How Does The New EPA PFAS Rule Affect Due Diligence For Property Transactions?

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Per- and polyfluoroalkyl substances (PFAS) are often used in Durable Water Repellent (DWR) treatments for outdoor clothing and other fabrics (Photo: Brocken Inaglory)

The US EPA’s new PFAS designation rule has wide-ranging implications, significantly altering the management of contaminated properties, real estate transactions, corporate mergers and acquisitions, environmental due diligence, and insurance. While, as a chemist, it is incredibly tempting to take a deep dive into the chemistry behind per- and polyfluoroalkyl substances (PFAS), this article will instead focus on the changes in how the EPA views PFAS compounds and how those changes impact the environmental due diligence process for property transactions.

New PFAS Designation by US EPA

On April 19, 2024, the US EPA announced its final rule designating two PFAS compounds, specifically perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), as ‘hazardous substances’ under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). With an effective date of July 8, 2024, the potential presence of PFOA and PFOS in soil or groundwater at a subject property for a Phase I environmental site assessment (ESA) may now be considered a recognized environmental concern (REC).

In addition to PFOS and PFOA, which are now designated hazardous substances, the PFAS class contains approximately 15,000 different compounds. The new ASTM Phase I ESA standard provides for a subject property to have an optional review of emerging contaminants that are not yet designated as hazardous substances, which may include any of the thousands of PFAS compounds besides PFOS and PFOA. The presence of PFAS compounds besides PFOS and PFOA may be considered a business environmental risk.

Case Study: Investigating PFAS Contamination Risk - Phase I ESA

While the change in designation only went into effect in July, KERAMIDA has already had an opportunity to perform an Environmental Site Assessment on a property where the historic and continued use of PFAS compounds was documented. Because PFAS compounds were not considered hazardous substances prior to EPA’s new rule, documentation of how the compounds were used was limited to product specification sheets for some of the materials used in manufacturing at the property. No documentation was available about how any excess material containing PFAS compounds was handled or disposed of. This fact suggested there was potential for small quantities of PFAS waste to enter the property's soil and/or groundwater during normal manufacturing operations when considering other conditions observed at the property.

Surface water adjacent to potential PFAS contamination source (Photo: KERAMIDA Inc.)

While the potential concentrations of PFAS contamination at the property were expected to be low, if detectable at all, the persistent nature of PFAS compounds and the long-term occupancy of the site by a manufacturer that used PFAS materials meant the use of those materials had to be identified as a REC as part of the Phase I Assessment of the property. If more compound-specific data had been gathered throughout the entire time of occupancy, KERAMIDA might have been able to reduce this REC to a business environmental risk by confirming that PFOS and PFOA were never present. Unfortunately, no data was available to confirm that.

KERAMIDA’s recommendation was to perform a small-scale site investigation to determine if detectable amounts of PFOS/PFOA (or other PFAS compounds that may fall under similar regulation in the future) were present in the soil and groundwater beneath the production areas of the property. Once available, the findings from that investigation will help the Client determine the next steps to take regarding the property.

What types of properties is PFAS testing recommended?

Agricultural field which required PFAS testing (Photo: KERAMIDA Inc.)

The case study above is just one example of investigating a PFAS contamination risk. Given how ubiquitous PFAS compounds are across multiple products and industries, KERAMIDA will continue to recommend considering their potential presence when due diligence for nearly any property transaction is performed.

Besides the most obvious potentially impacted properties, like airports and manufacturing facilities, you might be surprised to learn that agricultural properties also have the potential to have significant PFAS contamination present. PFAS frequently appears in treated wastewater and biosolids at municipal wastewater treatment plants (WWTPs). Biosolids from WWTPs are also frequently used as fertilizer for agriculture, and as such, undeveloped land can still have PFAS contamination.

Future Outlook on PFAS Regulations

The case study discussed in this article is an example of how KERAMIDA plans to approach the risk of PFAS contamination as part of the broader due diligence process in the future. While only two PFAS compounds are considered hazardous substances at the time this article is published, given the characteristics of nearly all PFAS compounds, it is only a matter of time before the number of PFAS compounds that are designated hazardous substances increases. Taking the time to identify possible sources of PFAS contamination at a target property now may help protect our Clients in the future, even if those compounds are not yet considered hazardous.

As the regulatory environment regarding PFAS continues to evolve, KERAMIDA is prepared to provide expert advice to our clients. Contact us or call (800) 508-8034 to speak with one of our PFAS compliance consultants today.

Author

Jay Nickel
Project Manager, EHS Compliance & Land Services
KERAMIDA Inc.

Contact Jay at jnickel@keramida.com.

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