On April 19, 2024, the US Environmental Protection Agency (“US EPA”) announced its final rule designating two per- and polyfluoroalkyl substances (“PFAS”), namely perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), as ‘hazardous substances’ under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). This rule will make PFOA and PFOS contamination subject to reporting, investigation, remediation, and monitoring requirements under CERCLA and may impact due diligence efforts in corporate transactions (e.g., M&A and finance) and real estate transactions.

PFOA and PFOS are two of the most studied, prevalent, and longest-used PFAS. They have historically been used in a wide range of industrial processes and consumer products, including carpets, clothing, fabrics for furniture, packaging for food and cookware, and firefighting foam. US EPA's designation of these compounds under CERCLA may result in additional remedial liability at certain of the country’s Superfund sites and other sites yet to be designated under CERCLA. US EPA will require reporting, investigation, remediation, and monitoring of releases of PFOA and PFOS, including at “closed” sites where the remedy has been completed and/or under CERCLA’s five-year review process. Under the new rule, US EPA and other parties may assert a claim for recovery of costs for cleanups of the specific PFAS compounds. Parties that have entered into consent decrees or other agreements with US EPA for Superfund cleanups could be subject to new remedial requirements for PFOA or PFOS, depending on covenants not to sue and reopener provisions of such agreements.

With the announcement of the final rule, US EPA issued a non-binding PFAS Enforcement Discretion Document that states that US EPA does not intend to pursue entities for PFAS contamination under CERCLA where equitable factors do not support such, including, but not limited to the following locations or property types: community water systems, publicly-owned treatment works, municipal separate storm sewer systems, publicly-owned/operated municipal solid waste landfills, publicly-owned airports, local fire departments, and farms where biosolids are applied to the land. The enforcement discretion document states that US EPA “will focus on holding accountable those parties that have played a significant role in releasing or exacerbating the spread of PFAS into the environment, such as those who have manufactured PFAS or used PFAS in the manufacturing process, and other industrial parties.”

Notably, PFOA and PFOS must now be evaluated in Phase I Environmental Site Assessments pursuant to the current ASTM standard, ASTM E1527-21, in order to satisfy the All Appropriate Inquiries standard for parties to avail themselves of certain liability protections under CERCLA. Consequently, there may be increased focus on PFAS, especially PFOA and PFOS, in due diligence efforts in corporate and real estate transactions. The new rule may also impact environmental insurance coverage for sites with known or suspected PFAS contamination.

US EPA originally proposed the rule in September 2022. The final rulemaking was delayed due to the significant number of public comments received on the proposed rule. The final rule could become subject to legal challenges, including from industry groups, states, and water districts.

Notably, in the future, US EPA could designate other PFAS as ‘hazardous substances’ under CERCLA, especially if US EPA successfully defends the new rule against any legal challenges. In April 2023, US EPA issued an advanced notice of proposed rulemaking seeking public input on possible CERCLA ‘hazardous substance’ designations for seven PFAS. In February 2024, US EPA proposed a rule that would list nine PFAS as ‘hazardous constituents’ under the Resource Conservation and Recovery Act (“RCRA”), which could impact CERCLA requirements. A ‘hazardous constituent’ listing under RCRA is a step toward a potential ‘hazardous waste’ listing under RCRA. If any of the relevant PFAS proposed for regulation under RCRA become designated as “hazardous wastes” under RCRA, they would automatically be regulated under CERCLA. Also, on April 10, 2024, US EPA set the first-ever federal drinking water standards for six PFAS, including PFOA and PFOS, which may be incorporated into CERCLA cleanup requirements for drinking water sources.

The new CERCLA rule listing PFOA and PFOS will also impact US state regulations that incorporate by reference ‘hazardous substances’ under CERCLA. In addition, under the rule, PFOA and PFOS are also now required to be listed as ‘hazardous substances’ under the Hazardous Materials Transportation Act, which may affect how businesses transport these substances, as well as placarding, packaging, and training.

Companies that manufacture, use or handle PFAS-containing products and materials should evaluate how the reporting and other compliance requirements under the new CERCLA designation may affect their operations. In addition, companies that (i) are involved, or have been involved, in Superfund cleanups at sites that could have PFAS contamination, (ii) are involved in CERCLA litigation for sites that could have PFAS contamination or (iii) otherwise could have liability for any PFAS contamination under the new rule should consider whether the rule could trigger cleanup obligations or other potential liability, including under any reopener provisions.

The final rule can be found here. Unless the rule is stayed through a legal challenge, it becomes effective on July 8, 2024.

1 PFAS are sometimes referred to as “forever chemicals” because of their strong carbon-fluorine bonds that cause these chemicals to be highly resistant to degradation, remaining in the environment for long periods of time.
2 Sites managed under CERCLA are often referred to as “Superfund” sites. Superfund site assessments evaluate site conditions to identify appropriate responses to releases of ‘hazardous substances’ to the environment. During this process, US EPA, states, tribes, and other federal government environmental programs collect data to identify and evaluate sites based on the Hazard Ranking System (“HRS”) criteria. Certain Superfund sites go on to then be listed on the National Priorities List ("NPL”) upon completion of HRS screening and public solicitation of comments about the proposed site. The NPL is the list of sites of national priority identified for long-term cleanup under CERCLA.
3 Notably, the now reportable quantity for PFOA and PFOS and their salts and structural isomers under CERCLA and the Emergency Planning and Community Right-to-Know Act is one pound within a 24-hour period, which is lower than the typical range of 100 - 5,000 pounds for reportable quantities of other hazardous substances under CERCLA. US EPA provides information here regarding the new reporting requirements for PFOA and PFOS.
4 If US EPA implements the investigation or remediation of PFOA or PFOS, it may recover related costs from responsible parties. After a party has resolved their CERCLA liability for PFOA or PFOS to the government, it may pursue contribution claims against third parties to recover costs of CERCLA liability. Settling with US EPA for CERCLA liability provides protection from contribution claims.
5 See Section VII(E) of the final rule, here. The final rule does not require PFOA and PFOS sampling at “closed” Superfund sites where the remedy has been completed; however, it also does not prevent US EPA from ordering investigation / remediation at such sites.
6 The enforcement discretion document only applies to CERCLA liability and does not apply to other US EPA programs or statutes that address PFAS.