On January 30, 2023, Phase 2 of the Biden Administration’s rule making revisions to Nation Environmental Policy Act (NEPA) were sent by the White House Council on Environmental Quality (CEQ) to the Office of Management and Budget (OMB). Once OMB completes its review the proposed rule will be published in the Federal Register for public comment. The proposed rules are expected to be released sometime this spring.

According to the National Law Review, the Phase 2 rules are likely to be more controversial as they are expected to address: consideration of environmental justice, public participation, and efforts to still streamline the process by imposing deadlines.

Biden Administration Rollback of the Trump Administration’s Overhaul to NEPA

The Trump Administration enacted a massive overhaul of the landmark regulation which went into effect on September 14, 2020. The revisions were the first substantive changes to NEPA since the 1970s. The major focus of the overhaul was twofold: 1) to speed up NEPA reviews for most projects; and 2) to reduce the overall scope of impacts considered under NEPA. Here is a quick summary of the changes the Trump administration enacted:

  • Cumulative Effects- Consideration of impacts from the proposed action together with other actions were eliminated. One such impact eliminated was consideration of the action as contributing to climate change.
  • Eliminated Federal Agency Rulemaking and NEPA Policies- CEQ has the authority to promulgate framework NEPA regulations that all federal agencies must follow. However, many federal agencies enacted their own supplemental rules and adopted NEPA policies govern reviews performed by their Agency.
  • Reduced Scope of Significant Effects– The rule eliminated consideration of effects that were remote in time, geographically remove, or the product of a lengthy causal chain.
  • New Definition of “Major Federal Action”- Excluded projects that have “minimal federal funding or minimal federal involvement” thereby reducing the number of projects that would trigger NEPA.
  • Indirect Effects- Eliminated consideration of ‘indirect effects” which are those caused by the action at a later time or farther removed in distance.
  • Purpose and Need- NEPA historically required federal agencies to consider “reasonable alternatives not within the jurisdiction of the lead agency.” The reforms instructed agencies to limit the range of alternatives to only those that were consistent with the applicant’s goals and the agency’s statutory authority.

Biden Administration’s Phase I Rule Revisions

Phase I of the rollback of the Trump Administration’s NEPA reforms went into effect on May 20, 2022. The Phase I rules restored the following: restored the scope of review under “Purpose and Need” to how it was performed historically, reestablished CEQ regulations as the “floor” with the federal agencies able to enact their own regulations, and restored the requirement to consider both indirect and cumulative impacts.

Reducing the Length of NEPA Reviews

The primary objective of the Trump Administration’s overhaul to NEPA was to reduce the timeframes for NEPA reviews. According to a review performed by CEQ, the average time to complete an Environmental Impact Study (EIS) was 4.5 years. A review by CEQ of the average length of an EIS found that most reports were over 600 pages.

While the Biden Administration’s Phase 2 rules are supposed to include revisions to help streamline the NEPA process. However, with the restoration of the scope of review required under NEPA and the possibility additional potential impacts requiring analysis, such as environmental justice, it will be a challenge for the Administration to expedite reviews.

With the Biden’s Administration $1.2 trillion dollar investment in the nation’s infrastructure, NEPA will be front and center on how quickly those improvements to the nations roads, bridges, water infrastructure and grid resilience will occur. How will the Administration be able to balance meaningful NEPA reviews with the equally important goal of implementing much needed improvements to the nation’s infrastructure? All eyes will be on the Phase 2 NEPA rules package when it is released this spring.

On December 16, 2022, Governor DeWine announced $88 million in grant funding for 123 brownfield remediation projects. This marks the third round of funding. Collectively, the three rounds of funding have resulted in a total of $341 million in grant funding awarded in one year. Of the $341 million in grant funds provided $19.2 million were assessment grant dollars (6%
of the total allocation) and $321.9 million were cleanup/remediation dollars (94%). 125 projects were awarded assessment dollars, and 188 projects were awarded cleanup/remediation grant dollars

The Ohio Brownfield Remediation Program (OBRG)is a truly transformational program. Many heralded the Clean Ohio brownfield grant program, which operated from approximately 2001 to 2012, as the “golden age” of brownfield cleanup and redevelopment in Ohio. During the 14 years Clean Ohio it awarded $400 million in grants for assessment and cleanup. The Ohio Brownfield Remediation Program will result in close to the same amount of funding in only one year. This truly is the golden age of brownfield redevelopment in Ohio.

Greater Ohio Policy Center released an excellent white paper that provides some great insights into the OBRG as well as the future for brownfield redevelopment in Ohio. Some of the key findings in the white paper include:

More Brownfield Funding is Needed– Even after $340 million in funding in one year there is still robust demand to address underutilized and contaminated sites across Ohio. The OBRG program was oversubscribed. The program was set up to be “first come first served” program. This meant applications that met the funding criteria were awarded funding in the order the applications were received until the funding ran out. Round 3 closed in just three days once the Department received requests for all remaining funding. I personally know of multiple projects that did not receive funding because applications were submitted after this three day period.

125 Projects are Poised for the Next Funding Cycle- Of the projects funded, 125 were assessment grants. This means these sites received funding for sampling to determine level of contamination on the property. Cleanup funding will be needed to put these projects back into productive use.

Ohio has the opportunity to build on this momentum by renewing the OBRG in the next budget cycle this July. This is an opportunity for Ohio to move past its “rust belt” moniker by addressing these legacy sites.

On December 15, 2022, the U.S. Environmental Protection Agency (EPA) issued a final rule that endorses ASTM E1527-21 which provides a uniform standard for performing Phase I Environmental Assessments. The new rule will have an effective date of February 13, 2023. The EPA endorsement of the new ASTM Phase I standard means that the procedures established in the new standard are now deemed to satisfy that U.S. EPA “All Appropriate Inquiries” rule (AAI). EPA’s AAI rule establishes the level of environmental due diligence necessary to qualify for certain CERCLA liability defenses, such as the Bona Fide Purchaser Defense (BFPD). The BFPD protects innocent purchasers from liability for historical contamination on property they buy or lease.  

EPA drew criticism when it previously allowed both the old ASTM E-1527-13 standard and the new ASTM E-1527-21 standard to both meet AAI. Traditionally, when the ASTM procedures are updated the expectation has been the “new and improved” procedures should be followed in all cases. Allowing two different ASTM standards to meet AAI created confusion with environmental professionals. When EPA’s new rule goes into effect on February 13, 2023, only Phase I assessment performed in accordance with ASTM E1527-21 will qualify for AAI.

What is a Phase I Assessment?

Phase I assessments are a review of federal/state environmental databases, a review of historical records related to the property, interviews of regulators and the current property owner and a site walkover to look for any evidence of the “confirmed presence, likely presence or a material threat of the presence of a hazardous substance or petroleum products” at the property. Any evidence of a release or likely release is called a “recognized environmental conditions” (RECs). Depending on the nature of the transaction, a finding of a REC on the property potentially triggers the need for sampling pursuant to a Phase II environmental assessment.

Why is compliance with the new ASTM 1527-21 important?

There are a number of important changes brought about by the new ASTM standard. Because under AAI, the burden to establish a CERCLA liability defense is on the prospective purchaser or tenant, it is critical to review the Phase I report for compliance with AAI and the new ASTM E1527-21 standard.

What are some of the noteworthy changes included in ASTM E1527-21?

Some of the most noteworthy changes included in the new ASTM standard include the following:

  • Emerging Contaminants– AAI is focused on due diligence to establish CERCLA defenses. CERCLA liability pertains to contamination from substances that have been designed “hazardous substances” under the statute. Largely driven by the growing concern surrounding per- and polyfluoroalkyl substances (PFAS), which are not yet designated as “hazardous substances,” the new ASTM E1527-21 standard provides for an optional review for “emerging contaminants.” These so called “emerging contaminants” are substances that are known or suspected to cause adverse effects to human health and/or the environment, but may not yet be regulated. EPA has announced its intention to list PFOS and PFOA (two PFAS compounds) as “hazardous substances” under CERCLA at some point in 2023. Even if those compounds are listed, there are thousands of PFAS compounds which are being evaluated and would still be considered emerging contaminants even after PFOA and PFOS are listed. While the new ASTM standard provides the option to review for “emerging contaminants,” given the significant public health and liability concerns associated with contaminants such as PFAS, it is highly recommended that you discuss with your environmental attorney and/or Environmental Professional (EP) whether to include review of emerging contaminants (especially PFAS) as part of your Phase I assessments. For example, in states which currently regulate PFAS, serious consideration should be given to including a review of PFAS compounds as part of your Phase I assessment.
  • Expiration of a Phase I– The old ASTM standard established that a Phase I report was still valid if it was completed no more than 180 days prior to acquisition or up to one year if certain portions of the reports are updated after six months. However, the old standard did not require the report to specify when certain portions of the report were completed. The new ASTM standard requires a date to be specified for the five components that are especially time sensitive- interviews, searches for recorded environmental cleanup liens, review of government records, site reconnaissance of the subject property and the declaration by the Environmental Professional. The revised standard also clarifies that the clock begins to tick for the 180 day time period when the first of these time sensitive critical tasks were performed.
  • New REC Definition- The new ASTM standards tweaks the definition of what constitutes a REC. The different definitions are shown below. The key change surrounds the addition of the qualifier “likely” in front of “release to the environment.” The comments in the new ASTM standard suggest this change is an attempt to reduce the variation in REC findings between EPs. Some EPs would only make a REC finding if the due diligence confirmed there was a release at the property. However, some EPs would make a REC findings if, based on their experience, the historical use of the property resulted in a high probability of releases. For example, a dry cleaner operating in a strip mall for decades. The EP must include in the Opinions Section the basis for their conclusion that a release was “likely.”
    • Under ASTM E1527-13, a REC is defined as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.
    • Under ASTM E1527-21, a REC means (1) the presence of hazardous substances or petroleum due to a release to the environment; (2) the likely presence of hazardous substances or petroleum products due to a likely release to the environment; or (3) the presence of hazardous substances or petroleum products under conditions that pose a material threat of a future release to the environment.
  • Historical Document Review- The new ASTM standard expressly requires the EP to review certain historical sources of information related to the property. Specifically, the EPA must review aerial photographs, topographic maps, fire insurance maps and local street directories. If one of these historical sources is not reviewed or not available, the EP must include an explanation as to why that source was not reviewed. Also, these same historical sources must be reviewed for properties adjoining the target property.
  • Findings, Opinions and Conclusions– There has been a lot of variation as to the content of the Findings, Opinions and Conclusions Section of Phase I reports among EPs. The new ASTM standard clarifies what should be included in each portion. The Findings Section should summarize the key facts discovered as part of the review which may lead the EP to conclude either a REC is present or no RECs are present on the property. The Opinions Section can be combined with the Findings section and should set forth the EPs explanation for its finding of whether there are RECs present or no RECs present on the property. Finally, the Conclusions Section must clearly identify all RECs, controlled CRECs and any significant data gaps.
  • Recommendations for a Phase II assessment- The new ASTM standard does require the EPA to opine as to whether a Phase II assessment may be necessary. However, specific recommendations by the EP to perform a Phase II are still optional.
  • Basis for Controlled Recognized Environmental Conditions (CRECs)- The definition of a CREC was clarified to be any REC that was addressed using a “property use limitation” (Example: deed restriction to commercial/industrial standards). The new ASTM standard requires the EP to specify the basis of its finding of a CREC along with any regulatory documents that relate to the finding of a CREC. For example, if a No Further Action Letter was issued that includes engineering controls, the EP must include the NFA as part of the Phase I so the User understands its obligations going forward relative to the property post-acquisition.
  • Definition of “Significant Data Gap”- If certain information was not available to the EP in performing the Phase I assessment, the EP is supposed to evaluate whether the missing information (referred to as a “data gap”) rises to the level of being significant. The new ASTM standard includes a definition of “significant data gap” which means “affects the ability of the environmental professional to identify a recognized environmental condition.”
  • Title Searches- The new ASTM standard clarifies that it is the User’s obligation to search title for activity and land use restrictions or environmental liens, the EP doesn’t necessarily have to perform the review. A title review must go back to 1980.
  • Examples of HREC and CRECs- To provide greater clarity of the differences between “Historical Recognized Environmental Conditions” and CRECs, the new ASTM standard provides examples. For an HREC, a release of “hazardous substances” must be addressed without any restrictions and any remaining contamination must be below residential cleanup standards.

In order to try to prevent major environmental issues at abandoned or closed factories, Ohio adopted a program known as the “Cessation of Regulated Operations” (CRO). While this program has been around since 1996, there are misconceptions among businesses and developers as to what it means when a property goes through CRO.

Ohio EPA’s fact sheet for the CRO program opens with an example of what the CRO program is intended to prevent:

“In 1987, vandals entered the closed Dayton Tire & Rubber facility to remove copper cores form several large transformers remaining at the facility.  This vandalism resulted in the discharge of Askerol (PCB oil) from transformers to Wolf Creek.  Cleaning up and demolishing the site took three years and cost approximately $8 million.”

At its core, the goal of the CRO program is to prevent releases of chemicals onsite after operations cease.  CRO requires the owner or operator to remove chemicals and drain equipment after operations are terminated in order to prevent releases of those chemicals since the facility will no longer be operating.

What types of facilities must go through CRO?

Ohio EPA estimates there are 7,000 operating facilities in the State that if they ceased operating would have to complete the CRO process.  Any facility that must submit annual chemical inventory reporting to the State Emergency Response Commission (SERC) is potentially subject to CRO with some limited exceptions.

Facilities that store “extremely hazardous substances”, “hazardous substances”, “flammable substances” and “petroleum” above certain thresholds (i.e. “Threshold Quantity” or TQ) trigger the SERC chemical inventory reporting requirement.  The TQ for hazardous chemicals is 10,000 pounds.  The Threshold Planning Quantity (TPQ) for extremely hazardous substances is 500 pounds.  While there are TQs for gasoline and diesel fuel, if fuel is stored in underground storage tanks, such Bureau of Underground Storage Tank Regulation (BUSTR) regulated facilities are exempt from CRO.

What CRO requires

For any facilities covered by the CRO requirements, the owner or operator of that facility must notify the Ohio EPA, the local emergency planning committee and the fire department that operations have ceased within thirty (30) days.  In addition to filing notice, the owner or operator that has permanently ceased operations must perform a number of other steps.

  • Within 30 days they must do the following:
    • Designate a contact person
    • Secure the facility-
      • Secure all windows and doors
      • Provide fencing
      • Provide lighting and a surveillance system
    • post warning signs around where chemicals are stored
  • Within 90 days the owner or operator must do the following:
    • Submit its most recent chemical inventory to Ohio EPA
    • Submit the current OSHA chemical list or MSDSs for all hazardous substances at the facility
    • Describe where each stationary vat, tank, electrical transformer, or vessel is located and what chemicals are stored within
    • Drain and remove regulated substances from vats, tanks, electrical transformers and vessels, including the piping
    • Remove off-site to another operating facility or to a licensed disposal facility all debris, non-stationary equipment, furnishings, containers, motor vehicles and rolling stock that contain or are contaminated with regulated substances
    • Certify to Ohio EPA that the actions above were performed

Misconception #1- A property is not “clean” just because it went through CRO

In performing due diligence for transactions, I have had multiple clients state that they understood certification of completion of CRO by the former owner or operator to mean the property is “clean.”  This is one of the major misconceptions regarding the program.  All certification of completion of CRO means is that chemicals stored onsite that had the potential to be released have been removed.  It does not mean the property is free of contamination.  Historical releases could have occurred that contaminated soil or groundwater even if the former owner/operator certified completion of CRO requirements.  Any party contemplating purchasing a property that was subject to CRO should still obtain a Phase I environmental assessment to evaluate whether there are any indications that releases historically occurred onsite.

Misconception #2- Upon certifying completion of CRO a facility has completed all its regulatory obligations

Simply because a company has completed the CRO process does not mean that it has completed all regulatory obligations associated with the property.   The most common regulatory obligations for a facility outside of CRO include:

  • Hazardous Waste Units (RCRA Units)- Any property that operated a hazardous waste unit is subject to investigation and cleanup requirements referred to as RCRA Closure.
  • Underground Storage Tanks- Any property that had underground storage tanks must complete proper closure of those tanks through the Bureau of Underground Storage Tank Regulation (BUSTR).
  • Environmental Permits- The owner or operator should terminate any permits applicable to the facility, including but not limited to: air permits, indirect discharge permits, NPDES discharge permits, NPDES stormwater permits, etc.  Each permit should be reviewed to determine the process necessary to terminate its effectiveness.  Terminating permits is in the owner/operators interest to stop reporting and record keeping obligations that may apply under such permits.

Misconception #3-  CRO only applies to owners/operators

CRO also applies to the holder of the first mortgage or the fiduciary for the facility.  The holder or fiduciary has the obligation to secure the facility, including posting warning signs if the operator fails to perform those tasks.  The holder and/or fiduciary must also submit a notice of abandonment to Ohio EPA and the local emergency planning committee.

Misconception #4- CRO ensures all hazardous substances are removed once operations cease

While CRO is an important tool that has reduced risks of releases of chemicals at numerous sites, it is not a guarantee such environmental problems do not exist.  Unfortunately, owners/operators may run into financial problems and do not have the funds to comply with the CRO requirements.  As a result, the building may simply be abandoned with chemicals stored onsite or left in equipment.  In such instances, U.S. EPA may have to step in and remove hazardous wastes using its Superfund (CERCLA) removal authority.

Cuyahoga County has been engaged in a long search for a new jail.  The preferred location is property on Transport Road, which was also the site of Rockefeller’s Standard Oil Refinery #1.  A significant part of the controversy surrounds whether the site is safe for redevelopment given its industrial past.  The debate surrounding the site shows the stigma we still associate with brownfields.  This despite the fact that approximately 700 sites, many much more contaminated than the site on Transport Road, have been successfully remediated in Ohio.

Here are several quotes from recent articles discussing the controversy surrounding the site.  The highlighted quotes show the stigma still assigned to brownfield sites:

Cuyahoga County’s preferred location for a new jail has been mired in controversy over whether toxic conditions can be remediated for safe use, but county officials say it’s the only property that meets all their criteria. (Cuyahoga County officials explain how they narrowed jail search to toxic Transport Road site (cleveland.com))

Executive candidates Chris Ronayne and Lee Weingart issued letters this week calling for council to pause jail planning, suggesting there are better options than the proposed $750-million, 1,900-bed facility at a potentially toxic site. Both have also said they will not put a jail at 2700 Transport Road, even if council votes to buy it. (Cuyahoga County executive candidates ask council to stop jail planning, lay out concerns, alternatives – cleveland.com)

 It has a toxic past and a recent environmental study revealed there remains oil deposits in the ground, as well as explosive methane and cancer-causing benzene gases that would require continuous remediation to prevent serious health risks. (Cleveland.com)

The discussion and debate surrounding the potential jail site shows the stigma and challenges of overcoming public perception even after nearly 30 years of brownfield redevelopment in Ohio.

The steps being proposed to address the issues at the potential jail site include:

  • Restriction on use of groundwater
  • Vapor mitigation system
  • Two feet of clean cap material
  • Completing a cleanup through Ohio EPA’s Voluntary Action Program (VAP) and obtain a legal release upon completion (i.e. VAP covenant-not-to-sue)

The list of remediation techniques outlined for the site are common and used at hundreds of brownfield sites across Ohio.  In terms of restrictions on use of groundwater, a large portion of the City of Cleveland is already subject to what is called an “urban setting designation” which prohibits use of groundwater due to impacts from prior industrial use.

I work on many brownfield redevelopment projects.  Many projects in the City of Cleveland typically involve vapor mitigation systems, which are similar to a radon mitigation used in homes.  The VAP has been used over 700 times in Ohio previously to protect owners from liability from pre-existing contamination.  Other high profile sites in the County are currently undergoing far more complex cleanups under the VAP, such as the former Ford plants.

Ohio just completed the highly successful Ohio Brownfield Remediation Program that included $350 million dollars for brownfield redevelopment.  The three rounds of funding were oversubscribed.  The first round of funding alone saw:

  • $252.6 million in funding
  • 116 cleanups the vast majority of which if not all will use the VAP
  • 74 assessment projects

If after decades of successful brownfield redevelopment we still cannot overcome the stigma associated with such sites, it leads to urban sprawl and neglect for our urban centers.  The map below highlights the issues with urban sprawl in Cuyahoga County:

Developed Land 2002

The first image shows the total developed land in Cuyahoga County in 1948.  The second image shows developed land in 2002.  The key fact is that the population between 1948 and 2002 is roughly the same. (Images courtesy Western Reserve Land Conservancy)  This is a classic demonstration of urban sprawl.

It is easier and often less costly to develop on greenfield property.  Those dynamics is what leads to neglect of our urban cores and the secondary issues associated with sprawl.

While the focus on the environmental debate seems to be the classic stigma associated with brownfield redevelopment, equal consideration should be given to our neglect of our urban core and the dynamics that contribute to sprawl.  Finally, with a successful track record of remediating and reuse of former industrial sites across the state we should be way past the debate whether such property can be successfully and safely redeveloped.

The term “game changer” has been thrown around quite a bit with regard to EPA’s intention to list PFOS and PFOA as “hazardous substances” under CERCLA.  The reason it is a game changer is that it will greatly simplify the evidence needed to support cleanup claims at any site where PFOS or PFOS contamination exists.  Furthermore, as detailed on EPA’s webpage, CERCLA liability is:

  • Retroactive – Parties may be held liable for acts that happened before Superfund’s enactment in 1980.
  • Joint and Several – Any one potentially responsible party (PRP) may be held liable for the entire cleanup of the site (when the harm caused by multiple parties cannot be separated).
  • Strict – A PRP cannot simply say that it was not negligent or that it was operating according to industry standards. If a PRP sent some amount of the hazardous waste found at the site, that party is liable.

Furthermore, CERCLA liability extends to all “potentially responsible parties” (PRPs).  Under CERCLA, PRPs are broadly defined as the following groups:

  • Any current owners of property where hazardous substances were released regardless of whether they released those substances
  • Any past owners or operators of a facility that released hazardous substances
  • Generators of hazardous substances
  • Any transporter of hazardous substances
  • Any person who arranged for the disposal of hazardous substances

Whereas most of the PFAS suits seeking cleanup that are being filed are being brought against manufacturers of PFOS and PFOA, CERCLA  makes: 1) establishing liability much easier for Plaintiffs; and 2) casts a much wider net of potential liability.  In addition, CERCLA allows one liable party to seek contribution from other PRPs, which will likely means many more defendants being named than have currently been targeted in suits seeking cleanup of PFOS and PFOA contamination.

Finally, PFOS/PFOA contamination is very widespread, including at most airports, many military bases, manufacturing sites and any landfills that accepted consumer products.  Therefore, the potential number of sites that could be pulled into CERCLA or possibly CERCLA cleanups that could be reopened to address PFOS/PFOA contamination are numerous.

For these reasons, listing PFOS and PFOA as “hazardous substances” will clearly be a game changer.

What action is EPA taking?

On September 6th, EPA published its proposed rule to designate PFOS and PFOA (as well as related salts and structural isomers) as “hazardous substances” under CERCLA.  As discussed below, EPA is basing its designation on a finding that the compounds pose a “substantial danger to public health or welfare or the environment” pursuant to its authority under CERCLA  Section 102.  This is the first time EPA has ever directly listed a compound as a hazardous substance using its authority under CERCLA Section 102.

What is the regulatory impact of EPA’s designation?

The designation has three primary regulatory impacts:

  1. Reportable Quantity (CERCLA 103(a)) EPA is proposing to establish a reportable quantity (RQ) of 1 lbs in 24 hours.  The RQ designation requires any entity that releases PFOA or PFOS above the RQ threshold to report the spill to EPA and local emergency response officials.  Under CERCLA, 1 lbs is the default RQ.  EPA suggest it intends to issue a future rulemaking on the RQ which would presumably lower the RQ threshold.
  2. Federal Property Transfers (CERCLA 120(h))– Any time the federal government transfers property with PFOS and/or PFOA contamination it must notify the transferee of the contamination.  Either the contamination must be addressed prior to the transfer or the federal government must continue to remediation post transfer.
  3. Hazardous Materials designation under the Hazardous Materials Transportation Act (CERCLA 306(a))–  As designated as a hazardous materials certain requirements related to transportation of such chemicals.  These include recordkeeping, placards on trucks as well as other requirements.
  4. Government Cleanups– U.S. EPA can require cleanup of sites with PFOA and PFOS contamination and seek recovery from potentially responsible parties (PRPs).
  5. Private Party Cleanups– Private parties that conduct cleanup consistent with the Nation Contingency Plan (NCP) can recover cleanup costs from potentially responsible parties (PRPs).

What parties are affected by the proposed rulemaking?

The rulemaking list various manufacturers or businesses that may be impacted by the rule.  The categories include:

  •  PFOA and/or PFOS manufacturers (including importers and importers of articles)
  • PFOA and/or PFOS processors
  • Manufacturers of products containing PFOA and/or PFOS
  • Downstream product manufacturers and users of PFOA and/or PFOS products
  • Waste management and wastewater treatment facilities

It is important to note that the list of parties potentially affected by the rule is purely for information purposes.  Any party that is a “potentially responsible party” or PRP under CERCLA, releases PFOS/PFOA above RQs or transports PFOS/PFOA will be covered by CERCLA.

What is the legal basis for designation of PFOS/PFOA?

There are two different ways a chemical or compound can be designated as a “hazardous substance” under CERLCA.  There is automatic designation under CERLCA 101(14) if a compound is listed under the following environmental regulations:

  • Clean Water Act section 311(b)(2)(A) hazardous substances;
  • Resource Conservation and Recovery Act section 3001 hazardous wastes;
  • Clean Water Act section 307(a) toxic pollutants;
  • Clean Air Act section 112 hazardous air pollutants; and
  • Toxic Substances Control Act section 7 imminently hazardous chemical.

Alternatively, EPA can designate a chemical or compound as a “hazardous substance” using its authority under CERCLA Section102 under the following criteria:

(1) “such elements, compounds, mixtures, solutions, and substances”

(2) “which, when released into the environment”

(3) “may present substantial danger”

(4) “to the public health or welfare or the environment.”

EPA has not designated compounds previously using its CERCLA Section102 authority.  Therefore, outside of the major ramifications of listing PFOS/PFOA as hazardous substances, this action is also significant because it will be the first time EPA presents its interpretation of its legal authority under CERCLA Section 102 which can have significant consequences for listing of future compounds.

What was the basis EPA used to support its conclusion PFOS/PFOA “may present substantial danger to public health or welfare or the environment?”

EPA categorizes concerns related to PFOS/PFOA into the following categories and provides an overview of scientific evidence related to each category:

  • Chemical/Physical Characteristics– EPA cites to studies showing the chemicals are persistent and bioaccumulate.  The water solubility allows the chemicals to migrate readily from soil to groundwater.
  • Toxicity and Toxic kinetics– EPA cites to its revised Health Advisory Level and its review of over 400 peer –reviewed studies regarding the toxicity of the compounds.  EPA provides an overview of the conclusions from these studies in the draft proposed rulemaking.
  • Environmental Prevalence– EPA discusses how widespread the contamination can be found.  EPA discussing AFFF as a major source of contamination in soil and groundwater where AFFF was released.

Did EPA consider the costs associated with designating PFOA/PFOS as “hazardous substances?”

No. EPA determined that it does not need to consider costs when designating a hazardous substance using its CERCLA Section102 authority.  Given the fact that this is the first designation of a chemical/compound under CERLCA Section 102(a), EPA’s interpretation that it should not consider costs when designating a compound as a “hazardous substance” under Section 102(a), will likely be an area that will be challenged by industry.  There have been multiple cases that have gone up to the U.S. Supreme Court regarding the Clean Air Act and other environmental statutes as to whether EPA is required to consider costs when promulgating a rule. In some cases the Court ruled EPA cannot consider costs and in some cases the Court rule cost is a relevant consideration.  It appears likely that EPA’s rejection of cost considerations through this designation will be challenged.

While EPA states it does not have any obligation to consider costs in designating PFOS/PFOA as “hazardous substances,” EPA states in its proposed rule that direct costs would be related to the RQ reporting requirement and would be minimal (estimated at $370,000 annually from reporting of releases).  However, EPA states indirect costs associated with required cleanup is difficult to quantify.

What is Industry’s view of the proposed action to list PFOS/PFOA as “hazardous substances?”

When the proposed rule was under OMB review, the U.S. Chamber of Commerce sent a letter with a supporting study on the cleanup costs that will be imposed on industry stating costs should be considered.  The Chamber commented:

  • Private party compliance costs for this rulemaking are estimated to be between $11 billion and $22 billion.
  • Corresponding annualized private party PFOS/ PFOA cleanup costs at non-federal sites are estimated to be between $700 million to $800 million

Why was a Regulatory Impact Analysis Required by OMB?

The U.S. Chambers’ cost estimates greatly exceed the $100 million threshold requiring EPA to prepare a full regulatory impact analysis (RIA) consistent with EO 12866 and the fulfillment of additional statutory requirements under the Congressional Review Act and Unfunded Mandates Reform Act.  EPA is preparing a RIA analysis that will likely draw heavy scrutiny from industry.  EPA’s forthcoming RIA will be called the Economic Assessment of the Potential Costs and Other Impacts of the Proposed Rulemaking to Designate PFOA and PFOS as Hazardous Substances.   .

What are the next steps in the EPA process?

There is a 60 day public comment period which commenced on September 6th when the proposed rule was published in the Federal Register.  Parties will have until November 7, 2022 to comment on the proposed rulemaking.  It is anticipated EPA will receive a very large volume of comments on the proposed rule.  EPA says it is targeting finalizing the rule in the Summer of 2023.

In July 2021, Ohio’s 2022-2023 budget allocated $500 million in new brownfield funding under various development programs: $350 million for the investigation, cleanup, and revitalization of brownfield sites and another $150 million for the demolition of vacant or abandoned commercial or residential buildings.

The Ohio Department of Development (ODOD) will administer the funding and is charged with adopting rules governing eligibility. ODOD released the program guidelines for both the Brownfield Program and Demolition Program on December 7.

Brownfield Remediation Fund

With regard to the $350 million allocated for brownfield redevelopment, the budget bill together with the guidelines establish the following structure for the program:

Allocation of Funds between Counties and ODOD

  • $1 million in funding is reserved for one year for each of Ohio’s 88 counties.
  • The remaining $262 million in funding is to be provided to eligible projects on a “first-come, first-served basis.”

Eligible Entities and Properties

 A county, township, municipal corporation, port authority, conservancy district, or park district (i.e. “unit of government”) can apply. Both nonprofit and for profit organizations can apply but must have an entered into an agreement with a unit of local government to complete the project.

To be eligible, a property must be considered a brownfield (i.e., known or potential releases of hazardous substances). Asbestos abatement projects also are eligible. Any entity that caused or contributed to the contamination is not eligible to seek funding but could transfer ownership to a eligible entity.

 Max Grant Awards

Applicants can seek Phase II assessment grants up to $300,000 and up to $10 million in grant funding for cleanup/remediation. The total amount of grant funding awarded a project is at the ODOD’s discretion; therefore, it will be critical for project applications to make a strong case for the level of funding sought in the application.

Cleanup/remediation costs that are eligible for reimbursement are:

  • Any action to contain, remove, or dispose of hazardous substances (can include installation of engineering controls, excavation of contamination, or groundwater treatment costs);
  • Up to 10% of the total request can be used for property acquisition costs; and
  • Up to 10% can be used for administrative costs, including: submitting reimbursement requests, reporting obligations, professional fees associated with obtaining a VAP No Further Action Letter or Covenant-Not-to-Sue, and Ohio EPA VAP fees.

Ineligible costs include:

  • Costs to prepare the grant application;
  • All legal costs; and
  • Costs incurred prior to the date of grant award (i.e., costs already spent to investigate or remediate a brownfield are not reimbursable).

Match Requirement

There is no match requirement when applying for grants to a county for its dedicated $1 million in funding, but all applications for funding from general funds awarded by ODOD require a 25% match. However, costs incurred in the two years prior to the grant award are eligible for use as matching funds.

Three Rounds of Funding Anticipated

  • Round 1: Opens December 7, 2021and closes January 31, 2022;
  • Round 2: Opens March 1, 2022 and closes April 30, 2022; and
  • Round 3: Opens July 1, 2022 and closes September 30, 2022.

Applications may be submitted during each open round. ODOD will review the applications and identify any deficiencies that must be corrected. Applicants will have 14 days to correct the deficiencies or risk rejection of their applications for that round of funding.

ODOD will award funding on a “first-come, first-served” basis as dictated by Ohio Revised Code 122.6511(C)(3). Awards will be made until the funding runs out.


Detailed information must be included for a complete application, including but not limited to the following:

  • Project description, including redevelopment plan;
  • Current condition of the property;
  • Number of anticipated new jobs and jobs retained;
  • Total project costs, including the cost to complete a cleanup of the property under the Ohio Voluntary Program, asbestos abatement costs, demolition costs, and infrastructure;
  • Supporting resolution or ordinance for the local government that is the project sponsor;
  • Access or purchase agreement;
  • Phase I/Phase II assessment reports;
  • Match documentation; and
  • Remediation plans.

Building Demolition and Site Revitalization Fund

The budget allocates $150 million for the demolition of commercial and residential buildings that are not brownfields:

  • $500,000 in funding is allocated to each of Ohio’s 88 counties.
  • The remaining $106 million in funding is to be provided on a first-come, first-served basis.
  • Up to 75% of the project cost will be funded (i.e., a 25% minimum match requirement for funds that are not directly allocated to the Ohio counties).
  • County land reutilization corporations (i.e., county land banks) will administer the program, and all funding will go through those entities.
  • Each county must designate a “Lead Entity” to administer the program.

Eligible costs include the following categories:

  1. General Administrative Costs: General oversight of the program, bid preparation, historic reviews and assessments, etc.;
  2. Eligible Pre-Demolition Costs: 10% of the award can be used for acquisition costs and environmental assessments (Phase I assessments and asbestos surveys), etc.;
  3. Eligible Demolition Costs: Removal and disposal of asbestos, demolition of buildings, removal of underground storage tanks, regulatory permit, and inspection fees, etc.; and
  4. Post Demolition Costs: Site restoration (grading and seeding), repair of sidewalks, curbs or catch basins, and landscaping and fencing (capped at $5,000).

Important Considerations

The Brownfield Program guidelines establish a maximum award of $10 million at the discretion of ODOD – a cap three times higher than any previous Ohio brownfield grant cap. Such a high cap will make possible very large brownfield redevelopment projects and increase the likelihood that the available funds will be used up quickly.

ODOD anticipates only three rounds of funding in 2022 to spend all $350 million in grant funds. ODOD also makes it clear that funding will be awarded on a “first come, first served” basis as required by the budget bill. The high grant cap together with the structure of the grant rounds is likely to set off a rush to submit project applications very quickly.

Projects without Phase II assessments can seek up to $300,000 in assessment money; however, it may be difficult for sites with no assessment performed to complete that work before the third round of funding. Sites that have already been assessed or are willing to pay for their own Phase II assessments will have a significant advantage in obtaining cleanup/remediation funding.

All sites must be cleaned up under Ohio EPA Voluntary Action Program (VAP) if the site is eligible. Alternative strategies to address environmental liabilities, such as Ohio’s Bona Fide Purchaser Defense, will not be eligible for funding based on the guidelines.

It is important to note that the application requires a significant amount of information – including site access or a purchase agreement, a full cost breakdown of the project, and a redevelopment plan – and that ODOD will simply reject incomplete applications from consideration for funding. In order to successfully position a project for funding, potential applicants will need to move quickly to gather the necessary information.

This week the Biden Administration released their PFAS Strategic Roadmap which sets forth ambitious action on regulation of Per- and Polyfluoroalkyl Substances (PFAS) pollution, including targeted action with deadlines for eight different federal agencies.  The EPA’s stated goal is to focus on PFAS both upstream and downstream.

Upstream EPA intends to look at evaluating toxicity of various PFAS compounds in a more efficient and accelerated manner.  EPA will target the “modest” number of industries that actually produce PFAS containing products and/or discharge PFAS into the environment reduce PFAS releases into the environment.  EPA states that key industries with significant documented discharges include PFAS production and processing, metal finishing, airports, pulp and paper, landfills, and textile and carpet manufacturing.

Downstream EPA intends to establish both drinking water standards and designate PFOA and PFOS as “hazardous substances” under CERLCA.  By taking these actions, EPA will have federal regulatory authority to pursue cleanup of PFAS related pollution.  Also, EPA intends to study more effective ways of addressing PFAS related pollution in the environment.

Below is a quick summary of some of the key components of the PFAS Strategic Roadmap.

Evaluate Toxicity of PFAS Compounds

  • There are hundreds of PFAS compounds and most have limited to no toxicity data
  • EPA will develop a National PFAS Testing Strategy
  • To the extent practicable, EPA will group PFAS compounds to more efficiently evaluate their toxicity
  • EPA is looking to identify data gaps regarding human health and ecological effects
  • To address gaps found, EPA will issue orders under Toxic Substances Control Act (TSCA) Section 4 authorities to require PFAS manufacturers to conduct and fund studies evaluating toxicity of PFAS compounds
  • EPA states the initial round of Section 4 Order are anticipated by December 2021

Reporting of PFAS Release and Uses

  • EPA wants to collect more information regarding use and release of PFAS compounds even when such uses or release are relatively small in quantity
  • The Toxics Release Inventory (TRI) requires companies to report releases of certain chemicals
  • The 2020 National Defense Authorization Act added reporting requirements of PFAS releases for certain industries
  • EPA believed certain exemptions from reporting limited the amount of information the Agency received under TRI reporting
  • EPA intends to propose a rulemaking in 2022 to categorize the PFAS on the TRI list as “Chemicals
    of Special Concern” and to remove the de minimis eligibility from supplier notification requirements for all “Chemicals of Special Concern.” (i.e. even industries with relatively small releases of PFAS will be required to report)
  • EPA proposed a rule in June of 2021 under its TSCA Section 8(a)(7) authority to collect information on any PFAS manufactured since 2011, including information on uses, production volumes, disposal, exposures, and hazards.  EPA intends to finalize the rule by January 2023.

Regulation of PFOA and PFOS in Drinking Water on an Accelerated Schedule

  • In March 2021, EPA published  a final determination to regulate Perfluorooctanoic acid (PFOA) and Perfluorooctane sulfonic acid (PFOS) in drinking water.
  • EPA expects to issue a proposed regulation in Fall 2022 to establish a drinking water standard for PFOA and PFOS (before the Agency’s statutory deadline of March 2023).
  • The Agency anticipates issuing a final regulation in Fall 2023.
  • Because the process to establish drinking water standards is lengthy, in the interim, EPA will establish non-binding health advisories for other PFAS compounds, such as the classification of PFAS compounds known as GenX.

Control PFAS Discharges in Wastewater and Stormwater

  • EPA is evaluating establishment of technology based treatment (i.e. Effluent Limit Guidelines) requirements for industries that are known to discharge PFAS such as metal finishing,
    electroplating electrical and electronic components, textile mills, and landfills.
  • EPA will require monitoring under NPDES permits of PFAS in stormwater, including implementation of best management practices (BMPs) to reduce PFAS discharges in stormwater
  • State and local authorities that implement pretreatment programs will be required to include source control and best management practices to reduce discharges of PFAS to downstream wastewater treatment plants

Designate PFOA and PFOS as “Hazardous Substances” under CERCLA

  • EPA is developing a Notice of Proposed Rulemaking to designate PFOA and PFOS as Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) “hazardous substances” for Spring 2022.
  • Such designations would require facilities across the country to report on PFOA and PFOS releases that meet or exceed the reportable quantity assigned to these substances.
  • Designation of “hazardous substances” will provide clear federal regulatory authority for cleanup of PFOA and PFOS contamination

Targeted Enforcement of “Imminent and Substantial Endangerment”

  • EPA is using current authority to gather information related to sites with high levels of PFAS contamination.
  • EPA is utilizing inspections, information requests,  and data collection to evaluate current risks posed by PFAS at specific sites
  • EPA states it will use existing regulatory authority to take enforcement when it concludes a site presents a “potential imminent and substantial endangerment situation”

Evaluate whether PFAS Compounds should be Designated “Hazardous Air Pollutants” under the Clean Air Act

  • The Clean Air Act requires EPA to regulate emissions of hazardous air pollutants (HAPs), which are
    pollutants that are known or suspected to cause cancer or other serious health effects.
  • There are currently 187 HAPs
  • EPA will evaluate whether to designated PFAS compounds as HAPs under the Clean Air Act
  • A HAP designation will trigger strict control over PFAS air emissions
  • EPA is targeting the Fall of 2022 to determine whether PFAS compounds should be designated as HAPs

Evaluate Technologies for Destruction and Removal of PFAS

  • Evaluate and develop technologies for removal or treatment of drinking water and wastewater
  • Evaluate technologies for contaminated site remediation, including groundwater treatment technologies
  • Research and evaluate air emission controls to reduce emissions of PFAS compounds
  • Evaluate and research technologies for the destruction and disposal of PFAS-containing
    materials and waste streams, including ensuring destruction technologies do not contribute to the release of PFAS contamination

An Arizona federal court has vacated the Trump Administration’s Navigable Waters Protection Rule (NWPR).   In the case of Pasqua Yaqui Tribe v. EPA, No. CV-20-00266 , the Court ruled that the Trump Administration’s regulatory effort to define the scope of the Clean Water Act (i.e. which rivers, streams and lakes are federally regulated) had “fundamental, substantive flaws”  and, therefore, vacated the NWPR.

The Court’s ruling dealt a major blow to one of the Trump Administration’s signature efforts to reduce federal regulation.  The Court’s action undid a regulatory effort that took nearly four years, from the signature of an Executive Order by President Trump, revocation of the Obama Waters of the United States (WOTUS) Rule and promulgation of the NWPR.  After the ruling, the EPA and Army Corps quickly announced that they would no longer be implementing the NWPR nationwide.

The Clean Water Act  regulates discharges of pollutants from point sources to “navigable water,” with “navigable waters” defined as “water of the United States, including the territorial seas.” 33 U.S.C. Sections 1311(a), 1367(7) and 1362(12).  The Clean Water Act does not further define the phrase “waters of the United States.”  Since the 2006 U.S. Supreme Court’s ruling in Rapanos, EPA has struggled to develop a rule to further define which rivers, streams and lakes are regulated by the federal government under the Clean Water Act.

After the Court’s action, the Army Corps of Engineers and U.S. EPA will rely upon the regulatory definition of “waters of the United States” that was in place prior to 2015.  Including the written guidance document prepared by the Army Corps of Engineers and U.S. EPA following the Rapanos ruling.  Many complained about the written guidance stating it was vague and applied inconsistently by the various Army Corps District Offices.

What happens next?

The District Court’s decision will likely be appealed.  The appeal time period runs through the end of October 2021.  Meanwhile, the Biden Administration had already announced it planning to proceed with yet another rulemaking to define the extent of federal jurisdiction over “waters of the United States.”  Any such rulemaking is certainly going to be challenged as well.

The multi-decade fight of the reach of the Clean Water Act stands as perhaps the best example of the impact of having gridlock in Congress and relying on the Executive Branch to determine critical environmental issues.  After four different U.S. Supreme Court decisions, nearly four decades of litigation, two failed regulatory rulemaking efforts, the reach of the Clean Water Act is still left unresolved.  It is like deja vu all over again…

In 2019, the U.S. Supreme Court’s decision in County of Maui V. Hawaii Wildlife Fund addressed when a permit is required under the Clean Water Act for discharges to groundwater.  Prior to Maui, it was a long standing debate as to when the Clean Water Act (CWA) in order to discharge to groundwater.  Traditionally, impacts to groundwater itself was outside the regulatory scope of the Clean Water Act.  The Court ruled, that in certain circumstances, a CWA permit was needed for discharges to groundwater.  Specifically, the Court ruled, a permit is needed when such discharges equate to the “functional equivalent” of a discharge to federally protected surface water (larger rivers, lakes or the ocean).

The Court’s ruling opened the door that NPDES CWA Permits may be needed for such things as:

  • Wastewater treatment systems with drain fields or that directly discharge to the subsurface;
  • Impoundments that may not be lined and leaching to groundwater;
  • Stormwater management practices that resulted in discharges to groundwater;
  • Leaks from storage tanks or subsurface piping that results in pollutants reaching groundwater;
  • Or other equipment, systems or practices that resulted in the discharge of pollutants to groundwater.

The Court established a somewhat vague standard for determining when a discharge was functionally equivalent to a direct discharge to surface water.  The “Functional Equivalent Test” established by the Court included the following factors to be considered on a case-by-case basis:

  1. How long do pollutants discharged to groundwater take to reach surface water;
  2. How long of a distanced do those pollutants discharged need to travel to reach surface water;
  3. The nature of the material through which the pollutants travel to reach surface water;
  4. The extent to which pollutants are diluted or change chemically as it travels and reach surface water;
  5. The amount of pollutants that reach surface water compared to the amount that was discharged from the point source of pollution;
  6. The manner by or area in which the pollutant enters surface water; and
  7. The degree to which the pollution, once it reaches surface water, has maintained its specific identity.

The Court noted that time and distance traveled would likely be the most important factors in the case-by-case analysis under the Functional Equivalent Test.

As with similar case-by-case tests for making regulatory determinations, implementation can be fraught with inconsistencies and variations in how the factors are evaluated region to region or even regulatory office to regulatory office.  This is why the Court indicated in its decision that EPA could provide administrative guidance to help ensure consistent application of the Functional Equivalent Test.

On January 14, 2021, the Trump Administration’s EPA finalized guidance called Applying the Supreme Court’s County of Maui v. Hawaii Wildlife Fund Decision in the Clean Water Act Section 402 National Pollutant Discharge Elimination Permit ProgramMany commentators viewed the guidance as an attempt to narrowly apply the Functional Equivalent Test in order to limit federal regulatory jurisdiction.  Perhaps the guidance document’s most controversial component was that, in applying the Functional Equivalent Test, EPA should consider the design and performance of the system discharging the pollutants.  For example, the more the design and performance of the system increased the distance pollutants needed to travel or the amount of time it took for pollutants to reach surface water, the less likely a permit would be required.  It was almost as if the intent of the system’s design would be evaluated under the guidance.  If the system wasn’t intended to have a discharge of pollutants to groundwater that reached surface water, then a permit would not be required.  

On September 15, 2021, the Biden administration announced it was rescinding the Trump administration’s guidance.   In rescinding the guidance, EPA stated that the Trump era guidance “added a new factor” to the Functional Equivalent Test which was inconsistent with the Court’s ruling (i.e. considering the design and performance of the system from which the pollutant was released).  By rescinding the guidance, the Biden Administration clearly intends to require CWA permits in more cases.  However, it is unclear whether the Biden Administration intends to develop its own guidance document to try an ensure consistent application of the case-by-case analysis.  In the meantime, the Functional Equivalent Test is likely to be prone to more inconsistent application.  Such regulatory uncertainty also typically leads to more litigation.