How PFOA & PFOS Hazardous Status Impacts Industrial Sites Under CERCLA: Phase I ESA Alert!

The U.S. Environmental Protection Agency (EPA) recently threw a curveball at industrial and commercial property owners by designating two notorious chemicals—perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)—as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

This change is a big deal for anyone owning or looking to buy or develop industrial sites, especially when it comes to conducting a Phase I Environmental Site Assessment (ESA).

So, what does this mean for your industrial business or new property acquisition? Well, to start, it means you better make sure your Phase I ESAs are airtight moving forward! If you're looking for a top-notch Phase I, reach out to us at RMA!

Want the full story? Let's jump in!

What Are PFOA and PFOS?

PFOA and PFOS are part of a chemical family known as per- and polyfluoroalkyl substances (PFAS), often called "forever chemicals." They’re tough as nails, sticking around in the environment and in our bodies for years.

These chemicals have been widely used in everything from firefighting foams to non-stick cookware to water-repellent fabrics. While their durability made them valuable in many industries, it also makes them a significant environmental and health risk!

CERCLA and Its Impact on Industrial and Commercial Property Owners

CERCLA, often referred to as the Superfund law, is designed to help clean up sites contaminated with hazardous substances and hold responsible parties accountable for cleanup costs. With PFOA and PFOS now classified as hazardous under CERCLA, any property contaminated with these chemicals is on the hook for CERCLA’s strict liability framework.

This means that if you’re a property owner—whether you caused the contamination or not—you could be liable for the entire cleanup bill.

This is particularly concerning for industrial sites with a history of using or being near operations involving these chemicals, such as manufacturing, metal finishing, or facilities that used firefighting foams. But don’t think residential developments are off the hook—multi-family residential projects could also feel the heat from this change.

Implications for Phase I Environmental Site Assessments

Now that PFOA and PFOS are in the hazardous substances club, they’re on the list for Phase I ESAs, which are conducted during property transactions to identify potential environmental liabilities called Recognized Environmental Conditions, or RECs (for a more detailed look, check out our other post What does a Phase I ESA look for? and Who needs a Phase I ESA?).

Bottom line - starting July 8, 2024, every Phase I ESA report will need to evaluate the risk of PFOA and PFOS contamination.

For anyone looking to purchase or develop industrial or commercial properties, this means an extra layer of due diligence. Not just any average Phase I will do! You're now going to need a thorough Phase I ESA - like our premium due diligence package - and possibly a follow-up Phase II - to reveal whether PFOA or PFOS contamination drastically affects the property's value, potential liabilities, and future use.

Recommendations for Investigation at Industrial Sites

Given the high stakes, here’s what industrial and commercial property owners and potential buyers should do to stay ahead of the game:

• Hire Qualified Environmental Professionals: Not just anyone can conduct a Phase I. Even if they're qualified, you need to make sure your environmental consultants are experienced in assessing PFAS contamination. They need to be familiar with the specific industrial processes that might have led to PFOA and PFOS showing up on your site. At RMA, we've got you covered here. Reach out to get started on your comprehensive Phase I!

• Go Beyond the Basics: If there’s a reasonable suspicion of PFAS contamination, don’t stop at the standard Phase I ESA. Consider additional testing—soil, groundwater, and surface water—to detect PFOA and PFOS, especially if the site has a history of industrial activities involving these chemicals.

• Dig Into Historical Usage: Investigate the property's history and any past industrial operations that might have used PFOA, PFOS, or similar compounds. Knowing what went down in the past can give you crucial insights into potential contamination risks.

• Evaluate Legal and Financial Risks: Work with legal counsel to understand potential CERCLA liabilities and explore defenses. Don’t forget to look into environmental insurance options to cover any potential liabilities.

• Stay Informed: The regulatory landscape around PFAS is rapidly evolving. Keep your ear to the ground for state and federal regulations, as well as new technologies for PFAS remediation, so you can make informed decisions about property acquisition and management.