Practical Effects of the EPA's New PFAS Rules – From Superfund Liability to Potential Litigation and Business Impacts

By Addie Ries, Steve Parascandola, Cliff Brinson and Dani Dobosz

The U.S. Environmental Protection Agency (EPA) recently announced two new PFAS rules which will require remediation of certain PFAS in drinking water and at contaminated sites. Beyond their direct effect on water providers and businesses potentially subject to Superfund liability, these new rules may engender additional PFAS litigation and expand the need for consideration of PFAS issues in real estate transactions and a host of other business operations.

What are PFAS?

Per- and polyfluoroalkyl substances (PFAS) are a diverse group of more than 9,000 synthetic chemicals that have been widely used because of their unique water, grease, and stain resistant qualities. Although by no means an exhaustive list, PFAS have been used to make industrial and consumer products such as plastics, electronics, solvents, coatings, paints, refrigerants, paper products, textiles, fire suppressants, pharmaceuticals, semiconductors, pesticides, construction materials, carpet and floor coverings, cookware, clothing, cosmetics, and personal care products. As a result, PFAS considerations affect a wide range of businesses and industries.   

PFAS are characterized by the presence of a carbon-fluorine bond which is resistant to many forms of degradation, but PFAS otherwise differ greatly in chemical structure and properties. Some PFAS, including perfluorooctanoic acid (PFOA) and perfluorooctanoic sulfonic acid (PFOS), have been studied more than others, but scientific study to assess the environmental and toxicological effects of PFAS is still developing.

EPA’s Proposed New Rules

1. Drinking Water MCLs – On April 10, 2024, the EPA announced its final rule setting Maximum Contaminant Levels (MCLs) for each of 6 different PFAS in public drinking water, including PFOA, PFOS, and certain other PFAS (or combinations thereof), pursuant to the Safe Drinking Water Act. Ten states previously adopted PFAS limits; however, the EPA’s long- awaited MCLs will be the first federally enforceable standards and are more stringent than any of the current state standards. Compliance with the new MCLs will require many public water systems across the country to expend significant funds to update their water treatment technology. While the Infrastructure and Jobs Act allocated billions of dollars for that purpose, those funds may be insufficient and public water systems have sued certain manufacturers and industrial users for alleged damages associated with testing and remediation efforts.

As part of the same rule, the EPA announced lower, non-enforceable Maximum Contaminant Level Goals (MCLGs) for each of the 6 PFAS in drinking water levels. The EPA described the MCLGs as “health-based” goals, set at levels at which there is no known or suspected risk to human health. Although non-enforceable, the MCLGs may drive further regulation and remediation efforts and increase litigation of common law claims.

2. CERCLA Designation – On April 19, 2024, the EPA announced its final rule designating PFOS and PFOA as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which will create reporting requirements and liability for “Potentially Responsible Parties” (PRPs). PRPs generally include: (i) entities which currently or previously owned or operated “facilities” (including undeveloped real estate) at which contamination is found, (ii) contaminated landfills and other disposal sites, (iii) entities which transported or “arranged for” the disposal of hazardous substances; and (iv) entities that generate hazardous substances (which now include PFOS and PFOA). 

In its Enforcement Discretion and Settlement Policy, the EPA detailed its plan to primarily pursue PRPs who have manufactured PFOS or PFOA, used PFOS or PFOA in the manufacturing process, and other industrial parties and federal entities that were responsible for PFOS and PFOA contamination. Although this policy is discretionary and subject to change, the EPA indicated that it does not intend to pursue claims against passive receivers of PFOS and PFOA, including community water systems, publicly-owned treatment facilities, municipal storm sewer systems, municipal landfills, publicly-owned airports, fire departments, and farms where biosolids containing PFOS or PFOA are applied. Of particular significance is the fact that the policy does not prevent PRPs from initiating actions for cost recovery or contribution against other private parties, meaning that parties responsible for cleanups may pursue others to help fund such cleanups. This potential liability can now include PFOS and PFOA cleanup at sites owned or operated by other parties in the past, as well as claims relating to previously completed cleanup actions. The new rules also raise the possibility of impacts to properties currently covered by use restrictions that are tied to the CERCLA list of “hazardous substances.”  

Practical Effects

It should be noted that other types of PFAS are being evaluated by the EPA and state and federal PFAS regulations will continue to evolve. For example, the EPA has proposed a separate rule listing other types of PFAS as “hazardous constituents” under the Resource Conservation and Recovery Act (RCRA). Should those other types of PFAS advance to being labeled “hazardous waste” under RCRA, they would automatically be regulated under CERCLA. States are expected to adopt their own MCLs and some states have enacted legislation limiting, banning, or requiring reporting or labeling for certain PFAS-containing products. Challenges are anticipated as objectors have expressed a number of concerns, including that PFAS regulation could outpace PFAS science and compliance could require more extensive testing, reporting, and/or remediation than is currently feasible or available.
 
In the meantime, businesses may wish to consider the following potential direct and indirect effects of the EPA’s recent actions.

• CERLCA claims against PRPs and litigation involving other parties allegedly responsible for PFOS and PFOA contamination. This may include CERCLA actions that were previously “closed-out” as to other contaminants but may be “re-opened” to address PFOS and PFOA.
• Expanded inquiry for environmental assessments in real estate transactions (commonly known as “Phase I” reports), and the consequences of uncovering previously unknown PFAS contamination. Previously, consultants preparing Phase I reports were not required to investigate potential PFOS and PFOA contamination, since PFAS were not included within the CERCLA list of hazardous substances; going forward, Phase I guidelines will require an evaluation of CERCLA-listed PFAS contamination at subject properties.  
• Continued litigation by water providers and others seeking to pass on the cost of testing and treatment of drinking water sources. Litigation of this type is already underway against certain manufacturers and distributors of PFAS and PFAS-containing materials.
• Continued litigation by individuals alleging personal injuries from PFAS exposure and by public and private landowners alleging property damage from PFAS contamination. Litigation of this type is already underway in the form of individual claims, class-actions, and multi-district litigation (MDL) as to certain PFAS-containing products.
• Continued consumer class-action lawsuits alleging claims of product mislabeling against manufacturers and distributors of food and beverages, clothing, cosmetics, and other consumer goods which contain PFAS.
• New and expanded consideration of PFAS in real estate transactions, permitting, labeling, insurance, supply chain and commercial contracts, and other business operations to account for potential risks and responsibilities.

Potential impacts will depend on the specific circumstances of each business.  Smith Anderson will continue to monitor developments and our team of lawyers experienced with PFAS litigation, counseling, and compliance are available to assist clients as needed. If you have questions related to this alert, please contact Addie Ries, Cliff Brinson, Steve Parascandola, another lawyer within the firm’s Toxic Tort and Environmental practice areas, or your regular Smith Anderson attorney.