On April 19, 2024, the United States Environmental Protection Agency (EPA) designated perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund. This new classification by EPA has far-reaching implications for businesses across industries, necessitating a proactive approach to compliance and risk management. We prepared the following questions and answers to address some of those implications. What is PFOS and PFOA, and why did the EPA classify them as hazardous substances? PFOA and PFOS are specific types of – Per and Polyfluorinated Substance (PFAS) compounds that have received significant attention due to their widespread use and potential health risks. PFOA is a synthetic compound that has been used in the production of various consumer and industrial products, including non-stick cookware, stain-resistant fabrics, firefighting foam, and food packaging. PFOS is another synthetic compound that has been used in similar applications, including firefighting foams and stain-resistant coatings. Both PFOA and PFOS (collectively referred to within as "PFOA/PFOS") are known to be persistent in the environment and can accumulate in the bodies of humans and animals. Certain research has linked exposure to these chemicals to various adverse health effects, including developmental effects, liver toxicity, immune system effects, and an increased risk of certain cancers. Due to their potential health and environmental risks, PFOA/PFOS have been targeted for regulation under CERCLA by EPA. What does this classification change? EPA's classification of PFOA/PFOS as hazardous substances under CERCLA means releases into soil, water, or groundwater exceeding reportable quantities (currently one pound in a 24 hour period) must be reported to federal, state, or tribal authorities. It also means EPA can hold industries and other potentially responsible parties (PRPs), such as owners and operators of a property, accountable for the costs of investigation and remediation. In addition to providing enforcement provisions for EPA to require investigation and remediation of releases, CERCLA provides PRPs with the right to pursue cost recovery and contribution claims. When does the rule take effect? The rule will come into effect 60 days after its publication in the Federal Register. As of the current date, the rule has not been published. Who will EPA target? EPA’s classification does not automatically mandate response actions to release of hazardous substances, such as investigation or cleanup. CERCLA is a discretionary statute with decisions made on a site-by-site basis based on whether a release from the site poses unacceptable risks to human health or the environment. EPA enforcement efforts will primarily target those significantly responsible for PFOA/PFOS releases into the environment, following EPAs objective of “Polluter Pays.” CERCLA's liability limitations, in conjunction with EPA enforcement discretion policies (such as those pertaining to de minimis or de micromis parties and innocent landowner policies) are designed to mitigate hardships for parties who did not significantly contribute to the contamination. Furthermore, EPA’s enforcement discretion policy clarifies EPA’s intent not to pursue certain entities, such as farmers, municipal landfills, water utilities, municipal airports, or local fire departments, when equitable factors do not support seeking CERCLA cleanup costs. What steps must be taken as a result of the new rule? According to EPA, the direct effects of the rule require the following: Releases of PFOA/PFOS that meet or exceed the reportable quantity (one pound in a 24 hour period) must be reported to the National Response Center, state or Tribal emergency response commission, and the local or Tribal emergency planning committee for the areas affected by the release. Federal entities that transfer or sell their property must provide notice about the storage, release, or disposal of PFOA/PFOS on the property and covenant (by making a commitment in the deed) warranting that it has cleaned up any resulting contamination or will do so in the future, if necessary, as required under CERCLA. The U.S. Department of Transportation must list and regulate these substances as hazardous materials under the Hazardous Materials Transportation Act. Owners or operators of any vessel or facility must provide reasonable notice to potential injured parties by publication in local newspapers serving the affected area of any release of these substances. How will this rule effect real estate transactions? EPA's designation carries implications for environmental due diligence in commercial real estate transactions. Before this designation, PFAS were typically treated in Phase I Environmental Site Assessments (ESAs) as emerging contaminants, beyond the assessment's scope. However, the classification of PFOA/PFOS as CERCLA hazardous substances places them on an equal footing with other hazardous substances within the CERCLA liability framework. Phase I ESAs may consider properties with historical industrial usage of PFOA/PFOS or situated in close proximity to potential sources of PFOA/PFOS contamination, such as manufacturing facilities, airports, and military bases, to be a recognized environmental condition. Additionally, sampling for PFOA/PFOS contamination could result in delays in finalizing transactions, or the seller may not allow testing for PFOA/PFOS, in which case the buyer could be forced to take on the risk of PFOA/PFOS being on the site being purchased, which may result in the buyer incurring clean up expenses. In conclusion, the classification of PFOA/PFOS as hazardous substances under CERCLA by the EPA has far-reaching implications for businesses across industries, necessitating a proactive approach to compliance and risk management. If you have any inquiries regarding establishing a proactive approach to compliance and risk management of PFOA/PFOS as hazardous substances, please feel free to reach out to one of our Environmental attorneys for guidance.
