Environmental Protection Agency’s PFAS Enforcement Discretion and Settlement Policy under CERCLA – Summary and Unresolved Questions

This is the second article in Fredrikson’s series of legal updates discussing the effects of EPA’s designation of PFOA and PFOS as hazardous substances under CERCLA. You can access the first article here. Watch for more in the coming weeks.

On May 8, 2024, the U.S. Environmental Protection Agency (EPA) published in the Federal Register the final rule designating perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), including their salts and structural isomers, as “hazardous substances” under section 102(a) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The final rule is effective July 8, 2024. See Fredrikson’s previous summary of the pre-publication version of the rule.

The original proposal to designate PFOA and PFOS as CERCLA hazardous substances raised a great deal of concern among public entities about the possible CERCLA liability they may face from providing public services that use, remove, treat or dispose of these substances. While the final rule does not alter the statutory liabilities these entities could face, EPA simultaneously issued a policy outlining how it would use its CERCLA enforcement discretion and settlement authority to shield those entities as much as possible from CERCLA liability.

General Statements of Policy

The PFAS Discretion Memo (Memo) begins with EPA’s declaration that it will focus its CERCLA enforcement and compliance efforts related to PFAS (in this case, meaning PFOA and PFOS and their salts and structural isomers) contamination on “major [potentially responsible parties],” such as “those who have manufactured PFAS or used PFAS in the manufacturing process and other industrial parties,” and on federal agencies or facilities responsible for PFAS contamination (see Memo, Pages 2 and 3). Conversely, it does not intend to pursue otherwise potentially responsible parties (PRPs) “where equitable factors do not support seeking response actions or costs under CERCLA," (see Memo, Page 3). The Memo concludes with a summary of the equitable factors EPA will consider when choosing to utilize its CERCLA enforcement discretion; the categories of entities EPA has determined will benefit from this discretion, based on the equitable factors; how EPA will use its CERCLA settlement authority to provide further liability protection to those entities; and the limitations and contingencies of its new policy.

Equitable Factors

The PFAS Discretion Memo listed the following factors as those EPA will consider when determining not to pursue an entity for PFAS response actions or costs under CERCLA:

1. Whether the entity is a state, local or Tribal government, or works on behalf of or conducts a service that otherwise would be performed by a state, local or Tribal government.
2. Whether the entity performs a public service role in:
   
   
   1. Providing safe drinking water;
   2. Handling municipal solid waste;
   3. Treating or managing stormwater or wastewater;
   4. Disposing of, arranging for the disposal of or reactivating pollution control residuals (e.g., municipal biosolids and activated carbon filters);
   5. Ensuring beneficial application of products from the wastewater treatment process as a fertilizer substitute or soil conditioner; or
3. Performing emergency fire suppression services. Whether the entity manufactured PFAS or used PFAS as part of an industrial process.
4. Whether, and to what degree, the entity is actively involved in the use, storage, treatment, transport or disposal of PF.

Parties Covered by the Enforcement Discretion Policy

Using the above equitable factors, EPA has already determined it will not pursue PFAS response actions or costs under CERCLA for the following types of parties:

Community water systems and publicly owned treatment works (POTWs)

“Community water systems” are defined under 40 C.F.R. § 141.2 as a public water system that serves at least 15 service connections used by year-round residents or regularly serves at least 25 year-round residents. “POTWs” are treatment works (as defined by Clean Water Act (CWA) section 212) owned by a state or municipality (as defined by CWA section 502(4)). EPA believes these entities warrant protection because they are required to treat PFAS-contaminated sources of drinking water and receive PFAS-contaminated wastewater. As a result, these entities may discharge effluents, leachate, permeate or regeneration brines; dispose or manage sewage sludge, biosolids and drinking water treatment residuals; or arrange for the disposal of spent treatment media that may contain PFAS;

Municipal separate storm sewer systems (MS4s)

EPA realizes, despite the best efforts of MS4 owners and operators to reduce the discharge of pollutants from their sewer systems, illegal dumping and connections may result in illicit discharges of PFAS-contaminated non-stormwater wastes into the MS4;

Publicly owned/operated municipal solid waste landfills

EPA opted to shield these landfills because they may accept solid waste from POTWs that may be contaminated with PFAS, particularly sewage sludge and solid residues resulting from treatment processes and filtration media, such as granular activated carbon filters;

Publicly owned airports and local fire departments

EPA extended discretion protection to airports and fire departments because many are required by Federal Aviation Administration regulations to store and use aqueous film forming foam (AFFF) to address fire emergencies and because, in the past, they have used AFFF during fire emergencies and training exercises;

Farms where biosolids are applied to the land

Farms routinely apply POTW-generated biosolids to their lands. EPA recognizes such land applications can result in both economic and resource management benefits, but also that these biosolids may also contain PFAS; and

Other entities determined under the Equitable Factors to warrant the application of enforcement discretion.

Additional Protection via Settlements

EPA acknowledges its decision to exercise its own enforcement discretion under CERCLA section 122(a) does not protect the above entities from being subject to, e.g., contribution claims brought by other PRPs under CERCLA section 113(f)(2). Thus, EPA offers two ways to provide eligible entities from such litigation threats using its powers under CERCLA.

First, EPA may protect certain non-settling parties when EPA enters settlement agreements with major PRPs. For example, if EPA settles with a PFAS manufacturer, it may secure a waiver of rights providing the PFAS manufacturer cannot pursue contribution against certain non-settling parties, thereby precluding a contribution claim from the major PRP against the non-settling party.

Second, EPA may enter into settlement agreements with the above-referenced parties itself. A party that resolves its liability through a CERCLA settlement with EPA will not be liable for third-party contribution claims related to the matters addressed in the settlement, which could minimize litigation costs and discourage third-party litigation. Some of these parties may even qualify for de minimis or de micromis settlements under the terms of EPA’s 2002 enforcement discretion/settlement policy.

Limitations of and Contingencies in the Discretion Policy

EPA noted the policy summarized in the Memo does not relieve even the targeted entities from all obligations stemming from the addition of PFOA and PFOS to the list of CERCLA hazardous substances. For instance, the policy does not exempt these entities from reporting PFAS releases under CERCLA, such as the obligation to report releases of these PFAS substances under CERCLA sections 103 and 111(g), section 304 of the Emergency Planning and Community Right-to-Know Act (EPCRA) and regulations promulgated under them. It also does not limit EPA’s ability to take enforcement actions or pursue costs from even the entities listed above if their (in)actions significantly contribute to, or exacerbate the spread of, significant quantities of PFAS contamination. Nothing in the new policy relieves federal agencies, such as the Departments of Defense and Energy, from liability or responsibilities under CERCLA. EPA will continue to refuse to provide “no action assurances” outside the framework of legal settlements. Lastly, the new policy is not a regulation nor does it create “new legal obligations or limit or expand obligations under any federal, state, Tribal or local law”; it is intended solely for the guidance of EPA’s employees (see Memo, Page 10).

Unresolved Questions

As is the case whenever EPA issues a new unpromulgated policy, parties who may be affected by this new policy will need to monitor its application in the months and years to come to see how its application develops and whether additional guidance becomes necessary to address questions left open by the policy. For instance, the Memo notes that even the entities granted enforcement discretion may still be subject to enforcement and cost liabilities if they contribute to or exacerbate the spread of significant quantities of PFAS contamination. This raises a number of questions, such as how much more PFOA- or PFOS-laden biosolids farmers may continue to accept, now that those substances are classified as CERCLA hazardous substances, before they lose the protections afforded under the new policy. Similarly, what obligations do otherwise-protected POTWs have to require that entities discharging PFAS to the POTW manage the levels of PFAS they discharge to the POTW for treatment to ensure the POTW is not “contributing to or exacerbating” the presence of PFAS contamination in landfills to which it sends its spent treatment media or in the biosolids its sends to farms for spreading?

Fredrikson’s Environmental Law Group is at the forefront of tracking and anticipating developments in PFAS regulations and liabilities, at both the state and federal level, across a wide range of areas, including remediation, product stewardship, solid and hazardous waste disposal, water discharges and air emissions. We advise and assist clients on PFAS compliance issues through seminars, legal updates and informal discussions. The team brings decades of experience in environmental law in a variety of contexts and across a broad scope of industries and includes members with backgrounds in government service and public policy, environmental consulting and as in-house counsel.