On January 10, 2022, EPA’s Office of Land and Emergency Management submitted its proposed rule to designate PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to the White House Office of Management and Budget (OMB).1 In its submittal, EPA notes that the proposed rule to designate PFOA and PFOS as “hazardous substances” was included in its 2019 PFAS Action Plan and that EPA has now determined that it has enough information to propose the designation. As we have previously reported,2 this designation, once adopted, will have significant implications for a broad spectrum of industry sectors and not only result in new reporting obligations, but also increased compliance and litigation risks.
In its Statement of Need for the proposed rule, EPA downplays the potential impacts of the CERCLA designation for EPA, other federal agencies, private parties and sites across the country. However, PFOS and PFOA, currently remain in firefighting foam that is required for use by the U.S. Department of Defense (DoD) and the Federal Aviation Administration. While DoD is seeking replacements that meet the necessary military specifications for use, DoD has not yet identified such replacements. EPA appears to focus solely on the imposition of new reporting obligations stating that the designation will allow the collection of “information regarding the location and extent of releases” and characterizes the proposed rule as “a reporting rule.” Consistent with EPA’s focus on reporting requirements, EPA has surprisingly made a determination that this rulemaking is not economically significant. However, the vast implications from such designation could include the following:
- The likely addition of more sites to the National Priorities List. As EPA and the regulated community have experienced, PFAS chemicals are being detected at a variety of sites, including sites with no history of PFAS use or disposal. EPA’s enforcement-first approach to Superfund sites will likely continue at sites with PFOA or PFOS if there are viable potentially responsible parties;
- The potential disruption to ongoing remediation activities at thousands of sites that currently are, or may become, Superfund sites, as well as added complexity and costs if parties are required to utilize different treatment technologies to address PFOA and PFOS impacts;
- The possible reopener of existing Superfund sites if EPA finds that previously undertaken remedial actions are no longer protective during its five year reviews with the potential to pull even redeveloped sites back into the CERCLA cleanup process; and
- The significant rise in expensive and disruptive Superfund litigation that would result from any associated EPA Section 106 cleanup orders or Section 107 cost recovery actions or private party Section 113 contribution actions. Given the draconian nature of CERCLA’s strict, and joint and several, liability scheme, even entities and industries that might have contributed minimally to PFOA or PFOS contamination at a particular site would be affected.
Notably, with respect to anticipated costs and benefits, EPA indicates that its analysis is currently underway and that it “expects to estimate lower and upper-bound reporting cost scenarios.”
EPA’s determination that this rulemaking is not economically significant, is interesting given that private potentially responsible parties, and the DoD would both face major liabilities at certain PFAS sites, particularly airports and airfields that have a history of discharging the firefighting foam known as “AFFF” that is well-known to contain PFOS and PFOA. A rule is considered economically significant if it has “an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities”.3 When a rule is economically significant, OMB requires that a regulatory impact analysis be conducted.4 Regulatory analysis is an important tool that allows agencies, including the White House, an opportunity to formally evaluate the key impacts, both positive and negative, as well as various alternatives that could be considered in addition to the chosen regulatory option. By treating this rulemaking as not economically significant, and focusing only on the reporting or ministerial burdens, EPA will not be required to complete a robust evaluation of economic impacts.
EPA’s Fall Regulatory Agenda indicates that the proposed rule is anticipated in March of this year, which means that the OMB review window may likely be less than the standard 90 days. Nevertheless, this window provides interested stakeholders with an opportunity to meet with OMB to discuss any issues related to the action under review.
The EPA Fall Regulatory Agenda lists the final rule anticipated date as “to be determined.” In its PFAS Strategic Roadmap issued in October of last year, EPA had previously indicated that a final rule was expected in the Summer of 2023 and that the agency was committed to conducting “robust stakeholder engagement.” Whether or not a final rule is ultimately adopted by the previously anticipated timeframe, it is evident that this action remains a high priority for EPA. In light of the potential significant legal and financial implications of designating PFOA and PFOS as CERCLA “hazardous substances,” it will be important for affected stakeholders to actively engage with EPA and OMB on these issues and provide input to guide the final rule development. We will continue to monitor and report on future developments.