In 2021 the Environmental Protection Agency (ā€œEPAā€) issued its strategic roadmap to address a broad group of thousands of manmade chemicals known as per- and polyfluoroalkyl substances (ā€œPFASā€), pledging to use ā€œevery tool in the toolboxā€ to address the chemicals. So far in 2024, EPA has taken a number of steps to execute on the goals of its 2021 roadmap. Among those steps were finalizing designation of certain PFAS as ā€œhazardous substances,ā€ finalizing standards for a number of PFAS in drinking water, issuing interim guidance for PFAS disposal methods, and proposing a rule for defining certain PFAS as ā€œhazardous constituentsā€.  The breadth of EPAā€™s rules and guidance is far reaching as the manufacture and use of PFAS are not limited to small or discrete sectors of regulated industry, rather PFAS have been used in a wide variety of industries. The imposition of restrictions and limits on PFAS are likely to have broad implications for manufacturers all along the supply chain.

Two PFAS Chemicals Designated as Hazardous Substances Under CERCLA

In April 2024, the EPA issued a designating two PFAS, perfluorooctanoic acid (ā€œPFOAā€) and perfluorooctanesulfonic acid (ā€œPFOSā€), as ā€œhazardous substancesā€ under the Comprehensive Environmental Response, Compensation, and Liability Act (ā€œCERCLAā€). Industry groups have filed challenges to portions of the rule which are currently pending in court; however, the rule went into effect on July 8, 2024 as those challenges proceed.

Designating PFOA and PFOS as hazardous substances triggers numerous requirements.  The primary impact of the rule is that it incorporates PFOS and PFOA into CERCLAā€™s strict, joint and several liability framework. This change grants EPA the power to investigate releases of PFOA and PFOS and compel potentially responsible parties (ā€œPRPsā€), including owners and operators of a property or facility, to remediate releases of PFOA and PFOS through the specific CERCLA enforcement provisions. This could lead to large costs for manufacturers tasked with cleaning up existing and historic sites. Private parties may now also take action under CERCLA to pursue cost recovery and contribution actions.

In addition, there are new immediate reporting requirements if PFOS or PFOA releases from a facility exceed a designated ā€œreportable quantityā€ (one pound within 24 hours). If the release exceeds this quantity, the responsible party must report to the National Response Center and relevant state or tribal authorities. Also, because many states include CERCLA hazardous substances under their cleanup statutes, designating PFOA and PFOS as hazardous substances may provide states the authority to require remediation under their own individual state laws.

Finally, the designation of PFOA and PFOS under CERCLA requires the U.S. Department of Transportation to classify these substances as hazardous materials for purposes of transport under the Hazardous Materials Regulations. Overall, the rule will likely have significant implications for closed and current remediation sites as well as regulated partiesā€™ current release reporting procedures and policies and transportation requirements.

EPA Issues Regulation Addressing PFAS Contamination in Public Water Systems

In April 2024, EPA also its first national drinking water regulation to limit PFAS contamination in drinking water. The rule establishes enforceable Maximum Contaminant Levels (ā€œMCLsā€) for six PFAS[1] that have been identified in drinking water. The rule sets the MCL for the specific set of PFAS at 4 nanograms per liter or parts per trillion (ā€œpptā€) for PFOS and PFOA and includes 10 ppt for four additional PFAS compounds.

The immediate impact of the rule is that public water systems must test and monitor for the identified PFAS by 2027. The regulation requires public water systems to release public information on PFAS levels in drinking water beginning in 2027. Additionally, public water systems have until 2029 to decrease PFAS levels if monitoring shows the levels exceed the applicable MCL. Beginning in 2029, public water systems must remediate PFAS contamination if they are in violation of one or more of the established MCLs and the system must provide notification to the public of such a violation.

In the short term, these standards will set compliance obligations and impose significant costs on public drinking water utilities.  In the longer term, the new standards may create a basis for states or EPA to attempt to establish very conservative maximum PFAS concentrations for discharges that have the potential to impact drinking water sources, including groundwater and surface water discharge standards, which will in turn impact facility stormwater and wastewater permitting.

EPA Issues Interim Guidance on the Destruction and Disposal of PFAS and PFAS-Containing Materials

On April 8, 2024, EPA issued on the destruction and disposal of PFAS and PFAS-containing materials. This guidance is the second of its type, as EPA issued an in 2020 as required by the National Defense Authorization Act (ā€œNDAAā€). The NDAA directs EPA to address the storage, disposal, and destruction of PFAS and PFAS-containing materials and requires EPA to review and update its guidance periodically. The new guidance retains three established technologies from the 2020 initial guidance that can destroy PFAS or control PFAS release into the environment: thermal destruction (high heat treatment), landfilling, and underground deep well injection. The guidance raises associated uncertainties and key data gaps that EPA has indicated require additional research and evaluation.  

The guidance aims to provide decision-makers with information allowing for identification of the most effective destruction, disposal, or storage method of PFAS-containing materials and waste. EPA does not make recommendations but urges decision-makers to consider all available factors and data to minimize PFAS release and contamination in the destruction and/or disposal process. Included in the guidance are modern technology evaluation frameworks allowing decision-makers to assess emerging innovative destruction and disposal methods. Overall, the guidance acts as a reference point and encourages decision-makers to prioritize disposal, destruction or storage methods that have a low potential for PFAS release into the environment, but this second interim guidance continues to leave open EPAā€™s specific position on the preferred disposal methods pending additional research.  As a result, regulated parties are still generally on their own in predicting and evaluating the potential risks associated with a particular disposal method for PFAS and PFAS-containing materials.

EPA Proposal Seeks to Regulate Nine PFAS as Hazardous Constituents under RCRA

On February 8, 2024, EPA published two proposed rules designed to provide EPA enforcement power to clean up PFAS contamination under the Resource Conservation and Recovery Act (ā€œRCRAā€). These rules, if adopted, would list nine PFAS[2] as ā€œhazardous constituentsā€ under RCRA.

If finalized, the rules will expand EPAā€™s ability to require PFAS cleanup at sites that are subject to RCRA jurisdiction. While listing the nine specific PFAS as ā€œhazardous constituentsā€ does not make these specific PFAS ā€œhazardous wastesā€ under RCRA, EPA may use this ā€œhazardous constituentsā€ designation to support a later ā€œhazardous wasteā€ classification. Even though the proposal does not classify the specified PFAS as hazardous waste, the rule would still allow EPA to require cleanup under the RCRA corrective action requirements.

The second proposal issued would broaden the definition of ā€œhazardous wasteā€ during cleanups at waste facilities. According to EPA, this proposed rule would harmonize the regulations with the statutory definition of ā€œhazardous waste.ā€ If this rule is adopted, there could be stricter and potentially more expensive cleanup requirements for PFAS and other emerging contaminants at RCRA corrective action sites. These proposed rules would expand the cleanup obligations at existing sites managed under RCRA corrective action orders and provide the EPA authority to issue new corrective action orders to address these nine PFAS or any emerging contaminants.

Looking Forward

The rules and guidance previewed above are just a handful of the actions EPA has taken to date to address PFAS and we expect additional proposals to continue to be developed and implemented. In addition to its 2021 strategic roadmap, EPA has made PFAS an enumerated initiative in its National Enforcement and Compliance Initiatives for the 2024 to 2027 review cycle.  We anticipate that EPA will continue to issue specific proposals aimed at PFAS in addition to pursuing cleanup actions and enforcement under its newly finalized rules.  The scope of these rules and proposals not only affect historic and current cleanup sites, but also the transport and release of PFAS from current facilities, which will have broad implications for manufacturers throughout the supply chain.

Special thanks to Noah Koleske, a summer associate in Ā鶹ֱ²„’s Milwaukee office, for his contributions to this article.

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2024 Manufacturing Manual

As you navigate the rapidly-evolving manufacturing landscape, the pace of change ā€“ from digital disruption to supply chain resiliency to the ubiquity of AI ā€“ has never been greater. In Ā鶹ֱ²„ā€™s 2024 Manufacturing Manual, authors from diverse practices and perspectives will release weekly articles that provide a comprehensive ā€œend-to-endā€ analysis of the manufacturing industryā€™s legal landscape. Our passion is empowering manufacturers to navigate a rapidly changing world with confidence and agility by providing the knowledge, insights, and legal strategies you need to flourish. We hope this Manufacturing Manual helps you unlock new opportunities for growth, innovation, and success.

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[1] The specific PFAS include five individual PFAS: PFOA, PFOS, PFNA, PFHxS, and HFPO-DA. Further, the EPA is including a mixture of two or more of four PFAS: PFNA, PFHxS, HFPO-DA, and PFBS.

[2] The nine specific PFAS proposed for listing are: (1) PFOA, (2) PFOS, (3) PFBS, (4) HFPO-DA or GenX, (5) PFNA, (6), PFHxS, (7) PFDA, (8) PFHxA, and (9), PFBA.

With sustainability increasingly being folded into corporate strategy, supply chain transparency and accountability are front of mind topics. Suppliers and vendors are critical partners in day-to-day operations, and their sustainability, sourcing, and sub suppliers play a significant role in a companyā€™s overarching sustainability and social assessment. The expanding importance of environmental and social reporting means that companies should ensure they have both the capabilities to monitor compliance and ensure accountability, and the contractual and legal rights to demand it from their suppliers. The days of relying on representations and warranties to ensure supply chain compliance may be fading away in favor of supplementing these terms with more complicated audit and reporting contractual obligations. These terms provide companies varying levels of access and visibility into suppliers while balancing the need to protect the suppliersā€™ confidential and proprietary information.  

The need for supply chain transparency and modernized contracts is highlighted by the proliferation of approved and proposed regulatory frameworks governing supply chain. From forced labor regulations to proposed due diligence directives, companies should be updating standard contract terms now to account for the supply chain transparency, accountability, and reporting obligations of the future. This may include everything from access to physical operations for labor related audits to disclosing information on sustainable sourcing. Evolution of operations, processes, and products is also likely to lead to evolution of the types and locations of suppliers. This, in turn, will create new needs at companies to set up the internal and external systems for supply chain monitoring and compliance within those geographies and industries.   

The United Nations previously published a to assist companies in auditing and improving their supply chains. The guidance emphasizes practices that companies may already implement, including defining expectations and monitoring compliance in their supply chains.  Companies can also audit and review their standard contracts to determine which provisions they can leverage for reporting and monitoring, and which terms will need to be updated to account for their evolving supply chain transparency needs. 

The wait will continue for Wisconsin per- and polyfluoroalkyl substances (PFAS) enforcement standards for groundwater. Last week the Wisconsin Department of Natural Resources (DNR) formally halted its efforts to adopt PFAS groundwater standards due to the significant projected enforcement and compliance costs associated with the standards.

PFAS are nicknamed ā€œforever chemicalsā€ because they do not break down in the environment and comprise a diverse group of many man-made chemicals that have been used in commercial products and industrial processes worldwide since the 1940s.

Last fall, the DNR initiated a rulemaking process to enact groundwater standards of four PFAS (after the U.S. Environmental Protection Agency issued health advisories for these same substances).[1] Anticipated costs are to blame for stopping the process. The estimated implementation and compliance costs of the DNRā€™s proposed standards would total over $33 million in the first two years. This estimate exceeds the $10 million agency rulemaking threshold.

As a consequence, the DNR now needs approval from the Wisconsin Legislature in order to continue. Specifically, the Wisconsin Legislature must enact a law authorizing the DNR to resume its rulemaking process. Until then, the draft standards are shelved.[2]

What does this mean for industry? While PFAS groundwater standards are likely on the horizon, they will not be here as soon as expected. In fact, they may not become effective until 2025 (or later) in light of this delay. Industry should use this time wisely to audit their PFAS risks and prepare their operations, products, and permitting for groundwater enforcement standards.

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[1] The DNRā€™s proposed rule would set groundwater enforcement standards of 20 parts per trillion (ppt) for PFOA and PFOS; 300 ppt for HFPO-DA; and 450 parts per billion for PFBS. To compare, the EPAā€™s proposed national primary drinking water regulations include enforcement levels of 4 ppt for PFOA and PFOS as individual contaminants, while including HFPO-DA and PFBS in a standard set for a combined group of PFAS. Per- and Polyfluoroalkyl Substances (PFAS): Proposed PFAS National Primary Drinking Water Regulation, Envā€™t Prot. Agency, https://www.epa.gov/sdwa/and-polyfluoroalkyl-substances-pfas.

[2] Wis. St. Ā§ 227.139(1) (2017).

Companies operating in the food and beverage industry are dealing with PFAS-related issues on a daily basis. So far, twelve states have passed legislation regulating PFAS, and each of those twelve states explicitly targets the food industry.¹ On the federal level, the Environmental Protection Agency issued a final rule restricting the use of certain long-chain PFAS in food packaging. The same is true in PFAS litigationā€”the plaintiffsā€™ bar has asserted PFAS-based fraud and misrepresentation claims against a number of food and beverage manufacturers and packagers. 

This is the tip of the iceberg when it comes to PFAS liability as litigation and regulations are just starting to gain momentum. More is certainly to come. As companies brace for the true impact of PFAS on their bottom lines, what can they do today to mitigate risk tomorrow?

Evaluating Your Insurance Policies: Past, Present, and Future

Obviously, companies should review and comply with existing PFAS regulations and keep a close eye on draft and proposed rules as well as pending legislation. But beyond that, now is a great time for food and beverage companies to evaluate their insurance policies. Commercial general liability (CGL) policies often cover regulatory and third-party private actions, including bodily injury and property damage claims. Companies should work with their insurance brokers and, as appropriate, their outside counsel to assess whether fraud and misrepresentation claims (which are appearing with increasing frequency in plaintiff suits) will fall outside the scope of their policies. Also, since the 1980s, many CGL policies include an absolute exclusion for pollution. Such an exclusion could be determinative of whether any PFAS-related claims will be covered by insurance, though analysis of the language of the policy and of the few cases to date to interpret insurance coverage for PFAS matters will be helpful. While CGL policies may not provide coverage for these types of claims, it is also worth evaluating whether directors and officers (D&O) or errors and omissions (E&O) insurance policies may provide any coverage related to these potential claims.

Remember to review past insurance policies, too. That is because for many policies, the accrual of a claimā€”when the injury or damage occurredā€”typically dictates which insurance policy applies to a particular claim. PFAS compounds have been used since the 1940s, and it is likely that a claim filed tomorrow may relate back to occurrences from decades ago. Now would be a good time to contact your insurance broker ā€“ or locate past brokers ā€“ to collect historic insurance policies dating as far as back as the 1940s (where applicable).PFAS coverage should be front of mind when assessing your companiesā€™ next policy strategy as well. While some claims may have accrued decades ago, othersā€”like food packaging claimsā€”are more likely to accrue in the present or future.

PFAS coverage deserves significant consideration during renewal negotiations and should be evaluated not only in terms of a potential pollution exclusion, but also in terms of the accrual date of claims as well as the spectrum of claims that could be asserted. These questions may counsel soliciting other insurance coverage, depending on your companyā€™s anticipated PFAS risk exposure.

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¹ See, e.g., NY SS 8817 (banning the distribution and sale of food packaging containing intentionally added PFAS); see also CA AB-1200 (prohibiting the distribution, sale, or offering of any food packaging that contains PFAS either intentionally added or at or above 100 ppm).