Extracted from Law360
In January, the U.S. Environmental Protection Agency proposed to focus its National Enforcement and Compliance Initiatives, or NECIs, for fiscal years 2024-2027 on pursuing parties responsible for alleged exposures to per- and polyfluoroalkyl substances, also known as PFAS.
If adopted, the EPA's proposal would have serious ramifications for manufacturers who release PFAS into the environment and federal facilities that are significant sources of PFAS contamination.
While the EPA has indicated over the past few years that it will use enforcement tools to hold responsible parties liable for legacy and ongoing PFAS contamination, the proposed NECI clarifies that the agency will focus its enforcement resources on manufacturers and federal facilities over other parties, thus placing a clear target on the backs of these entities.
In so doing, the EPA plans to leverage key statutory authorities and regulatory action it has undertaken under the Biden administration, including the designation of PFAS compounds PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act.
As government enforcement actions related to these ubiquitous substances is likely to surge, companies that may have a connection to PFAS should consider getting ahead of the issue now.
It would be prudent to begin mitigating PFAS liability exposure by conducting environmental due diligence, analyzing the company's previous or ongoing use of PFAS, reviewing current and historical insurance policies, and determining whether and how to report any historical or recent releases of PFAS into the environment.
The EPA's NECIs
The EPA selects national initiatives every four years to focus federal enforcement resources on widespread environmental problems. The primary objective of these initiatives is to pursue formal enforcement actions, focus resources and attention on serious alleged violations of federal environmental laws, and ensure compliance.
Historically, the EPA has used a variety of enforcement and compliance assurance tools to achieve national initiatives. While criminal enforcement and civil enforcement remain the EPA's key tools to address instances of alleged noncompliance and create general deterrence, the EPA also uses informal enforcement and compliance assurance tools to advance the national initiatives, known as NECIs.
Focus on PFAS Contamination and Enforcement
One proposed NECI would focus on implementing the commitments to action made in the EPA's 2021-2024 PFAS Strategic Roadmap. In the road map, the EPA committed to pursuing parties responsible for releases of PFAS into the environment.
According to the EPA, exposures to PFAS can lead to adverse human health impacts and present a public health and environmental issue.
However, most research has focused on animal studies, which test doses of PFAS that are higher than the doses most people experience from environmental exposure. Humans and animals react differently to PFAS, and not all the effects observed in animals may occur in humans.
A PFAS NECI would initially focus on identifying the extent to which PFAS exposures may present a threat to human health and the environment and pursuing parties responsible for those alleged exposures.
The EPA would also work with states on this initiative and seek to supplement PFAS enforcement work already performed by many state regulators. To the extent that PFAS cleanup efforts occur under CERCLA, the EPA would develop a CERCLA enforcement discretion and contribution protection settlement policy regarding PFAS contamination.
For example, the EPA intends to focus enforcement efforts on PFAS manufacturers whose actions may result in the release of significant amounts of PFAS into the environment and on federal facilities that may be a significant source of PFAS contamination. The EPA does not intend to pursue entities when certain so-called equitable factors do not support assigning CERCLA responsibility.
How the EPA Will Identify PFAS Contamination
Although the NECIs do not specify how, precisely, the EPA would identify the extent of PFAS contamination and alleged impacts on human health and the environment, the agency has already initiated historic actions under multiple federal environmental statutes to identify past and ongoing releases of PFAS into the environment, including at federal facilities where PFAS have been used, manufactured, discharged and/or released.
For example, the Safe Drinking Water Act requires the EPA once every five years to issue a list of unregulated contaminants to be monitored by public water systems. In December 2021, the EPA published its fifth Unregulated Contaminant Monitoring Rule, which requires sample collection between 2023 and 2025 for 30 chemical contaminants, including 29 different PFAS compounds.
This action will help the EPA identify the national occurrence of PFAS in drinking water and at what levels, including analyses of potential environmental justice impacts, which could inform the EPA's PFAS enforcement initiatives.
In addition, the EPA has proposed to designate two of the most well-studied PFAS compounds — PFOA and PFOS — as hazardous substances under CERCLA. Such designations would require facilities across the country to immediately report on PFOA and PFOS releases that meet or exceed the reportable quantity assigned to these substances.
The hazardous substance designations would also enhance the ability of the EPA to obtain information regarding the location and extent of releases.
Going forward, the EPA has indicated that it will consider designating additional PFAS as hazardous substances under CERCLA as more specific information related to the alleged health effects of those PFAS and methods to measure them in groundwater are developed.
How the EPA Will Pursue Responsible Parties
The NECIs state that the EPA would use CERCLA as at least one mechanism to pursue parties potentially responsible for PFAS contamination. As discussed above, the EPA has proposed to designate PFOA and PFOS as hazardous substances under CERCLA, which will likely be met with legal challenges.
But the EPA does not have to wait to formally adopt regulations designating these chemicals as hazardous substances before taking enforcement action under CERCLA.
For example, since PFOA and PFOS are contaminants and pollutants under CERCLA, the EPA can pursue short-term removal actions to address releases or threatened releases of these chemicals that may present an imminent and substantial danger to the public health or welfare, but, generally, cannot require a private party to pay for or conduct the removal action.
If the EPA formally adopts regulations designating PFOA and PFOS as hazardous substances under CERCLA, the EPA can conduct response actions if there is a release or threatened release without having to establish an imminent and substantial danger.
Thus, designating PFOA and PFOS as hazardous substances will likely increase the pace at which cleanups occur because it will allow the EPA to require responsible private parties to address releases of PFOA and PFOS at sites without other ongoing cleanup activities, and allow the government and private parties to seek to recover cleanup costs from potentially responsible parties.
The proposed NECI for PFAS fleshes out how the EPA may enforce CERCLA with respect to PFAS contamination.
For example, the EPA will likely release a policy memorandum providing agency personnel with general guidance on addressing PFAS contamination through CERCLA enforcement actions, to assist them in exercising their enforcement discretion. The EPA would also encourage its regional components to focus their enforcement discretion on manufacturers and federal facilities.
At the same time, the policy memorandum may provide general information to manufacturers, federal facilities and other stakeholders who will be affected by the EPA's anticipated enforcement actions with respect to PFAS contamination.
In addition, the EPA may issue a separate memorandum with general principles governing PFAS contamination contribution settlements under CERCLA and issue specific procedures for its regional components to use in assessing contribution settlement proposals.
Overall, the proposed NECI for PFAS should signal to manufacturers, federal facilities and other potentially responsible parties that the EPA intends to make PFAS contamination a critical enforcement initiative in fiscal years 2024-2027.
The EPA is currently laying the groundwork to pursue these enforcement actions by taking historic action under several key environmental statues, including CERCLA, to identify the extent of PFAS contamination and hold potentially responsible parties liable for cleanup costs.
While the prospect of PFAS enforcement is frightening, the time to prepare is now. PFAS could be identified as a potential chemical of concern at an unlimited number of commercial and industrial properties.
Companies should consider conducting environmental due diligence into their historical or ongoing use of PFAS, what containment, control or management procedures they have in place, and whether there have been any releases into the environment.
Companies should also review their current and historical insurance policies to determine their coverage and consider obtaining policies that may include coverage for potential future remediation costs.
In addition, companies should consider whether they may have an obligation to report any historical or current releases of PFAS into the environment to regulatory agencies, and the potential risks and consequences of reporting or failing to report.