On April 19, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of the long-awaited final rule designating two per- and polyfluoroalkyl substances (PFAS) as “hazardous substances” under the Comprehensive Environmental Response, Cleanup, and Liability Act (CERCLA). This final rule comes right on the heels of EPA’s April 8announcement of the final rule setting maximum contaminant levels (MCLs) for six PFAS under the Safe Drinking Water Act (SDWA). Our detailed summary of the MCL final rule is available here.

EPA’s April 19th final rule designates two of the most widely used PFAS — perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) — as “hazardous substances” under Section 102 of CERCLA. In conjunction with the announcement, EPA also released an enforcement discretion memo titled “PFAS Enforcement Discretion and Settlement Policy Under CERCLA,” which provides a uniform set of principles that EPA Regions are directed to use when implementing the final rule. EPA’s final rule expands potential liability under CERCLA, authorizes EPA to direct cleanups of properties impacted by either PFOA or PFOS, and imposes new reporting requirements for releases of these substances.

A New Universe of Potentially Responsible Parties

Under the final rule, which will become effective 60 days after publication in the Federal Register, PFOA and PFOS will become a part of CERCLA’s strict liability framework. Under this framework, potentially responsible parties (PRPs) can be held liable for the costs of cleaning up hazardous substances. PRPs include anyone who transports or arranges for the disposal of a hazardous substance, as well as any person who owns or operates property where a release of hazardous substances has occurred. Moreover, PRPs who conduct cleanup activities (including private parties) pursuant to CERCLA may recover response costs from other PRPs through either a contribution or cost recovery action.

Thus, the final rule designating PFOA and PFOS as hazardous substances creates a potentially enormous new universe of affected properties and PRPs. PFOA and PFOS have been used in a wide range of commercial and industrial products for decades, including carpets, clothing, food packaging, cookware, and firefighting foams. As a result, these chemicals are ubiquitous in the environment, and PFOA and PFOS may be present at many sites that were previously not subject to liability under CERCLA, or at CERCLA sites that are being addressed, or were already addressed, for other contaminants of concern (COCs). The final rule may result in a reallocation of liability among PRPs, or as EPA acknowledges, create the potential that parties who did not significantly contribute to PFOA and PFOS contamination “may be sued and face uncertain litigation costs.”

On the same date that EPA issued the final rule, EPA also released its PFAS Enforcement Discretion Memo, in an apparent attempt to minimize the expansive consequences of the final rule for parties that did not significantly contribute to PFOA and PFOS contamination. In the memo, EPA indicates that it will “focus on holding accountable those parties that have played a significant role in releasing or exacerbating the spread of PFAS into the environment.” EPA’s memo calls these entities “major PRPs,” which include “those who manufactured PFAS or used PFAS in the manufacturing process, and other industrial parties,” including federal agencies. On the other end of the spectrum, the memo states that EPA does not intend to pursue PRPs where “equitable factors” do not support enforcement actions. EPA specifically states that the agency will not pursue CERCLA enforcement actions against the following entities:

1. Community water systems and publicly owned treatment works;
2. Municipal separate storm sewer systems (MS4s);
3. Publicly owned/operated municipal solid waste landfills;
4. Publicly owned airports and local fire departments; and
5. Farms where biosolids are applied to land.

For other entities, EPA says it will exercise its enforcement discretion, based on the following “equitable factors”:

• Whether the entity is a state, local, or Tribal government, or works on behalf of or conducts a service that would otherwise be performed by a state, local, or Tribal government.
• Whether the entity performs a public service role in providing drinking water, handling municipal solid waste, treating or managing stormwater or wastewater, disposing of pollution control residual (e.g., municipal biosolids or activated carbon filters), beneficially reusing wastewater products as fertilizer, or performing emergency fire suppression services.
• Whether the entity manufactured PFOA or PFOS or used either as part of an industrial process.
• Whether and what degree the entity uses, stores, treats, transports, or disposes of PFOA or PFOS.

In cases where EPA determines that an entity’s liability for PFOA or PFOS contamination should be limited based on these equitable factors, the EPA may “provide some measure of litigation and liability protection” by using settlement agreements in two different ways.

• First, EPA intends to protect certain nonsettling PRPs when the agency settles with major PRPs at a PFOA or PFOS site. If EPA settles with a major PRP, EPA may secure a waiver of rights, prohibiting the major PRP from seeking a contribution claim against other, less culpable, PRPs.
• Second, EPA may enter into settlement agreements, where these equitable factors do not support an enforcement action, to protect a less culpable party against a contribution or cost recovery action brought by private parties. A party that resolves its CERCLA liability through a settlement with EPA, cannot be liable for third-party contribution claims.

EPA also emphasizes that it will prioritize cleanups of sites where PFOA and PFOS pose the greatest risk to human and environmental health, with a continued emphasis on sites in environmental justice communities.

PFOA and PFOS Cleanup Standards

EPA acknowledges that some commenters to the proposed rule argued that CERCLA is not an appropriate tool to address PFAS contamination because CERCLA does not impose a specific set of cleanup standards for hazardous substances. Rather, CERCLA’s cleanup standards are those standards that are determined to be “applicable or relevant and appropriate requirements” (ARARs). ARARs are selected on a site-by-site basis and can be based on existing federal or state standards, but as some commenters pointed out, the regulatory landscape for PFOA and PFOS is evolving rapidly and, currently, PFOA and PFOS are not regulated by most states or even under other federal statutes.

In the final rule, EPA rejected these concerns and concluded that the current regulatory landscape for PFOA and PFOS is sufficient to identify ARARs. In particular, EPA suggested that the brand-new MCLs for PFOA and PFOA established in its April 8 rulemaking would likely be considered appropriate cleanup standards under CERCLA. Notably, the MCLs for PFOA and PFOA are set at 4.0 parts per trillion (ppt) — the lowest level at which these substances can be reliably detected.

CERCLA Reporting Requirements

As with all other CERCLA-listed hazardous substances, the designation of PFOA and PFOS as hazardous substances means that entities who discover a release of PFOA and/or PFOS that equals or exceeds a reportable quantity (in this case, one pound) over any 24-hour period, are now subject to immediate release reporting under CERCLA. EPA states, however, that the final rule does not require entities to report past releases unless those releases are continuing as of the final rule’s effective date.

Summary

Given the widespread presence of PFOA and PFOS in the environment, their designation as CERCLA hazardous substances will likely lead to the reopening of closed sites, the addition of PFOA or PFOS as a COC at existing sites, and an increase in the number of sites and entities subject to EPA’s authority under CERCLA. As CERCLA imposes strict liability on PRPs, parties who did not contribute to PFAS contamination will potentially be subject to litigation and liability costs.

EPA has attempted to mitigate this impact with its PFAS Enforcement Discretion Memo to carve out certain categories of PRPs (what it called nonmajor PRPs) from federal enforcement. Importantly, while EPA’s enforcement policy might keep EPA focused on certain PRPs it does not necessarily deter state regulators from enforcing against these parties under CERCLA, nor does it prevent private parties from pursuing their own contribution or cost recovery actions in situations where they are not prohibited from doing so by an EPA settlement.