Emerging PFAS Regulations Affect Real Estate

Perfluorinated and Polyfluorinated Alkyl Substances (PFAS) are a class of emerging environmental constituents that must be considered in real estate and business transactions. The anticipated start of PFAS regulations as early as 2023 will result in additional considerations associated with managing environmental risks on properties impacted by these substances, as evidenced by the emergence of litigation by landowners seeking to recoup future cleanup costs. planned with manufacturers of PFAS and Products containing PFAS.

More PFAS lawsuits are expected to emerge as the Environmental Protection Agency implements regulations that should trigger the assessment and potential cleanup of these emerging contaminants as early as 2023. As further explained below -below, wWhile much has been written about the recent trend of lawsuits targeting manufacturers of PFAS-containing products (rather than just the manufacturers of the chemicals themselves), a less discussed but emerging trend is litigation by landowners seeking damages associated with PFAS contamination even where such contamination has not impacted public or private drinking water sources (which have been the primary focus of PFAS regulation to date). Prior to acquiring and selling properties where PFAS may have been used and/or produced, such as airports, firefighting training grounds, and a wide variety of manufacturing facilities, the evaluation of PFAS should be considered as a component of environmental due diligence.

Introduction to PFAS

The PFAS class consists of thousands of chemicals, the best understood of which are PFOA (perfluorooctanoic acid, first produced by DuPont and used to produce Teflon) and PFOS (perfluorooctane sulfonic acid, first produced by 3M and used at Scotchgard). In recent years, PFAS have attracted the attention of regulators and the public due to their high mobility in groundwater, resistance to degradation, and widespread use in many industries.

Emerging regulations

The EPA plans to issue a final rule designating certain PFAS (including PFOA and PFOS) as hazardous substances under the Federal Comprehensive Environmental Response, Compensation, and Liability Act.[i] (CERCLA, Federal Superfund Act) by spring 2023. This designation would effectively incorporate these chemicals as part of Phase I environmental site assessment reports, which are required to satisfy “all appropriate requests” in order to obtain liability protections under CERCLA. . PFAS regulations can also trigger a cleanup when PFAS are detected above certain standards, which have yet to be finalized by the EPA and most states. Specifically, the most recent Phase I Environmental Site Assessment Standard (ASTM E1527-21) contemplates the future regulation of PFAS.[ii] These impending developments have the potential to affect real estate transactions from an acquisition, disposition and financing perspective. It is important to note that although only a small subset of PFAS should be named, many other PFAS are known to degrade into these constituents.

The EPA also plans to finalize drinking water standards for PFOA and PFOS by fall 2023. These standards should be orders of magnitude lower than the standards for more well-known contaminants; To illustrate, while the potable water standard (known as the “maximum contaminant level” or MCL) for the common dry-cleaning solvent PCE is set at 5 parts per billion, the EPA recently established non-binding drinking water health advisories of 4 and 20 pieces per quadrillion for PFOA and PFOS, respectively.[iii] Evaluation of remedial technologies for PFAS cleanup remains ongoing, and many effective groundwater remediation for better-known contaminants (such as petroleum and chlorinated solvents) have yet to be proven effective for PFAS. .[iv] Therefore, the need to remediate PFAS in groundwater can complicate the cleanup of properties where PFAS are detected, particularly if the groundwater at those properties may be affected by other constituents.

Thus, by 2023, the assessment and investigation of PFAS will receive increasing attention, which, in turn, will affect the environmental due diligence associated with real estate and corporate transactions. Consideration of PFAS components as part of Phase I environmental site assessments may result in underground environmental investigations of properties where impacts are suspected and potential cleanup when impacts are identified. Apparently, in recognition of this changing regulatory landscape, the PFAS litigation landscape has also begun to change.

Changing Landscape of PFAS Litigation

Since the first PFAS-related claim was filed in 2010, the majority of lawsuits – and all major settlements identified – have involved contamination of water supplies (private wells and public water sources). Such claims typically involve plaintiffs seeking redress for (i) alleged injuries resulting from ingestion of contaminated water, (ii) treatment costs for PFAS-affected water, and/or (iii) the decrease in property values ​​caused by the loss of a source of drinking water. Primary defendants at this stage include PFAS manufacturers and downstream manufacturers incorporating PFAS into secondary products (eg, textiles, electronics, food packaging).

This initial litigation is expanding, however, as more recent claims go beyond contamination of drinking water sources and involve landowners seeking to recover investigation and repair costs due to the mere existence of PFAS contamination. Examples include a California airport and a Florida firefighting academy where PFAS was detected at levels above the tentative level cleaning standards established by these states.[v]

More significantly, an airport in South Carolina – a state that has yet to adopt standards for PFAS, interim or otherwise – filed suit on January 6, 2022, seeking recovery of future investigation costs and cleaning related to PFAS contamination on his property. Unlike the prosecutions referenced above, where the investigations were either mandated or directed by the state, the impetus given to the underground investigation that identified the PFAS may indicate a forward-looking strategy.

The number of lawsuits seeking to recover PFAS-related investigation and remediation costs is set to increase as the assessment and cleanup of these chemicals becomes a standard part of due diligence. However, it should be noted that an increasing number of cases are being transferred to a multi-district litigation in Charleston, SC, set up to handle claims relating to fire-fighting foam containing PFAS. This increase would have led to recent complications and delays.

conclusion

With just over a year until the aforementioned federal regulations are finalized, landowners undertaking assessment or cleanup activities on properties where PFAS contamination is suspected should be proactive in assessing the environmental impacts as well as environmental risks.

Experienced legal counsel can help first determine whether a PFAS assessment is warranted on a property and then, where possible, quantify and mitigate the associated environmental risks.

  • If significant historical manufacture or use of PFAS is suspected at a property, environmental sampling for PFAS should be considered, particularly in a pre-acquisition context. Careful consideration should be given to the specific constituents sampled and the implications this sampling may have on future regulatory requirements.
  • Identifying PFAS can be beneficial for entry into brownfield and voluntary cleanup programs, due to the liability protections that often attach under these programs for pre-existing environmental conditions. Discussing property-specific PFAS issues with regulators when entering the program, even before the aforementioned federal regulations take effect, can help ensure the broadest liability protections and minimize risk. reopening associates upon future regulation.
  • Contractual allocation of environmental risks (eg indemnities, releases, escrow agreements) should be considered for properties suspected or known to be affected by PFAS.
  • Litigation trends are emerging for landowners impacted by PFAS contamination that should continue to be monitored. As noted above, ongoing multidistrict litigation has recently experienced significant challenges and associated delays.

Heather T. Friedman is a partner and Brian A. Remler is a partner at Morris, Manning & Martin, LLP.


[i] 42 USC § 9601 and following.

[ii] The recently published ASTM Standard for Phase I Environmental Site Assessments provides, in Appendix X.6.10, that “when [PFAS and other emerging contaminants] are defined as a hazardous substance under CERCLA. . . these substances should be assessed as part of this practice. Once the EPA adopts this new standard as a rule (as planned), Phase I will be required to assess PFASs that are designated as hazardous substances to meet “all appropriate requests” that are necessary for landowners obtain liability protections related to the cleaning application by the Environmental Protection Agency of CERCLA.

[iii] Although the EPA may ultimately set slightly higher MCLs for these constituents based on practical considerations, even MCLs set in the parts-per-trillion range are expected to create significant challenges for remediation of PFAS-affected properties.

[v] Sampling was demanded of the owner of the California airport by order of the State Water Board. In contrast, sampling at the Florida facility appears to have been undertaken directly by the state – the Florida Department of Environmental Protection has conducted environmental assessments at fire training facilities where the use Aqueous Film Forming Foam, or AFFF, has been confirmed or suspected based on a statewide investigation.