In recent years, per- and polyfluoroalkyl substances or, as they are more commonly known, “PFAS,” have been the subject of high-profile litigation and heightened scrutiny by federal and state governments as concerns rise about the risks they present to human health and the environment. This trend is of significant interest to the specialty chemical industry, as well as to manufacturers, importers, and end-users of various chemical products, and treated equipment and parts, because PFAS embodies a vast array of synthetic chemicals—over 7,000, according to some sources—that may be unknowingly present in a company’s products or operations. Moreover, because PFAS regulation is a relatively recent phenomenon, many companies may not know or fully appreciate their nexus to PFAS.
Since 2017, several states have earnestly begun establishing cleanup levels for various PFAS, primarily perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), and issuing directives requiring responsible parties at cleanup sites to sample for PFAS. Certain states have also invoked the authority of consumer protection laws to phase out PFAS from specific products or to require warning statements regarding the presence of PFAS in the products. California, with its Safe Drinking Water and Toxic Enforcement Act of 1986, better known as “Prop 65,” is on the cutting edge in this regard.
In 2019, the U.S. Environmental Protection Agency (EPA) took an important step toward regulating PFAS at the federal level by issuing its PFAS Action Plan. EPA called for a coordinated approach toward regulating PFAS under the existing framework of federal environmental statutes, and the agency has initiated several notable rulemakings to implement aspects of the Action Plan. See our former alerts for more information (including greater detail on litigation initiated by the plaintiffs’ bar, which is not the subject of this post).
Early indications are that the march toward heightened federal regulation will continue under the Biden Administration. For example, the Biden Plan To Secure Environmental Justice and Equitable Economic Opportunity prioritizes the improvement of the nation’s water quality supply and promises aggressive follow-through on aspects of the 2019 EPA PFAS Action Plan, including the designation of PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the establishment of Maximum Contaminant Levels (MCLs) for these two chemicals under the Safe Drinking Water Act (SDWA). Thus far, the Biden EPA has taken significant steps toward realizing this goal, including:
- February 22, 2021: Issuing a revised regulatory determination for PFOA and PFOS under the SDWA and establishing a 42-month timeline for promulgating national primary drinking water standards, including MCLs, for these two substances.
- March 11, 2021: Proposing to add 23 PFAS substances to the SDWA Unregulated Contaminated Monitoring Rule. The occurrence data gathered from monitoring under this rule serves as a basis for making regulatory determinations under other SDWA provisions.
- March 17, 2021: Publishing an Advance Notice of Proposed Rulemaking, soliciting comments on PFAS in wastewater discharges as a potential basis for effluent limitations guidelines, pre-treatment standards, and new source performance standards for the Organic Chemicals, Plastics and Synthetic Fibers point source category.
- April 8, 2021: Updating its risk assessment for perfluorobutane sulfonic acid, which, though deemed less toxic than PFOA or PFOS, was found to have effects on the thyroid, reproductive organs and tissues, developing fetuses, and kidneys following oral exposure.
- April 27, 2021: Issuing a memorandum calling for the implementation of the 2019 PFAS Action Plan, the convening of an “EPA Council on PFAS,” and the development of a new strategic initiative, titled, “PFAS 2021-2025 – Safeguarding America’s Waters, Air and Land.”
- May 19, 2021: Adding 11 new PFAS to its SDWA Drinking Water Treatability Database.
- June 3, 2021: Adding three new PFAS to the Toxic Release Inventory reporting list, pursuant to the National Defense Authorization Act.
- June 10, 2021: Proposing a rule under TSCA Section 8(a) requiring businesses to submit data to EPA on their manufacture and importation into the United States since 2011 of PFAS chemicals and PFAS products, irrespective of the volume imported.
Additionally, there has been a flurry of PFAS-related legislation proposed in the United States Congress. Most important is the April 13, 2021 introduction in the House of Representatives of the bipartisan PFAS Action Act of 2021. If enacted into law, this proposed legislation would establish a Congressional mandate for many of the EPA proposals mentioned above, in addition to requiring other actions, such as the designation of PFOA and PFOS “hazardous air pollutants” under the Clean Air Act and the institution of a moratorium on the introduction into commerce of new PFAS products.
In short, the federal government is stepping up its regulation of PFAS, and it is safe to assume that such sweeping federal scrutiny of PFAS will also lead to additional state regulation.
Federal and State Emphasis on Information Requests and Subpoenas
To further their effort to regulate PFAS substances, both federal and state governmental agencies have employed the vehicle of targeted, company-specific information requests issued under statutory authority and subpoenas to gather data about PFAS-related activities. In the context of PFAS-related investigations, a subpoena is a writ issued by a governmental agency (or court) under its general investigative authority to compel the production of information under a penalty for failure to comply. An information request functions similarly, except that it is issued under the authority of a specific statute that the agency is responsible for implementing. As opposed to industry-wide information-collection efforts, which are often issued in the form of regulations, such targeted efforts generally serve as a basis for enforcement against the recipient.
In its 2020 PFAS Action Plan Program Update, EPA indicated the issuance of twenty information requests to companies regarding PFAS, pursuant to federal statutes such as the Clean Water Act (CWA) (thirteen requests), TSCA (five requests), CERCLA (one request), and RCRA (one request). Additionally, the program update mentions the performance of eleven (11) PFAS-related site inspections. These figures have doubtless increased since the program update was published in February 2020.
Similarly, state environmental agencies have utilized their own information request provisions and subpoena power, which can also be wielded by state attorney generals, to gather information from businesses. States such as California, Michigan, New York, and New Jersey have been particularly active in this regard, and Pillsbury’s experience suggests a degree of interstate coordination.
What to Do When You Receive a Subpoena or Information Request
Should your business receive an information request or a subpoena for information from an authorized governmental agency, the general approach to responding is largely the same. First, it is important to note that a legal duty exists to respond to subpoenas and certain statutory information requests. The latter include requests issued pursuant to Section 11 of TSCA, Section 308 of the CWA, Section 3007 of RCRA, and Section 104(e) of CERCLA. As with subpoenas, failure to respond to information requests issued under these statutory provisions may serve as grounds for penalty assessments and other means of enforcement.
Close scrutiny of the request, and the assistance of legal counsel, is worthy of consideration. Despite the general duty to respond, various aspects of the response may be negotiable. For example, upon a showing of cause, recipients may seek and obtain reasonable extensions on deadlines set forth in the subpoena or information request, as well as clarifications that could serve to limit the ostensible scope of the information being sought to that which is truly helpful and of interest to the investigation. In this connection, it is worthwhile to note that, from a regulatory and litigation perspective, not all PFAS are equally relevant, as some PFAS—e.g., PFOA and PFOS—are of greater concern than others.
Therefore, recipients may wish to consider the legal necessity of involving counsel as soon as possible to evaluate the scope and terms of the subpoena or request. Furthermore, the involvement of counsel may serve to maximize the degree of confidentiality and privilege that a respondent may assert over the communications and investigatory activities involved in preparing a response.
Recipients may also wish to consider the potential advantages of contacting the issuing authority early on to understand the basis for the subpoena or information request. Such discussion could be useful in establishing a positive relationship with the issuing agency, as well as for clarifying potential misunderstandings. In the latter connection, it is possible that the issuing authorities may be proceeding on inaccurate information (e.g., confusing corporations with similar names, mistakenly assuming successor liability, etc.). Another advantage of learning the motivation of the issuing agency is that, with specific information, the respondent may be better suited to take corrective action to mitigate the potential for future liability. One may also use the preliminary discussions or correspondence with the issuing authority to stipulate procedures for the treatment of confidential business information or trade secrets.
Recipients may also wish to consider the necessity of issuing a litigation hold, to ensure that no potentially responsive information is destroyed. Even if inadvertent, the destruction of potentially responsive information may have adverse implications in the context of enforcement. Moreover, it is not uncommon for subpoena and information request recipients to be required to provide an account of the steps taken to ensure a fulsome and comprehensive response. In the same connection, given the trend toward electronic recordkeeping, consideration should be given to retaining forensics vendors or IT specialists to assist with pulling information from company email servers, electronic documents databases, and personal computers and laptops.
The key to a good response is to provide clear and concise responses, while bearing in mind broader issues, such as privilege, corporate form (i.e., distinctions between affiliated companies), and trade secrets, as these may affect the scope and manner of the information that is disclosed, as well as broader strategies for mitigating potential liabilities.
Additional Steps and Considerations
For companies that utilize or have utilized PFAS in their operations or products, the receipt of a subpoena or information request may serve as a trigger for broader internal evaluations of chemical handling procedures, corporate governance practices, and relationships with third parties. For example, a subpoena or information request may touch upon the tip of the iceberg of a broader PFAS issue, which one may expect to be addressed in subsequent subpoenas or information requests. In that case, the company may wish to undertake a more extensive internal investigation to obtain a better grasp of potential liabilities and potential measures to mitigate these liabilities, before being compelled to do so through receipt of a subsequent subpoena or information request.
It is also possible that a subpoena or information request may require the divulgence of information regarding the respondent’s corporate affiliates or chemical suppliers and customers. The submission of such information may give rise to business relations complications, which the respondent should work to identify and address. For example, if the subpoena or information request response entails the disclosure of private-party transactions conducted under a confidentiality or non-disclosure agreement with another corporation, the respondent should review that agreement to discern whether it has a duty to notify the other corporation of its proposed disclosure.
Where the response to subpoena or information request reveals a current or limited lack of organizational understanding regarding the regulatory and civil liability risks associated with PFAS, respondents may further consider developing organizational capacities to mitigate potential future liabilities, such as corporate compliance programs or environmental management systems. These frameworks help an organization achieve its environmental goals through consistent review, evaluation, and improvement of its environmental performance. They are also looked upon favorably by regulators.
Finally, given the trend toward heightened PFAS regulation, respondents with a nexus to such chemicals may wish to consider “green chemistry” approaches involving the substitution of PFAS with more environmentally benign chemicals.
What to do?
Pillsbury advises all types of businesses to identify their liabilities and obligations pursuant to the impending state and federal regulation of PFAS. If you are unsure whether your business is subject to PFAS regulation or would like more information about responding to an information request or subpoena, contact Pillsbury for more information. Please contact Reza Zarghamee (202.663.8580) with any questions.