January 24, 2025

By Walker Livingston, Capstone Energy Analyst

Capstone believes that although federal environmental regulations will slow with the incoming Trump administration, regulators will likely not fully roll back Biden-era PFAS rules—a positive for utilities and waste management companies. However, blue states are likely to implement environmental policy aggressively, providing a blueprint for future federal regulation and creating opportunities for environmental consulting companies.

Outlook at a Glance:

• Utilities and Waste Management Companies to Benefit from Trimming of PFAS Rules Liability Exemptions, but Legacy Producers Remain Under Fire
• Plastics Manufacturers to Benefit from Failure of UN Negotiations of Plastics Treaty, Attempts to Revive in 2025 Unlikely to Create Impactful Document
• Chemical Manufacturers and Pesticide Producers to Benefit from Zeldin Delegating Policy to Assistant Administrators

Utilities and Waste Management Companies to Benefit from Trimming of PFAS Rules,  Liability Exemptions, but Legacy Producers Remain Under Fire

Winners	American Water Works Company Inc. (AWK), Essential Utilities Inc. (WTRG), Waste Management Inc. (WM), Republic Services Inc. (RSG), Clean Harbors Inc. (CLH), Xylem Inc. (XYL), investor-owned utilities and waste management companies
Losers	3M Co. (MMM), Chemours Co. (CC), Corteva Inc. (CTVA), DuPont de Nemours Inc. (DD)

Biden-Era PFAS Rule Rollback Unlikely, New Rules to Slow

Capstone believes that the federal Environmental Protection Agency (EPA) under the incoming Trump administration will not roll back Biden-era marquee regulations for PFAS focusing on drinking water standards and hazardous substance designations under the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund), but will likely rework the rules to be friendlier to industry. The main beneficiaries of the paring down of these rules will likely be investor-owned utilities, who will still be required to implement PFAS mitigation measures, but will be able to use that capital expenditure to expand their rate base. During Donald Trump’s first term, he started the long process of regulating PFAS in drinking water, but left office before his administration could propose a rule regulating some PFAS in drinking water. Joe Biden later proposed a rule regulating PFAS in drinking water, and finalized it in April 2024.

New rules or risk assessments that the Biden EPA planned to follow through with will slow under Trump 2.0. The Biden EPA has planned several PFAS-related rules for 2025, including a rule to list several PFAS as ‘hazardous constituents’ under the Resource Conservation and Recovery Act (RCRA) and another proposed rule for adding PFAS requirements to National Pollutant Discharge Elimination System (NPDES) permits. Under a Trump EPA, particularly one that may have its budget slashed by a Republican Congress, the agency’s ability to craft new rules will likely be curtailed, and those being drafted now will be delayed. The delays would likely have a mixed effect on legacy chemical companies: a positive outcome as risk assessments or waste and water management actions are delayed, and a negative effect as new chemicals would take time to hit the market.

States Ready to Take the Lead on PFAS Regulation

As the federal government slows down on releasing new PFAS regulations, blue states will likely take the lead in pushing rules and legislation forward over the next four years. Maryland has already begun this process with SB 956, a bill signed into law in May 2024. This law instructs the Maryland Department of the Environment (MDE) to identify significant industrial users (SIUs) of PFAS, develop monitoring and testing criteria for those SIUs, and finally develop PFAS action levels and mitigation plans for pretreatment permits for those SIUs to reduce the levels of these chemicals entering state waters. If states follow Maryland’s approach, PFAS manufacturers and manufacturing processes such as textile production that utilize PFAS will face headwinds as the states are likely to draw up significant mitigation plans to reduce PFAS discharges.

California will also likely play a large role in fighting any changes Trump makes to environmental policy and regulation. Governor Gavin Newsom (D) recently requested $25 million from the legislature for a legal defense fund to challenge Trump’s priorities going forward, from environmental issues to abortion. The state had spent $42 million during the first Trump administration challenging the president’s actions. In the proclamation convening a special session of the state’s legislature, Newsom targeted potential Trump 2.0 actions to dismantle “long-standing environmental protections for clean air and clean water.”

Liability Exemptions for “Passive Receivers” Likely Coming in 2025

Capstone believes that Sen. Shelley Moore Capito (R-WV) will introduce liability exemptions from federal Superfund liability for utilities and certain other entities in 2025. As incoming Chair for the Senate Environment and Public Works Committee (EPW), Moore Capito will wield considerable power in setting environmental policy, especially as Trump’s EPA Administrator pick, Lee Zeldin, lacks deep environmental policymaking experience. Moore Capito announced in late November 2024 that she was ready to enforce her power going forward, with a specific focus on streamlining National Environmental Policy Act (NEPA) permitting reviews and PFAS legislation. Under these liability exemptions, certain handlers of PFAS, like utilities, would escape litigation and liability, but legacy PFAS manufacturers and PFAS users would still face significant litigation risk and liability.

These liability exemptions would be a powerful tool for utilities, waste management companies, and other entities to avoid the quagmire of Superfund liability litigation, which heavily involves third-party contribution litigation that can drag on for years. The original liability exemptions bills also targeted airports, agriculture, and fire suppression companies, in addition to water systems and resource management systems, meaning that Capito could take a broader approach to exempting “passive receivers” of PFAS, i.e., utilities, wastewater treatment plants, and waste management sites that treat but do not produce those chemicals. However, her push to hold legacy PFAS polluters accountable would likely be challenging for companies such as 3M and Dupont.

Plastics Manufacturers to Benefit from Failure of UN Negotiations of Plastics Treaty, Attempts to Revive in 2025 Unlikely to Create Impactful Document

Winners	Dow Inc. (DOW), Huntsman Corporation (HUN), Berry Global Group (BERY), Amcor (AMCR)
Losers

Failure of Plastics Treaty Will Delay Global Plastic Reduction Aspirations

Capstone believes that the United Nations plastic treaty will fail to incorporate meaningful reductions in plastic pollution in a benefit to plastics manufacturers, who faced the potential for a global cap on plastic production in the treaty. However, the failure of the treaty negotiations to finalize a document and major plastic production countries like the United States not favoring global caps mean that the final document is likely to be ineffective. On December 1, 2024, the United Nations negotiations on completing a plastics pollution reduction treaty broke down, with negotiations planned to resume at some point in 2025. One of the largest points for discussion at the conference was a plan to introduce global caps on plastic production to reduce pollution, which the US initially showed support for in August 2024 but rolled back its support by the time of the actual negotiations.

The collapse of the negotiations at the conference, which was the last planned conference to produce the treaty, indicates the significant range of opinions on how to handle plastic pollution. The election of Trump also reportedly hung over the conference, with negotiators concerned about the US approach to any finalized treaty. With Trump’s plan to provide the oil and gas industry with significant support, the negotiating position of the US at future plastic pollution reduction negotiations may become even more tenuous.

Trump Likely to Abandon Biden-era Plastic Policies

In addition to stepping back from additional global-level efforts to reduce plastic pollution, Trump is also likely to abandon or deprioritize Biden-era efforts to address plastic pollution. Biden’s National Strategy for Plastic Pollution was published in November 2024 and followed another policy plan in July 2024 that sought to eliminate federal procurement of single-use plastics by 2035. Trump’s focus on improving American manufacturing as well as supporting the oil and gas industry, combined with skepticism towards environmental regulations, means that these policy positions that are unmoored by Congressional action are much more likely to be deprioritized or explicitly revoked. Trump’s abandonment of Biden-era plastic reduction policies would provide positives to large-scale plastic producers like Dow (DOW), Berry Global (BERY), and Amcor (AMCR), which would gain from any pullback of a federal push to reduce the use of single-use plastics in federal procurement.

Chemical Manufacturers and Pesticide Producers to Benefit from Zeldin Delegating Policy to Assistant Administrators

Winners	Chemical manufacturing like Huntsman Corporation (HUN) and Dow Inc. (DOW), pesticide producers like Corteva Inc. (CTVA) and American Vanguard Corp. (AVD)
Losers

Zeldin’s Relative Lack of Environmental Experience Means that Assistant Administrators Will Hold a Significant Amount of Policy Direction Power

Zeldin is likely to be confirmed as EPA Administrator as he represents one of Trump’s less controversial picks for Cabinet positions in addition to Republican’s comfortable majority margin in the Senate once the new Congress is seated.

Zeldin does not draw on a significant depth of environmental policy knowledge and experience like former Trump 1.0 EPA Administrator Andrew Wheeler (or current Biden EPA Administrator Michael Regan). Without that deep knowledge on how the agency functions, much of the policy direction for Zeldin will likely be delegated to his assistant administrators at the agency, who are more likely to come from industry-friendly sources. During the first Trump administration, the EPA’s assistant administrator positions were largely staffed by persons who had previous industry experience or ties, which will most likely continue in his next administration. On the whole, this would likely benefit chemical and pesticide producers via more industry-friendly regulations, however the manufacturers themselves would likely also benefit from a strongly-funded EPA for the purposes of the speed of new chemical reviews and new pesticide registrations and reviews, which is unlikely under a Republican-controlled Congress and White House,

Trump’s Pick for Office of Chemical Safety and Pollution Prevention Will be Key for Pesticide, Chemical Regulation

Although Zeldin does have experience with PFAS regulations stemming from his representation of Long Island and local PFAS contamination issues, his assistant administrator for the Office of Chemical Safety and Pollution Prevention (OCSPP) will likely be the primary arbiter of chemical regulation going forward. During the first Trump administration, OCSPP was led by Alexandra Dunn, a longtime environmental lawyer, from 2019 to 2021, and was supported by Nancy Beck, a longtime industry lobbyist, during that time.

Trump’s pick for assistant administrator for OCSPP could also return to a previous norm of reduced correspondence with Congress on potential regulations, such as over the reporting of some PFAS chemicals, as reported by the Hill in April 2024, detailing political appointees barring career employees from contacting Senate environmental staff on the potential impacts of a PFAS regulation. Additionally, the EPA Office of Inspector General (OIG) recently released reports on whistleblower reprisal operations, finding that several scientists during the Trump administration were retaliated against in violation of the agency’s Scientific Integrity Policy.

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