EPA Designates Two PFAS as CERCLA Hazardous Substances

On April 17, 2024, the U.S. Environmental Protection Agency (“EPA”) finalized its rule designating perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), along with their salts and structural isomers, as “Hazardous Substances” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”).¹ PFOA and PFOS are two of the thousands of per- and polyfluoroalkyl substance (“PFAS”) chemicals that are frequently referred to as “forever chemicals”.²

PFAS are man-made chemicals used since the 1940s to impart water, grease, and stain resistance.³ They have been used in a wide variety of applications and products, including food packaging, fabrics, cosmetics, non-stick coatings, polishes, waxes, paints, cleaning products, chrome-plating, electronics, and firefighting foams.⁴ Although manufacturers of PFOA had phased out the use of that compound and replaced it with PFAS alternatives of similar usefulness, satisfactory alternatives reportedly are not available or adequate for all uses. The United States Department of Defense has stated that access to PFAS generally is “mission critical” for effective national defense, and “[l]osing access to PFAS due to overly broad regulations or severe market contractions would greatly impact national security.”⁵ Given the broad historical use of PFOA and PFOS, and the asserted continued need for PFAS in supporting certain key sectors such as national defense, the EPA’s rule is likely to have broad effects in a variety of industries.

This is the first time the EPA has relied on its authority in Section 102(a) of CERCLA to designate Hazardous Substances.⁶ To designate a “Hazardous Substance” pursuant to Section 102(a) the EPA was required to determine that releases of PFOA and PFOS into the environment may present substantial danger to the public health or welfare or the environment.⁷ The EPA did not determine whether designation pursuant to Section 102 of CERCLA requires a consideration of cost, finding that designation was appropriate either way.⁸ The EPA explained that it used a “totality of the circumstances” analysis, including an assessment of costs, to determine that designation was warranted.⁹ The U.S. Chamber of Commerce Coalition of Companies and Trade Associations has estimated that it could cost potentially responsible parties (“PRPs”) $17.4 billion to clean up PFOA and PFOS at existing non-federal NPL sites.¹⁰

The designation of PFOA and PFOS as “Hazardous Substances” will have the following significant legal consequences among others:

• Release Reporting: Any person in charge of a facility or vessel must immediately report any release of one or more pounds of PFOA or PFOS within a 24-hour period to the National Response Center (other than federally permitted releases);¹¹
• Broader Authority for EPA Response Actions: The EPA may take removal and remedial action in response to a release or threatened release of PFOA or PFOS, without determining whether an imminent and substantial danger to the public health or welfare exists;¹²
• EPA May Order Response Actions: If the EPA determines that there may be an imminent and substantial endangerment to the public health and welfare or the environment, the EPA may order PRPs to respond to a release or threatened release of PFOA or PFOS;¹³
• EPA May Recover Costs: The EPA may recover its costs of responding to a release of PFOA or PFOS from PRPs;¹⁴ and
• Private Parties May Recover Costs: Private parties that respond to a release or threatened release of PFOA or PFOS may recover from PRPs their necessary costs of response that are consistent with the National Contingency Plan.¹⁵

In conjunction with announcing the final rule, the EPA issued a related enforcement discretion policy.¹⁶ The policy document announces the EPA’s intention “to focus its enforcement efforts on entities who significantly contributed to the release of PFAS contamination into the environment, including parties that manufactured PFAS or used PFAS in the manufacturing process, federal facilities, and other industrial parties.”¹⁷ Further, it announced the EPA’s intention not to pursue response actions or costs under CERCLA “where equitable factors do not support seeking response actions or costs”¹⁸ including against the following:

1. Community water systems and publicly-owned treatment works;
2. Municipal separate storm sewer systems;
3. Publicly owned or operated municipal solid waste landfills;
4. Publicly owned airports and local fire departments; and
5. Farms that apply biosolids to land.¹⁹

Since the exercise of enforcement discretion by the EPA does not insulate such parties from third-party claims under CERCLA, the EPA’s enforcement discretion policy announces the EPA’s intention to provide “some measure of litigation and liability protection” to them either by securing waivers of third-party claims in settlements with PRPs or by entering into settlement agreements providing contribution claim protection directly with such parties.²⁰

Principal Implications for Transactional Due Diligence

The designation of PFOA and PFOS as “Hazardous Substances” does not change CERCLA’s liability scheme. CERCLA continues to impose liability without regard to fault, typically on a joint-and-several basis. The existing defenses to liability, including the “Innocent Landowner”²¹ and “Bona Fide Prospective Purchaser”²² defenses, also remain available. Although the designation merely adds two chemicals to the long list of “Hazardous Substances,” the extensive historical use of PFOA and PFOS and the EPA’s relatively intense focus on these substances will have several practical implications for the scope of the environmental due diligence and the evaluation of the environmental risks presented by the target in a given transaction. In undertaking or evaluating the results of the environmental due diligence, the transaction parties should consider the following:

• PFOA/PFOS Based RECs: Phase I Environmental Site Assessments conducted pursuant to ASTM Standard Practice E1527-21 will need to address the current and historic use of PFOA and PFOS and the potential that releases of PFOA and/or PFOS have occurred. Evaluation of other PFAS will continue to be optional under ASTM Standard Practice E1527-21 as a “non-scope” consideration. This will lead to the designation of PFOA and PFOS related “Recognized Environmental Conditions” (“RECs”). 
• Identification of RECs: Where current or historic use or handling of PFOA or PFOS has occurred at a target property, one should evaluate whether such use or handling has resulted in a release or likely release to the environment or poses a material threat of a future release to the environment. However, care must be taken to ensure that Phase I Environmental Site Assessments do not characterize the mere inclusion of a site in a PFAS-related database or the documented use of PFOA or PFOS, without evidence of a release, likely release, or threatened release as a REC.
• Need to Consider Non-Manufacturing Uses of PFOA/PFOS: Even where there is no evidence of PFOA or PFOS use in manufacturing operations at a target property, one should consider whether PFOA or PFOS has ever been discharged at the target property, including in firefighting foam.
• Potential Expansion of Existing or Re-Opening of Previously “Closed” Remediation Cases: One should consider whether there is a potential for the expansion or reopening of site investigation and remediation cases that are on-going or previously received no further action approval and whether target sites and companies could be identified as contributors to PFOA or PFOS contamination. The EPA has already begun gathering and publicizing information related to PFAS usage and releases.²³ Such information will likely facilitate claims of potential responsibility for PFOA and PFOS contamination.
• Increased Risk of Third-Party Disposal Site Liability: In particular where a target company has a long history of off-site disposal of waste containing PFOA or PFOS, one should consider whether there is a potential for third-party disposal site liability. Such sites could be new NPL or state superfund sites listed due to PFOA/PFOS or existing NPL or state superfund sites that now need to address PFOA/PFOS contamination.
• Potential Exclusion from New Insurance: Even before this designation, Pollution Legal Liability insurance underwriters began to scrutinize the potential for PFAS-related liability and sometimes expressly excluded or limited coverage. Designation of PFOA and PFOS as “Hazardous Substances” might result in an increase in such exclusions and limitations. Identified PFOA/PFOS related RECs could be excluded from representation and warranty insurance coverage.

Principal Implications for Products Liability / Mass Torts

Regulatory initiatives and litigation trends often converge and a CERCLA designation by the EPA further heightens business and legal risk. The EPA promoted this measure as a “key commitment” under its PFAS Strategic Roadmap²⁴ and stated that it may designate four additional PFAS compounds under CERCLA, signaling continuing regulatory scrutiny of these chemicals.²⁵

The final designation of PFOS and PFOA may have various and wide-reaching effects beyond those statutorily imposed by CERCLA, including those described below.

• Plaintiffs Tort Lawyers Leverage Regulatory Actions in Litigation: Plaintiffs frequently seek to use the EPA regulatory statements to support their claims in mass tort and class action litigation. For instance, in personal injury tort cases, plaintiffs point to regulatory statements, like a CERCLA designation, as evidence that PFOA and PFOS caused injuries. They will point to the designations to support their expert opinions and attempt to use them to persuade judges and juries to overlook any weaknesses in their medical causation evidence. Plaintiff lawyers often seek to confuse the distinction between the precautionary principles that guide environmental regulations intended for an entire population with scientific principles that govern medical causation. Their prior efforts using these tactics in PFAS-related actions have had some success. As we previously reported,²⁶ in advance of a trial over a city’s economic costs to investigate and remediate PFOA in municipal water, the city persuaded the court to allow it to introduce the EPA’s proposed rulemaking on PFOA and PFOS as evidence of the reasonableness of the plaintiff’s efforts to remove PFAS from the water supply.²⁷ We expect these arguments to recur, particularly with a final CERCLA designation.
• Prolonged Remediation of Existing or New Sites: A final designation of PFOA and PFOS could significantly increase the number and duration of remediation activities at active and new Superfund sites. Given the ubiquity of these chemicals due in large part to their long history of varied usage, even existing Superfund sites nearing closure could face a longer timeline of remediation projects and face significant additional costs. Among other requirements, sites could face new testing protocols, treatment technologies, and longer-term site monitoring leading to greater and longer-term uncertainty from a litigation risk perspective.
• PRPs: In addition to manufacturers and importers of the chemicals themselves, PRPs could include businesses that use(d) or manufacture(d) materials that contained PFOA and PFOS and potentially the wastewater and waste management facilities that treated or disposed of them. Any PRP faces a risk of private litigation, and the potential risk is particularly acute given CERCLA’s imposition of liability on a joint and several basis. That means that a party may be held liable for the entirety of a site cleanup even if its release of PFOA and/or PFOS was minimal and even if that release occurred decades ago. The business impacts of any Superfund litigation are also potentially substantial. In addition to devoting resources to litigating possible claims, there is the associated cost of addressing the public and media awareness of and reaction to a business’s alleged ties to historical PFOA and PFOS usage.

Finally, while the CERCLA designation is – for now – limited to PFOA and PFOS, PFAS include thousands of chemicals, and the EPA has indicated it intends to add more of them to the “Hazardous Substances” list.²⁸ Any additional PFAS designations are likely to exacerbate and expand the risks discussed above. As regulators (and plaintiff torts lawyers) remain focused on PFAS, businesses and other stakeholders that manufactured or used PFAS should expect to face increasing risk of costs and potential litigation from private and public actors.