In Focus: A PFAS State of Mind
While the law concerning PFAS is still in flux, property owners and operators need to consider its implications.
PFAS regulation is a work in progress at both the state and federal levels. At the federal level, the EPA has issued nonenforceable health advisories related to two of the more common PFAS constituents, PFOS and PFOA, and recently released a PFAS Strategic Roadmap. This Roadmap includes goals for finalizing drinking water standards for PFOA and PFOS and designating certain PFAS constituents as hazardous substances under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) in 2023.
The EPA also recently stated that it would initiate a rulemaking to categorize certain PFAS constituents as hazardous waste under RCRA (Resource Conservation and Recovery Act) and clarifying that EPA can require investigation and cleanup of such wastes under the RCRA corrective action process. In the absence of final federal regulation, several states have adopted or are in the process of adopting their own groundwater standards, drinking water standards, and hazardous substance designations for PFAS constituents. The PFAS constituents addressed by and standards set under state regulations vary by jurisdiction.
Questions to Keep in Mind
With all of these moving pieces, it can be difficult for property owners and operators to determine how to best include PFAS in decision-making related to property investigation, remediation, and transactions. While each property will differ and should be evaluated individually, below are some general questions and considerations for property owners and operators to keep in mind while the full scope of PFAS regulation remains uncertain.
It can be difficult for property owners and operators to determine how to best include PFAS in decision-making related to property investigation, remediation, and transactions. I. If I believe I have PFAS impacts at my property, do I need to investigate or remediate them?
Owners or operators responsible for an investigation or remediation under a state cleanup program at a property that is (or may be) contaminated with PFAS should consider whether to perform an investigation or remediation for PFAS constituents. Even in the absence of final regulatory requirements, including PFAS in an investigation or remediation may ultimately help limit future costs, as well as potential risks and liabilities.
Among other factors a responsible party should consider is whether there are applicable or proposed PFAS remediation requirements in the jurisdiction where the property is located. Significantly, even though a state may not have promulgated soil, groundwater, or drinking water standards for PFAS, it may nonetheless require PFAS be addressed as part of a state cleanup action.
For example, while Wisconsin has not yet promulgated any soil, groundwater, or drinking water standards for PFAS, it considers these constituents to fall under the already established state definitions of “environmental pollution” and “hazardous substance.” Owners and operators of properties impacted by PFAS in Wisconsin are required to conduct a site investigation, develop site-specific cleanup standards, and conduct remedial actions. Similarly, while Indiana has not promulgated regulatory limits for PFAS, it has published screening levels for three PFAS constituents in its Risk-Based Closure Guide.
Another consideration is the potential impact of PFAS from the property. This includes potential exposure to employees and others at the property, as well as off-site migration of impacted groundwater. Conducting an initial investigation and engaging in remedial steps, such as source and site controls, can help to limit human exposure and off-site migration. While not the focus of this article, owners and operators should keep in mind that even in the absence of final regulation there remains a risk for PFAS-related tort liability. Engaging in investigation and steps to limit exposure and migration, even in the absence of a final remedial objective, can help mitigate the risk of such liability.
Even in the absence of final regulatory requirements, including PFAS in an investigation or remediation may ultimately help limit future costs, as well as potential risks and liabilities. Costs and uncertainties should also be taken into consideration. For example, in a jurisdiction without finalized PFAS remedial objectives, the scope of required remedial activities may change once such objectives are finalized. Thus, unless the state has remedial objectives for PFAS or agrees to site-specific remediation objectives, it may make sense to hold off on any final PFAS remediation. In such a situation, it may still make sense to engage in investigative activities for PFAS, particularly if it can be coupled with the investigation for other contaminants and result in cost savings. It may also make sense to engage in certain preliminary remedial activities to limit risk and potential liabilities until remedial objectives are finalized. Ultimately, the responsible party should consider the extent to which actions now can limit further investigation, remediation, and liability in the future.
II. How does new PFAS regulation impact my previously remediated property?
Under most state cleanup programs, protections received for remediated properties will not extend to previously unknown/uninvestigated contaminants. Accordingly, if a property contains PFAS contamination that was not addressed in a previous remediation, owners/operators of that property will likely be open to liability for those PFAS. For example, in Illinois (where standards for PFAS constituents are being developed), a No Further Remediation letter received upon completion of remediation, which includes a release from further responsibilities for performing remedial actions at a property and states that a site is protective of human health and the environment, is voidable upon “[s]subsequent discovery of contaminants not identified as part of the investigative or remedial activities upon which the issuance of the No Further Remediation letter was based that pose a threat to human health or the environment.”
Additionally, states may require further affirmative actions at previously remediated properties where PFAS contamination was not addressed. Such requirements will vary by state. For example, in New Jersey (which has adopted standards and hazardous substance designations for certain PFAS constituents), previously remediated sites with a restricted use or limited restricted use final remediation document must conduct evaluations for PFAS constituents as part of required ongoing remedial action protectiveness certifications.
On the federal level, once PFAS constituents are designated as hazardous substances, they will need to be included in five-year reviews and could trigger further actions at CERCLA sites where remedial actions have been completed.
Given that PFAS are already regulated in several states and will likely be regulated on the federal level soon, it can be helpful to address and allocate potential liabilities associated with PFAS as part of a real estate or corporate transaction. III. When purchasing a new property, should PFAS be included in my Phase I site investigation?
The current ASTM (American Society for Testing and Materials) E1527-13 Standard, which governs Phase I environmental site assessments, requires that a Phase I include contaminants that are CERCLA hazardous substances or petroleum products. Because PFAS are not yet regulated as hazardous substances under CERCLA, they are not required to be included in Phase I reports under the current ASTM standard. However, in the interim, a party can choose to include PFAS in a Phase I assessment. Doing so may make sense for certain properties, including those located in states with applicable PFAS standards or soon to be promulgated PFAS standards and/or those where there may have been activities at the property or neighboring properties related to manufacture of PFAS-containing items, storage of PFAS-containing items, or fires extinguished with the help of PFAS-containing foams. Including PFAS in a Phase I investigation can have benefits for a property purchaser, including the use of the bona fide prospective purchase defense for potential future CERCLA liability (as well as state counterparts to that defense for potential liability under state cleanup laws).
IV. How should PFAS-related liability be addressed in transactions?
Given that PFAS are already regulated in several states and will likely be regulated on the federal level soon, it can be helpful to address and allocate potential liabilities associated with PFAS as part of a real estate or corporate transaction, including through representations and warranties and indemnification provisions. Understanding the scope of potential PFAS contamination and liability prior to entering into a transaction can help more clearly define and delegate liabilities associated with such contamination as part of the deal. When delegating responsibility for PFAS-related contamination, it is also important to keep in mind that the applicable regulatory regime and standards governing PFAS may change over time. Additionally, even in the absence of a delineation of the potential PFAS-related liability, parties may find it helpful to consider how hazardous substances and environmental liabilities are defined under governing transaction agreements and how those definitions will impact the allocation of any potential PFAS-related liability.
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