Sponsored by American Conference Institute
Written by Jaclyn Jaeger on behalf of ACI Insights
New regulations from the Environmental Protection Agency (EPA) and state-by-state PFAS bans are creating an environment of increased compliance and litigation risk for all companies and manufacturers using PFAS chemicals. Masu. Failure to adequately mitigate these new risks could result in large-scale supply chain disruptions, significant non-compliance fines, legal costs, and environmental liability.
Latham & Watkins partner Julia Hatcher and Lowenstein Sandler partner Keegan Brown are co-chairs. American Conference Association PFAS Regulation, Compliance, and Litigation Summit; It will be held in May.they recently caught up ACI insights Provides a preview of the latest PFAS-related developments that will be discussed.
Q: Broadly speaking, what are the most pressing concerns regarding PFAS-related regulation and litigation?
brown: Science has not kept pace with the evolving legal landscape. There are many regulations being proposed or finalized, and there are also many lawsuits based on the premise that all PFAS pose some degree of unreasonable risk to human health and the environment. The litigation and regulatory landscape has outpaced the actual science, creating challenges across the board.
Hatcher: PFAS have important uses, including semiconductor manufacturing and certain types of medical devices. Separating critical applications of PFAS from a policy and regulatory perspective, how to identify them, and sustain their use is a major challenge.
Q: Looking ahead, the EPA will soon final rule Designation of PFOS and PFOA as hazardous substances under CERCLA. What practical implications could this have for all potentially responsible parties?
brown: In practice, this rule means that these two PFAS compounds (PFOS and PFOA) are subject to the investigation and remediation process under federal Superfund law. This will expand the scope of investigation at existing contaminated sites. If PFOS or PFOA is detected above the applicable regulatory limits, additional investigation and cleanup efforts will be required, the costs of which must be borne by one or more potential responsible parties. For new sites on the Superfund list, this will be another issue that will need to be considered and addressed.
Hatcher: There will be a lot of litigation between potentially responsible parties as to who is actually responsible for the pollution. This case will be quite complex, as the various historical uses of PFOS and PFOA in many value chains are currently not widely understood.
Q: What can companies do to best mitigate their risk of PFAS regulation and litigation?
brown: The first step is to better understand where the connections to PFAS lie. Companies often think they don’t use PFAS or only use them in small applications. It’s only when you start digging a little deeper that you find out that it’s used in a wider range of applications, creating additional risks. The first step is to understand the scope of the potential problem. Once that is done, you can identify the most pressing legal risks and develop strategies to mitigate them. Regulators may determine that it is appropriate to install additional environmental controls or treatment systems on certain waste streams to proactively treat PFAS in advance of potential problems.
Q: What developments should PFAS manufacturers and importers’ legal advisors be aware of regarding EPA’s “Significant New Use Regulations” under the Toxic Substances Control Act (TSCA)?
Hatcher: The manufacture and import of new chemicals that meet the definition of PFAS (not currently on the TSCA inventory of existing chemicals) must go through a new chemical approval process by EPA. EPA has a PFAS Policy for New Chemical Approval Reviews that states that a new PFAS chemical may be approved by the EPA if a specific significant use exists and exposure and release can be eliminated. I am aware that there is. However, the policy makes clear that the review will be rigorous and that it will be difficult to get new PFAS chemicals approved by the EPA. Separate from the new chemical approval process, EPA is using its “significant new use” authority under TSCA to address PFAS, among other chemicals, and seek to use it in a fairly aggressive manner. There is.
Q: There was recently an important decision from the Fifth Circuit regarding PFAS and the “significant new use” authority. What did the court decide in that case?
Hatcher: On March 21, 2024, the Fifth Circuit Court of Appeals issued a decision regarding a company called Inhance Technologies that has been manufacturing certain long-chain PFAS during the fluorination process of plastic containers. Inhance has been engaged in the fluorination process of plastic containers. Over 40 years. The EPA pursued Mr. Inhans for violating the EPA’s long-chain PFAS “Significant New Use Rule” (or “SNUR”). In December 2023, EPA issued two orders under Section 5 of TSCA prohibiting Inhance from producing PFAS during its fluorination process.
The Fifth Circuit vacated the EPA’s order in a March 21 decision, vacating the order. The court found that “Article 5 is intended to regulate covered substances before their first manufacture, not decades after the manufacturing process has begun.” EPA will likely file for reconsideration in the Fifth Circuit, and there is a related enforcement case against Inhans in another Pennsylvania court that EPA could use to try to rule differently on SNUR’s authority. there is a possibility.
Most simply, the EPA is looking to use its new use authority quite aggressively to restrict existing PFAS chemicals. If the Fifth Circuit’s ruling stands, the EPA would have to use its TSCA Section 6 authority to regulate or ban existing PFAS chemicals, which is much more complex. It requires a cost-benefit analysis. That requires more up-front risk assessment and justification. Therefore, we may see significant changes in how TSCA is applied and how EPA can proactively use TSCA to limit existing PFAS chemicals.
Q: What other PFAS-related litigation risks should companies be aware of?
Hatcher: Companies are under pressure to claim that their products are “sustainable,” “green,” or “environmentally friendly.” Companies should be careful in making such claims when PFAS are involved. Further litigation risks may arise if companies claim that their products are sustainable despite the presence of PFAS.
Q: What steps should companies take to reduce their PFAS-related risk exposure?
brown: The PFAS issue highlights the need for a coordinated approach among companies, research and development teams, communications and investor relations teams, and legal and compliance teams. Definitions of PFAS vary from jurisdiction to jurisdiction, so in some cases there may be an internal disconnect between what is being said and what is being heard. This disconnect can cause problems and create additional risks for your company. In the long term, you need to take a step back and ask yourself, “Is this type of chemical important to our business, or are there alternative chemicals that don’t pose these risks?” We have to start thinking about those issues.
Q: Another issue that companies must consider is PFAS liability in M&A transactions. What are the important considerations there?
Hatcher: Those with PFAS expertise are often called upon to become involved in transactional matters. In my experience with transactional matters, when we represent buyers, many times the seller will claim that they do not have PFAS, but we know the type of product they are making and the claims they make. So I know that’s not true. As you’re looking at this product, you know that historically those kinds of products definitely have his PFAS in them. Keegan points out that all these voters need to come together and ask, “Do we have PFAS?” Which type of PFAS, long-chain or short-chain, are they critical? Are alternatives possible? Should it be considered depending on the overall situation? ”
Q: What are the likely future developments in new regulations and litigation related to PFAS?
brown: For the most part, much of the PFAS regulatory and litigation landscape tends to focus on long-chain PFAS chemicals. Depending on how it is defined, thousands of chemicals could be included in his definition of PFAS. Therefore, we should expect the number of PFAS chemicals subject to regulatory and litigation activity to continue to expand.
Hatcher: There are various state laws banning the use of PFAS in certain types of consumer products, some of which will go into effect next year. Efforts to regulate PFAS at the state level will likely continue. Many companies are grappling with how to stay on top of these developments in state law. Companies must continue to think of PFAS regulation as an evolving issue and look to the future.
Join both Julia and Keegan this May. ACI’s PFAS Summit Learn more about how to reduce potential PFAS-related risks for your business.Learn more about