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New PFAS Listing Under Superfund Will Lead to Major Expansion of Liability

April 22, 2024 Articles

On April 19, 2024, the U.S. Environmental Protection Agency (USEPA) announced its final rule designating perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as hazardous substances under Section 102(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund.

PFOA and PFOS are part of a broad class of per- and polyfluoroalkyl substances (PFAS). Although production of PFOA and PFOS has been largely phased out, USEPA determined that these chemicals present a continued risk to human health due, in part, to their ability to persist in the environment.

The designation of PFOA and PFOS as CERCLA hazardous substances has a number of significant implications, including for those who own or plan to acquire property contaminated with these substances, or who use these substances in their operations. Moreover, USEPA has indicated that it may designate an additional seven PFAS as CERCLA hazardous substances in the near future.  The primary implications are highlighted below.

New Reporting Obligation for Spills and Releases

Certain releases of PFOA and PFOS to the environment must now be reported. Under CERCLA Section 103(a) and Emergency Planning and Community Right-to-Know Act (EPCRA) Section 304, any known release at or above the reportable quantity (RQ) must be immediately reported to federal, state, tribal, and local authorities. EPA has adopted an RQ of one pound released in a twenty-four-hour period for PFOA and PFOS. Such reporting is intended to increase visibility into the location and magnitude of such releases, and is likely to lead to additional enforcement actions and litigation over impacts to the environment and human health.

Increased Liability for Superfund Cleanups by USEPA

Although the federal government is already authorized to clean up PFAS contamination under certain circumstances, the designation of PFOA and PFOS as CERCLA hazardous substances significantly increases and streamlines USEPA’s ability to bring enforcement actions and to recover cleanup costs from potentially responsible parties (PRPs). Under CERCLA’s strict liability regime, PRPs may be found jointly and severally liable for the investigation and remediation of all CERCLA-designated substances at a contaminated property placed on CERCLA’s National Priorities List (commonly known as “Superfund sites”).

USEPA’s expanded ability to rely on CERCLA may manifest itself in a number of problematic ways for PRPs. Significantly, as of March 2019, USEPA had already identified 180 existing Superfund sites where PFAS contamination was also present. Where remediation has already been completed at a site for non-PFAS contamination, USEPA may seek to reengage via its “reopener” authority to address previously unknown conditions where the completed remedy is not fully protective. USEPA may also expand the scope of work required at active CERCLA sites to include investigation and remediation of PFOA and/or PFOS. The designation of PFOA and PFOS will also likely lead to the creation of new “PFAS-only” Superfund sites. 

Although USEPA also announced a policy whereby it would not pursue certain entities – such as publicly owned water systems and municipal solid waste landfills – under many circumstances, this expansion of CERCLA liability to include PFAS will result in PRPs facing significantly larger cleanup bills at existing sites, as well as a new universe of PRPs being saddled with unanticipated liability.  This will increase the risk that more PRPs need to seek bankruptcy protection. More broadly, entities seeking to acquire properties or businesses will need to invest additional effort in their pre-acquisition environmental due diligence efforts to minimize the risk of taking on PFAS-related CERCLA liability (discussed further below).

Increased Litigation by Private Parties

The designation of PFOA and PFOS as hazardous substances under CERCLA will also give private parties a powerful tool for seeking recovery of their own cleanup costs. Currently, cost recovery actions related to PFAS contamination rely on state common law theories, such as nuisance, trespass, and negligence. However, CERCLA provides a much more favorable statute of limitations. For many common law claims, the statute of limitations may start running from the time the contamination occurred or from discovery of the contamination. In contrast, the limitations period for a CERCLA cost recovery claim generally does not begin until a cleanup is at least initiated or, depending on the type of cleanup, completed. A CERCLA claim is also usually easier to establish, as CERCLA imposes strict liability on PRPs and only includes a handful of statutory defenses, each of which is difficult to prove.

Increased Focus on Pre-Acquisition Environmental Due Diligence

Environmental due diligence for the acquisition of a property or business generally includes performing the actions necessary to meet CERCLA’s “all appropriate inquiries” standard for liability protection, which is typically performed via a Phase I Environmental Site Assessment and, if needed, environmental testing and analysis. Because PFOA and PFOS are now CERCLA hazardous substances, such inquiries will need to be expanded to include identification of use and/or releases of these substances. Importantly, diligence already conducted for currently pending acquisitions may need to be expanded before the acquisition closes, if they do not already include consideration of PFOA and PFOS.

Conclusion

Designation of PFOA and PFOS as CERCLA hazardous substances significantly increases the potential liability associated with releases of those substances to the environment at a wide range of contaminated sites, both currently known and unknown. As a result, we are likely at the beginning of a new phase of major USEPA enforcement actions and private party litigation. Managing these liabilities and risks, including via environmental due diligence efforts, will be of the utmost importance.

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