Navigating PFAS Risk and its Persistent Impact on Emerging Laws and Liability

PFAS, or per- and polyfluoroalkyl compounds, long the province of white-coats, has entered the cultural zone of interest, not to mention the courts, the halls of Congress and state legislatures, seemingly every regulatory body, and more boardrooms than you can count.

In this article, we endeavor to explain what PFAS are, tell the tale of growing awareness blossoming into maturing litigation, explain the current state of key lawmaking and regulation as it pertains to the water industry particularly, and identify developments we see on the horizon. The goal is that we, as attorneys representing clients in infrastructure, may be better able to advise toward mitigating risk and complying with emerging laws regarding PFAS.

A Chemical That Forever Changed the Landscape

Shortly after World War II ended, in 1947, 3M invented and began manufacturing perfluorooctanoic acid (PFOA), one on the most well-known members of the PFAS family. Just four years later, DuPont began using PFOA to make Teflon, the familiar brand often associated with its use as a coating on cookware or as a soil and stain repellent for fabrics and textile products. Then, in a twist of luck, or rather misfortune in retrospect, a 3M employee spilled the newly discovered perfluorooctane sulfonic acid (PFOS) on a shoe, and upon seeing it repel oil and water, voilà!, Scotchgard had arrived. By the 1960s, PFOA and PFOS were widely used, and 3M and the US Navy had developed Aqueous Film-Forming Foam (AFFF), which used a unique blend of these PFAS chemicals and water to create a foam that could blanket a liquid fuel fire and suffocate it. Unsurprisingly, AFFF became ubiquitous at airports and military bases in the following years. Undoubtedly, many PFAS chemicals found significant success because of their efficacy in a large variety of commercial uses.

Unfortunately, signs began to surface that gave rise to concerns about environmental and health impacts due to PFAS exposure. The thing that made PFAS so effective—its durability and long-lasting nature—also made it a potential danger. Studies have shown that because PFAS chemicals break down extremely slowly, they can accumulate in people, animals, and the environment.

And this is precisely what Wilbur Tennant discovered in his cattle in the 1990s. Mr. Tennant was a farmer in West Virginia whose property contained a creek that ran next to an unlined landfill in which DuPont had discharged thousands of tons of sludge containing PFOA since the 1980s. When Mr. Tennant noticed the creek was turning frothy, his cattle were dying, and his family was getting sick, he decided to file a lawsuit in 1999 in the US District Court for the Southern District of West Virginia against DuPont, alleging the conditions were the fault of DuPont.

Mr. Tennant was not alone. His lawsuit turned into a class action case that DuPont eventually settled, and, in the process, DuPont agreed to fund an independent science panel to study the possible links between PFOA exposure and certain health risks.

In 2012, the independent science panel funded by the DuPont settlement released its findings, demonstrating that PFOA exposure in drinking water was linked to an increased risk of developing kidney cancer, testicular cancer, thyroid disease, high cholesterol, ulcerative colitis, and preeclampsia. A rush to the courts ensued. Shortly after these findings were released, thousands of personal injury cases were filed, leading to a multidistrict litigation (MDL) that DuPont eventually settled in 2017 for $671 million.

Around 2016, litigation, which had historically focused more on alleged improper disposal, zeroed in on a product: the Aqueous Film Forming Foam (AFFF) used to fight fires at airports around the country which allegedly resulted in contamination of thousands of water sources. Thousands of lawsuits were consolidated into an MDL in the US District Court for the District of South Carolina. The MDL contains three species of claims: claims by water utilities for remediation and testing damages, claims by individuals alleging medical harm from AFFF, and claims by state attorneys general, for resource contamination.

Meanwhile, during Mr. Tennant’s original lawsuit against DuPont, his lawyer, Robert Bilott, sent a letter in 2001 to the US Environmental Protection Agency (EPA), warning of the dangers of PFAS chemicals. Under the Toxic Substances Control Act, any manufacturer that found evidence of a substantial risk to human health of the environment from toxic chemicals was required to report it to the EPA for testing. Prior to Mr. Bilott’s letter in 2001, the EPA had no notice of the potential dangers of PFAS. As a result, after Mr. Bilott sent his letter, the EPA sued both DuPont and 3M for allegedly withholding information about a substantial risk to human health and the environment; both companies chose to settle with the EPA.

Regulatorily Speaking, What Is Allowable?

In 2009, the EPA published a provisional health advisory (PHA) level for PFOA at 400 parts per trillion (ppt) and for PFOS at 200 ppt. Noting that the science had evolved since the 2009 PHA, though, in 2016 the EPA published a new PHA, stating that, individually or combined, the level of PFOS and PFOA should be no more than 70 ppt.

Despite the continued research and PHA issuances, prior to 2023, the EPA had still not established a National Primary Drinking Water Regulation (NPDWR) as required by the Safe Drinking Water Act (SDWA). That all changed last year when, on March 14, 2023, the EPA announced the proposed NPDWR to set legally enforceable levels, known as maximum contaminant levels (MCLs), for six PFAS, including family members PFOA, PFOS, PFHxS, PFNA, PFBS, and HFPO-DA (the latter commonly referred to as GenX chemicals). The public comment period for EPA’s proposed NPDWR ended May 30, 2023, receiving over 120,000 public comments. EPA submitted the final NPDWR for interagency review in winter of 2023. On April 10, 2024, EPA announced the final rule. Public water systems have five years to comply with these MCLs, with certain monitoring and disclosure requirements beginning in 2027.

The levels in the final NPDWR are striking: For PFOA and PFOS, the MCL is 4 ppt. In this realm of brain-eluding measurements, the common analogy is four drops of water in an Olympic-sized swimming pool. We prefer the ratio analogy of one second per 8,000 years. The EPA’s goal is actually 0 ppt, but bending to the limits of contemporary science, the MCL of 4ppt was set at the current limits of detection. For PFHxS, PFNA, and HFPO-DA, the MCL is 10 ppt. And for combinations of certain specified PFAS substances, including PFBS, the rule employs a formula—a Hazard Index—to combine their relative weighted presence, still in the realm of parts per trillion.

Who Pays for Settlements and Compliance?

That compliance will come at a substantial cost. Although EPA has estimated the cost of compliance at approximately $1 billion annually, the American Water Works Association, based on technical analysis by Black & Veatch, estimates water utilities will need to invest more than $50 billion over the coming decades, with an annualized cost at about four times the EPA’s estimate. Some studies double that amount if future regulations require water utilities to dispose of removed PFAS (often embedded in treatment media) as a hazardous substance under CERCLA.

All things being equal, these costs would ultimately be borne by ratepayers. As it happens, a variety of actual and potential funding sources will cover some, but probably not all, of the expense of the water industry’s compliance with the new PFAS NPDWR.

One that has caught a lot of national attention is the settlement in the MDL in South Carolina involving defendants 3M and DuPont, among others. In June 2023, shortly before bellwether trials were to begin, DuPont and 3M announced proposed settlements to resolve the water utility category of claims pending in the MDL. Under the terms of the settlements, DuPont agreed to pay water providers approximately $1.2 billion and 3M up to approximately $12.5 billion. While some eligible claimants opted out of the settlement class in order to preserve the option of bringing future claims against the defendants, many more class members remained in and will soon begin receiving settlement funds to help pay for capital and operating costs associated with PFAS treatment. While these settlements are substantial and will provide immediate relief to many water providers (and help mitigate impacts to ratepayers), they are a small fraction of the total costs water providers nationwide will incur to comply with the new EPA limits.

Another source of funding is and will likely continue to be various federal and state legislative actions. The Bipartisan Infrastructure Deal, signed into law in November 2021, includes $10 billion to address emerging contaminants, including $5 billion to help small and disadvantaged communities to address PFAS in drinking water, $4 billion to help drinking water utilities remove PFAS from drinking water supplies, and $1 billion to help wastewater utilities mitigate PFAS in wastewater discharges. These funds are accessed in various ways, with much coming through state revolving loan funds and some through grants.

Recently introduced bipartisan legislation would allow states flexibility to use funding from the $5 billion earmarked for small and disadvantaged communities to help assist private well owners in removing PFAS from their drinking water.

Several states, too, have appropriated funds to address PFAS in drinking water. For example, the Wisconsin legislature made $125 million available to combat PFAS, but getting this money from the budget to the entities in need has proved challenging. In Wisconsin 2023 Senate Bill 312, the legislature proposed enabling the Wisconsin Department of Natural Resources to create a number of programs to provide grant money to municipalities, landowners, and other individuals for PFAS testing, treatment, and reimbursements. However, the bill did not make specific provisions for applying the $125 million to these grants and has faced pushback for an alleged “poison pill” provision that could allow polluters to go unpunished. The bill was vetoed by the governor on April 9, 2024. Bills like these have stagnated in states across the nation, with lobbyists on both sides pushing back on provisions they find objectionable.

Yet these federal and state appropriations, combined with funds available through litigation settlements to date, still leave a substantial funding gap for nationwide compliance with the new NPDWR limits. Some of this gap may be closed by future appropriations and future litigation (the hope of many utilities that have opted out of the recent 3M and DuPont settlements, and many state AGs who continue to bring lawsuits against PFAS producers), but no doubt much will be borne by ratepayers.

“Passive” PFAS Receivers or Handlers and Liability

A major source of concern for water and wastewater utilities, and other enterprises whose workflows may passively receive PFAS that they did not create or intentionally use, is the specter of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund, liability. Under CERCLA, EPA may identify sites contaminated with hazardous substances and compel those responsible to clean up the sites or pay for the cleanup. This could include current and former owners or operators of sites where hazardous substances were released or disposed of, as well as those who transported or disposed of those substances.

On April 19, 2024, EPA finalized a rule that designates two of the primary PFAS substances as “hazardous substances” under CERCLA. A major concern of entities that have “passively” handled or disposed of designated PFAS, such as water and wastewater utilities, landfills, recycling companies, farmers who applied biosolids, and others, is that they may be saddled with massive cleanup liability under CERCLA. During the public comment period, numerous players in the water and wastewater industries, and other “passive receivers” of PFAS substances, urged that the final rules should exempt their industries. These sectors argued that liability should attach to the chemical sources of PFAS, but not to those who were passive conduits of PFAS and whose ratepayers and customers, ultimately, would pay the costs of CERCLA liability.

While the final rule did not contain such exemptions, EPA has published a PFAS Enforcement Discretion and Settlement Policy Under CERCLA (Enforcement Discretion Policy), signaling it intends to use its enforcement discretion to particularly target entities that caused PFAS releases, such as manufacturing and industrial facilities, and to not prioritize enforcement against passive receivers such as certain water and wastewater utilities, farmers, municipal airports, and others. Yet many of these passive receivers argue that enforcement discretion is no substitute for regulatory or legislative exemptions. For even if EPA uses its enforcement discretion not to target certain passive recipients, these passive receivers argue, CERCLA allows potentially responsible parties to seek contribution from other potential responsible parties (such as water and wastewater utilities), and also allows “citizen suits” where citizens step into the shoes of EPA to bring suits that EPA may have chosen not to.

Several legislative efforts are afoot to offer statutory protections to prevent parties from recovering costs or damages under CERCLA from certain passive receivers of PFAS, such as water and wastewater utilities, composting facilities, and others. At this time it is unknown whether any of these legislative efforts will succeed. Additionally, some passive receivers of PFAS may fall through the cracks of EPA’s Enforcement Discretion Policy. For example, the policy specifically says EPA does not intend to pursue CERCLA actions for PFAS against “publicly owned treatment works,” but does not specifically say the same about investor-owned treatment works (though the enumerated exemplars are preceded by “including, but not limited to” language). Time will tell how EPA uses its enforcement discretion—or not—with respect to passive receivers.

Future Regulations, Lawsuits, and How Lawyers Can Show Value

Many states, too, have introduced and are introducing a host of PFAS-related laws and regulations that for the time being will result in a patchwork of compliance requirements for actors in a broad variety of industries. For example, California has passed a bill that requires labeling PFAS, among other chemicals, on cookware. The statute also applies a broad definition of PFAS and bars advertising cookware products as “PFAS-free” if the products contain any of these substances. Colorado has recently enacted a law banning the sale of a wide variety of products containing “intentionally added PFAS,” including textiles, food packaging, certain oil and gas products, and others. Maryland, likewise, has recently prohibited added PFAS in textiles, food packaging, and other products. Several other states have banned added PFAS in food packaging, some including external packaging, not just the packaging that comes in contact with food.

Washington State is considering legislative restrictions on PFAS in clothing, automotive products, and others. The details of these actual and proposed restrictions are too many, varied, and developing to list here, but the upshot is clear: companies manufacturing and selling products for a national audience will have their hands full meeting these patchwork standards or at least ensuring “lowest common denominator” compliance with the most restrictive of these requirements.

Moreover, many of these piecemeal legislative efforts overly focus on prospective problem-solving, seeking only to prevent more PFAS from entering the environment, and lack the retrospection needed to deal with the PFAS that is already in the clothing, cookware, water, and environment all around us. This problem will fall on the backs of American infrastructure, forcing utilities to determine not only how to filter, remove, and safely dispose of PFAS but also how to fund such efforts, ideally without ratepayers bearing the brunt of the financial burden.

The above is just the tip of the iceberg, focusing primarily on the litigation and regulatory environment affecting drinking water and water sources. But regulations for wastewater effluent discharges, manufacturing and use, importing, inventory reporting, expanded testing and monitoring, testing method standards, and other areas have their own detailed stories. For a chemical family encompassing thousands of compounds used in everything from firefighting foam and Teflon to hamburger wrappers and underwear, this is not surprising, nor is the fact that the litigation landscape is constantly changing and has no end in sight.

In these first few months of 2024, we have already seen multiple new PFAS lawsuits filed: suits by state AGs against PFAS producers; suits by environmental public interest groups against municipalities for alleged PFAS contamination via the municipalities’ wastewater discharges; class actions by customers against water utility companies, and suits by municipalities against PFAS producers and other alleged polluters. As we look to the future, we see many opportunities for infrastructure attorneys to provide value to their clients by advising on regulatory compliance, risk allocation and mitigation in business and property sales and mergers/acquisitions, lobbying and public policy to seek client-favorable laws, regulations, and exceptions, and in active litigation.