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Hamer-Bailey: PFAS legal responsibility and business property transfers

Over the previous few years, one of the crucial talked about — and confounding — subjects in environmental legislation has been the difficulty of PFAS contamination (of per- and polyfluoroalkyl substances). A pervasive a part of our trendy lives, from Teflon to Scotchgard to firefighting foam, PFAS compounds now appear to be each a blessing and a curse. Their very nature to be heat-resistant and very steady for quite a lot of business makes use of additionally makes them persistent in each the surroundings and our our bodies. The proof of PFAS toxicity and its wide-ranging destructive well being results is mounting. This was even a subject of the 2019 film “Darkish Waters” starring Mark Ruffalo and Anne Hathaway, which was based mostly on a e-book by fellow legal professional Rob Bilott.

The fact is that nearly each human on the planet has PFAS chemical compounds of their blood. Since 1999, our Facilities for Illness Management and Prevention have discovered 4 PFAS compounds in almost each human blood pattern analyzed within the U.S.: PFOS, PFOA, PFHxS and PFN. And virtually each piece of actual property on this nation probably may have PFAS impacts. Each single environmental marketing consultant I’ve spoken with who has sampled for PFAS has discovered it each time they’ve appeared. I’ve been on the Midwestern States Environmental Consultants Affiliation’s PFAS Workgroup for 2 years, and that’s been the case in each report.

For me, the debates over whether or not and find out how to regulate PFAS given the publicity of its darkish aspect have actually shined a highlight on an enormous downside in environmental legislation and litigation: We actually have to rethink the present “Section I” Environmental Website Evaluation, aka the ASTM E1527. Most practitioners in actual property and business transactions know now to do environmental due diligence earlier than a business actual property buy (and, hopefully, leases). However they mistakenly wager the farm on doing an excellent ol’ ASTM E1527 Section I and suppose that if adopted to the letter, they’re golden.

There are actually loads of environmental consultancies on the market that may fortunately churn out Section I’s like automobiles off the meeting line on the previous Normal Motors vegetation in Indiana. The crash of 2008-2009 put a dent in that market, but it’s nonetheless on the market. However counting on these baseline, cookie-cutter stories could be extremely problematic not just for potential purchasers however their lenders, their insurers, and many others.

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To get on my soapbox, the ASTM E1527 normal is one strategy to present “all acceptable inquiries” (AAI) have been undertaken to judge environmental circumstances and potential legal responsibility, to acquire sure legal responsibility protections below Superfund (Complete Environmental Response, Compensation, and Legal responsibility Act, Sections 101 and 107). However it’s hardly the one one and is commonly inadequate. Anybody shopping for or leasing property (lessor or lessee) ought to carry out strong environmental due diligence well-tailored to the particular property but in addition to the wants and objectives of the consumer(s).

Sure, the U.S. Environmental Safety Company usually adopts the ASTM E1527’s to be used in performing AAI, most lately on Dec. 30, 2013. As famous within the Federal Register then: “In the present day’s motion presents events the choice of utilizing a further ASTM Worldwide normal to conduct all acceptable inquiries. Events buying doubtlessly contaminated properties might use the ASTM E1527-13 normal observe when conducting all acceptable inquiries pursuant to CERCLA. Nevertheless, right now’s rule doesn’t require that any celebration use this normal. Any celebration who desires to conduct all acceptable inquiries below CERCLA might comply with the All-Applicable Inquiries Rule at 40 CFR Half 312 or use the brand new normal acknowledged in right now’s remaining rule, the ASTM E1527-13 normal.” (Emphasis added).

Courts in numerous jurisdictions have acknowledged this subject, similar to our Chief Choose Tanya Walton Pratt, in one of many newest iterations of the continued Moran Electrical/Von Duprin/Main Instrument dogfight in Indianapolis: “This Court docket is inclined to agree with Goodson that Congress didn’t intend to make a Section I Environmental Website Evaluation [ESA] the unique means by which a purchaser might fulfill the BFPP [bona fide prospective purchaser] protection’s all acceptable inquiries normal.” Von Duprin LLC v. Moran Elec. Serv., Inc., 2019 WL 535752, at *15 -16 (S.D. Ind. Feb. 11, 2019) (not reported, emphasis added). (Citing R.E. Goodson Const. Co., Inc. v. Worldwide Paper Co., No. 4:02-4184-RBH, 2006 WL 1677136, at *6 (D.S.C. June 14, 2006)).

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As of the writing of this text, the older 2013 ASTM E1572 normal had sundown as of the tip of 2021 (after eight years), however the U.S. EPA had not adopted the brand new normal. Thus, there lastly is the ASTM E1527-21, however no adoption. That is slightly unprecedented and largely as a result of conundrum of PFAS regulation for such a ubiquitous and widespread contaminant.

Which leads me again to the “PFAS factor.” The ASTM E1527-21 model barely begins to handle potential issues with the evaluation of potential PFAS contamination at a property. A lot of the maintain up over the rewrite was over find out how to adequately tackle dangers posed by this group of contaminants that we’re simply starting to grasp. We will probably assume the delays on the U.S. EPA on adopting the brand new model are a continuation of the identical lack of awareness.

With regards to rising contaminants like PFAS, the Section I ESA has lengthy been woefully insufficient by solely addressing the small listing of “hazardous substances” particularly outlined below CERCLA in 42 USC § 9601(14). Even the definition of “Brownfield website” within the 2018 BUILD Act displays a extra trendy actuality, talking to property that could be “sophisticated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” 42 U.S.C § 9601.

And whereas the ASTM E1527 is often adopted by the U.S. EPA, ASTM Worldwide and its requirements are supposedly impartial. Sure, a part of the express objective of the ASTM E1527 is to handle contaminants below the scope of CERCLA and petroleum merchandise, and to ascertain landowner legal responsibility protections. (ASTM E1527-21 § 1.1). But as an impartial normal, the E1527 fails to replicate the real-world and enterprise realities of most customers. The objective is to ascertain a authorized protection in opposition to later claims, whatever the U.S. EPA’s newest place or CERLCA definitions.

Free from exterior management and with now-international governance, one of many ASTM Worldwide’s strategic objectives is to “[a]lways be related and constantly improve the technical high quality of requirements … .” In Indiana, like many different states, there are a number of environmental statutes to deliver non-public claims in opposition to landowners no matter CERCLA, to not point out the tort claims that may very well be introduced. A vigorous Section I might present a protection. However the ASTM E1527-21 nonetheless solely considers rising contaminants and different points as “non-scope concerns” or “enterprise environmental dangers” — even when the potential contaminants are infamous, excessive threat and lurking across the nook like PFAS.

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But PFAS is simply straight addressed in part X6.10: Substances Not Outlined as Hazardous Substances of the ASTM E1527-21: “[W]right here a Section I Environmental Website Evaluation is carried out to fulfill each federal and state necessities [where state requirements for PFAS exist], or as directed by the consumer of the report, it’s permissible to incorporate evaluation and/or dialogue of those substances in the identical method as some other Non-Scope Consideration.”

The massive subject throughout property transfers actually isn’t whether or not there could also be potential sources on the transaction property that may very well be a legal responsibility for the purchaser, however extra probably, what are the sorts of contaminants and what number of sources are there? To disregard the fact of rising contaminants within the ASTM E1527 normal is an actual vulnerability in conducting defensible due diligence. And so, till the usual is satisfactorily up to date or the definition of “hazardous substances” is expanded, property house owners, lessees, their lenders, their insurers and particularly their environmental consultants ought to be conscientious about this of their due diligence actions.•
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Melissa A. Hamer-Bailey, CHMM, is an affiliate at Kroger Gardis & Regas and a member of the agency’s Building and Environmental Regulation observe teams. Opinions expressed are these of the creator.

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