Clark Hill 2023 Automotive & Manufacturing Industry Outlook: EENR
New regulatory developments and other actions regarding per- and polyfluoroalkyl substances (“PFAS”) will continue to be front of mind for the automotive and manufacturing industries in 2023. These activities include the following:
EPA Guidance to States on PFAS for NPDES Permits
On December 5, 2022, EPA issued new guidance to states detailing how states can utilize their authorized National Pollutant Discharge Elimination System (“NPDES”) programs to monitor for discharges of PFAS and restrict the discharge of PFAS at their source. This guidance updated a previous memorandum issued on April 28, 2022, and recommends that states use the most current methods to analyze known and suspected source of PFAS and utilize their pretreatment and NPDES permitting authority to impose technology-based limits on these PFAS sources. For example, the guidance recommends that states require industrial dischargers to utilize best management practices (“BMPs”) such as: eliminating and substituting products when a reasonable PFAS-free alternative can be used in an industrial process; minimizing accidental discharges via operations improvements and good housekeeping practices; and replacing or decontaminating equipment following the substitution of PFAS-free products. In addition to an anticipated immediate reduction in PFAS discharges, EPA expects states to be able to obtain new monitoring information to help inform future steps that can be taken to limit PFAS discharges. Certain states like Michigan and California have already begun to include certain PFAS-related requirements into their NPDES permitting programs, and this new guidance will likely lead to numerous other states taking action to identify and regulate PFAS dischargers.
PFAS CERCLA Designation
On August 26, 2022, EPA announced a long-anticipated proposed rule which would designate two PFAS—perfluorooctanoic acid (“PFOA”) and perfluorooctanesulofonic acid (“PFOS”) including their structural isomers—as “hazardous substances” under the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The proposed rule marks the first-ever rulemaking effort by EPA to designate new substances as hazardous under CERCLA, and it (along with any future PFAS designations) will likely have significant regulatory impacts across the country once finalized. Among other impacts, the final rule would impose reporting obligations for any releases of PFOA and PFOS in quantities greater than one pound over a 24-hour period; expand regulatory authority for EPA and other entities to require cleanup without demonstrating an imminent and substantial endangerment; and could result in the designation of new CERCLA cleanup sites or remedy modification (or even potentially the “reopening”) of existing CERCLA sites. In addition to regulatory impacts, a final CERCLA designation for these chemicals would also likely result in new CERCLA cost recovery and contribution litigation brought by both governmental authorities and private parties. The comment period on the proposed rule ended on November 7, 2022, and EPA has claimed that it plans to issue a final rule by the summer of 2023. If and when a final rule is eventually published, there will undoubtedly be litigation between private parties and EPA over the validity of the rule.
EPA and State Drinking Water Standards (De Facto Remediation Standards) for PFAS
Although EPA missed its target of the end of 2022, EPA still plans to issue proposed National Primary Drinking Water Regulations (“NPDWRs”) for PFOA and PFOS, as well as potential NPDWRs for other PFAS or groups of PFAS. EPA still anticipates finalizing the rule by the end of 2023. Because drinking water standards typically are default groundwater remediation standards, the EPA NPDWRs may significantly impact the cleanups of sites impacted by PFAS.
Some states have already finalized their own drinking water standards for PFOA and PFOS. For example, on January 14, 2023, Pennsylvania’s Environmental Quality Board published Maximum Contaminant Levels (“MCLs”) for PFOA and PFOS. As noted in the table below, Pennsylvania’s MCLs will be comparable to MCLs established by other states (all values are parts per trillion):
*MCL is for a group of six PFAS including PFOA and PFOS
**MCL is for a group of five PFAS including PFOA and PFOS
The actions by states to establish MCLs, which then become remediation standards, have not gone unchallenged. For example, 3M Company challenged the process by which Michigan promulgated its MCLs/groundwater remediation standards. In a November 12, 2022 ruling, the Michigan Court of Claims agreed with 3M that Michigan EGLE violated the state Administrative Procedures Act during the second round of rulemaking to codify the new MCLs as groundwater cleanup criteria because EGLE did not adequately consider the business compliance costs of the new regulation. However, the court stayed the ruling to allow both sides to appeal, and Michigan EGLE did appeal on December 6, 2022.
Proposed Changes to TRI Reporting for PFAS
On December 5, 2022, EPA proposed a rule that would add all PFAS included on the Toxic Chemical Release Inventory (TRI) to the list of Chemicals of Special Concern as part of the Toxic Chemical Release Reporting requirements under the Emergency Planning and Community Right to Know Act. Such listing will set the PFAS reporting level at 100 pounds, exclude PFAS from the TRI de minimis reporting exemption, limit the use of range reporting and eliminate the option to use the Form A reduced reporting form. In addition to these changes, EPA has proposed to eliminate the de minimis exemption under the Supplier Notification requirements. This proposed change to the Supplier Notification requirements would apply to all chemicals on the list of Chemicals of Special Concern. Comments are due by February 3, 2023.
EPA’s Proposed National Enforcement and Compliance Initiative for PFAS
On January 12, 2023, the EPA published a notice requesting public comment on EPA’s National Enforcement and Compliance Initiatives for Fiscal Years 2024-2027. The notice includes a proposed new NECI directed at PFAS contamination, which would focus on implementing the commitments made in EPA’s 2021-2024 Per- and Poly-fluoroalkyl substances (PFAS) Strategic Roadmap to hold polluters and other responsible parties accountable for their actions, ensuring that they assume responsibility for characterization and remediation efforts and prevent future releases of PFAS. According to EPA, a PFAS NECI initially would focus on identifying the extent of PFAS exposures that pose a threat to human health and the environment and pursuing responsible parties for those exposures. To the extent that PFAS cleanup efforts occur under CERCLA, EPA will develop a CERCLA enforcement discretion and contribution protection settlement policy regarding PFAS contamination. For example, EPA intends to focus enforcement efforts on PFAS manufacturers whose actions result in the release of significant amounts of PFAS into the environment, and on federal facilities that may be a significant source of PFAS contamination. The notice states that EPA does not intend to pursue entities where equitable factors do not support assigning CERCLA responsibility. This notice is just another example of the continued increased scrutiny of PFAS manufacturing, exposure and remediation by EPA and the states. For manufacturers interested in submitted comments on the proposed PFAS NECI, comments must be received on or before March 13, 2023.
In addition to monitoring these PFAS issues, manufacturers also will be anticipating the resolution of what constitutes “Waters of the United States” or WOTUS, particularly if they have plans to construct a new facility or expand an existing one in sensitive areas such as wetlands.
Waters of the United States Final Rule
On December 30, 2022, EPA and the Department of the Army announced that they issued a final rule defining “Waters of the United States” (WOTUS). The term WOTUS provides the basis for water quality protection under the Clean Water Act. The rule establishes protection for traditional navigable waters, territorial seas, interstate waters and impoundments. In addition to these four, the rule also provides protection for tributaries and adjacent wetlands provided they meet either the “relatively permanent” or the “significant nexus” standards set forth in the rule. Finally, the rule provides protection for a catch-all category of “additional waters” if they meet either the relatively permanent or significant nexus standards.
The relatively permanent standard identifies “relatively permanent, standing or continuous flowing waters connected to (and waters with a continuous surface connection to) traditional navigable waters, territorial seas or interstate waters.” The significant nexus standard identifies waters such as tributaries and wetlands that “either alone or in combination with similarly situated waters significantly affect the chemical, physical or biological integrity of traditional waters, territorial seas, or interstate waters. Finally, the rule retains the activity-based agricultural exemptions and provides for other exclusions that EPA believes will further increase regulatory certainty. The final rule has not yet been published in the Federal Register. It is expected that the rule will be challenged in federal court by interested parties.
Sackett v. EPA
EPA’s WOTUS rule also comes at a time when the United States Supreme Court in Sackett v. EPA is considering the reach of the Clean Water Act in a case involving adjacent wetlands. Petitioners are challenging the Ninth Circuit’s decision that adopted the significant nexus standard. A decision by the Supreme Court is expected later this year and could provide further clarity on the proper test for determining the reach of the Clean Water Act.
The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.
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