/>iPer- and polyfluoroalkyl substances (PFAS) have become a focal point of regulatory scrutiny nationwide due to their persistent environmental presence and potential health risks.
For businesses, navigating the evolving landscape of PFAS regulation is crucial—these substances are widely used in various industrial and consumer applications, from firefighting foams to non-stick cookware. Understanding the legal implications of PFAS regulation, including stringent reporting requirements, potential liability, and compliance strategies, is essential to mitigate risks and ensure sustainable operations. This article summarizes current PFAS regulations, examines the regulations' impact on businesses, and offers practical guidance for legal compliance and proactive risk management.
Understanding PFAS
PFAS encompass thousands of individual compounds, including well-known substances like perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS). PFAS are human-made chemicals in use since the 1940s to repel oil and water and resist heat. Such characteristics make them useful in commercial and consumer products such as food packaging, water- and stain-repellent fabrics, breathable clothing, cosmetics, and car wax as well as industrial and manufacturing processes such as metal plating and semiconductor manufacturing. These properties make PFAS exceptionally durable and effective in various applications, but they also contribute to their persistence in the environment, earning them the nickname "forever chemicals."
Despite their utility, PFAS have raised health and environmental concerns. Due to their widespread use and persistence, PFAS accumulate in the environment and in human and animal tissues. Certain PFAS exposure over a prolonged period has been linked to cancer and other illnesses. The persistence and bioaccumulation potential of PFAS caught the attention of the United States Environmental Protection Agency (EPA) in the mid-2000s. The EPA then launched into developing comprehensive regulatory measures to control the use of PFAS and mitigate their impact.
Federal and State Regulatory Approaches to PFAS
The EPA began a PFOA stewardship program in 2006 as it worked to develop health advisory limits. In recent years, the EPA has intensified its efforts to regulate PFAS. Central to this regulatory evolution is the EPA’s PFAS Strategic Roadmap, unveiled in October 2021, which outlines an ongoing comprehensive approach to tackling PFAS contamination. The Roadmap marked a pivotal shift in the EPA towards stricter oversight and enforcement aimed at researching toxicity levels, restricting and reducing exposure, and mitigating the risks associated with PFAS manufacturing and use. Following the publication of the PFAS Strategic Roadmap, EPA announced health advisory limits for four kinds of PFAS, warning that the compounds are more toxic than previously thought. Over the last two years, it reduced the health advisory limits for PFOS and PFOA and added health advisories for two chemicals considered replacements for PFOA and PFOS, one group familiar to North Carolinians known as GenX chemicals and the other known as perfluorobutane sulfonate (PFBS). The North Carolina Department of Environmental Quality (NCDEQ) released its own Action Strategy for PFAS in June 2022 after investigating GenX in the Cape Fear River, which affected the drinking water of residents in the greater Wilmington and Fayetteville areas.
Recently, the EPA has folded PFAS regulation into several existing federal environmental statutes, discussed below. By this action, the EPA seeks to increase knowledge of and protections against the risks of PFAS in the environment.
Toxics Release Inventory PFAS Reporting Rule
The Toxic Release Inventory (TRI) Reporting Program mandates that certain industries annually report the quantities of specific toxic chemicals they release into the environment under Section 313 of the Emergency Planning and Community Right-to-Know Act. The TRI Reporting Program is intended to maintain transparency and public awareness of toxic chemicals in the environment. Businesses that manufacture, process, or use listed chemicals above threshold levels must disclose their releases, waste management practices, and pollution prevention activities. The first six PFAS chemicals were added in 2020, and there have been steady additions in annual phases since then. For the 2023 calendar year, reports for the 189 chemicals previously on the TRI lists were due July 1, 2024. For the 2024 calendar year, reports for the seven chemicals recently added to the TRI will be due July 1, 2025.
Toxic Substances Control Act PFAS Reporting Rule
Under the Toxic Substances Control Act (TSCA), manufacturers, importers, and processors of chemicals must comply with various reporting requirements to ensure environmental and human health safety. Key obligations include chemical data reporting every four years, pre-manufacture notifications for new chemicals developed for the market, and notifications for significant new use by industries. Additionally, companies must periodically update the TSCA Chemical Substance Inventory, submit risk evaluations when directed by the EPA, and report health and safety data indicating substantial risk. While businesses can claim Confidential Business Information to protect trade secrets, they must provide justifications and face periodic reviews. The EPA monitors compliance and imposes penalties for non-compliance, including fines and legal actions.
The EPA unveiled the PFAS Reporting Rule in 2023, adding many PFAS to the TSCA Inventory and including significant measures to address the health and environmental risks associated with these chemicals. The EPA now requires more rigorous reporting and testing for PFAS, mandating that all entities manufacturing or importing PFAS in any quantity (i.e., no de minimis exemption) provide detailed data on production, use, and potential exposure risks. Entities must report detailed information about PFAS manufactured or imported in the past 10 years, including chemical identity, categories of use, production volumes, by-products, and disposal methods. The TSCA Reporting Rule identifies covered PFAS by three structural definitions rather than by name, and includes chemical substances, manufactured "articles" as defined by TSCA, and scrap imported for recycling.
Reports must be submitted electronically through the EPA’s Central Data Exchange using the Chemical Information Submission System. Entities are required to submit the necessary information certified by a responsible official within the organization, ensuring accuracy and completeness of the data. Most reporting is due from November 12, 2024, to May 4, 2025; importers and smaller manufacturers have until November 10, 2025.
Safe Drinking Water Act National Primary Drinking Water Rule
Concerns about PFAS in drinking water have been in the public domain for several years, particularly in eastern North Carolina. After in-depth investigations by the EPA and NCDEQ, the EPA announced it would regulate PFAS under the Safe Drinking Water Act (SDWA). Aimed at ensuring the safety and quality of the nation’s drinking water, the SDWA establishes standards for entities providing drinking water to the public, including states, localities, and other suppliers. The SDWA encompasses both naturally occurring and man-made contaminants, and mandates testing and treatment processes to protect public health. The EPA has increasingly focused on regulating PFAS through the SDWA to protect the public receiving its potable water from public water systems.
The EPA issued its first health advisory limits in 2016 for PFOS and PFOA at 70 parts per trillion (ppt)(for perspective: one part per trillion is roughly one granule of sugar in an Olympic-size swimming pool). In 2022, it reduced those limits and added GenX and PFBS to the list of covered PFAS. Expert scientific opinions from toxicologists around the world differ on what levels of these substances are sufficient to protect human health, and a wide range among standards is emerging. Despite this uncertainty, in 2023, the EPA proposed maximum contaminant levels (MCLs) for six PFAS at levels significantly lower than previously published based on EPA's own scientific studies concerning lifetime exposures. Eventually, on April 26, 2024, EPA finalized the National Primary Drinking Water Rule (NPDWR), setting the most conservative MCL standards for PFOA and PFOS at four parts per trillion (ppt) and GenX chemicals, PFNA, and PFHxS at 10 ppt. The standards are enforceable as of June 25, 2024.
Under the NPDWR, public water systems are required to regularly monitor for PFAS and report their findings to the EPA. Initial sampling for PFAS to establish a baseline profile for the system must be complete by 2027, followed by ongoing compliance monitoring. By 2029, public water systems must comply with the MCLs and notify the public of any exceedances. If PFAS concentrations exceed the established MCLs, water suppliers must take corrective actions, such as treating the water to reduce PFAS levels or providing alternative water supplies. Additionally, the rule mandates public notification to ensure that consumers are informed about PFAS levels in their drinking water and any potential health risks.
Although the NPDWR does not dictate which treatment technologies public water systems must use to comply, it encourages the adoption of advanced treatment technologies, such as activated carbon adsorption, ion exchange, and high-pressure membranes, which are effective in removing PFAS from water. By setting these stringent standards and monitoring requirements, the rule aims to reduce PFAS exposure and protect public health by placing a greater responsibility on businesses and water systems to ensure compliance and safeguard drinking water quality.
The NPDWR has potential implications beyond drinking water. States will need to adopt standards that are no less stringent than the MCLs, and the MCLs may be considered as cleanup goals for drinking water sources impacted by PFAS. Other criteria, such as effluent limitations or pre-treatment criteria in National Pollutant Discharge Elimination System permits, may be derived based on the MCLs. The North Carolina Environmental Management Commission has been meeting with NCDEQ about how best to implement PFAS regulations not only for drinking water but also for surface water and groundwater.
CERCLA Hazardous Substance Designation
The most recent, and possibly most impactful, regulation passed seemingly with the least fanfare. On May 8, 2024, the EPA published its final rule designating PFOS and PFOA as "hazardous substances" under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The rule will become effective 60 days later, on July 8, 2024. Commonly known as Superfund, CERCLA is a 1980 federal law designed to address the cleanup of sites contaminated with hazardous substances. The CERCLA liability scheme is a crucial component of this law, aiming to ensure that the parties responsible for contamination pay for cleanup.
Under CERCLA, several categories of potentially responsible parties (PRPs) can be held liable: current owners and operators of facilities and property where PFAS contamination is found; past owners and operators when PFAS disposal occurred; generators and parties who arranged for the disposal or treatment of PFAS-containing materials, including transporters. CERCLA imposes strict liability, meaning that PRPs are liable for PFAS contamination regardless of fault or negligence—the mere presence of PFAS will trigger liability. CERCLA also enforces joint and several liabilities, which means any PRP may be held responsible for the entire cost of the cleanup if the contamination is indivisible, thus allowing the EPA to seek full recovery of costs from any single PRP if necessary. Furthermore, PRPs may seek contributions from other PRPs to share the burden of PFAS cleanup costs and can initiate cost recovery actions to reclaim expenses from other liable parties.
CERCLA’s liability is retroactive, applying to actions involving PFAS that occurred before the law's enactment in 1980. This means that the EPA can reconsider, scrutinize, and address past activities leading to PFAS contamination. There are limited defenses available to PRPs under CERCLA, including acts of God (natural disasters beyond human control), acts of war, and third-party defense (contamination caused solely by an independent third party not connected to the PRP). PRPs are financially responsible for various costs associated with PFAS cleanup, such as site investigation and assessment, remediation and cleanup, health assessments and ongoing monitoring, and legal and administrative expenses.
The EPA has the authority to negotiate settlements with PRPs or issue orders mandating PFAS cleanup, and it can also sue PRPs to recover costs incurred during the cleanup process. EPA released a PFAS Enforcement Discretion and Settlement Policy indicating that its initial, primary focus is on: (1) PRPs who have manufactured PFAS or PFOA or used them in a manufacturing process; and (2) other industrial parties and federal entities responsible for contamination. Although discretionary policies are subject to change, the EPA does not currently intend to pursue passive receivers of PFOS and PFOA. These include community water systems, publicly owned treatment works, municipal storm sewer systems, and farms where biosolids are applied to the land as fertilizer.
At the state level, the North Carolina House of Representatives recently put forth a PFAS Pollution and Polluter Liability bill. At this time, the bill imposes liability only on those companies that manufacture PFAS compounds, not those that utilize raw PFAS feedstock to manufacture other products (i.e., weatherproof caulking, grease resistant coating for products, etc.), that discharge into a water body used as a public water supply. A PFAS Manufacturer, as defined in the bill, would be liable for the costs of remediation if a nexus is drawn from an exceedance of an MCL at any public water supply to that entity. It remains to be seen how NCDEQ integrates the recent CERCLA designation into its waste management programs.
Challenges for Business Operations and Real Estate Transactions
Businesses, particularly industrial facilities and manufacturers, face a host of challenges and considerations regarding regulations governing PFAS. Compliance obligations are stringent and multifaceted, often requiring detailed permit applications and adherence to specific guidelines set by regulatory bodies. NCDEQ has deployed a PFAS Questionnaire in several of its regulatory programs to collect information on the presence and use of PFAS-containing materials. The federal reporting rules outlined above necessitate thorough identification and assessment of PFAS use and disposal practices. Businesses must also undertake characterization and cleanup of sites impacted by PFOA and PFOS, which can be complex and resource intensive. This process may involve revising or expanding risk assessments, conducting further investigations, and implementing additional response actions at existing sites to ensure comprehensive mitigation of PFAS contamination.
The presence of PFAS has equally significant implications for real estate transactions, particularly with respect to due diligence. Due to the CERCLA designation, when PFOA and PFOS are suspected or confirmed at a site, they now trigger inclusion as Recognized Environmental Conditions (RECs) in Phase I Environmental Site Assessments conducted under ASTM E1527-21 standards, necessitating a thorough evaluation of potential concerns. The identification of RECs or the reclassification of historical RECs as current RECs due to the presence of PFAS can affect deal negotiations. This includes historical releases and the assessment of environmental liabilities, including reopening site incidents, which can lead to substantial revisions in property valuations. The potential for litigation will be heightened as the EPA or PRPs seek to recover costs associated with CERCLA response actions.
Practical Steps and Considerations
The EPA Strategic Roadmap sets an ambitious timeline for regulations, increased monitoring, and remediation efforts, and North Carolina is poised to adopt its own requirements. PFAS compliance will affect operations and transactions in diverse ways, including through SDWA drinking water standards, CERCLA hazardous substances designations, or TSCA reporting requirements. Therefore, proactive compliance strategies to avoid potential liabilities and ensure sustainable operations are necessary.
Businesses navigating this complex regulatory landscape should adopt best practices, including seeking information through continuous education, collaborating with industry peers, and engaging legal counsel and consulting technical experts for guidance and risk management. As regulations continue to evolve (potentially becoming as pervasive as the PFAS themselves), staying informed and adaptable is crucial to managing risks, ensuring compliance, and protecting business interests in the face of growing regulatory demands.
