For a few years, we have written about the EPA’s efforts to enact enforceable drinking water levels at the federal level for PFAS. It was clear long ago that the EPA’s PFAS drinking water standards would include at least PFOA and PFOS, with a likelihood of at least a couple of other PFAS included in any proposed regulation. Now, with the release of the EPA’s proposed drinking water limits for certain PFAS on March 14, 2023, the answers to the basic questions of “how low will the limits be” and “which PFAS will be included” are answered. Understanding what will come next, though, is critical for corporations, insurers, and financial world portfolio risk analysts alike as they begin to assess the enormous financial impact that the finalization of the drinking water rule will have.

EPA’s PFAS Drinking Water Standards

On March 14, 2023, the EPA issued its proposed drinking water standard. While nearly 400 pages, the key takeaways are as follows:

(1) PFOA and PFOS will have an acceptable level of 4 parts per trillion (ppt);

(2) The proposal states that both PFOA and PFOS are presumed to cause cancer, which necessarily means that the EPA assumes that there is no safe level of consumption of drinking water containing PFOA and PFOS. The 4ppt level was set, though, due to the fact that lab testing for PFOA and PFOS at levels below 4ppt becomes harder to do, more costly, and less reliable. So, the EPA seeks to set the enforceable limit at the lowest possible technologically available level to labs of all sizes; and

(3)  PFNA, PFBS, HFPO and PFHxS were also addressed under the proposed rule using the EPA’s Hazard Index approach. EPA explains this approach as follows: “To determine the Hazard Index for these four PFAS, water systems would monitor and compare the amount of each PFAS in drinking water to its associated Health- Based Water Concentration (HBWC), which is the level at which no health effects are expected for that PFAS.
Water systems would add the comparison values for each PFAS contained within the mixture. If the value is greater than 1.0, it would be an exceedance of the proposed Hazard Index MCL for these four PFAS. For ease of use, EPA intends to provide water systems with a web-based form that will automatically calculate the Hazard Index. More information on the Hazard Index, including an example of how to calculate it, can be found in the rule proposal at: www.epa.gov/sdwa/and-polyfluoroalkyl-substances-pfas.”

So What’s Next?

Under the Safe Drinking Water Act, the EPA has 18 months to hold a public comment period, hold meetings to receive additional input on the proposed rule, consider all comments received, and modify the rule, if needed. Once this period passes, the EPA can publish the rule as a final regulation in the Federal Register, although the EPA can do so more quickly if it chooses to. EPA Administrator Regan, in a statement when the proposed rule was released, noted that he intends to have the rule finalized by the end of 2023.

It remains our opinion that the proposed rule will pass and it will become a final rule either in December 2023 or in the first quarter of 2024. Once that occurs, though, expect immediate and numerous lawsuits from various groups challenging the regulation. The arguments that will be put forth will assert that the EPA put politics before science and acted too quickly, that the science does not support the EPA’s drinking water limits, and that the EPA did not consider studies counter to the ones that it cited as reliance material and so it acted arbitrarily and capriciously in putting forth its regulation. These lawsuits will likely delay the full rollout of the regulation, as the challenging parties will surely seek a stay on EPA’s power to enforce the regulation during the pendency of the lawsuits.

PFAS Drinking Water Standards: Impacts on Businesses

Regardless of when the final PFAS drinking water standards come into full force and effect, the financial implications to businesses will be enormous. While many believe that the chemical industry in particular will feel the brunt of the regulations, this view overlooks the significant downstream impact that will be felt in every state in the country by companies that used (not manufactured PFAS).

Under the Safe Drinking Water Act, the EPA has the authority to pursue any party that it feels contributed to pollution of drinking water such that levels of the pollutant exceed the regulatory limits. In states that already have drinking water standards (it should be noted that the EPA’s proposed 4ppt limit is lower than any state limit currently in effect, and so the federal PFAS drinking water standard would trump all state regulations already in effect), companies from many different verticals have already felt the financial impact of PFAS enforcement action. The state-level EPA arms target polluting companies, whether such pollution was intentional or not, and have the power to force the companies to pay for the full cost of remediation. Even relatively simple sites or sources of such PFAS contamination can cost companies hundreds of thousands of dollars in professional remediation costs, with more complex sites often costing several million dollars in remediation costs. While in reality, the EPA or state arms of the EPA can pursue as many responsible parties as it wishes, it often chooses to send enforcement notices to a small handful of companies. With strict liability the standard in most states for such actions and statutes supporting “joint and several liability” (i.e. – any responsible party can be pursued for 100% of costs), this often leads to civil lawsuits among parties to litigate shares of responsibility, which drives up costs even further.

While estimates vary on the total year-over-year impact of the EPA’s PFAS drinking water standards, the midpoint for the estimates seems to be in the high nine figures year over year as the total cost to companies for the foreseeable future.

Conclusion

The writing has been on the wall for the last 18 months with respect to companies needing to ensure that they are prepared for the day when the EPA has final PFAS drinking water standards to use for enforcement action, and the clock is moving into the eleventh hour in terms of time remaining to prepare. Companies absolutely must take steps to ensure that they understand both their current and legacy PFAS pollution risks, they must take a hard look at steps that can be taken today to minimize such risks and get ahead of enforcement action through pro-active actions on properties owned by the company, and they must understand the temperature of the state-level EPA arms in which properties or facilities with risk are situated – i.e., is the local EPA arm an aggressive enforcer? Not aggressive? Is PFAS their top priority? Is their focus elsewhere at the moment?

These and many other complex questions must be addressed now while there is still time to do so.