Per- and Polyfluoroalkyl Substances (PFAS), also referred to as “forever chemicals,” are a broad class of man-made chemicals that have been used in countless products and manufacturing processes for the past 70 years. The same qualities that give PFAS a high utility for industrial and commercial applications (surfactant, heat resistant) also cause PFAS to be persistent in soil and water and, in some cases, to be toxic to humans.
In 2023 EPA intends to issue the first of a number of PFAS regulations that will affect numerous industries. These regulations include finalizing a rule to designate certain PFAS as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA aka Superfund); setting Safe Drinking Water Act standards for certain PFAS; setting PFAS limits in Clean Water Act National Pollutant Discharge Elimination System permits; and proposing a rule to regulate PFAS air emissions under the Clean Air Act.
Moreover, a number of states are stepping in and developing their own PFAS regulations and passing laws banning PFAS in consumer goods.
Considering the growing regulatory risks associated with PFAS, now is the time to consider PFAS as a component of environmental due diligence in real property transactions. EPA is sending a strong signal on this front as well.
On Dec. 15, 2022, EPA took final action to amend its “All Appropriate Inquiry Rule” (AAI Rule) to allow the use of the updated American Society for Testing and Materials (ASTM) standard E1527-21. ASTM standards are the environmental due diligence measures that prospective purchasers of real property can perform to satisfy the AAI Rule and avoid or otherwise minimize their liability as a Potentially Responsible Party (PRP) under CERCLA.
Under the updated ASTM standard, to satisfy the AAI Rule a party performing a Phase I Environmental Site Assessment now has the option of including “emerging contaminants” such as PFAS in its assessment. However, once EPA finalizes its rule designating certain PFAS as “hazardous substances” under CERCLA (expected summer 2023) those PFAS will become recognized environmental conditions (RECs) which must be analyzed to satisfy the AAI Rule and minimize CERCLA liability.
Thus those involved in the buying and selling of real estate, including lenders, should consider evaluating PFAS as part of their environmental due diligence to minimize potential regulatory liabilities.
* This article first appeared in The Journal Record on January 25, 2023, and is reproduced with permission from the publisher.