EPA Rule Change Expected To Trigger Additional State Regulation, Exacerbate Inflation

Eleven states have passed legislation banning PFAS chemicals in food packaging and other consumer products. In three of those 11 states — California, Maine, and New York — new regulations dealing with usage and mitigation reporting requirements begin to take effect on the first day of 2023.

PFAS, an acronym referring to Per- and Polyfluoroalkyl chemicals, are a category of substances that the EPA describes as “a group of manufactured chemicals that have been used in industry and consumer products since the 1940s because of their useful properties.” As the EPA explains, there “are thousands of different PFAS, some of which have been more widely used and studied than others.”

Such prohibitions and regulations, which ultimately drive up prices for consumers, present another example of the way in which additional regulations, like new taxes, impose added costs on businesses that are ultimately borne in part by consumers. As with other government mandates and restrictions, critics of certain PFAS regulations point out how they impose costs that will disproportionally harm low- and middle-income households, much like regressive tax.

Despite the regressive nature of such regulations, legislation to prohibit and regulate PFAS chemicals is sure to be introduced and likely enacted in more states in 2023 and beyond. The sponsors of such legislation will be buoyed by a recent EPA proposal to designate two PFAS chemicals — perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) — as toxic substances.

In the new rule published in the federal register on September 6, the EPA proposes to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA). This designation change, if permitted to take effect, will cost employers $800 million annually, according to an estimate from the U.S. Chamber of Commerce.

The Office of Management and Budget has ruled the EPA’s proposed designation for PFOA and PFOS is an “economically significant” regulation, which means the OMB deems the rule will impose more than $100 million in additional costs. While the OMB has made clear the EPA’s proposal for PFOS and PFOA will have a significant economic impact, the EPA remains unable to quantify any direct or indirect costs from the proposed rule, such as the price of remediation or transferal contaminated federal property.

Pointing to the proposal’s imposition of costs that are certain in existence but uncertain in magnitude, individual companies and industry groups aside from the U.S. Chamber are calling for repeal of the proposed EPA rule. The EPA acknowledges its ignorance when it comes to potential costs imposed by the new rule.

“Given the lack of information and systemic analysis of remediation of PFOS and PFOA, we seek information and comment that may allow EPA to estimate incremental indirect costs associated with this rule,” states the EPA’s economic assessment of the rule.

“The evolving understanding of technology used to assess and respond to various PFOA- or PFOS-contaminated media at sites introduces further uncertainty in developing a quantitative estimate of the cost of response actions,” the EPA assessment added, noting “an important indirect impact of the proposed designation is to transfer the costs of potential response activities from the public to polluters.”

World Health Organization Guidelines Call Into Question More Stringent EPA Regulations

Many environmental organizations and other proponents of this EPA rule change now feel undermined by World Health Organization draft provisional drinking water guidelines released on September 29. The guidelines do not go as far as the EPA’s, as the WHO document states, due “significant uncertainties and absence of consensus” when it comes to PFAS-related data collection and record keeping.

Some environmentalists are concerned the WHO guidelines will be used to advocate for lighter EPA regulation of PFAS chemicals in the U.S. The WHO is accepting comments on its draft drinking water guidelines through November 11.

The deadline to submit formal comments on the EPA’s proposed designation change for PFOA and PFOS is November 7. Soon after that deadline more PFAS-related state legislation will begin to be introduced as pre-filing deadlines for 2023 legislative sessions approach in state capitals across the country.

As of 2021, the annual cost of all federal regulations was estimated at $1.9 trillion, higher that all personal and corporate income tax collections combined. The EPA’s proposed rule for PFAS, with its significant but unknown costs, demonstrates why and how the federal regulatory burden is expected to continue growing. This additional PFAS regulation proposed by the EPA, it is believed by many, will embolden lawmakers and regulators in more states to take their own action. Unfortunately for households already struggling to contend with the highest inflation rate in four decades, history has shown the rising cost of federal regulations will not deter state lawmakers from layering on their own costly mandates and prohibitions.