PFAS Playbook

On August 12, 2022, the Office of Management and Budget (OMB) completed its review of the EPA’s proposed rule to list two per- and polyfluoroalkyl substances (PFAS) as “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). In doing so, the OMB changed its designation of the proposed rule to “economically significant,” which will now require the EPA to conduct a regulatory impact analysis (RIA) – including consideration of the rule’s potential costs and benefits – before the rule takes effect.

The EPA’s proposed rule would list perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) (two types of PFAS) as “hazardous substances” under CERCLA. If and when the rule takes effect, it would require parties to report releases of PFOA and PFOS. It is also expected to pave the way for EPA enforcement actions, including cleanup proceedings, as well as open the door to additional waves of litigation.

The OMB’s change of designation will result in a speedbump to the EPA’s landmark proposal. A rule is designated as “economically significant” when it is expected to impose costs of $100 million or more annually. These costs may include, for example, direct costs tied to reporting requirements, and indirect costs such as the cost of liability for cleanup. The EPA’s PFAS proposal was previously designated as “other significant,” which is used for rules expected to have less than $100 million in economic effects, but which are still considered significant under specified criteria. Rules designated as “economically significant” require an RIA, while those designated as “other significant” do not.

The RIA will require the EPA to broadly analyze the economic and policy implications of the proposed rule. This includes showing that it is necessary and justified to achieve the proposed goal in the least burdensome, most efficient and cost-effective way. Specifically, the EPA will have to consider and quantify the costs and benefits of the proposed rule and its alternatives.

The OMB’s change of heart came in response to a number of comments, including, most notably, the U.S. Chamber of Commerce. The Chamber commissioned a study which estimates the annual costs to clean up the two substances at private party sites would cost businesses in excess of $700 million per year.

The RIA is very unlikely to deter the EPA’s plans to list the two PFOA and PFOS as “hazardous substances” under CERCLA. However, the RIA and the OMB’s subsequent review and comment thereof (which may require changes or further analysis), create obstacles for the EPA to overcome and which may delay the EPA’s 2023 timeline to finalize the rule.