Client alert: Implications of USEPA’s designation of PFOA and PFOS as hazardous substances under CERCLA

On April 17, 2024, the US Environmental Protection Agency (USEPA) finalized a long-awaited rule designating perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), including their salts and structural isomers (collectively referred to as PFOA and PFOS), as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as “Superfund".

Highlights of the rule

The hazardous substance designation follows commitments in USEPA’s October 2021 PFAS Strategic Roadmap. Potential implications of the rule and what it could mean for stakeholders are highlighted below:

The final rule provides USEPA additional tools, including enforcement authority, to address PFOA and PFOS found in the environment, and USEPA expects the pace of cleanups of such sites to increase. For example, USEPA and delegated federal agencies are now able to respond to releases of PFOA and PFOS without first having to make a determination of imminent and substantial endangerment (as defined by USEPA).

Notably, a CERCLA hazardous substance designation for PFOA and PFOS means that liability for addressing environmental impacts from these substances can be more readily imposed upon potentially responsible parties (PRPs). USEPA now has the authority to require PRPs to investigate and remediate sites contaminated with PFOA and PFOS. Furthermore, private parties that conduct site cleanup consistent with the National Oil and Hazardous Substances Contingency Plan (NCP) can attempt to recover costs from other PRPs. According to USEPA, entities that may be affected by this new rule include manufacturers and processors of PFOA or PFOS, manufacturers of products containing PFOA or PFOS, downstream PFOA- or PFOS-containing product users, waste management companies, wastewater treatment facilities, and others.

Under CERCLA, any release of a designated hazardous substance (excluding federally permitted releases) exceeding a specified reportable quantity (RQ) must be reported to the National Response Center. For PFOA and PFOS, releases¹ equal to or greater than an RQ of one pound (1 lb) within a 24-hour period must now be reported to USEPA. The RQ may be adjusted as USEPA receives more information about the releases and associated human health and environmental risks.

In conjunction with the CERCLA hazardous substance designation, USEPA issued a memorandum outlining the agency’s approach to enforcement discretion in CERCLA matters involving PFOA or PFOS. The memorandum states that where equitable factors do not support seeking response actions or costs under CERCLA, the agency does not intend to pursue claims against:

USEPA identified these five categories of entities as being associated with PFOA and/or PFOS through passive receipt of waste streams or handling of PFOA and/or PFOS for public safety in suppressing fires.

Mergers, acquisitions, and transactions

Under ASTM International’s Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process E1527-21 (the “ASTM Standard”), Appendix X6.10, risks associated with emerging contaminants, such as PFOA and PFOS shall be included within the scope of the ASTM Standard if and when such emerging contaminants are defined to be hazardous substances under CERCLA. As such, Phase I environmental site assessments (ESAs) performed in accordance with the ASTM Standard should now include an evaluation of potential concerns associated with PFOA and PFOS. In addition, Phase I ESAs will need to include the known or potential presence of PFOA and PFOS in site environmental media resulting from historical releases in the discussion of recognized environmental conditions (RECs), historically recognized environmental conditions (HRECs) and/or controlled RECs (CRECs) in order to meet the requirements of all appropriate inquiry. Potential impacts associated with releases of other PFAS (or other emerging contaminants) may continue to be included as non-scope considerations and discussed in relation to potential business environmental risks but would not be considered within the scope of the ASTM Standard.

The designation of PFOA and PFOS as CERCLA hazardous substances may result in the identification of new RECs or the reclassification of HRECs or CRECs as RECs based on the presence or likely presence of PFOA and/or PFOS in site environmental media. For sites with complex prior investigation and/or remediation and with known or likely historical use of PFAS, a robust review of historical reports may be appropriate to understand whether PFOA and PFOS have been included in prior investigations. Where historical testing for PFOA and PFOS has been performed, the review may need to include scrutiny of the analytical methods used, analytical detection limits, areas and media tested, whether any historical remediation would have potentially addressed the presence of PFOA and PFOS, the criteria to which data were compared, and changes in the regulatory framework under which PFAS may be evaluated or addressed among other factors.

Whether or not to perform a Phase II investigation to evaluate the potential presence of PFAS also requires careful consideration; in some cases, a desktop evaluation of potential environmental liabilities could be performed in lieu of testing.

For sites currently subject to regulatory oversight, considerations may include:

Phase II investigations for PFOA, PFOS, and possibly other PFAS should include careful consideration of current and potential historical use of PFAS at the site(s) to assist in evaluating appropriate sample locations, selection of appropriate analytical methods and detection limits, consideration of an appropriate PFAS analyte list, a determination of the regulatory criteria or screening levels to which data will be compared, an understanding of the regulatory frameworks under which site data will be evaluated, data quality objectives, and potential background contributions.

Other non-scope considerations for the due diligence process may include an evaluation of the potential for third-party CERCLA liability associated with off-site disposal sites or an evaluation of the adequacy of environmental reserves for CERCLA sites where PFOA and/or PFOS are known to be present.

Site investigation and remediation

The hazardous substance designation for PFOA and PFOS will increase the number of sites under Superfund, and the speed at which sites with PFOA and PFOS impacts may be investigated and cleaned up. The designation allows USEPA to identify sites that may require response actions and then undertake short-term removals or longer-term remedial actions at sites where PFOA and PFOS have been released or where the threat of such a release exists. USEPA can also ask private parties to conduct response actions. The potential for USEPA or PRPs conducting the response actions to recover costs from other responsible parties (RPs) is also likely to facilitate the investigation and cleanup of sites impacted by PFOA and PFOS.

The hazardous substance designation for PFOA and PFOS does not automatically require any investigation or cleanup actions. USEPA will instead make decisions regarding response actions on a site-specific basis through its Hazard Ranking System. Once a contaminated site has been placed on the National Priorities List (NPL) and USEPA takes action under CERCLA and the NCP, the prescribed CERCLA process begins, including remedial investigation, feasibility study, record of decision, remedial design, and remedial action (see figure below). It generally takes many years, and even decades for the more complex sites, to be considered for delisting from the NPL.

If PFOA or PFOS are detected at sites that are currently undergoing remedial actions or are in the operation and monitoring phase during five-year reviews, it may lead to revision or expansion of risk assessments, further investigation, and if needed, to additional response actions.

The hazardous substance designation is also expected to increase the number of sites addressed for PFOA and PFOS under state-led cleanup programs. With the recent promulgation of MCLs for six PFAS and the designation of PFOA and PFOS as hazardous substances, states that have taken a wait-and-see approach to PFAS will, at a minimum, be required to implement USEPA’s federal regulations. This will increase site scrutiny at the state level and lead to more site investigation and remediation activity for PFOA and PFOS.

At sites where PFOA or PFOS are the primary contaminant of concern (COC) – and even at some sites where they are not – PFOA and PFOS will be relevant to the development and screening of remedial alternatives. Remedial action objectives (RAOs), preliminary remediation goals (PRGs), and ultimately remedial goals (RGs) may be established that address PFOA and/or PFOS, and that may consider state criteria, if applicable, and may also consider the recently established MCLs as applicable or relevant and appropriate requirements (ARARs). In addition, background impacts – whether natural or human caused – or baseline conditions that are not affected by site releases are an important consideration of CERCLA response actions. Typically, PRGs are not set below site-specific background levels. Given the ubiquity of PFOA and PFOS in the environment and their widespread historical use, an understanding of potential background contribution to sites where PFOA and PFOS are identified as COCs may be important.

Liability valuation and cost allocation

USEPA’s designation of PFOA and PFOS as CERCLA hazardous substances – along with other recent regulatory updates including USEPA’s establishment of MCLs for six PFAS – serve as triggers for corporations, property owners, and other legal entities to update the valuation of, and potential recognition and reporting of, environmental liabilities that are standard practices under the Sarbanes Oxley Act requirements. Other PFAS that are not yet regulated in this way at the federal level may have federal and state health advisory levels that could still be considered as ARARs for sites.

In consideration of both new and prospective regulatory developments, entities should periodically reevaluate and quantify potential liabilities associated with PFAS contamination in environmental media as part of reserve estimation and/or public reporting. Liabilities for PFAS in environmental media can be estimated, explicitly considering uncertainties in regulatory status and target levels, by conducting scenario analyses using several methods to bracket the potential range of outcomes.

PRPs under CERCLA may also be liable for Natural Resource Damages, including damage or injury to, destruction of, or loss of natural resources. Natural Resource Trustees are authorized to perform natural resource damage assessments (NRDAs) and recover costs beyond those associated with CERCLA response actions to restore or replace natural resources to the conditions that would have existed without the hazardous substance release, which could now include releases of PFOA and PFOS.

Taking a proactive approach to scenario analyses, liability valuation, and risk management can provide a basis for optimizing existing site and portfolio strategies and/or cost recovery and cost allocation strategies, leading to improved bottom-line financial outcomes. Reliable environmental liability estimates for PFOA, PFOA and other PFAS must provide transparency regarding the (reasonable) underlying assumptions utilized to develop the scenarios and associated costs, including risk drivers and regulatory triggers; the regulatory framework under which a given site may be addressed; current and potential future site use; and other factors. It will continue to be important to acknowledge the level of certainty (or uncertainty) relating to such estimates and PFOA and PFOS may present some unique challenges in these acknowledgments.

At multiparty sites, the CERCLA designations for PFOA and PFOS may impact existing agreements on the allocation of costs. Forensic analysis for source identification and timing may support certain parties in renegotiating existing allocation agreements. Additionally, new cost drivers involving PFOA and PFOS contamination could affect counterparty risk by impacting the creditworthiness of certain parties, thereby posing a risk of shifting liabilities to deeper pockets (e.g., through bankruptcy). Entities involved at multiparty sites may benefit from a proactive look at potential changes in creditworthiness, and whether negotiations or cash-outs could be beneficial options to pursue (from either side of the issue).

Water

The USEPA enforcement discretion memo issued in conjunction with the new rule is a critical component in the evaluation of potential liabilities for public service utilities. While community water systems, POTWs, and publicly operated landfills and farms that received PFAS-containing biosolids were tagged as low priorities for USEPA action, the designation of PFOA and PFOS as CERCLA hazardous substances means that these facilities are now targets as PRPs. The liability implications and generally higher costs will likely be motivations for private parties responsible for sites with potential contributions from currently de-prioritized facilities nearby to use CERCLA provisions as a means to bring in utilities as PRPs.

A significant concern for water and wastewater utilities is the possible liability related to the disposal of PFAS-laden materials such as spent treatment media, sludge, and biosolids. Any release of PFOA or PFOS above the RQ of 1 lb in a 24-hour period must be reported to federal, state, tribal, and local authorities. However, most water utilities are not expected to have releases above the RQ due to the relatively low PFAS concentrations typically anticipated in media such as surface water, groundwater, stormwater, and wastewater.

Spent treatment media such as granular activated carbon (GAC), ionic exchange resins, and other novel sorbents may have been disposed of in private landfills that could be designated as Superfund sites if PFOA or PFOS were released into the environment. In these situations, utilities could be identified as PRPs by other RPs and could end up with a portion of the liability for site cleanup costs. Likewise, the land application of PFAS-containing biosolids for soil enhancement at agricultural sites, currently a low agency priority per USEPA’s memorandum on enforcement discretion, could be connected to PFOA/PFOS transport to adjacent areas or groundwater. Private party PRPs could look to add utilities to PRP groups to share responsibility for future clean-up costs.

Currently, established treatment technologies for PFAS in water involve capture and removal, but not destruction. The CERCLA designation will demand significantly increased efforts on the technical, regulatory, and cost feasibility of residuals management and disposal/destruction. Specific topics that will now require further consideration are leachate, spent GAC, and brine generated from ion exchange and ultrafiltration/reverse osmosis used for surface water, groundwater, and wastewater treatment.

Litigation

Brian Drollette, Steve Washburn

The designation of a chemical as a CERCLA hazardous substance provides a legal vehicle for pursuing litigation against parties responsible for their release or disposal. CERCLA’s liability provisions allow PRPs to be held accountable for costs associated with investigating, remediating, and restoring contaminated areas.

The designation opens avenues for third-party claims for cost recovery. PRPs and RPs that incur expenses related to addressing PFOA and PFOS contamination can pursue claims against those who generated, transported, or arranged for the disposal of hazardous substances. Furthermore, that liability can extend to parties who owned or operated at facilities at the time of disposal, even if they did not directly contribute to the contamination. Determining the appropriate allocation of costs is likely to be a focus of third-party litigation related to PFOA or PFOS contamination.

USEPA acknowledged the equitable factors that courts generally apply when evaluating liability, such as the volume and toxicity of the hazardous substance contributing to the contamination and the degree of care exercised in handling the hazardous substances. These factors and others are designed to ensure those who contributed to the contamination bear responsibility for its cleanup. In the rule, USEPA stated that “it does not believe that the designation is going to result in widespread, significant liability consequences for parties that lack meaningful responsibility for the contamination at issue.” However, “meaningful responsibility” was not defined, and because of the relative ubiquity of PFOA and PFOS in the environment from decades of use and release, combined with often very low cleanup levels associated with these compounds, “meaningful responsibility” may have a broader definition than for other contaminants.

Air

Although classifying PFOA and PFOS as hazardous substances under CERCLA does not mean that USEPA must also list them as hazardous air pollutants (HAPs) under the Clean Air Act (CAA), it does potentially pave the way for such action. Section 112(b)(3)(A) of the Clean Air Act (CAA) specifies that any person may petition the Administrator to modify the HAP list contained in CAA section 112(b)(1), otherwise known as the CAA HAP list, by adding or deleting a substance.

CAA section 112(b)(3)(B) sets out the substantive criteria for granting a petition. It calls for the Administrator to add a substance to the CAA section 112(b)(1) list, “upon a showing by the petitioner or on the Administrator's own determination that the substance is an air pollutant and that emissions, ambient concentrations, bioaccumulation or deposition of the substance are known to cause or may reasonably be anticipated to cause adverse effects to human health or adverse environmental effects.”

USEPA has already acknowledged that “air emissions of PFAS from industrial sources is now recognized as a significant route for PFAS releases to the environment and is evidenced by deposition as well as their presence in rainwater.” Thus, it seems probable that certain individual PFAS, including PFOA and PFOS, will likely be listed as HAPs in the not-too-distant future. Several states already have ambient air quality criteria for various PFAS compounds, further supporting the position that federal action may be forthcoming.

Ramboll can help

For more than two decades, Ramboll has helped clients around the world resolve their most critical PFAS issues. Our multi-disciplinary expertise and experience have been instrumental in assisting clients in reducing a wide range of risk and liabilities related to PFAS source treatment and control, site remediation, product safety and stewardship, regulatory compliance, and environmental due diligence.

For more information on Ramboll’s experience and capabilities, visit www.ramboll.com/pfas.

Notes

¹CERCLA section 101(22) defines "release" as any "...spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant) ..." [USEPA]