by Jack Yoest
Two recent proposals that the federal government are considering in the name of consumer safety have Uncle Sam coming after products millions of Americans use every day. While a potential gas stove ban has received several headlines in recent days, millions of Americans may not know that the government has also had a role in beginning the phasing out of a chemical that is a component in so many products that it will likely impact every American in the country.
Perfluoroalkyl and polyfluoroalkyl substances (PFAS), chemicals in circulation since the 1940s, are part of a family of man-made ingredients in common use. They are familiar in household and industrial applications such as cellphones, nonstick cookware, waterproofing and stain-resistant finishings, hygiene, and medical devices.
The Environmental Protection Agency (EPA) wants to label certain PFAS as hazardous, claiming that these compounds tend to linger indefinitely in the environment without degrading and are found in water and then in wildlife and human beings. But while this would seem to be a concern, the science is not settled, and regulators have yet to deliver an ideology-free answer for humans.
The good news is that researchers have concluded, that amidst all this confusion, “the rain jacket you wear is not a direct threat to your health. Outdoor apparel has been tested for human health and safety, and your use of a product containing forever chemicals likely isn’t a source of contamination.” Also, industry has phased out and invested millions of dollars in remediation efforts for the two PFAS compounds – out of the 5,000 or so in existence – that were previously used in manufacturing processes and found to potentially cause health issues and the levels in question in the environment have decreased dramatically over the last twenty years. But none of this has yet to slow down the federal government.
Despite the fact that Centers for Disease Control (CDC) has found that “human health effects from exposure to low environmental levels of PFAS are uncertain,” the Biden administration is moving forward with a massive regulatory overreach that is changing the way that American companies are doing business. Clever regulators want to use the over-broad authority of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, as a bludgeon to extract a “tax” on the chemical and petroleum industries.
The mere threat of these government regulations has already enacted drastic changes in industry. On December 20th, 3M, a major manufacturer of PFAS chemicals, announced its intent to phase out the production of PFAS chemicals by 2025 in response to these “accelerating regulatory trends.” While Wall Street analysts have applauded the move, calling it “a step in the right direction for 3M given all the regulatory scrutiny of PFAS chemicals, it is yet another example of government regulation altering the regular course of business and the kinds of unique management challenges excessive government regulation presents business leaders with today.
Executives and business owners must be attuned as never before to market distortions caused by government overreaction. Chief Executive Officers need to be reminded of the politics of ‘multiple points of accountability’ where stakeholders, (that is: government) drive decision-making more than stockholder interest.
In the case of this potential Superfund designation, the fact is that the threat of further federal government regulation as well as escalating legislative, regulatory, and legal action both internationally and at the state and local level to restrict or prohibit the use of PFAS chemicals have made many companies wary of using the compounds. As one industry insider put it, “customers are taking note of PFAS regulations. They’re looking for alternatives.”
While government is coercing something that may have very well happened on its own, as evidenced by past voluntary industry efforts to phase out certain kinds of PFAS, this is nonetheless a moment for innovation in the chemical industry and an opportunity to respond to shifting consumer demands. PFAS manufacturers are in the process of researching, developing, and innovating new solutions that will reduce dependency on PFAS and provide PFAS alternatives, but such things take time. In the interim, consumers may unfortunately be left to face the consequences of higher costs and less choice because of the regulatory uncertainty the EPA has generated around the modern PFAS chemicals that are safely made and used today.
Ultimately, the goal of government regulation should be to create procedures that protect human health while still allowing for the use of essential compounds. It is clear from industry’s recent decision to phase out PFAS chemicals as opposed to working within onerous EPA guidelines that this regulatory regime is no longer in balance. All too often the federal government finds itself doing too much – or too little. Wisdom is needed for the balance.
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Jack Yoest is an Assistant Professor of Practice and Management at The Catholic University of America Busch School of Business and a former Assistant Secretary of Health and Human Resources for the Commonwealth of Virginia. He is also a corporate management consultant, and author of “The Memo: How the Classified Military Document That Helped the U.S. Win WWII Can Help You Succeed in Business“