On January 10, 2022, the EPA submitted a plan to designate a PFAS Superfund to the White House Office of Management and Budget (OMB) when it indicated an intent to designate two legacy PFAS—PFOA and PFOS—as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act ( CERCLA, also known as Super Fund Law). The EPA previously stated its intention to conduct the proposed classification by March 2022 when it submitted the PFAS Roadmap in October 2021; However, critics have argued that the EPA has said for years that it would take this step, but never did. Now, under applicable regulatory procedures, the Office of Management and Budget must file any opposition to the EPA’s proposal within 90 days. If it does not, the EPA will submit the designation to the Federal Register for public comment, keeping it on track to set the final rule by 2023.
As we have predicted many times before, the designation of “hazardous substances” under CERCLA will have huge financial implications for companies with any type of inherited or current pollution concerns from PFOS and PFOS. Insurance companies, investment firms, and private equity alike should pay attention to this change in law when considering their corporate interests.
PFAS Superfund Appointment: Impact on Business
Once a substance is classified as a “hazardous substance” under CERCLA, the EPA can compel parties it considers polluted to either clean up the polluted site or compensate the EPA for a full treatment of the polluted site. Without designating a PFAS Superfund, the EPA can only blame parties it feels contributed to the pollution, but has no power to compel parties to fix or pay costs. The assignment also leads to significant corporate reporting requirements. Currently, these reporting requirements do not exist for PFAS, but they apply to industries beyond PFAS industries only.
The final effects of PFOA and PFOS designation will be enormous. Companies that use PFOA and FFC in their industrial or manufacturing processes and send waste PFOS/PFOS to landfills or otherwise discharge the chemicals into the environment will be at immediate risk of enforcement action by the EPA given the intent of the EPA Environmental protection declared to sequester all PFOS pollutants any kind of accountability. Waste management companies should be particularly concerned about the large areas of land used in landfills and the potential contamination with PFOS that can be found in most landfills due to the spread of chemicals in consumer goods. These site owners may be the first targets when designating a PFOA/PFOS, which will lead to lawsuits against any company that has sent waste to landfills for contributing to the cleaning cost borne by the waste management company or the insured.
Also of concern to businesses are the prospects of reopening that could result in the designation of CERCLA. Sites designated or previously identified as premier funding sites will be subject to additional review for PFOA/PFOS concerns. Sites found to contain PFOA/PFOS contamination may be reopened by the Environmental Protection Agency (EPA) for investigation and attributing the cost of remediation to parties that the EPA considers to be responsible for the contamination. Whether through direct enforcement actions, repair actions to reopen, or contribution lawsuits, site clean-up costs can run into the tens of millions of dollars, of course depending on the scale of contamination.
Now more than ever, it is clear that the EPA is on the way to regulating PFAS pollution in the country’s water, land, and air. The EPA has also announced, for the first time publicly, when it expects such regulations to be enacted. These regulations will require states to act as well (and some states may still have stronger regulations than the EPA). Regulations at the federal and state levels will affect many companies and industries, even if their contribution to drinking water pollution issues appears to be minimal. In states that have already enacted standards for PFAS drinking water, companies and landlords have already seen local environmental agencies study potential sources of PFAS contamination more closely than ever before, resulting in unexpected costs. Beyond drinking water, the EPA PFAS plan shows the EPA’s desire to take regulatory action beyond just drinking water, and companies should definitely start preparing now for regulatory actions that will have significant financial implications down the road.
© 2022 CMBG3 Law, LLC. All rights reserved.National Law Review, Volume XII, No. 11