Converting Risk to Reward in the Biosolids Industry

Despite having over 130 years of collective environmental law experience, Verrill’s environmental group is very cautious in making predictions about the future. But sometimes we identify a trend that seems so obvious that we are willing to venture a prognostication. Management and handling of biosolids is one of those areas where all the signals point to a major opportunity. Don’t get us wrong, there are significant risks, but as the saying goes, “no risk, no reward.”

We urge our clients in the materials management marketplace and our municipal clients to take a close look at recent developments in the biosolids arena. While the trends indicate that there will be significant and painful displacement of existing investments and technologies, those who are ahead of the technological and regulatory curve stand to gain an upper hand in the marketplace. Of course, the challenge will be in selecting the correct technology and making the right educated guess about the direction of regulation and proper allocation of risk.

Even though our investment advisor friends like to remind us that “past performance is not necessarily an indicator of future performance,” understanding where the industry has been and the changes occurring are nevertheless critical to divining the future. The U.S. Environmental Protection Agency’s recent draft conclusion that fertilizer made from sewage sludge containing PFOA or PFOS [1] can present an unreasonable risk to human health is just one major indicator of where biosolids management is headed.[2] Equally, perhaps even more, significant is EPA’s designation last July that these two “forever chemicals[3]” will henceforth be legally considered “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act, (“CERCLA” or “Superfund”).[4] As more technical data demonstrate the prevalence of these PFAS compounds in wastewater, sewage sludge, and biosolids, the inevitable conclusion is that the nation is headed toward a fundamental change in how these materials will be managed.

It would be remiss of us not to point out the liability risk associated with handling these materials[5]. These risks will chase more timid players away from the market and invite less risk-averse players to join. While we fully acknowledge those risks, as experienced environmental attorneys, we can advise clients on creative and innovative means to reduce those risks and tread in areas where others are too timid to venture. Historically, we have successfully advised clients on how to manage risks associated with such business opportunities. Even now, we advise clients who successfully navigate the shoals in this marketplace.

From a practical perspective, it is unlikely that the regulators will ultimately make it impossible or extremely risky to manage biosolids, even though they may contain some level of PFAS.[6] “S*#t happens,” and we expect it to continue to happen. The point here is that we don’t believe that the government or the courts will impose a strict liability or regulatory scheme that will make the management of biosolids either extremely expensive or technically challenging. Out of sheer necessity, we believe cooler heads will prevail in the PFAS space. However, we nevertheless anticipate that stricter regulation and liability concerns will stimulate significant new opportunities in the marketplace. Let us help you to take advantage of these opportunities.