Capping a flurry of recent activity concerning per- and polyfluoroalkyl substances (PFAS), US EPA on April 19, 2024 designated two PFAS as hazardous substances. Designations of other PFAS are likely to follow. The same day, EPA issued its PFAS enforcement policy. These developments could mark the beginning of a new era of enforcement and litigation. There also are implications for environmental diligence in business transactions.

PFAS Hazardous Substance Designation

EPA issued its long-awaited final rule designating two PFAS – perfluorooctanoic acid (PFOA) and perfluorooctanesultonic acid (PFOS), including their salts and structural isomers – as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). EPA made this designation after concluding that PFOA and PFOS “may present substantial danger to public health or welfare or the environment” when released into the environment. PFAS, which are ubiquitous in the environment, are sometimes referred to as “forever chemicals” because they persist so long in the environment.

CERCLA imposes strict and in many cases joint and several liability for releases of hazardous substances. Parties who are liable under CERCLA (known as potentially responsible parties, or PRPs) include current and certain prior owners and operators of contaminated sites, and parties who generated, or arranged or transported for disposal of hazardous substances. The designation of PFOA and PFOS as hazardous substances allows EPA and private parties to recover response costs for investigations and cleanup. In addition, the designation creates release reporting obligations under CERCLA and the Emergency Planning and Community Right-to-Know Act (aka, SARA Title III).

The final rule will go into effect 60 days after the date of publication in the Federal Register, which has not yet occurred.

Enforcement Policy

In conjunction with the final rule, EPA published a Memorandum entitled “PFAS Enforcement Discretion and Settlement Policy Under CERCLA” (Enforcement Policy). According to the Enforcement Policy, EPA does not intend to seek response actions or costs against the following parties: (1) community water systems and publicly owned treatment works (POTWs); (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 the land.

Factors that EPA will consider in deciding whether to pursue a party for PFAS contamination include:

• Whether the party is a state, local, or Tribal government, or works for or in lieu of such a government.
• Whether the party is a provider of drinking water, municipal solid waste management, wastewater or stormwater management or treatment, or management of pollution control residuals (such as municipal biosolids and activated carbon filters) services; performs beneficial application of wastewater treatment byproducts as a fertilizer substitute or soil conditioner; or performs emergency fire suppression services.
• Whether the party manufactured or used PFAS in an industrial process.
• The extent to which the party is actively involved in the use, storage, treatment, transport, or disposal of PFAS.

EPA has authority to enter into settlements with PRPs to protect them from liability. EPA also can require a PRP with whom it settles to waive the party’s rights to sue other PRPs. The Enforcement Policy also says that PRPs that contribute a miniscule amount of PFAS should not be held financially responsible for cleanup. EPA’s enforcement discretion is contingent upon full cooperation. Any enforcement discretion is also subject to alteration based on newly emerging science or other regulatory requirements.

Implications for Phase I ESAs in Environmental Diligence

The American Society for Testing and Materials (ASTM) E1527-21 standard for Phase I Environmental Site Assessments, published in November 2021, contemplated the inclusion of PFAS and other emerging contaminants as hazardous substances. Under ASTM E1527-21, emerging contaminants, like PFAS, were not included in the Phase I scope of work until such a contaminant was regulated by EPA as a hazardous substances under CERCLA. Now that PFOS and PFOA are CERCLA hazardous substances, the potential for releases of these contaminants at a subject party fall within the scope of a Phase I ESA.

Other Recent PFAS Developments

On April 10, 2024, EPA issued a final rule that established national drinking water standards for six PFAS. The rule requires public water systems to monitor for these chemicals and provide the public with information concerning concentrations in the drinking water by 2027. Water systems have until 2029 to implement measures to reduce PFAS levels that exceed the applicable standards. Drinking water standards provide a basis for groundwater remediation under federal and state laws, therefore, the rule will affect more than simply public water systems.

On April 8, 2024, EPA issued interim guidance on the most effective means of destroying or disposing of PFAS-containing materials and wastes. The guidance states that the following three technologies “have a lower potential for environmental release of PFAS”: underground injection in a permitted hazardous industrial or hazardous waste injection well; disposal in a permitted hazardous waste landfill; and thermal treatment. And in January 2024, EPA finalized a rule that: prevents companies from starting or resuming the manufacture or processing of 329 PFAS; specifies methods to better measure PFAS in the environment; and adds seven PFAS to the list of chemicals covered by the Toxics Release Inventory (TRI) under SARA Title III.

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