This article provides overviews the status of PFAS regulation in the United States. Given the ubiquity of PFAS in commercial products, the expectation is that the United States’ regulation of PFAS and liability risks associated with PFAS will be of interest to a wide array of Japanese businesses, including specialty chemical companies, industrial manufacturers, oil and gas operations, and trading companies. Indeed, it is to be understood that many businesses, including those that have never knowingly used PFAS in their operations, may have a nexus to PFAS without knowing that they do. This article briefly describes PFAS, the types of products that include it, the recent wave of litigation involving PFAS contamination, which has involved settlements above $10 billion, and developments in federal and state regulation of these chemicals. This is followed by a brief discussion of specific scenarios in which these developments may affect Japanese corporations. The article ends with the recommendation that businesses that manufacture, distribute, use, or dispose of PFAS or products containing PFAS should stay abreast of these developments and develop proactive strategies to minimize their potential liability.

Introduction
Poly- and perfluoroalkyl substances (PFAS) are a class of approximately 15,000 synthetic fluorinated organic compounds (by EPA’s most recent reckoning). The carbon-fluorine bond is among the strongest in organic chemistry and gives PFAS their physical properties: fire-, water- and grease resistance. Due to these properties, PFAS exist in a wide array of industrial and commercial products, including:  

  • Aqueous fire-fighting foam (AFFF)
  • Paper and packaging products
  • Plastics
  • Surfactants
  • Surface coatings for textiles, utensils, electronics, automobile parts, etc.
  • Lubricant and oil formulations
  • Cosmetics
  • Nonstick cookware
  • Textiles.

Additionally, PFAS are used in a vast array of industrial processes and critical applications, including the manufacture of circuit boards and semiconductors.

The combined market for PFAS chemicals is estimated to exceed at least $28 billion annually. Japanese businesses interface with PFAS in different capacities, as manufacturers, processors, distributors, and users of PFAS-containing products. Additionally, Japanese businesses active in the mergers and acquisitions market may have to decide whether to take on other businesses’ PFAS-related liabilities as a part of a transaction.

PFAS have been subject to heightened regulatory scrutiny since the 1990s. In the early 2000s, the U.S. Environmental Protection Agency (EPA) (and other environmental and public health agencies around the world) classified certain PFAS chemicals as “persistent, bioaccumulative, and toxic.” The term “persistent” refers to the fact that PFAS do not naturally biodegrade in the environment. PFAS are “bioaccumulative” in that they remain and, over time, accumulate in the bloodstream and organ tissue. They are “toxic,” inasmuch as exposure to certain PFAS has been reported to be linked to developmental defects, chronic illnesses and death. In particular, PFAS are reported to cause thyroid disease, pregnancy issues and cancer, though opinions vary about the degree of risk and at what concentrations such risks become acute. This classification stands at the heart of the increasing litigation risks associated with PFAS and the attention paid to PFAS by United States regulators. As explained below, PFAS are a “hot topic” in United States environmental law, as was the case in the 1980s and 1990s with asbestos and in the early 2000s with dioxins and polychlorinated biphenyls (PCBs).

The PFAS Supply Chain
To date, three types of entities in the PFAS supply chain have incurred the bulk of the liability:

(1) Primary manufacturers: These are typically specialty chemical companies that produce and distribute PFAS either in bulk or in commercial- or industrial-grade formulations that also contain other chemicals. Thus far, 2023 has witnessed the two largest PFAS settlements of all time, both arising in connection with the water contamination cases in multidistrict litigation (MDL-2873), with various Dupont entities entering into a proposed settlement for $1.185 billion and 3M for between $10.3 and $12.5 billion.

(2) Secondary manufacturers or processors: These companies, which are significantly more numerous than primary manufacturers, obtain PFAS or other fluorinated compounds for use in their own industrial processes (e.g., textile manufacturers that treat their products with waterproofing agents made by principal manufacturers). These liabilities stand to be significant, potentially up to several hundreds of millions of dollars.

(3) End users: These can be businesses that use PFAS-containing formulations and products produced by businesses in categories (1) and (2) (e.g., the aviation industry, which both outfits planes with PFAS-coated seats and other equipment due to their fire-resistant qualities and uses PFAS-containing AFFF to quench fires or perform firefighting drills).

Each of the three business-types mentioned above is theoretically capable of introducing PFAS to the environment—and consequently incurring liability—through accidental spills and releases, permitted discharge, disposal, and, in the case of products such as AFFF, product usage. In terms of the nature of the liability exposure, primary and secondary manufacturers (including those that are overseas and knowingly arrange to place their chemicals in United States commerce) are exposed to product liability suits, while any entity that introduces PFAS into the environment has exposure for toxic tort liability (i.e., exposure to environmental claims made pursuant to common law causes of action, such as negligence, nuisance, trespass, personal injury, etc.) and, depending on the laws and policies of a given state, statutory liability. (See the next section for developments related to federal law.)

In addition to these three types of businesses, other entities that are part of the supply chain or that interface with it may incur liability. For example, depending on the degree of control that they exert over PFAS products and the types of claims being brought, trading companies and warehousing and storage facilities also have potential liability exposure. The same holds for waste disposal and treatment facilities (e.g., landfills, incinerators, wastewater treatment plants, and publicly owned treatment works), which are technically not part of the supply chain, but which accept wastes from businesses that are, and public water systems, which may distribute potable water impacted by PFAS-contaminated groundwater and thus incur liability.

Although the vast majority of liabilities and judgments have been issued in the context of environmental contamination and injury to human body, recent years have witnessed a flurry of activity involving PFAS-related consumer action claims against different businesses, including some operating in the food and beverage and cosmetics industries. Under other consumer protection laws, businesses producing PFAS-containing products may be liable for false advertising if the businesses make claims such as the products are “clean,” “organic” and “harmful chemical free” for example.

“Good PFAS” v. “Bad PFAS”
It is fair to state that PFAS have entered the public consciousness. Recent years have witnessed a proliferation of news articles and media stories pertaining to “forever chemicals” —a nickname given to PFAS because of their persistence. Because such publications and broadcasts do not distinguish between the various types of PFAS, which have different health and safety profiles, the general public has been accustomed to treating all PFAS as identical. This attitude has carried over to environmental advocacy groups, who stress the fact that most of the 15,000 or so PFAS chemicals have not been rigorously studied from the standpoint of environmental fate and transport, ecotoxicity, and human toxicity. Many lawmakers, too, are unattuned to the nuanced differences between PFAS chemicals—this is especially true at the state level. On the other hand, industry and members of the scientific community have pointed out that not all PFAS should be regulated in the same way. For example, fluoropolymeric PFAS are less likely to present adverse health effects than non-fluoropolymeric long-chain PFAS.

Until now, the EPA has seemed to be taking a phased approach to PFAS regulation, in the sense that it is gradually expanding the scope of PFAS subject to proposed or final regulation. Moreover, the Agency seems to differentiate between the different classes of PFAS is its June 2023 “Framework for Addressing New PFAS and New Uses of PFAS.” This policy document imposes different requirements for the health and safety information necessary to support pre-market approvals under the Toxic Substances Control Act based on the type of PFAS involved and the likely exposure scenarios. Nevertheless, the EPA consistently speaks of expanding the scope of PFAS regulation, so it is difficult to anticipate where or how it will draw the line.

A similar uncertainty exists in the European Union, though the circumstances differ. In February 2023, the European Chemical Agency proposed a universal ban on the PFAS production, to be implemented over a period of more than 13 years. However, it seems doubtful that this regulation will survive in its current form, given the 4,000+ comments that have been received as of the close of the public comment period in September 2023.

Difficulties of Destroying PFAS
Once PFAS enters the environment, new exposure pathways are created. PFAS are among the most dispersible chemicals in the environment. PFAS’ chemical and physical properties make PFAS remediation challenging, particularly in groundwater or surface water. To date, treatment techniques have proven effective only on a limited basis. The most effective strategy has been to isolate and capture PFAS using membrane filtration (e.g., ion exchange, granular activated carbon, and reverse osmosis or nanofiltration). Even then, disposing of PFAS captured from remediation systems—or of unused commercial stocks of PFAS-containing products—can be problematic, as older commercial waste incineration facilities do not operate at the necessary temperatures to break the carbon-fluorine bonds that give rise to PFAS substances. For this reason, companies are increasingly considering more costly, energy-intensive remediation strategies, including supercritical water oxidation, electrochemical oxidation, and in situ thermal remediation.1

Federal Regulatory Developments
EPA and the federal government have taken incremental steps to regulate PFAS since the early 2000s. For example, in 2002, EPA initiated a phaseout of PFOA and PFOS by major domestic manufacturers, but no recall of products.2 This was followed in 2006 by a PFOA Stewardship Program, which secured commitments from eight major manufacturers and users of the chemical to manage and dispose of their product stocks. Among the eight businesses that participated in the stewardship program, two were Japanese fluoropolymer manufacturers, Asahi Glass and Daikin Industries. Since the early 2000s, EPA has promulgated regulations either creating or clarifying the need to submit notifications—Pre-Manufacture Notifications (PMNs) and Significant New Use Notifications (SNUNs)—to EPA under Section 5 of the Toxic Substances Control Act (TSCA) before the marketing and commercial distribution of certain PFAS-containing products.3

In September 2021, under the Biden Administration, EPA published its PFAS Strategic Roadmap, which delineated the actions that EPA planned to take in the short- and long-term to address PFAS.4 Among other things, the Roadmap calls for the significant expansion of PFAS regulation above and beyond just PFOA and PFOS.5 In addition, the Roadmap calls for the refinement of analytical techniques for sampling and identifying PFAS and further research into feasible remedial technologies. Notable regulatory efforts undertaken pursuant to the Roadmap include, without limitation:

  • Listing PFAS as “Hazardous Substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).6 In August 2022, EPA proposed listing PFOA and PFOS and their salts and isomers as CERCLA “hazardous substances.” Subsequently, in April 2023, EPA issued an advance notice of proposed rulemaking to list seven additional PFAS:

Perfluorobutanesulfonic acid
Perfluorohexanesulfonic acid
Perfluorononanoic acid
Hexafluoropropylene oxide dimer acid (sometimes called “GenX”)
Perfluorobutanoic acid
Perfluorohexanoic acid
Perfluorodecanoic acid

Once finalized, these proposed listings will bring sites contaminated with the pertinent PFAS under the scope of CERCLA, the primary federal environmental remediation statute. It stands to impose joint and several liability on past and present owners and operators of properties contaminated with these substances, as well as on transporters and parties that arrange for the disposal of these ubiquitous chemicals. Thus, entities with no operational nexus to PFAS, may walk into PFAS-related liabilities merely based on holding a real estate interest in a contaminated property. Furthermore, given that CERCLA is the model for most state environmental cleanup statutes, the expectation is that the states, too, would list these substances in their analogous laws once EPA has added them to the “hazardous substances” list. CERCLA listing will provide another statutory basis for private party litigation, as Sections 107 and 113 authorize potentially responsible parties to bring suit against one another to recover response costs. Expanding the list of hazardous substances will create an impetus for regulators to require sampling for these potential contaminants at sites where remediation is underway or not yet completed. It may also serve to “reopen” investigations at sites where remediation had been completed and compel responsible parties to incur costs for which they have not yet planned.

  • Establishing an enforceable Maximum Contaminant Limit (MCL) for six PFAS under the Safe Drinking Water Act.7 This measure will have a twofold impact. First, it will establish an enforceable federal limit for these PFAS, such that regulated public water systems will incur liability in the form of penalties and injunctions for exceeding them.8 This, in turn, will precipitate lawsuits against the violating utilities by customer, as well as by the utilities against the parties responsible for contaminating the water supply. Second, because MCLs inform environmental remediation efforts, the codification of an MCL will establish a de facto remediation target for the six PFAS in groundwater. In this connection, it is relevant that EPA has proposed, as an MCL, four parts per trillion (ppt) for PFOA and PFOS. This standard is orders of magnitude lower than the cleanup levels for most other deleterious contaminants, such as volatile organic compounds, and many in the regulated industry conclude it is predicated on an overly conservative interpretation of toxicity data. The Proposed Rule was issued March 2023.9 Coupled with the broad sweep of CERCLA liability, this proposed regulation stands to greatly increase the costs and duration of PFAS-related remediation projects.
  • One-Time PFAS Reporting Rule under TSCA Section 8(a)(7): In late September 2023, EPA issued a pre-publication of a final rule that would require businesses to provide information to the agency regarding their manufacture or importation of PFAS since 2011. The reporting deadline is October 11, 2025. The information that must be reported is largely similar to that which is required to be submitted every four years under the TSCA Chemical Data Reporting (CDR) rule. However, the one-time PFAS reporting rule does not contain many of the exemptions that apply to CDR. Not only is there no weight-based reporting threshold, but EPA has chosen not to allow the article exemption. As a result, in addition to manufacturers and importers of bulk chemicals, businesses that import articles, or manufacture them in a way that forms new PFAS (e.g., through heat treatment), will have to obtain information from entities that are upstream in the supply chain. This may be particularly difficult in the case of articles, as unlike bulk chemicals and mixtures, manufactured parts and complete products typically are not distributed in commerce with Safety Data Sheets or specifications that enumerate all the chemicals present within them. Aside from facilitating EPA efforts to prioritize specific PFAS for further investigation and restrictions, the information that the EPA receives will assist federal and state agencies in prioritizing specific operations for potential investigations and enforcement. Moreover, pursuant to the Freedom of Information Act, such information stands to be made available to the public, including environmental and consumer advocacy groups and plaintiffs’ firms. Such groups, as well as governmental agencies, may have a vested interest in tying certain businesses to known areas of PFAS contamination.

In total, the measures specified in the PFAS Strategic Roadmap and issued in the proposed rules stand to regulate PFAS’ introduction into commerce, use, and remediation. Over two dozen Congressional bills are pending that require implementation of the PFAS Strategic Roadmap or otherwise touch on PFAS.

State Regulatory Developments
Numerous states also have undertaken legislative and regulatory actions to address PFAS, with dozens of bills introduced and enacted throughout the country. Besides continuing to initiate lawsuits against businesses believed to have contributed to PFAS contamination, states currently are implementing three broad categories of actions to address PFAS: (1) developing drinking water and groundwater cleanup standards; (2) regulating PFAS-containing products; and (3) gathering information to evaluate the potential for harmful PFAS exposure at businesses and remediation sites. 

  • Drinking water and groundwater cleanup standards: To date, many states have issued guidance or regulations establishing drinking water or groundwater remediation standards for PFAS.10 These standards span a wide range of numerical limits, which reflect the fluid state of information and diversity of opinion regarding the consequences of PFAS exposure.
  • Commercial regulation of PFAS-Containing Products: In this connection, a number of states have codified laws requiring business entities such as manufacturers, packagers, importers, suppliers, and distributors of PFAS-containing products to provide consumer warning statements or labels. More than a dozen states, such as Maine and Minnesota, have issued or proposed laws requiring manufacturers and importers of products with intentionally added PFAS to notify the state the state environmental agencies, and to cease introducing PFAS-containing products into state commerce by certain dates.11 As with the one-time PFAS reporting rule under TSCA Section 8(a)(7), compliance with these laws will require subject businesses to investigate their global supply chains and/or provide information to their customers regarding the PFAS content of the products that they themselves supply.
  • PFAS Evaluation at Remediation Sites: Another state approach is to require responsible parties at remediation sites to evaluate the potential for PFAS contamination near drinking water resources through research into past and present property uses, as well as environmental sampling. For example, in 2019, California initiated a Phased Investigation Plan to obtain data on PFAS in effluent and drinking water.12 The investigation, which is ongoing, will proceed in three phases: the first two phases will cover primary manufacturing sites, landfills, and properties, such as airports, where releases of PFAS-containing firefighting agents are more likely, while the third phase will cover secondary manufacturers of PFAS-containing products.

Similar measures have been initiated in New York and New Jersey, where state environmental agencies have directed responsible parties at active remediation sites—including, in the case of New Jersey, sites that have received conditional closure predicated on institutional or engineering controls—to evaluate the potential for PFAS contamination based on historical operations and, if such potential is found to exist, to develop sampling and investigation plans.13 Additionally, states such as North Carolina are now issuing mandatory PFAS questionnaires in connection with all permit applications and renewals.

Besides increasing the litigation risk to businesses identified as having used PFAS in past or present operations, these state initiatives stand to influence the manner in which companies approach remediation projects. For example, given NJDEP’s apparent willingness to “reopen” cleanup sites that have been closed out subject to controls, parties performing remediation will have to weigh the costs of achieving conditional closure on a shorter time frame and at lesser cost versus taking more time and incurring greater cost to achieve unconditional closure.

States are also using their subpoena authority more expansively to obtain information that may serve as the basis for bringing PFAS-related enforcement actions or lawsuits.

Wave of State and Private-Party Litigation
The immediate origins of the current  PFAS litigation wave date back to 2012, when the EPA required public water systems regulated by the Safe Drinking Water Act to sample for perfluorooctanoic acid (PFOA) and perfluorosulfanate (PFOS), the two most widely studied PFAS substances, as well as four other PFAS substances, under the unregulated contaminant monitoring rule.14 The sampling identified concentrations of these two PFAS contaminants at public water systems across the United States, spurred additional investigations of the nation’s water supply, and prompted lawsuits.

The initial wave of private-party litigation targeted two categories of defendants: (1) PFAS manufacturers and (2) water utilities. In 2018, DuPont and its former subsidiary Chemours paid $671M to resolve approximately 3,500 claims involving releases from the Washington, West Virginia facility where Teflon—which contains PFOA—was manufactured.15 Around the same time, class action lawsuits were brought against water utilities in Colorado, Michigan, New York and Pennsylvania.16 Because PFAS in water utilities is from contamination from third-party sites, the water utilities themselves became plaintiffs in litigation. Around the same time as the DuPont settlement, 3M, another major primary manufacturer of PFAS, agreed to pay $35M to a water utility in Alabama to cover the costs of remediating PFAS in the public water system.17 Primary manufacturers are still the focus for litigation, but the web is increasing to include secondary manufacturers and processers as well.

Several states also have initiated litigation against companies alleged to have introduced PFAS into the environment. Notable efforts include those by state attorneys-general in California, Illinois, Minnesota, Michigan, New York, New Mexico, New Jersey, New Hampshire and North Carolina. The defendants in these lawsuits have included primary and secondary manufacturers of PFAS, as well as the Department of Defense (due to its use of AFFF). The settlements reached to date have been considerable. For example, in 2018, 3M settled for $850M with Minnesota for releases of PFAS in the Twin Cities Metro Area.18 Of this amount, $720M were allocated toward drinking water restoration and natural resource projects. 3M faces similar liability exposure for PFAS-related contamination in other states.

Another sizable settlement involved Wolverine Worldwide, a prominent secondary manufacturer of PFAS. This company incorporated 3M’s Scotchguard water-proofing agent into its leather products, the disposal of which resulted in PFAS impacts to drinking water resources near Rockford, Michigan.19 In February 2020, Wolverine Worldwide entered into a consent decree with the state of Michigan and local townships to pay nearly $70 million toward extending a municipal water system to about 1,000 homes with private wells that were affected by the contamination.20 Michigan, in fact, is estimated to have one of the highest concentrations of PFAS sites of any state, and in 2019, the Michigan attorney-general’s office issued a call for private attorneys to assist in bringing suit against responsible parties.

Much of the recent PFAS settlement activity has been consolidated in MDL-2873 in a federal district court in South Carolina. This MDL is a consolidation of over 7,000 lawsuits related to PFAS contamination from AFFF, a component of Class B firefighting foam. The defendants include a wide array of companies, including primary manufactures of PFAS chemicals present in the AFFF, as well as the manufacturers and distributors of the AFFF itself. AFFF has been in use by the Department of Defense, airports, and other industrial facilities since the 1970s. The cases consolidated in this MDL fall into three large categories: (1) lawsuits to recover the costs of remediating PFAS contamination in public water systems, (2) personal injury suits, and (3) natural resource damages claims.

Thus far, two proposed settlements have been obtained with respect to the first category of lawsuits, and the amounts at issue are staggering. In June 2023, Dupont and its affiliated entities, Chemours and Corteva, entered into a proposed settlement for $1.185 billion. Soon after, 3M agreed to pay between $10.3 billion and $12.5 billion (depending on how many public water systems detect PFAS impacts). These settlement amounts reflect the difficulties of remediating PFAS in water, and because the proposed settlements are accompanied by releases and indemnities, a legitimate concern on the part of other MDL defendants and governmental agencies involves the risk shifting that may set in if it turns out that the cleanup costs are greater than were initially anticipated. In such a scenario, secondary manufacturers and end users of PFAS would have to bear the risks of the cost overruns. This risk to secondary manufacturers and end users holds true outside the context of the MDL. Thus, the resolution of claims involving primary manufacturers is of concern to a wider array of businesses.

Environmental Groups
Environmental advocacy groups in the United States are very much interested in PFAS, and the state and federal initiatives discussed above have made it easier for such groups to identify potential litigation targets. Specifically, in May 2020, the Environmental Working Group (EWG) developed an interactive map of 2,858 sites (as of June 2022) with PFAS contamination across all fifty states (. Compiled using publicly available information from numerous sources, including the EPA website, the map organizes the sites into three categories: (1) military installations, (2) drinking water systems, and (3) other known sites. In many cases, the map specifies the cause of the contamination (e.g., releases of AFFF), the types of PFAS involved, and any analytical data. This information can provide adequate information with which prospective claimants can identify potentially responsible parties and substantiate a claim. In certain instances (more common for the “other known sites” category), the map will even identify the name of the business or property owner, thus obviating the need for further research on the part of prospective claimants. EWG has indicated that the map is “dynamic,” meaning that it will be kept up to date as new information is obtained.

Other advocacy groups, such as Mamavation,21 have started publicity campaigns for PFAS in products. For example, Mamavation will take certain drugstore products, grocery store items, and cosmetics, send these products to laboratories to be tested for PFAS indicators and publish whether PFAS is present in these common products. This awareness may even trigger lawsuits as consumers argue they were misled by manufacturers and distributors that these products did not contain PFAS. This is even more likely if the product has been advertised as “clean,” “organic” “green,” or any similar term. In addition, plaintiffs’ firms may use this information in order to initiate PFAS-related lawsuits, especially as they grow in resources due to large PFAS settlements.

Specific Concerns for Japanese Businesses
Japanese companies may be affected by the regulatory climate surrounding PFAS in various ways. In this section, we will consider how the different causes of actions and actual and prospective regulations may apply to such companies:

Scenario #1 – Product Liability: Product liability may attach to any Japanese company in the chain of business that distributes PFAS in the United States. This would include both primary manufacturers and secondary manufacturers, including those that based in Japan, as well as U.S. subsidiaries involved in importing the PFAS-containing products to the United States.

Scenario #2 – Toxic Tort Litigation (Besides Product Liability): As indicated, toxic tort liabilities arise from common law actions, which can be brought by any public or private entity, provided that they are the party that has suffered injury and the specific elements of each cause of action (e.g., negligence, trespass, nuisance, personal injury, inherently dangerous activity, etc.) are satisfied. Toxic tort liabilities generally attach to businesses proximately responsible for causing harmful exposure. In the case of PFAS, this means the entities that release PFAS into the environment, either through accidental spills or deliberate industrial processes and disposal practices. Japanese parent corporations that serve as chemical suppliers should be insulated from such liability, as long as they do not exercise undue operational control over those aspects of their subsidiaries’ business that may give rise to releases (e.g., how to dispose of industrial wastes). Similarly, trading companies that arrange for the importation of PFAS-containing products should not incur such liability, as long as they do not exercise operational control over the products at the time that they are released. On the other hand, U.S. subsidiaries that engage in industrial operations involving PFAS or that use and dispose of PFAS products in a way that endangers the environment would be most at risk.

Scenario #3 – Statutory Environmental Remedial Liability. Generally, the same businesses that have exposure for toxic tort liability may be exposed to liability under environmental remedial statutes, as these aim to hold the parties directly responsible for causing contamination (as opposed to upstream suppliers) liable for cleanup costs. To determine liability exposure, attention must be paid to the substantive requirements of the statute under which the claim is brought. As of the date of this publication, PFAS are not regulated as “hazardous substances” or “hazardous wastes” under the two main United States federal statutes dictating remediation and cost recovery, CERCLA and RCRA, respectively, although this is expected to soon change. On the other hand, as mentioned above, several states have developed laws and guidance pursuant to which they have issued directives, which impose remedial liability and cost recovery on parties responsible for causing PFAS contamination. In general, the scope of entities that may incur liability under these state laws includes past and present owners and operators of PFAS-contaminated sites, businesses that arrange to dispose of or release PFAS at a given location, or companies engaged in transporting PFAS at the time that a release occurred.

That United States’ statutory liability attaches to past and present owners of contaminated sites also raises liability concerns for Japanese companies that do not themselves deal with chemicals but that acquire other businesses or real estate in the United States. A Japanese company that acquires a fee or leasehold interest in property with PFAS contamination may incur remedial liability as an owner or operator depending on the laws of a given state (and almost certainly after PFAS is added to the CERCLA list of hazardous substances) even if the business itself never used or handled PFAS. Thus, Japanese companies that engage in such transactions are encouraged to perform pre-closing acquisition-related environmental due diligence, also known as “All Appropriate Inquiries,” to (a) assess their liability exposure, and (b) if such exposure exists and the applicable law provides, qualify for defenses to remedial liability for pre-existing contamination that they did not cause or exacerbate.

Companies that acquire the equity of a business that is a responsible party at a PFAS remediation site should be insulated from liabilities to the extent that corporate formalities are observed. However, failure to observe these formalities may lead to veil-piercing liabilities or, if the acquiring company exercises undue control, direct liability as an operator. Furthermore, even if the acquiring corporation is not itself deemed liable, PFAS liabilities may impair the value of its investment in the subsidiary. Thus, Japanese companies looking to acquire other businesses in the United States also are encouraged to perform pre-closing environmental transactional due diligence. The reason is not to enable the Japanese companies to avail themselves of the affirmative defenses to CERCLA liability, which are not available in the context of an equity transaction, but rather to gain adequate information regarding environmental conditions to inform a business decision whether or not to proceed with the transaction.

Scenario #4Liability under Consumer Protection Statute. Currently, at least 11 states have enacted consumer protection statutes related to PFAS and further consumer protection laws are anticipated. These statutes impose requirements such as (1) prohibitions on the manufacture or distribution of specific products containing PFAS and (2) notification requirements to state agencies regarding the presence of PFAS in products. As a result of these laws, distributors will likely ask suppliers about the presence of PFAS in their products. This may cause further supply chain and business disruptions, as businesses may discontinue procuring or (in the case of vendors) selling products after they learn that they contain PFAS. Moreover, non-compliance with these new laws could subject companies to regulatory enforcement and penalties. Because regulation of PFAS in consumer products is so novel, the promptness and extent to which these laws will be enforced in each state remains to be seen. Regulated industries, including Japanese companies, should be aware that, similar to other environmental laws, most states impose per-day or per-violation penalties for noncompliance that may be aggravated by intentional or knowing violations or mitigated by good faith compliance efforts. They may also issue stop-sale orders, which can be disruptive to businesses. Furthermore, the laws incentivize plaintiffs’ firms and public interest groups to independently test certain products for PFAS content and then to report non-compliant businesses to state regulators.

Under these laws, companies will have to account for a more or less ubiquitous class of chemicals. This is even more concerning when considering that regulators are employing broad definitions of PFAS for regulatory purposes. Companies will need to be careful if making any claims that can be interpreted as touching upon PFAS. Generally, companies will need to be vigilant in cases where there are laws requiring PFAS disclosure. It is beneficial to businesses to be proactive in terms of determining the presence of PFAS in their products, so as to avoid a situation where the state, a plaintiff’s lawyer, or a public interest group “surprises” them with an enforcement action or injunction.

Conclusions
PFAS regulation and liability is a fluid, fast-developing topic in environmental law. Given the pervasiveness of PFAS and the health and environmental risks that PFAS pose, the liability risks are potentially significant, even to companies that do not presently know that they use PFAS. Companies that may have manufactured or used PFAS are encouraged to evaluate present and past products, supply chains, and processes to obtain a better understanding of their connection to these chemicals. If current operations involve PFAS, then the costs and benefits of continued PFAS use should be weighed. For companies that have manufactured or distributed PFAS products, either now or in the past, it may be worthwhile to determine the scope and scale of distribution, as well as any warning statements or health and safety information that may have been issued to customers. Information on how PFAS-containing substances were disposed of or otherwise released to the environment would also be relevant. It is important for companies to consider that when a chemical is deemed toxic, the government will deal with it, such as through remediation, and look to shift costs to industry and other third parties. This impacts the liability affecting companies, including increasing governmental investigations, enforcement actions by states for breaches of codified laws, litigation by states and private parties under common law or for breaches of statutory/regulatory provisions, and indirect liabilities due to supply chain disruptions or contractual breaches. Moreover, it would behoove any company conducting a PFAS audit of this type to do so under the direction of counsel to maximize the scope of privilege. Finally, Japanese corporations looking to acquire real property or other businesses in the United States are strongly encouraged to account for PFAS in their transactional due diligence.


1 Examples would include supercritical water oxidation (involves oxidation at temperatures and pressures exceeding the thermodynamic critical point), electrochemical oxidation (involves the application of an electrical chemical and is similar to the process that some wastewater treatment plants use), and in situ thermal remediation (involves heating the source areas to eradicate contaminants).

2 Significant New Use Rule, Envt. Prot. Agency, 67 Fed. Reg. 72,854 (Dec. 9, 2002) (codified at 40 C.F.R. pt. 721); Perfluoroalkyl Sulfonates; Significant New Use Rule, Envt. Prot. Agency, 67 Fed. Reg. 11,0008 (Mar. 11, 2002) (codified at 40 C.F.R. pt. 721); Perfluoroalkyl Sulfonates.

3 Long-Chain Perfluoroalkyl Carboxylate and Perfluoroalkyl Sulfonate Chemical Substances; Significant New Use Rule, Envt. Prot. Agency, 85 Fed. Reg. 45,109 (July 27, 2020) (codified at 40 C.F.R. pt. 721); Perfluoroalkyl Sulfonates and Long-Chain Perfluoroalkyl Carboxylate Chemical Substances; Final Significant New Use Rule, Envt. Prot. Agency, 78 Fed. Reg. 62,443 (Dec. 23, 2013) (codified at 40 C.F.R. pts 9, 721); Perfluoroalkyl Sulfonates; Significant New Use Rule, Envt. Prot. Agency, 72 Fed. Reg. 57,222 (Oct. 9, 2007) (codified at 40 C.F.R. pt. 721); Perfluoroalkyl Sulfonates; Significant New Use Rule, Envt. Prot. Agency, 67 Fed. Reg. 72,854 (Dec. 9, 2002) (codified at 40 C.F.R. pt. 721); Perfluoroalkyl Sulfonates; Significant New Use Rule, Envt. Prot. Agency, 67 Fed. Reg. 11,0008 (Mar. 11, 2002) (codified at 40 C.F.R. pt. 721).

4 EPA’s Per- and Polyfluoroalkyl Substances (PFAS) Action Plan, Envt. Prot. Agency, EPA 823R18004 (Feb. 2019).

5 Preliminary indications are that the agency will look to designate some 29 additional PFAS as high priority along the same lines as these two chemicals in the aftermath of the sampling conducted pursuant to the fifth Unregulated Contaminant Monitoring Rule.

6 42 U.S.C. §§ 9601 et seq.

7 42 U.S.C. §§ 300f et seq.

8 PFOA, PFOS, PFNA, PFHxS, PFBS, HFPO-DA (GenX)

9 PFAS National Primary Drinking Water Regulation Rulemaking, 88 Fed. Reg. 18638 (Mar. 29, 2023).

10 E.g., Groundwater Information Sheet: Perfluorooctanoic Acid (PFOA) and Perfluorooctanesulfonic Acid (PFOS), California Water Resources Control Board; 310 Code Mass. Reg. 22.00 Massachusetts Drinking Water Regulations.

11 Me. Stat. tit. 38, § 1614 (2021).

12 State Water Resource Control Board, PFAS Phased Investigation Approach, CA Water Boards (March. 6, 2019).

13 Guidelines for Sampling and Analysis of PFAS under NYSDEC’s Part 375 Remedial Programs, N.Y. State Dep’t of Envt. Conservation (Jan. 2020),; New Jersey Safe Drinking Water Act, N.J.A.C. 7:10; Private Well Testing Act, N.J.A.C. 7:9E; Ground Water Quality Standards, N.J.A.C. 7:9C; New Jersey Pollutant Discharge Elimination System rules, N.J.A.C. 7:14A, List of Hazardous Substances, N.J.A.C. 7:1E.

14 Revisions to the Unregulated Contaminant Monitoring Regulation (UCMR 3) for Public Water Systems, Envt. Prot. Agency, 77 Fed. Reg. 26,072 (May 2, 2012).

15 In re E.I. Du Pont De Nemours and Company C-8 Personal Injury Litigation, U.S. District Court for Southern Ohio, No. 13-2433.

16 Bell v. 3M Co., Nos. 16-CV-02351-RBJ, 16-CV,02394-RBJ, 16-CV-02352-RBJ (D. Colo.); Wolverine World Wide, Inc. v. 3M Co., No. 1:18-CV-00039-JTN-ESC (D. Mich.); New York v. 3M Co., No. 904029-18 (N.Y. Sup. Ct. June 19, 2018).

17 W. Morgan-E. Lawrence Water & Sewer Auth. v. 3M Co., No. 17-12381 (11th Cir. Jun. 4, 2018).

18 State of Minnesota v. 3M Co., No. 27-CV-10-25562 (Minn. 4th Dist.).

19 Wolverine World Wide, Inc. v. 3M Co., No. 1:18-CV-00039-JTN-ESC (D. Mich.).

20 Wolverine World Wide PFAS Settlement, Plainfield Charter Township, https://www.plainfieldmi.org/information_about/pfas_settlement/index.php (last accessed Aug. 3, 2023).

21 Product Investigations, Mamavation, (last visited Aug. 3, 2023).