It has now been over a year since PFOA and PFOS – two types of PFAS – were designated as hazardous substances under CERCLA, the federal Superfund law.  Among the consequences of these designations was that PFOA and PFOS became subject to the ASTM standard for Phase I Environmental Site Assessments (“ESAs”), meaning environmental consultants can now consider the confirmed or “likely” presence of PFOA or PFOS a recognized environmental condition (“REC”) in a Phase I ESA report.  Previously, while PFAS often was addressed in Phase I ESAs, the ASTM standard did not require such an evaluation and any identified PFAS concerns did not meet the definition of a REC.      

            I will admit to having fears that including PFOA and PFOS in the Phase I ESA process would lead to a significant increase in the number of RECs identified by environmental consultants.  With federal drinking water standards in the parts per trillion – an order of magnitude lower than the standards for other contaminants – and with low levels of PFAS perceived to be ubiquitous in the environment, it seemed possible that consultants would consider PFAS a REC at virtually all commercial/industrial properties on the basis that PFOA and/or PFOS “likely” are present in the environment and do not qualify as a “de minimis condition.”

            Thankfully, my fears have not materialized.  Instead, our transactional team’s experience has been that environmental consultants generally have not been considering PFAS a REC without evidence of a release or a particular use likely to have resulted in a release.  We have, however, come across several ways in which the treatment of PFAS in Phase I reports has been different than other contaminants:

• Some consultants have added a designated section to their Phase I reports regarding PFAS.  These sections often include boilerplate language and disclaimers indicating that PFAS are ubiquitous in commercial/industrial environments and could potentially be present at the subject property.  This is reminiscent of how consultants discuss pesticides at properties historically used for agricultural purposes.

• The environmental database reports that consultants order and review as part of the Phase I ESA process (such as those generated by EDR or ERIS) now typically include a search of a “PFAS Industry” dataset, which is a dataset compiled and maintained by EPA which includes approximately 120,000 facilities across the country that are known to operate in industry sectors that may handle or generate PFAS.  While inclusion in this dataset does not indicate that PFAS actually were handled or generated by the listed facility (let alone released to the environment), when a current or past facility on a property is listed, it usually leads to discussion in the Phase I report and can prompt the consultant to designate potential PFAS as a REC. Given the inherently speculative nature of the EPA data set, we do not believe inclusion on the “PFAS Industry” database is evidence of REC.  

• In some jurisdictions, even when PFAS are detected, consultants can reasonably characterize the detection as a “de minimis condition.”  This is particularly true when the impacts are limited to groundwater, there is no requirement to report the condition to a regulatory authority, groundwater beneath and in vicinity of the property is not used as drinking water, and there is no reason to suspect an on-site source of the detected PFAS.  The rationale for this determination is that a situation like this meets the two primary criteria of a “de minimis condition”: (i) the condition generally does not present a threat to human health or the environment, and (ii) the condition generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.   

• PFAS are being identified as a concern – and often a REC – at properties where biosolids (i.e., sewage sludge) are known or suspected to have been applied to the land. This stems from recent studies indicating that biosolids often contain PFAS. Biosolids can be used as a fertilizer and to restore and revegetate land.

Another observation we have had since the designation of PFOA and PFOS as CERCLA hazardous substances is that some environmental insurance carriers remain willing to provide coverage for PFAS, especially when PFAS are not considered a REC in the Phase I report.  This coverage can include costs to clean up any later discovered PFAS contamination, as well as defense costs associated with responding to any governmental orders or third-party bodily injury or property damage claims associated with PFAS, subject to standard deductibles and policy conditions.