Are Your Due Diligence Activities “Emerging” With The Times?

For years environmental due diligence has focused primarily on adverse impacts from contaminants like volatile and semi-organic compounds, metals, asbestos, lead, etc.  However, in recent years a new threat to certain real estate transactions has emerged. Emerging contaminants are synthetic or naturally occurring chemicals that are not commonly monitored in the environment but have the potential to cause known or suspected adverse ecological and/or human health effects. The most common emerging contaminants are per- and polyfluoroalkyl substances (PFAS), which includes the chemical Gen-X found at the Chemours plant in Fayetteville, NC. PFAS include a broad classification of over 5,000 chemicals used for non-stick products (e.g. Teflon), cosmetics, skin care products, water repellent clothing, fire-fighting foam, chrome plating, electronics manufacturing and many other industrial applications. These chemicals are persistent in the environment and in the human body – meaning they don’t break down and they can accumulate over time.  At the present time these chemicals are primarily a concern for surface water and groundwater, but concerns associated with air, soil and plant materials are growing.

HEALTH EFFECTS FROM EXPOSURE

There is evidence that exposure to PFAS can lead to adverse health effects in humans. If humans ingest these chemicals (by eating or drinking food or water than contain PFAS), the PFAS are absorbed and can accumulate in the body.  As people get exposed to PFAS from different sources over time, the level of PFAS in their bodies may increase to the point where they suffer from adverse health effects. Studies indicate that PFAs can cause reproductive and developmental, liver and kidney, and immunological effects in laboratory animals. These chemicals have caused tumors in animal studies. The most consistent findings from human epidemiology studies are increased cholesterol levels among exposed populations, with more limited findings related to infant birth weights, effects on the immune system, cancer, and thyroid hormone disruption.

PFAs CAN BE PERVASIVE AND WIDE SPREAD

In many instances PFAs are spread by airborne pollution. Chemical plants release air emissions through stacks that contain thousands of pounds of these pollutants. The chemicals are blown by the wind and deposited through rain, seeping into and contaminating groundwater. The Chemours Fayetteville Works Plant sits along the Cape Fear River in North Carolina. For years this plant emitted these chemicals from their vent stacks, eventually resulting in hundreds of contaminated groundwater wells around the plant.   To date, the farthest contaminated well has been identified nine miles from the plant. Company officials don’t yet know how far the impacts extend. The plant has also released these chemicals into the Cape Fear River.

COMPANIES STEPPED UP TO REDUCE PFA PRODUCTION

Certain PFAS chemicals are no longer manufactured in the United States. In 2006, eight major companies in the PFA industry joined a global stewardship program to reduce the production of PFAs.  The goals of the program were to to achieve, no later than 2010, a 95 percent reduction in facility emissions to all media and commit to working toward the elimination of these chemicals from emissions and products by 2015. Participating companies included Arkema, Asahi, BASF Corporation (successor to Ciba), Clariant, Daikin, 3M/Dyneon, DuPont, and Solvay Solexis. Based on the final reports, all companies met their goals. Although PFAs are no longer manufactured in the United States, they are still produced internationally and can be imported into the United States in consumer goods such as carpet, leather and apparel, textiles, paper and packaging, coatings, rubber and plastics.

IMPACTS ON THE COMMERCIAL REAL ESTATE MARKET

Phase I Environmental Site Assessments must be conducted in accordance with 40 CFR Part 312 (or the ASTM E 1527-13 standard) to obtain protection from potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an innocent landowner, a contiguous property owner, or a bona fide prospective purchaser.  To date, PFAS have not been added to CERCLAs list of hazardous substances. So, should you be testing for emerging contaminants in your Phase II ESA studies? First, make sure you have a clear understanding of historical activities at and in the vicinity of the site to determine whether there is a potential for impacts from an emerging contaminant. Second, understand the regulatory climate as it relates to these contaminants because like the contaminants themselves, this is emerging. Third, understand the pros, cons and ramifications of such testing and how it impacts the overall needs of your project. Whether dealing with emerging or traditional contaminants, make sure you are making an informed decision prior to moving from the Phase I to Phase II stage of any project.

IMPACTS ON THE RESIDENTIAL REAL ESTATE MARKET

The re-sale of residential properties with contaminated drinking water wells, or houses near areas with known PFA releases, are feeling the impact of these new chemicals. Real estate agents are bound by their profession to disclose material facts, including groundwater contamination, before a home is sold. Disclosures can be withheld by unscrupulous agents or simply by little information being disclosed to the agents themselves. Full disclosure can result in houses not being sold or being sold at a significantly less value. The cost to drill a new water supply well or connect to public water can cost tens of thousands of dollars. When buying a house with a private water supply well or fed by a water well system, one should ask whether the house is located in a zone with known PFA contamination.

NEW EMERGING CONTAMINANTS CONTINUE TO BE EVALUATED

EPA evaluates potential substitutes for PFAs as part of its review process for new chemicals under the Toxic Substance Control Act (TSCA). Over 300 alternatives of various types have been received and reviewed by EPA so far. EPA reviews the new substances against the range of toxicity, fate and bioaccumulation issues that have caused past concerns with PFAs, as well as any issues that may be raised by new chemistries.  For some of these chemicals, EPA requires degradation testing before the chemical can be commercialized. The U.S. Environmental Protection Agency recently announced a new validated method for testing PFAS in drinking water. This new validated test method complements other actions the agency is taking to help communities address PFAS nationwide.

 

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