On January 14, 2021, the New Jersey Department of Environmental Protection (“NJDEP”) filed suit against the United States to compel the United States to address immediately contamination of New Jersey groundwater with PFOA and PFOS from facilities owned or operated by the United States. The suit, which was brought pursuant to the federal Safe Drinking Water Act (“SWDA”) and the New Jersey Safe Drinking Water Act (NJSWDA”), alleges that the use of AFFF at federal facilities caused the contamination, which presents an imminent and substantial endangerment to drinking water supplies in New Jersey. NJDEP seeks injunctive relief ordering the United States to control the source of PFOS and PFOA, to remediate the PFOS and PFOA, to provide alternate water supplies, and to conduct medical monitoring for New Jersey residents who have been exposed. NJDEP also seeks recovery of its reasonable costs for investigation and remediation of the PFOA and PFOS contamination above New Jersey drinking water standards. New Jersey drinking water standards for PFOS (13 ppt) and PFOA (14 ppt) are considerably lower than EPA’s Lifetime Health Advisory level (“HAL”) of 70 ppt.

The complaint asserts that in the case of an imminent and substantial endangerment to human health where the United States has caused or contributed to the endangerment, NJDEP has the authority to institute an action against the United States because NJDEP has primary enforcement authority under the SDWA and the SDWA includes a provision requiring federal agencies to comply with all requirements of the SDWA pertaining to public water systems. The complaint further alleges that under the savings provision of the NJSWDA, federal sovereign immunity is waived and NJDEP has the authority to file an action for private wells.

The complaint focuses on the use of AFFF at Department of Defense operations at Joint Base McGuire-Dix-Lakehurst (“JBMDL”), Naval Weapons Station Earle, and Naval Air Warfare Center Trenton noting that “a single firefighting training event can release thousands of gallons of foam-laced water into the environment” and “decades of AFFF use throughout JBMDL has demonstrably contaminated groundwater on and around the joint base.” The complaint alleges that the United States failed to take sufficient action to protect off-site drinking water supplies near JBMDL, which forced NJDEP to conduct its own sampling and provide an alternate water supply for off-site residents. Further, the complaint alleges that the United States had not taken any action to address contamination in off-site private wells down-gradient of Naval Weapons Station Earle that exceed the New Jersey drinking water standards but do not exceed the EPA HAL.

The complaint was filed in the AFFF Multi-District Litigation in federal court in South Carolina, but NJDEP did not waive its designated home venue of New Jersey, thus preserving its ability to challenge venue at a later time.

We’ve discussed in our previous posts the process that EPA will likely use to designate PFOA and PFOS as “hazardous substances,” how that designation will impact responsible parties, and what effects it may have on current EPA-lead investigations and remediations. In this article we discuss how the process may impact states that are also addressing PFAS. Many states have “superfund” laws modelled on CERCLA that allow those states to respond to contamination and to seek cost recovery from responsible parties for a release of a “hazardous substance” into the environment.

State Implications

Many state “superfund” regimes rely on CERCLA for formal “hazardous substance” designations and define a “hazardous substance” to automatically incorporate, among other things, substances designated by EPA as hazardous substances.

Accordingly, an EPA designation of PFOA and PFOS as hazardous substances is likely to have ripple effects in states where analogous superfund statutes adopt EPA’s hazardous substance list. Below are three examples of state statutory provisions that could lead to further state actions following an EPA designation:

  • Section 103 of the Pennsylvania Hazardous Sites Cleanup Act (35 P.S. § 6020.103) defines a “hazardous substance” to include those “defined or designated as a hazardous substance pursuant to the Federal Superfund Act.”
  • Section 58:10-23.11b of the New Jersey Spill Act defines a “hazardous substance” to include “the list of hazardous substances adopted by the federal Environmental Protection Agency pursuant to section 101 of the ‘Comprehensive Environmental Response, Compensation and Liability Act of 1980,’ Pub.L.96-510 (42 U.S.C. 9601 et seq).”

Section 9103 of the Delaware Hazardous Sites Cleanup Act (7 Del.C. § 9103(25)) defines a “hazardous substance” to include “any hazardous substance as defined in CERCLA.”

In two of our previous posts, we discussed the United States Environmental Protection Agency’s (EPA) “Hazardous Substance” Designation Process and the Implications of a Designation on Responsible Parties. Here, in this post, we discuss what a designation of PFOA and PFOS might mean for ongoing investigations and remediations lead by EPA.

Current EPA Interim Recommendations for CERCLA and RCRA Sites

EPA’s current interim policy, published December 19, 2019, provides guidance for a “risk-based” approach at sites where PFOA and PFOS groundwater contamination is being evaluated and addressed under federal cleanup programs, such as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and corrective action under the Resource Conservation and Recovery Act (RCRA). EPA states the following for sites with PFOA and/or PFOS contamination of groundwater that is a current or potential source of drinking water:

  • Sites should be screened using a groundwater screening level of 40 parts per trillion (ppt);
  • Where there is no adequately protective state Maximum Contaminant Level (MCL) or applicable or relevant and appropriate requirement (ARAR), EPA recommends a “Preliminary Remediation Goal” for groundwater that is a current or potential source of drinking water of 70 ppt;
  • Where groundwater is currently being used for drinking water, EPA expects that parties address PFOA and PFOS levels that exceed 70 ppt.

EPA reiterates that its guidance is intended to be interim and would be revised upon the promulgation of a federal ARAR, such as a national drinking water standard for PFOA or PFOS.

Ongoing Investigations and Remediations

As EPA makes clear in its interim policy, efforts to investigate and address sites impacted by PFOA and PFOS are already underway. EPA also has the option of “re-opening” a site investigation to add PFOA or PFOS as a contaminant to be evaluated. Though EPA’s investigation and remedy selection authority is not limited to “hazardous substances,” EPA may use a formal designation of PFOA and PFOS as incentive to review its current Superfund site investigations and remedies.

EPA’s response and remedial actions are guided by regulations at 40 CFR Part 300 (the National Oil and Hazardous Substances Pollution Contingency Plan or more commonly the “NCP”). Generally, EPA develops a remedial investigation and feasibility study (RI/FS), remedy selection, and ultimately publishes a “record of decision” (ROD). Prior to adopting a ROD, EPA may alter its published remedy if new information becomes available that significantly changes its scope, performance, or cost of the remedy, per 40 CFR 300.430(f)(3)(ii).

EPA may also consider incorporating new “hazardous substances” during its required “5-Year Review” of each remedy under 40 CFR 300.430(f)(4). During this “review” process, EPA will review the implementation and performance of its selected remedy in order to assess whether it is protective of human health and the environment. In addition to the 5-Year Review process, EPA can change a remedy through publication of an “Explanation of Significant Difference” section 117(c) of CERCLA (42 U.S.C. § 9617(c)) and EPA may propose an amendment to the ROD if there are changes that fundamentally alter the basic features of the original remedy with respect to scope, performance or cost (40 CFR 300.435(c)(2)). EPA could pursue either of these approaches at sites where PFOA or PFOS are discovered, particularly if the PFOA and/or PFOS contamination affects a current or potential source of drinking water.

As previously reported, the Biden administrative is expected to make PFAS regulation and enforcement a priority by, among other things: designating PFAS as hazardous substances, setting enforceable limits under the Safe Drinking Water Act, prioritizing substitutes through procurement policies, and accelerating toxicity studies and research. Plan to Secure Environmental Justice and Economic Opportunity.

On February 3, 2021, the Senate Committee on Environment and Public Works held a public hearing on the nomination of Michael S. Regan to be Administrator of the Environmental Protection Agency. Since 2017, Regan has led the North Carolina Department of Environmental Quality as Secretary. In that role, Secretary Regan has been credited with leading the state’s negotiations with Chemours over its Fayetteville plant and PFAS impacts to the Cape Fear River. See Consent Order documents.

PFAS questions came early in the nomination hearing from Democratic Senator Kristen Gillibrand of New York and Republican Senator Shelley Moore Capito of West Virginia, two other states where PFAS issues have been major focuses of investigation, enforcement and regulation.

Regan’s responses at the hearing confirmed that he is on board with Biden’s stated approach:

Senator Gillibrand: So my first question is this. Will you make PFAS an agency-wide priority at the EPA, so that more time is not wasted while families continue to be exposed and harmed by these very toxic chemicals?

Mr. Regan. Thank you for that question, Senator Gillibrand. You and I and Senator Capito know all too well the devastating impacts to our States by the lack of action on behalf of the EPA. PFAS, PFOA, perfluorinated compounds, will be a top priority for this Administration. We will pursue discharge limits. We will pursue water quality values. We will pursue all avenues that we can while we are developing these rulemaking processes, to give the proper signals to States, so that States can take the appropriate actions, like we have had to take in North Carolina.

Senator Gillibrand. Will that include setting a drinking water standard for PFAS?

Mr. Regan. Thank you for the question, Senator. What I plan to do is sit down and spend some time with the staff at EPA, with our counsel; to understand the multiple avenues I believe we have at our fingertips to address PFAS.

. . .

Senator Gillibrand. . . . Given your experience at the State level, what is your vision on how EPA should approach industrial PFAS solutions in order to prevent more PFAS from entering the environment in the first place?

Mr. Regan. Thank you for that question. I think there is a lot of wisdom in the vision and the direction that you are headed in order to have a full accounting of how these forever chemicals are entering into our water, as well as our air. So I think we need to take a look at the discharge of PFAS from a water quality standpoint. I think we need to take a very strong look at the emissions that are coming from the combustion and incineration of products that yield PFAS into our atmosphere. I can commit to you that on day one, that this is and will be a priority for this Administration to set limits on how much of this chemical compound is entering into our air and our water.

Senator Capito. … Senator Gillibrand mentioned PFAS. You and I talked about this on the phone. . . . But I am like-minded with her in terms of the restlessness of getting there and the delay. So I would impress upon you how important I think that is to our Nation and to our Nation’s [youth], as they are living through the impacts of what this could have on drinking water. So I would just ask a pledge to keep working with me and us on that.

Mr. Regan. Absolutely.

On February 9, 2021, in its first 2021 hearing led by Democratic Senator Tom Carper of Delaware, the Committee voted 14-6 to send Regan’s nomination to the full Senate for a confirmation vote.

 

 

The Biden Administration has pledged to designate certain PFAS as hazardous substances under federal law. What effect would the United States Environmental Protection Agency’s (EPA) designation of PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) have on the legal landscape? As you may recall, in a previous post we discussed the regulatory processes through which EPA can designate PFOA and PFOS as “hazardous substances.” Now, in this post we discuss what a designation means for liability for responsible parties under CERCLA and relevant reporting obligations.

Responsible Party Liability

The first immediate effect occurs in the context of a responsible party’s liability to EPA and other responsible parties. Under CERCLA section 107(a) (42 U.S.C. § 9607(a)), EPA can recover costs that it incurs addressing the release of a “hazardous substance” from responsible parties. Section 107(a) of CERCLA identifies four categories of persons who are responsible for “all costs of removal or remedial action” incurred by EPA, and those terms are defined to cover the cleanup, removal, and other remedies implemented to address a release or threatened release of a “hazardous substance” into the environment. In addition, under section 113(f) of CERCLA (42 U.S.C. § 9613(f)), a responsible party can seek contribution from other parties who are also liable for the release of a “hazardous substance” under section 107(a). Thus, designation of PFOA and PFOS as hazardous substances would both create CERCLA liabilities and afford contribution remedies to responsible parties at PFAS sites.

Reporting Obligations

The second effect involves release reporting obligations. Under CERCLA section 103(a) (42 U.S.C. § 9603(a)), a person in charge of a facility must report any release of a “hazardous substance” from the facility if the quantity of that release is equal or greater than the “reportable quantity” (RQ). Section 102(b) of CERCLA (42 U.S.C. § 9602(b)) dictates an RQ of one pound for any “hazardous substance” if EPA does not promulgate a specific quantity for that substance at 40 CFR 302.4 and 302.5.

 

For the past several years, much attention has been focused on the United States Environmental Protection Agency’s (EPA) legal authority to respond to PFAS contamination. When EPA published its PFAS Action Plan in February 2019, it discussed, among other things, designating PFOS and PFOA as “hazardous substances” through one of the available statutory mechanisms under CERCLA. A year later in its February 2020 update, EPA again noted that it “continued moving forward with the regulatory process for proposing to designate PFOA and PFOS as hazardous substances under CERCLA.”

While EPA has not recently provided additional detail on the state of its progress, as we discussed in a previous post, President-Elect Biden has indicated his administration’s priority to designate PFOS and PFOA as hazardous substances. We expect that EPA is likely to focus on this process in early 2021 to lay the administrative groundwork for rulemaking.

Next Steps: CERCLA’s Regulatory Process

As highlighted above, in its PFAS action plan EPA noted its consideration of the various available statutory mechanisms through which it can make a “hazardous substance” designation. In context, EPA is referencing the defined term “hazardous substance” under CERCLA, which automatically incorporates a substance designated as such under CERCLA regulations at 40 CFR Part 302, under the Clean Water Act at 40 CFR Part 116, listed as a “hazardous waste” under the Resource Conservation and Recovery Act (RCRA) at 40 CFR Part 261, any “hazardous air pollutant” listed under the Clean Air Act at 42 USC § 7412, and any “imminent hazardous chemical substance” under the Toxic Substance Control Act at 15 USC § 2606.

Regardless of the statutory source of authority, those regulatory options are similar with respect to their administrative processes, which generally require that EPA publish its proposal to designate a “hazardous substance” for public comment in a Notice of Proposed Rulemaking, with at least a 30-day public comment period following its publication. On occasion, EPA may first solicit information from the public through publication of an “Advanced Notice of Proposed Rulemaking” before it develops a proposed regulation. In either instance, members of the public have the opportunity to comment and provide issues for EPA to consider. Following its publication of a Proposed Rulemaking, EPA considers those public comments, makes any necessary changes to its proposed regulation, and then issues and publishes its final regulation, accompanied by EPA’s response-to-comments document.

Following a final promulgation of the designation, CERCLA identifies the substance on its “List of Hazardous Substances and Reportable Quantities” at 40 CFR 302.4. The list also includes the statutory source pursuant to which the substance was designated, the associated Chemical Abstracts Service registry number (CAS number), any relevant RCRA waste number, and any relevant reportable quantity.

We will continue to monitor EPA’s progress towards these designations and other PFAS related regulatory developments as the Biden Administration’s EPA implements its agenda.

The U.S. District Court in the Western District of North Carolina recently held in Colony Insurance Co. v. Buckeye Fire Equipment Co. that an insurance company must defend personal injury claims arising from direct exposure to Aqueous Film Forming Foams (AFFF) under a Commercial General Liability (CGL) Policy despite the policy containing a “Hazardous Materials Exclusion.” That exclusion requires a discharge into the environment and, generally, may not be applied to injuries caused by something other than traditional environmental pollution.

Defendant Buckeye Fire Equipment Co. (Buckeye) has been sued in hundreds of underlying cases related to Buckeye’s manufacture of fire equipment containing AFFF, which have been consolidated into Multi-District Litigation in the United States District Court for the District of South Carolina (i.e., the AFFF Products Liability Litigation, MDL No. 2873, U.S. Dist. Ct. of S.C., or the “AFFF MDL”). Plaintiffs in the underlying cases have sued Buckeye and others for bodily injury or property damage caused by both “traditional environmental pollution” (e.g., a release into the environment) and direct contact with or exposure to AFFF. Approximately a third of the underlying cases allege harm from both direct and environmental exposure. The District Court provided a representative example of the allegations from one of the underlying cases: “During [underlying plaintiff’s] employment as a firefighter instructor, he was significantly exposed to elevated levels of PFOS and PFOA in their concentrated form as a result of regular contact with [d]efendant’s AFFF products and through PFOS and PFOA having contaminated the Fire College well system.”) (emphasis in original). Buckeye requested insurance coverage for the underlying cases alleging direct exposure. Plaintiff Colony Insurance Co. (Colony) sought a declaratory judgment that it has no duty to defend.

In its Motion for Summary Judgment, Colony alleged that it had no duty to defend any of the underlying lawsuits alleging direct or environmental exposure because the “Hazardous Materials Exclusion” excludes coverage for injuries “which would not have occurred in whole or in part but for actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of ‘hazardous materials’ at any time.”

The District Court disagreed and held that Colony could not deny coverage to the underlying complaints that allege direct exposure because the injuries were caused by “something other than traditional environmental pollution.” Under North Carolina case law, an insurer cannot deny coverage based on a pollution exclusion if the occurrence and resulting injury are not “prototypical environmental harms” to which a pollution exclusion is generally applied. The terms “discharge,” “dispersal,” “release,” and “escape” are particular environmental terms of art in this context, and a “discharge, dispersal, release, or escape” of a pollutant must be into the environment to trigger the pollution exclusion clause and deny coverage. The Court cited to W. Am. Ins. Co. v. Tufco, 409 S.E.2d 692 (N.C. Ct. App. 1991), where it was held that “‘vapors or fumes released from the chemicals used by [the insured] during’ the insured’s routine business operations” were not discharges into the environment and thus not excluded from coverage.

Finally, it is important to note the limitation of the holding. Both parties agreed that the issue of indemnification was not ripe and the District Court limited its analysis to the issue of Colony’s duty to defend underlying cases alleging direct exposure. Buckeye also conceded that Colony has no duty to defend any of the underlying actions that allege solely environmental exposure.

In September 2020, the New Mexico Environment Department (NMED) finalized the settlement of an enforcement action against Cannon Air Force Base (CAFB), a federal facility, relating to the facility’s discharge of PFAS-containing wastewater to groundwater without a permit. According to the allegations of an administrative compliance order (ACO) issued in January 2020, CAFB had an existing groundwater discharge permit that was due for renewal, but the permit renewal application did not disclose the presence of PFAS in the facility’s discharge. Accordingly, NMED refused to administratively continue the permit without CAFB first submitting a renewal and modification application that reflected the presence of PFAS. As a result, CAFB’s groundwater discharge permit expired on March 31, 2019, and its subsequent discharges were therefore unpermitted. (It is notable that several months prior to the enforcement action, the Air Force and NMED had sued one another in federal court; the Air Force sued seeking a declaratory judgment that New Mexico’s state standard was arbitrary and capricious, while NMED alleges in its federal lawsuit that AFFF usage at the bases since approximately 1970 is the source of the PFAS found in area soils and groundwater, asserting claims under state law and RCRA.)

NMED alleged that the Air Force had failed to appropriately notify the agency of the change in the quality of CAFB’s discharge occasioned by the presence of PFAS, and also had been unlawfully discharging its wastewater without a groundwater discharge permit since April 1, 2019. It assessed a civil penalty against the Air Force totaling $1.7 million for multiple violations of state environmental regulations. After CAFB submitted a complete renewal and modification application, the State agreed to accept “an administrative fee” of about $250,000 in full resolution of the civil penalties assessed in the ACO.

This matter points to the difficulty that states around the country are having in enforcing state PFAS standards against the U.S. Department of Defense – the entity that in many states is seen as a significant potentially responsible party with respect to PFAS contamination related to AFFF usage. The Department of Defense has raised numerous defenses and objections to state enforcement and litigation efforts, from sovereign immunity to arguments based on the absence of PFAS from the list of CERCLA hazardous substances, to (as in New Mexico) challenges to the validity of state regulatory standards for PFAS. Interestingly, in the settlement with NMED the Air Force also managed to avoid admission of any of the factual allegations in the ACO or of liability. For now, the friction between state PFAS regulation and enforcement and the Department of Defense continues.

On October 13, 2020, North Carolina, acting through its Attorney General, filed suit in state court against DuPont, Chemours and related companies seeking costs to investigate, assess, remediate, restore and remedy PFAS contamination “across a broad swath of North Carolina.” The complaint alleges that the defendants contaminated the land, air, water and natural resources of North Carolina as a result of releases of GenX and other PFAS from the Fayetteville Works facility. The suit seeks damages for injuries to natural resources, property damages, economic damages, punitive damages, restitution and disgorgement. The complaint, which requests a jury trial, seeks to void the spinoff of Chemours and enjoin the transfer of assets that belonged to “Old DuPont” on the basis the “Old DuPont knew that Chemours was undercapitalized and could not satisfy the massive [PFAS] liabilities that it caused Chemours to assume.”

According to a press release from the Attorney General’s Office, in August the Attorney General announced a formal investigation into those responsible for PFAS contamination in North Carolina and this suit is the first case as a result of that ongoing investigation. In addition to the Attorney General, the complaint was filed by a number of private law firms on behalf of North Carolina. The complaint was filed one day after court approval was received on an Addendum to a Consent Order between the North Carolina Department of Environmental Quality and Chemours that requires Chemours to a take action to reduce PFAS entering the Cape Fear River through residual groundwater contamination from the Fayetteville Works facility. The suit raises a number of interesting issues including the effect of past settlements, the ability to challenge corporate reorganizations, and the Attorney General’s ability to act as a trustee of the state’s natural resources using private law firms.