A wave of recent changes in federal and state law pertaining to PFAS chemicals is likely to present both immediate and long-term challenges to the government contracting community. At the federal level, contractors that import products, parts, packaging, equipment or other articles with components that contain PFAS must confront new and extensive regulatory reporting requirements relating to such imports going back to 2011, and they must do so by May 2025. At the state level, a growing list of states are enacting total bans on the sale and distribution of such products and components. On top of this flurry of environmental regulatory activity, the Biden Administration continues to direct federal agencies to develop procurement strategies that prioritize the purchase of PFAS-free articles as part the Administration’s broader effort to leverage the federal procurement function in pursuit of climate and sustainability policy objectives.
As these regulatory responses to PFAS chemicals continue to grow and proliferate, government contractors should be prepared to face increasing levels scrutiny aimed at their direct and indirect use of PFAS chemicals. For a primer on this emerging landscape, refer to Crowell & Moring’s recent webinar Critical Reporting Requirements for Products Containing PFAS: What Companies Need to Know (and Do) Now.
What are PFAS chemicals and where are they used in government contracting?
Per-and polyfluoroalkyl substances (commonly referred to as PFAS) are a broad class of man-made synthetic chemicals that are used widely in consumer, commercial, and industrial products for their range of performance qualities, including:
- Resistance to chemical reactivity or degradation,
- Resistance to extreme temperatures,
- Physical strength and resilience
- Water repellency,
- Flame retardancy,
- Anti-friction properties,
- Surfactant properties, and
- Superior electrical insulation.
PFAS chemicals are widely used across the U.S., including the following sectors:
- Aerospace and Defense,
- Automotive,
- Construction,
- Electronics,
- Energy, and
- Consumer Products and Apparel.
PFAS chemicals are commonly found in a wide range of products and components sold to the government, including some types of tubing, piping, seals, gaskets, cables, insulators, wiring, castings, sealants, laminates, printed circuit boards, coolants, solar panel components, consumer products and fabrics—just to name a few. A recent U.S. Department of Defense (“DoD”) report to Congress reflected such widespread presence of PFAS throughout, for example, the defense industrial base value chain. As DoD summarized:
Critical PFAS uses were identified in almost every major weapon system category including but not limited to fixed wing aircraft (trainers, fighters, bombers, transports, refuelers, ground support, unmanned, and associated support equipment); rotary wing aircraft (attack, transports, heavy lifts, search-and-rescue, and associated support equipment); surface ships (combat, destroyers, aircraft carriers, cutters, landing crafts); submarines; missiles (air-to-air, ground-to-air, air-to-ground, ballistic); torpedo systems; radar systems; and battle tanks, assault vehicles, and infantry carriers.[1]
What environmental regulation is emerging?
Federal Environmental Regulation
EPA recently issued final regulations under Section 8(a)(7) of the Toxic Substances Control Act (TSCA) (as mandated by Congress in the FY 2020 National Defense Authorization Act) that impose extensive reporting obligations on any company that, at any time since 2011, manufactured or imported any PFAS chemical, including PFAS chemicals imported as part of manufactured articles. Importantly, EPA’s new PFAS reporting regulations do not include many of the exemptions that are typically found in regulations issued under TSCA. For example, there is no exemption for substances manufactured or imported as impurities or byproducts and no broad exemption for materials manufactured or imported only for research and development (R&D) purposes. Moreover, there is no exemption for articles manufactured or imported pursuant to a government contract, and no exemption for articles that might implicate national security concerns. Finally, there is no minimum production (or import) threshold that triggers reporting and no “de minimis” level of PFAS content below which reporting is not required. As a consequence, government contractors will be subject to the reporting requirements of the rule if, at any time since January 1, 2011, the contractor imported a piece of equipment containing one or more PFAS compounds, regardless of the number of pieces of equipment imported (e.g. for one-off imports) and regardless of the level or concentration of PFAS in each piece of equipment.
What Information Must be Reported?
Companies subject to the new rule will be required to provide EPA with the information listed below, at a minimum, for each facility that imported an article containing components with one or more PFAS compounds:
- The identities of the PFAS substances in the article;
- The categories of use of the PFAS substances in the article;
- The specific functions of the PFAS substances in the article;
- The estimated maximum concentrations of the PFAS substances in the article; and
- The annual import volume of the article containing the PFAS substance(s).
What is the reporting standard?
Importantly, this information must be reported for each year, starting in 2011, that articles with PFAS-containing components were imported by the facility, to the extent that such information is “known to or reasonably ascertainable by” the submitter. The regulations define this to mean “all information in the person’s possession or control, plus all information that a reasonable person similarly situated might be expected to possess, control, or know.” EPA further explains in the preamble to the final rule that the “known to or reasonably ascertainable” standard requires submitters to conduct a reasonable inquiry within the full scope of their organization and may also require:
inquiries outside the organization to fill gaps in the submitter’s knowledge. Such activities may include phone calls or email inquiries to upstream suppliers or downstream users or employees or other agents of the manufacturer, including persons involved in the research and development, import or production, or marketing
What is the timeline for compliance?
Under the new rule, companies will have one year to collect the information required to be reported, followed by a six-month period, ending in May 2025, during which reports must be submitted to EPA. Given the complexities of navigating multi-tiered global supply chains, contractors should act without delay to understand their obligations and initiate the investigations and develop the internal processes needed to assure compliance with this new rule.
State Law Bans and Restrictions
Two states – Maine and Minnesota – have recently enacted laws that will prohibit the sale and distribution in those states of any product or any product component that contains any PFAS chemical, regardless of whether the product is intended for industrial, commercial or consumer use. Under both states’ laws, the regulator may exempt specific products or product categories if the regulator determines that the use of PFAS in those products is “currently unavoidable.” Both states define a currently unavoidable use to mean a use that is “essential for health safety or the functioning of society” for which alternatives are not reasonably available.
Also, it is important to be aware that several other states are poised to follow Maine and Minnesota in enacting laws to ban from commerce all products containing PFAS chemicals. Copycat bills have been introduced already this session in Illinois and Connecticut, and similar bills are pending or expected to be introduced in additional states, including New York, California, Colorado, and Kentucky, among others.
Conclusion
Government contractors should be prepared to face increasing levels of PFAS-driven scrutiny. For example, the identification of PFAS-containing articles in compliance with EPA’s PFAS reporting rule might also pose unique risks to government contractors where, simultaneously, the Biden Administration continues to develop new policies fostering “sustainable procurement” mechanisms, including the development of new markets for PFAS-free products and services. As we have explained previously, through Executive Order 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, the Administration outlined a host of federal sustainability and climate change-related procurement initiatives, with a primary focus on achieving “a carbon pollution-free electricity sector by 2035 and net-zero emissions economy-wide by no later than 2050.” Also included within the Administration’s notion of sustainable procurement, however, is prioritizing the procurement of PFAS-free products. According to the Implementing Instructions for E.O. 14057 issued by the White House Council on Environmental Quality (“CEQ”) in August 2022, the provisions of Section 208 within E.O. 14057 include the direction for agencies to “prioritize substitutes for products that contain perfluoroalkyl or polyfluoroalkyl substances (PFAS). . .” While direct procurement restrictions pursued to date have been discretely targeted (e.g., phaseout of PFAS-containing firefighting foams and a DoD ban on the purchase of consumer products such as non-stick cookware and utensils, as well as stain-resistant upholstered furniture, carpets, and rugs (as directed by section 333 of the FY 2021 NDAA)), additional restrictions, labelling and notice requirements, and information requests are expected to emerge, both in the form of new procurement policies as well as specific provisions included in individual contracting opportunities. Accordingly, government contractors should approach the immediate compliance obligations summarized above with one eye on future procurement restrictions and preferences.
For further information, please contact:
Paul Freeman, Partner, Crowell & Moring
pfreeman@crowell.com
[1] Report on Critical Per- and Polyfluoroalkyl Substance Uses Pursuant to Section 347 of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (Public Law 117-263) at 5 (Aug. 2023).
