Preparing for Emerging Contaminant Liability and Administrative Law Challenges
On June 21, 2022, Gov. Ron DeSantis signed into law legislation that requires the Florida Department of Environmental Protection (DEP) to begin administrative steps to develop and submit to the Florida Legislature, by January 2025, drinking water standards for two chemical substances with the potential to create a public health crisis. This 2022 law is somewhat unique in that it requires DEP to bring its proposed standards back to the legislature for its review, comment, and approval. This article discusses the regulatory and legal implications of this law and related issues.
The governor’s signature follows a flurry of activity at the federal level. On June 15, 2022, the U.S. Environmental Protection Agency (EPA) reduced the current Health Advisory Level (HAL) for two substances in the category of “emerging contaminants” known as PFOA (perfluorooctanoic acid) and PFOS (perfluorooctane sulfonic acid) (collectively PFAS or per- and polyfluoroalkyl substances), down to infinitesimally low levels equivalent to one drop of water in 10 million gallons. HALs are not legally enforceable as standards or rules under federal or state law, but are routinely relied upon by states, including Florida, as “de facto” standards. To date, no administrative or other legal challenges have been brought against DEP for relying on EPA’s HAL for PFAS. That could change depending on how DEP implements the new laws.
On January 10, 2022, EPA submitted a proposal to the White House Office of Management and Budget (OMB) that will designate PFAS as “Superfund hazardous substances,” discussed below. If the OMB does not object to EPA’s proposal, it is expected that by December, EPA will have published the draft rule with a final rule expected in late 2023. While EPA in its “Statement of Need” appears to be focused on reporting requirements and obligations and listed the proposed rule as “not economic[ally] significant,” by designating PFOA and PFOS as a “hazardous substance” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or also known as Superfund), it is widely anticipated that the final rule will affect many segments of the public and private sectors. Further, it would likely trigger a cascade of federal administrative law challenges, such as negotiating consent orders and disputing notices of violations, as well as litigation activities including cost recovery, third-party contribution claims, all available under CERCLA, and Florida law equivalents, such as under F.S. Ch. 376.
In addition, through its delegated programs in DEP, EPA could order supplemental investigations and, if needed, remediation of these substances at hazardous waste sites in active remediation, and could reopen investigations on over 250 now closed dry cleaners where PFOA and PFOS impacts are suspected. Private parties would also have to face a course of action and contribution of cleanup costs in the rehabilitation of sites impacted by these substances; and PFOS and PFOA will be included in all Phase I Environmental Site Assessments to satisfy the requirements of the recently updated EPA All Appropriate Inquiries Rule (AAI), discussed below.
Concurrent with the actions at the federal level, it is expected that the federal designation will have a domino effect on DEP’s cleanup programs under F.S. Ch. 376, as it uses EPA’s CERCLA hazardous substance list as basis to regulate these compounds. While EPA remains the lead agency for CERCLA, by agreement with EPA, DEP often will take the lead, with appropriate oversight from EPA. In Florida, that means DEP takes regulatory direction from EPA Region 4 in Atlanta. Historically, EPA will defer to the states on enforcing applicable laws and regulations, but DEP and EPA have not always seen eye to eye, particularly when it comes to application of cleanup target levels, which may be considered Applicable or Relevant and Appropriate Requirements (ARAR) under CERCLA requirements, which a Potentially Responsible Party (PRP) must meet. Typically, a HAL alone — without a promulgated rule — would not constitute an ARAR. And DEP could simply adopt the HAL as a rule, thereby likely triggering administrative challenges under F.S. Ch. 120.
Another administrative law issue is whether DEP will “piggyback” on the EPA HAL, or develop a standard of its own. DEP has traditionally followed EPA in its adoption of water quality and other standards, but is not obligated to do, and may create its own standard if it not less protective of human health or the environment. Regardless, any rulemaking by DEP is subject to the rule challenge procedures found in F.S. Ch. 120.
Considering these substances are present in every segment of society such as food wrappers, firefighting foam, manufacturing, healthcare, cooking utensils, coatings, stain resistance in carpet and clothing, as byproduct of dry cleaning and wastewater treatment, biosolids, and landfill leachate, the potential for large segments of industry to be enforced against or imposed in whole or in part CERCLA liability due to the presence of PFAS contamination is staggering. Superfund liability is:
1) Retroactive — where parties may be held liable for acts that happened before 1980;
2) Joint and Several — any one party can be held liable for the entire cleanup of a site if the harm caused by several parties cannot be separated;
3) Strict — a party cannot avoid its responsibility by claiming that it was not negligent or was operating according to industry standards. If a party is found to have sent a small amount of PFAS to a site or contributed to harm, the party is liable;
4) Limited Defenses — act of God, act of war, or act of a third party.
While the Supreme Court’s 1994 decision in Landgraf v. USI Film Products, 511 U.S. 244 (1994), clarified confusing precedent regarding retroactive liability, since PFAS were used before 1980 in Florida, it is anticipated that federal and Florida courts will still find it challenging to interpret this portion of CERCLA liability.
The joint and several portion of CERCLA liability poses significant challenges to PRPs, as it holds each defendant liable for the cleanup of an entire site. However, in Florida, and as result a of the 2006 legislative amendment to F.S. §768.81, damages are apportioned according to each party’s percentage or degree of fault rather than the doctrine of joint and several liability. In 2009, the U.S. Supreme Court affirmed the limitation on joint and several liability, finding that factors such as geography and duration could be used to apportion liability for an indivisible harm such as a plume of contaminated groundwater. Notwithstanding this holding, it is anticipated that determining the degree of each PRP’s fault regarding its contribution will be subject to legal challenges.
The strict portioning of CERCLA liability will likely present the most significant challenges in Florida due to the amount of commercial and residential real estate deals, as well as property turnover rate. For instance, in Miami Dade, the commercial property turnover rate between 2016 and 2020 was estimated at 8%. At such rate, it would take about 12 years to see about 30% of commercial property in Miami Dade to change ownership. It is likely that with minor rate variations, this trend is similar throughout Florida. Change in property ownership is important since CERCLA’s strict liability portion generally refers to “ownership” of a property where hazardous substances are found. However, the statute is silent as to the date from which ownership is measured. In California Dep’t of Toxic Substances Control v. Hearthside Residential Corp., 613 F.3d 910 (9th Cir. 2010), the Ninth Circuit held that “ownership” is determined at the time cleanup costs are incurred and not when a cost recovery lawsuit is filed.
This decision is important because the purchaser of a fully remediated property should no longer be at risk of being held strictly liable for the costs of cleaning up the property prior to purchase. In Florida, and in cases of fully remediated sites granted a Site Rehabilitation Completion Order (SRCO) by DEP, and whose ownership may have transferred several times, it is unclear how Florida courts will rule when some of the original owners that may have released these substances are no longer corporate or economically viable to address PFAS contamination under the reopener clause stated in every SRCO.
The Reopener Clause in CERCLA and in Florida
The 1986, CERCLA amendments made permanent the requirements of “reopeners” in all but a few limited circumstances. Given that potential PFAS presence in surface waters, in a migrating plume, or in sufficient concentrations in soil to leach or leaching to potable water resources, would be a strong element in favor of EPA imposing a reopener in settled or open Superfund or Superfund Alternative cases, the affected private parties must get ready to frame an appropriate response. In Florida, and following the federal lead, DEP includes in every SRCO (with or without recorded and non-recorded institutional controls) a reopener clause. As result of the reopener provisions, parties that administratively settle waste cleanup cases with DEP under the provisions of F.A.C. Ch. 62-780 live with the risk that their settled cases could be reopened due to the identification of new chemicals of concern or new site conditions, such as the potential for PFAS being present. While DEP has, to date, not offered an opinion on how it plans to address reopeners for PFAS contamination, it also has not established the number of closed hazardous wastes, dry cleaning solvent programs, and state-funded cleanup sites, landfills, and others that may be subject to EPA and DEP’s reopener provisions and cleanup demands.
Concurrently, and more unsettling given that EPA has announced for all intents and purposes a zero de facto cleanup standard, and that PFAS currently cannot be broken down to nonharmful components in situ and require groundwater extraction and treatment via filtration and soil incineration, sites under the DEP’s oversight for assessment and remediation may need to modify their assessment approaches, remedial designs, and technologies as well length of monitoring to address these substances. By not being able to achieve a zero cleanup standard, the administrative law recourse left for a responsible party to avoid exorbitant remediation and monitoring costs is to invoke a provision of CERCLA that is rarely used called a “Technical Impracticability Waiver.” At the state level, the best option is to invoke the statutory directive that Florida citizens be protected under “actual circumstances of exposure” under F.S. §376.30701.
The “Hazardous Substance” Designation in AAI and CERCLA Liability
AAI is defined as the process of evaluating a property’s environmental conditions and assessing potential liability for any contamination. While federal regulations do not require that a Phase I Environmental Assessment be performed, it is a common requirement in Florida for most real estate transactions involving existing commercial property, vacant urban land, and agricultural land. Every Phase I environmental assessment must be conducted in accordance with the AAI Final Rule (Ref. 40 C.F.R. Part 312). The rule provides that ASTM International Standard E-1527-12 (Standard Practice for Environmental Assessments: Phase I Environmental Assessment Process) and E2247-16 (Standard Practice for Environmental Assessments: Phase I Environmental Assessment Process for Forestland or Rural Property) are consistent with the requirements of the rule and can be used to meet the statutory requirements for conducting an appropriate inquiry. The inquiry is conducted to obtain protection from potential liability under CERCLA as an innocent landowner, a contiguous property owner, or a bona fide prospective purchaser, since persons may be held liable for cleaning up hazardous substances at properties they currently own or operated in the past. Corporations also use AAI as part of due diligence where the CERCLA defenses would not apply. Courts have ruled that parties not following the AAI process have a very high burden of proof in establishing a CERCLA defense.
Most parties to a real estate transaction currently consider PFAS as a “business risk” and act accordingly to their risk tolerance. However, upon the expected EPA designation of PFAS as “hazardous substances” under CERCLA, the AAI standard will certainly change, and due to PFAS prevalence in air, groundwater, sediments, and soil, have a profound effect on evaluating environmental risk, liability, and transaction financing. For instance, and considering that DEP has recently reported the detection of PFAS above its provisional cleanup target level of 70 ng/L in over 50% of dry cleaner sites sampled with several sites reporting PFAS plumes migrating to private commercial and residential property, commercial property owners considering selling and having had a dry cleaner as a former tenant or property owners potentially being affected by a PFAS contaminant plume will certainly face additional scrutiny under AAI.
Addressing the emerging contaminant PFAS regulation will continue to be a priority for EPA and DEP. The anticipated designation by EPA of PFAS as “hazardous substances” under CERCLA will have profound impacts across a wide swath of industries, local governments, individual PRPs, formerly responsible parties with settled cases, and current responsible parties in the process of settling cases. Once the designation is final, it will expose parties that used, manufactured, received, or transported PFAS to significant CERCLA liability. It will also strongly influence real estate transactions and investor risk tolerance. However, there are also several points of entry to contest or challenge agency action, including those of DEP depending on how DEP responds with its own rules. Preparing for the likely onslaught of administrative hearings under F.S. Ch. 120 will become extremely important in this context.
The impact of the 2022 legislation requiring the proposed rule to be presented to the legislature is also breaking new ground, and the legal implications of that, depending on what the legislature does, are uncertain. Questions already have arisen over whether there are separation of powers challenges to be made under Florida’s fairly strict constitutional scheme. Stakeholders in Florida should monitor developments at the federal and state levels, as well as evaluate whether claims already settled or being settled could be affected by CERCLA liabilities, the new Florida legislation, and new EPA and DEP rules, and prepare for challenges at the federal and state levels.
 State of Florida Office of the Governor, Gov. Ron DeSantis Signs Twelve Bills (June 21, 2022), https://www.flgov.com/2022/06/21/governor-ron-desantis-signs-twelve-bills-2/.
 See U.S. EPA Headquarters, Office of Water, EPA Announces New Drinking Water Health Advisories for PFAS Chemicals, $1 Billion in Bipartisan Infrastructure Law Funding to Strengthen Health Protections, News Release (June 15, 2022), https://www.epa.gov/newsreleases/epa-announces-new-drinking-water-health-advisories-pfas-chemicals-1-billion-bipartisan#:~:text=As%20part%20of%20a%20government,used%20to%20reduce%20PFAS%20in.
 See Pat Rizzuto, White House Eyes EPA Plan Making Two PFAS Hazardous Wastes, Bloomberg Law (Jan. 11, 2022), available at https://news.bloomberglaw.com/environment-and-energy/white-house-reviewing-epa-plan-making-two-pfas-hazardous-wastes.
 White House Office of Management and Budget, Office of Information and Regulatory Affairs (Fall 2021), https://www.reginfo.gov/public/doeAgendaViewRule?pubId=202110&RIN=2050-AH09.
 Comprehensive Environmental Response, Compensation and Liability Act, enacted by U.S. Congress on December 11, 1980. See 42 U.S. Code §9601, et seq. It is codified in 43 U.S.C. Ch. 103.
 U.S. EPA, Superfund Liability, https://www.epa.gov/enforcement/superfund-liability.
 Nicole McGinnis, Reconsidering CERCLA Retroactivity after Landgraf v. USI Film Products, University of Chicago Legal Forum 1, art. 18 (1997).
 State Dep’t of Env’t Prot. v. Allied Scrap Processors, Inc., 724 So. 2d 151 (Fla. 1st DCA 1998).
 Fla. Stat. §768.81 (2005), allowed for joint and several liability in certain circumstances depending on percentage of fault and amount of damages. The current version of §768.81 no longer offers joint and several liability. See Laws 2006, Ch. 2006-6, §1, eff. (Apr. 26, 2006); see also Broward County v. CH2M Hill Inc., 302 So. 3d 895 (Fla. 4th DCA 2020).
 Burlington Northern & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009).
 James Hawkins, Hawkins Commercial Realty, Miami Date Commercial Property Estimated Turnover 2016 to 2020 (July 1, 2021), https://www.hawkinscre.com/chart-miami-dade-commercial-property-estimated-turnover-2016-to-2020/.
 42 U.S.C. §9607(a)(1).
 Section 122(f)(6), 42 U.S.C. §9622(f)(6)(B), (C).
 U.S. E.P.A., Clarification of the Consultation Process for Evaluating the Technical Impracticability of Groundwater Restoration at CERCLA Sites, OLEM Directive 9200.3-117 (Dec. 28, 2016), available at https://semspub.epa.gov/work/HQ/198193.pdf.
 Ralph DeMeo, Michael Petrovich & Christopher Teaf, Risk-Based Corrective Action: How Is It Working? 89 Fla. B. J. 47 (Jan. 2015).
 40 C.F.R. §312.20.
 Coppola v. Smith, Case No.11-cv-01257-AWI-BAM, slip op. (E.D. Cal. Jan 15, 2015); Joseph Koncelik, Latest Environmental Due Diligence Case Highlights the Value of the “Innocent Landowner Defense,” Ohio Environmental Law Blog (Mar. 8, 2015), https://www.ohioenvironmentallawblog.com/2015/03/brownfields-transactions/latest-environmental-due-diligence-case-highlights-the-value-of-the-innocent-landowner-defense/.
 Nicholas Barnes, Fabio Fortes, Ziqi He & Steven Folsom, Florida Statewide PFAS Pilot Study at Drycleaning Sites (May 2021), https://floridadep.gov/sites/default/files/White_Paper_Florida_PFAS_Pilot_Study_Drycleaning_Sites.pdf.
This column is submitted on behalf of the Administrative Law Section, Stephen C. Emmanuel, chair, and Lyyli Van Whittle, editor.