• U.S. EPA has designated two PFAS compounds—PFOA and PFOS—as hazardous substances under CERCLA (commonly known as Superfund).
• A memorandum accompanying the designation explained that the EPA will use its discretion to not enforce the designation against certain public agencies like community water systems, publicly owned treatment works, and landfills.
• But the designation could impose on those agencies—and all other potentially responsible parties—strict liability for certain costs to clean up and remove PFOA and PFOS contamination.
• The designation means that Phase I environmental site assessments for real estate transactions must consider PFOA and PFOS.

On April 19, the U.S. Environmental Protection Agency (EPA) designated perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS) as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or Superfund. These are just two of the many per- and polyfluoroalkyl substances (PFAS) currently under scrutiny.

For any property at which “hazardous substances” are released into the environment, CERCLA requires that current or past owners or operators investigate and remediate or remove the contamination. The duty to investigate and remediate the contamination applies in part to owners and operators regardless of fault. Even if someone else caused the contamination, a party’s mere ownership of a facility could impose on it strict liability to clean up the hazardous substances. So in designating PFOA and PFOS as hazardous substances, CERCLA now requires that owners and operators clean up PFOA or PFOS contamination on their properties.

As EPA’s designation explains, PFOA and PFOS were historically used in a wide range of consumer products including carpets, clothing, fabrics for furniture, packaging for food and cookware, firefighting foam, and a wide range of other industrial processes. So the risk of potential contamination to various types of properties is similarly wide ranging. That risk extends not only to properties at which there were industrial operations, but also to wastewater treatment operations that may have incidentally received influent containing PFOA and PFOS from industrial dischargers. In response to concerns that public agencies have raised over the EPA imposing on them strict liability for cleaning up that contamination, the EPA also released an enforcement discretion memorandum explaining that it “does not intend to pursue entities where equitable factors do not support seeking responsive actions or costs.” The memorandum provides a non-exhaustive list of entities from whom it does not intend to pursue cleanup liability:

• community water systems and 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.

That enforcement discretion memorandum, however, does not affect these entities’ strict liability under the statute. Therefore, those entities technically remain liable for cleanup costs. Though the EPA may not pursue cleanup costs or cleanup actions against, say, a municipal solid waste landfill, a private party that incurred certain costs cleaning up the contamination may sue the municipality to recover a share of those cleanup costs. Without a legislative fix from Congress, the assurances that the EPA’s memorandum offers therefore are limited.

The designation also affects the scope of Phase I environmental site assessments. While CERCLA imposes strict liability on current owners of properties at which there was a release of hazardous substances, an innocent owner may enjoy certain protections from liability if at the time it purchased the property it performed “all appropriate inquiries.” The “all appropriate inquiries” rule requires, in part, that the prospective buyer perform an adequate Phase I environmental site assessment to determine whether there was a release of hazardous substances. Designating PFOA and PFOS as “hazardous substances” means that Phase I environmental site assessments should now include within their scope an evaluation of the potential presence of both PFOA and PFOS.

The EPA’s designation is yet another step taken to increase federal regulation of PFAS. As we have previously reported, the EPA has proposed a rule adding nine PFAS chemicals to the Resource Conservation and Recovery Act’s list of hazardous constituents. Most recently, the EPA adopted new drinking water limits for PFAS that will lead to new monitoring, reporting, and treatment requirements for public water systems. These recent PFAS updates further reflect the complex and developing regulatory landscape for which property owners, especially commercial and industrial owners as well as public water suppliers, wastewater treatment operators, and growers should remain aware.