INSIGHT: PFAS Liability Is Coming to California

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Across the country, regulators and litigants are turning their attention to the emerging contaminants known as “perfluoroalkyl” or “polyfluoroalkyl” substances (PFAS). PFAS are ubiquitous in modern life. These emerging contaminants come from an incredible variety of sources and have been used in myriad ways for decades, ranging from firefighting at airports and military bases to carpet manufacturing to wastewater treatment. PFAS are also exceptionally common in food packaging, especially fast food.

Yet despite their breadth of consumer uses, PFAS are remarkably persistent; even those PFAS that actually do break down upon remediation only transform into more persistent PFAS chains. Due to the persistence of PFAS, combined with their ubiquity, some form of PFAS is present in almost all biological tissue in the U.S., including humans. Complicating matters, our scientific knowledge of most PFAS chains is relatively limited. PFAS are an extremely diverse family of hundreds of thousands of synthetic organic compounds. Any plan to remediate PFAS contamination will invariably pose an enormous (and costly) challenge.

Regulators at all levels are turning their attention to this challenge. While most regulatory activity is occurring at the state level, the federal government has tentatively begun to enter the fold. In May 2016, the EPA set “Health Advisory” levels for two common kinds of PFAS— perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)—at 70 parts per trillion combined in drinking water. But these Health Advisory levels are not enforceable on their own, so the EPA has been hard-pressed to take further action, especially when reports surfaced that the EPA sought to block publication of a different federal health study that allegedly showed that PFOA and PFOS endanger human health at levels lower than the EPA had previously determined.

In response, the EPA convened a National Leadership Summit in May 2018 to “take action” on PFAS. At the summit, the EPA announced it would begin taking steps to designate PFOA and PFOS as “hazardous substances” under federal law and evaluate the need for a “maximum contaminant level” for PFOA and PFOS in drinking water. The EPA also is visiting communities impacted by PFAS and conducting other research. And on Sept. 6, the U.S. House of Representatives Energy and Commerce Subcommittee on Environment heard testimony on PFAS contamination and remediation, and the U.S. Senate Committee on Homeland Security & Governmental Affairs followed suit nearly three weeks later.

But state regulators and litigants are not waiting for the federal government to take concrete action. In November 2017, for example, the New Jersey Department of Environmental Protection recommended maximum contaminant levels for PFOA at 14 parts per trillion and for PFOS at 13 parts per trillion, roughly five times more stringent than the EPA Health Advisory. This past month, that same agency formally adopted a maximum contaminant level of 14 parts per trillion for another form of PFAS called perfluorononanoic acid (PFNA). New Jersey seems especially focused on protecting its public water supplies from PFAS.

The state of Washington has taken a different approach. In late February 2018, it added PFAS to its list of chemicals that cannot intentionally be used in food packaging. That ban goes into effect in 2022 at the latest, and even earlier if state regulators can find safer alternatives than PFAS in food packaging. One month later, Washington explicitly banned the use of PFAS in the manufacture of firefighting foam. Washington regulators are also aggressively testing public water systems to determine whether remedial action is necessary to address PFAS contamination.

The increasing regulatory scrutiny paid to PFAS throughout the country has been complemented by a burgeoning number of statutory and tort claims under federal and state law. To establish liability, litigants have deployed the federal Resource Conservation and Recovery Act (RCRA) and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Even though the EPA has not established any enforceable standards for PFAS, federal statutes can still be used to impose liability for remediation of PFAS contamination. PFAS contamination has also been challenged under the traditional toxic tort rubric. Plaintiffs alleging contamination have argued that businesses manufacturing or disposing PFAS knew or should have known that their PFAS-related activities were potentially hazardous to human health and the environment. Considering the numerous, difficult evidentiary issues at play with PFAS, the variety of toxic tort claims available in PFAS litigation will magnify the difficulties for businesses named in those actions.

These regulatory and legal elements suggest a hostile economic climate for any company that has manufactured or potentially used PFAS in its business. Depending on where that company is located, it might be facing strict groundwater regulations, onerous labeling and packaging requirements, or an active plaintiffs’ bar looking to bring suit against PFAS-related businesses. Throughout the country, companies are starting to face serious PFAS risks. But in California, they are staring down the proverbial “perfect storm” of liability under Proposition 65—a multifaceted statute intended to address chemical contamination.

On Nov. 10, 2017, the California Office of Environmental Health Hazard Assessment (OEHHA) added PFOA and PFOS to “the list of chemicals known to the state to cause reproductive toxicity (developmental endpoint) for purposes of Proposition 65.” This means that, starting November 2018, companies doing business in California with 10 or more employees will be required to provide a “clear and reasonable” warning before knowingly and intentionally exposing anyone to PFOA or PFOS. Complicating matters, the OEHHA implemented a comprehensive overhaul of the “clear and reasonable” benchmark late last month. And Proposition 65 is not limited to warning requirements; it protects drinking water too. Starting July 2019, California businesses will be prohibited from discharging PFOA or PFOS into drinking water sources as well.

Under Proposition 65, the potential liability for the use of ubiquitous chemicals such as PFAS ranges from “serious” to “extreme.” Civil penalties can reach up to $2,500 per violation per day, and Proposition 65 provides liberal private enforcement mechanisms. Proposition 65 can also incentivize lawsuits through attorneys’ fees awards. As demonstrated by the state’s ongoing experience with coffee retailers, Proposition 65 violations can threaten operations statewide.

For businesses that manufactured, retailed, or used products containing PFAS on a regular basis—such as fast-food packaging—adding up $2,500 per violation per day could in a little over a year amount to a million dollars of potential legal liability. Moreover, once in litigation, plaintiffs are only required to find trace amounts of the listed chemical, while defendant businesses are obligated to prove the negative that the chemical presents no significant health risk. Undoubtedly, the sizable and aggressive Proposition 65 plaintiffs’ bar in California has already started analyzing the chemistry of common consumer products to determine whether PFAS are present.

Despite the substantial risk to California businesses posed by its listing decision, the OEHHA has not even established maximum allowable dose levels for PFOA or PFOS. When it added PFOA and PFOS to its Proposition 65 list, the OEHHA invoked the “authoritative bodies” mechanism by relying on EPA science. But unlike the EPA, which set unenforceable Health Advisory limits at 70 parts per trillion combined for PFOA and PFOS to drinking water, the OEHHA has stated that its own “listing is not specific to any route of exposure” or even to established maximum allowable dose levels. The only direction the OEHHA has given is that it expects to complete its recommended drinking water standards “later this year.” Adding to the confusion, the OEHHA has given no indication whether it will impose legacy warning requirements for products that contained PFOA and PFOS before they were listed—such as carpeting installed decades ago. Instead of offering any real guidance, the OEHHA declared it “remains the responsibility” of regulated parties “to determine if a warning is necessary or a discharge is prohibited.”

In the meantime, the OEHHA recommended “interim notification levels” for PFOA and PFOS for use by the State Water Resources Control Board in regulating public water supplies in California that are almost as low as detection limits. Upon the OEHHA’s recommendation—and similar to the regulators in New Jersey—the board adopted notification levels for PFOA of 14 parts per trillion and for PFOS of 13 parts per trillion. These notification levels provide drinking water guidelines for local agencies to follow in detecting and reporting PFOA and PFOS in public water supplies. Granted, the guidelines adopted by the board are technically distinct from Proposition 65 and only require local water agencies to report PFOA or PFOS to their boards when those contaminants are detected at or above prescribed notification levels. Yet, these exceptionally low thresholds were specifically recommended by the OEHHA, and it is unlikely the agency would accept anything higher than that threshold under Proposition 65.

Even worse, federal, state, and local regulators have already undertaken significant testing of public water supplies in California for PFAS-related compounds, which could be used to support aggressive Proposition 65 claims the moment the warning requirement goes into effect in November.

According to a recent statewide analysis of drinking water sources pursuant to the federal “Unregulated Contaminant Monitoring Rule,” at least 36 sources have PFOS detections, and 32 sources have PFOA detections. In other words, data already exist that show California drinking water supplies have been exposed to chemicals prohibited under Proposition 65. Once the OEHHA finally sets maximum contaminant limits, local water districts will be on the hook for remediation liability. As explained above, PFAS are neither easy nor cheap to remediate. The water districts will be forced to find other parties to help shoulder the remediation burden, especially manufacturers and distributors of firefighting foam, which is a common groundwater exposure method. These companies will be at serious risk of immediate Proposition 65 litigation come November.

The liabilities associated with PFAS exposure could be substantial, particularly in California. Even worse, given the ever-expanding scope of PFAS regulation and litigation, the landscape is always shifting. For business owners and operators who have used PFAS—or are simply unsure whether they did—the present regulatory and legal environment can be daunting.

There are steps businesses can take to stave off the worst consequences of PFAS-related liability. As an initial step, companies can have audits performed to assess their potential liability, and take steps to minimize risks.

A thorough audit will examine the business top-to-bottom. Even if the business never manufactured its own products with PFAS, it must be equally certain that products bought and used as part of business were also PFAS-free. The company’s legal department should review the business’s relationships with PFAS suppliers and consumers, including any contracts or other transactional documents (such as insurance policies) for assumptions of risk and other related protections. Be sure to receive warranties from suppliers that they are providing PFAS-free products and that those products did not encounter PFAS anywhere in the supply chain. Businesses should require their suppliers to substantiate their warranties by providing indemnity if the business’s products are proven to contain PFAS. Given the ubiquity of PFAS, and the growing risk of regulatory enforcement and litigation, it is crucial that suppliers provide not only warranties, but indemnity as well.

With a complete risk profile of PFAS, businesses can begin addressing the greatest points of risk. If at all possible, businesses should immediately transition to using PFAS-free equipment and supplies at all levels. But in many cases, businesses face potential liability for historical PFAS exposure that cannot necessarily be resolved with replacement products. For example, does a law firm that installed carpet in its office two decades ago need to test that carpet? If the law firm detects PFOA or PFOS in the carpet, must it post a Proposition 65 warning?

With the deadline for PFOA and PFOS warnings looming, the OEHHA has not provided an answer. The Proposition 65 plaintiffs’ bar in California is ready to prey on that uncertainty the moment the warning requirement becomes active in November. In less than three weeks, businesses may be faced with balancing the business risks of a warning requirement against the unpredictable cost of Proposition 65 litigation. Even though there are mechanisms in place under Proposition 65 to avoid warning requirements, the OEHHA admits that mechanism “can be very complex” because it involves analysis of animal studies, epidemiologic data, risk analysis, and much more.

Of course, no matter how well prepared, no business will always be able to avoid the storm of PFAS liability. But if it can batten down the hatches now, it will be ideally positioned to take on any PFAS-related challenge head-on.

Jeffrey Dintzer is a partner and Nathaniel Johnson a senior associate in Alston & Bird’s Environment, Land Use & Natural Resources practice.

The opinions expressed here do not represent those of Bloomberg Environment, which welcomes other points of view.

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