems to monitor 29 PFAS (and lithium) in drinking water sources between 2023 and 2025, and to track the presence of PFAS before a health-based standard is set pursuant to the SDWA. While these public suppliers and systems do not necessarily create PFAS releases from exposure to their infrastructure or treatment processes, they may qualify as a “transporter” or “arranger” under CERCLA simply by moving water contaminated with PFAS through their pipes and causing PFAS releases through otherwise permitted discharges. If these public entities are found to be PRPs under CERCLA, then ratepayers are at risk of public entities passing along their financial liability in the form of higher rates.
- Wastewater and solid waste operations. Operators that generate biosolid material for land application may be subject to CERCLA liability simply by processing and transporting biosolids for other beneficial purposes. Financial liability for PFAS remediation could again be passed on to ratepayers, rather than manufacturers or other parties. Note, agricultural operations and landowners receiving biosolids may also be liable.
- Airports and local fire departments. These groups have long used AFFF that contain PFAS for fire suppression and training. Financial liability for PFAS remediation could be passed on to taxpayers rather than the party or parties that initially caused PFAS to enter the systems.
EPA’s Enforcement Discretion Policy is designed to alleviate concerns of these groups. But that policy is discretionary and case-specific and does not provide broad coverage from contribution in recovery actions. As such, the policy is not a permanent guaranty that such entities will not be held responsible for costs.
- Boom in CERCLA litigation. With the designation of PFOA and PFOS as hazardous substances, EPA and the states may seek to investigate and remediate a number of new sites around the country or expand cleanup requirements at existing sites. Private parties may prospectively seek to allocate responsibility for PFAS by filing private CERCLA actions. As PRPs are held responsible for cleanup costs, those parties may turn around and seek contribution for any other person liable or potentially liable. 42 U.S.C. § 9613. Manufacturing of PFAS began in the United States in the 1930s, and the extent of contamination of PFOA and PFOS is still unknown. Because of the prevalence and persistence of PFOA and PFOS in the environment, we expect that CERCLA litigation will substantially increase across the country.
- Impact on landowners and prospective purchasers. Developers and prospective purchasers will need to evaluate PFOA and PFOS contamination as part of their due diligence. PFAS contamination has previously been considered a non-scope issue for Phase I Environmental Site Assessment reports, but EPA’s hazardous substances designation of PFOA and PFOS now means that they must be considered.
- Constant vigilance. PFAS regulations are rapidly evolving. Both the federal government and state governments are considering and implementing additional regulations and policies. Those that manufacture, handle, transport or otherwise arrange for distribution of PFAS, directly or indirectly and particularly PFOA and PFOS, should closely monitor proposed and final federal and state actions.
For more information about the PFOA and PFOS hazardous substance designation, please contact the attorneys listed or your primary Brownstein attorney.
This document is intended to provide general information regarding EPA’s designation of two pfas compounds as hazardous substances under CERCLA. The contents of this alert are not intended to provide specific legal advice. The law in this area is changing rapidly, and Brownstein insights are not automatically updated. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.