PFAS CERCLA Designation Hits A Hurdle…For Now

Article By John Gardella

National Law Review

Tuesday, August 23, 2022

Just a week ago, we reported that a significant step forward was taken in the effort to designate certain PFAS as “hazardous substances” under CERCLA when the White House Office of Management and Budget (OMB) approved the EPA’s plan to designate PFOA and PFOA under CERCLA. However, the OMB recently required that the EPA issue a Regulatory Impact Analysis (RIA) prior to issuing a proposed PFAS CERCLA designation, which will require the EPA to provide a cost-benefit analysis report before the proposed regulation can proceed. While this step will likely slow down the EPA’s progress in putting forth a CERCLA designation for certain PFAS, we predict that it will nevertheless not deter the EPA from accomplishing what it set out to do.

Any PFAS designation will have enormous financial impacts on companies with any sort of legacy or current PFOA and PFOS pollution concerns. Corporations, insurers, investment firms, and private equity alike must pay attention to this change in law when considering risk issues.

On January 10, 2022, the EPA submitted a plan for a PFAS Superfund designation to the White House Office of Management and Budget (OMB) when it indicated an intent to designate two legacy PFAS – PFOA and PFOS – as “hazardous substances” under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA, also known as the Superfund law). The EPA previously stated its intent to make the proposed designation by March 2022 when it introduced its PFAS Roadmap in October 2021. Under the Roadmap, the EPA planned to issue its proposed CERCLA designation in the spring of 2022. On August 12, 2022, a CERCLA PFAS designation took a significant step forward when the OMB approved the EPA’s plan for PFOA and PFOS designation. This step opened the door for the EPA to put forth its proposed designation of PFOA and PFOS under CERCLA and engage in the required public comment period.

When OMB initially contemplated approving the EPA’s proposed rule, it designated the rule as “other significant”, which meant that the rule was predicted to have costs or benefits less than $100 million annually. However, the OMB received several pieces of feedback expressing concern that such an estimate fa undervalued the impact that such a designation will have. More specifically, the Chamber of Commerce provided its own estimate that the CERCLA designation would have a cost impact of over $700 million annually. As a result, the OMB changed its designation of the EPA’s propose rule to “economically significant”, which triggered the EPA to have to conduct a RIA prior to proposing the PFAS CERCLA designation. Under the RIA, the EPA will have to provide support for its position that a CERCLA designation is justified to achieve EPA goals and to provide support for the contention that such a designation is the least burdensome and most cost-effective way to achieve the EPA’s goals.

While the RIA requirement will certainly put in jeopardy EPA’s self-set goal of having a final PFAS CERCLA designation published in 2023, our prediction remains that during the Biden Administration, we will see the EPA issue a proposed rule designating PFOA and PFOS as “hazardous substances” under CERCLA.

Opposition to CERCLA Designation

Since the EPA’s submission of its intent to designate PFOA and PFOS as hazardous substance to the OMB, the EPA has been met with industry pushback on the proposal. Three industries met with the OMB earlier in 2022 to explain the enormity of regulatory and cleanup costs that the industries would face with a CERCLA designation of PFOA and PFOS – water utilities, waste management companies, and the International Liquid Terminals Association. These industries in particular are concerned about bearing the burden of enormous cleanup costs for pollution that third parties are responsible for. Industries are urging the OMB and EPA to consider other ways to achieve regulatory and remediation goals aside from a CERCLA designation.

During an April 5, 2022 meeting of the Environmental Council of the States (ECOS), several states also expressed concerns regarding the impact that a CERCLA designation for PFAS types would have in their states and on their constituent