Per- and polyfluoroalkyl substances (PFAS), often referred to as "forever chemicals" because of their strong chemical makeup and persistence in the environment, have recently been the subject of regulatory actions by the Environmental Protection Agency (EPA). As a result, businesses must now consider the implications of PFAS not only from an ongoing compliance standpoint but also in transactions. PFAS can be present in everything from household products and food packaging to fire extinguishing foam and in manufacturing processes such as chrome plating, electronics, and certain textile, carpet, and paper manufacturing.
U.S. EPA Adoption of New ASTM Standard
On December 15, 2022, the U.S. EPA published a final rule establishing the American Society for Testing and Materials (ASTM) 1527-21 Standard Practice for Phase I Environmental Site Assessments (Phase I's) as the new standard for Phase I environmental assessments. Beginning February 13, 2023, Phase I’s must meet the standards set forth in ASTM 1527-21 in order to comply with the "all appropriate inquires" (AAI) rule under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA). The existing standard, ASTM 1527-13 will no longer be a recognized method of AAI compliance as of December 15, 2023. Compliance with AAI is a prerequisite to certain liability protections afforded under CERCLA as an Innocent Purchaser, Bona Fide Prospective Purchaser, or Contiguous Landowner.
ASTM 1527-21 includes several significant updates and clarifications from the ASTM 1527-13 standards, including revised definitions and requirements associated with Recognized Environmental Conditions (RECs), reporting data gaps, clarifications on continued viability for Phase I reports, and clarification of requirements for reporting on emerging contaminants including for PFAS.
The ASTM 1527-21 standard clarifies in a footnote how Phase I’s should address PFAS and other emerging contaminants. The new standard does not affirmatively require such contaminants to be addressed in Phase I reports unless and until the emerging contaminants at issue are designated CERCLA hazardous substances by the EPA. Until that time, PFAS are to be treated as a "non-scope consideration," though not as a REC.
However, given the increasing regulatory concerns regarding PFAS, potential purchasers and lessees of a property should seriously consider evaluating the possibility of PFAS contamination on the property regardless of how the ASTM standard addresses PFAS. Recent legislative and regulatory trends suggest that certain PFAS chemicals may soon be considered hazardous substances under CERCLA. On August 26, 2022, the EPA proposed to designate Perfluorooctanoic Acid (PFOA) and Perfluorooctanesulfonic Acid (PFOS) as hazardous substances under CERCLA. The new approach to emerging contaminants in the ASTM standard is just one of many signals of the expansion in cleanup liability with respect to PFAS.
Proposed New Rules on PFAS-Related Reporting and Notifications
In addition to the emergence of PFAS as a potential part of Phase I assessments in transactions, manufacturers, importers, and other businesses should be aware of certain advances in the regulatory directives set forth in the EPA’s PFAS Strategic Roadmap. The first area of potential new rules related to PFAS involves reporting and notification requirements under the Toxic Substances Control Act (TSCA). In June of this year, U.S. EPA proposed a new reporting and recordkeeping rule under TSCA, which would require all U.S. manufacturers and importers of PFAS to respond to a one-time reporting requirement that would seek detailed information on all PFAS-containing materials made or imported since January 1, 2011. Since the introduction of the proposal, there has been an outcry in the business community at the significant underestimation by the EPA of the costs of compliance for small businesses under this rule, leading to an updated analysis and request for comment that ended on December 27th. While the final rule was expected to be published no later than January 1, 2023, the revised analysis has delayed that publication date. However, once finalized, the submission period for reports would begin six months from the effective date of the final rule, so businesses potentially affected should stay vigilant.
Additionally, on December 2nd, the EPA proposed what are known as “significant new use rules” (SNUR) under TSCA for chemical substances, including 35 different PFAS substances, that were the subject of premanufacture notices. Essentially, these SNURS would require persons who intend to manufacture (or import) or process any of these PFAS substances to notify the EPA at least 90 days before commencing that activity, initiating a period of evaluation by the EPA of the use of that substance. The public comment period for this proposed rule ends January 3, 2023.
Finally, another rule was proposed by U.S. EPA on December 5th that would change the reporting obligations on PFAS to the Toxic Releases Inventory (TRI). The TRI tracks the management of certain toxic chemicals that may pose a threat to human health and the environment. Among the changes is the proposed elimination of an exemption that allows facilities to avoid reporting information on PFAS when those chemicals are used in small, or de minimis, concentrations.
Those potentially affected by PFAS regulation should anticipate 2023 to be another eventful year. If your business has any questions or concerns over the emerging role of PFAS review in transactions or the potential compliance and reporting requirements imposed or on the horizon, please contact your team of Calfee environmental attorneys.