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By Sean Leary, Associate Principal, District Office Manager (Minneapolis), GZA GeoEnvironmental Inc.
Every day we learn more about the prevalence and health threats associated with PFAS (per- and polyfluoroalkyl substances). An estimated 200-million United States residents receive PFAS-containing drinking water daily[1], and a recent study identified 57,412 locations across the country where PFAS contamination is probable[2].
In Minnesota, 2023 is shaping up as a year of major changes in how PFAS are regulated, with significant implications for commercial real estate.
The U.S. Environmental Protection Agency (“EPA”) recently released a proposed rule to designate two widely used PFAS, perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), as Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) hazardous substances. When this rule becomes final, the EPA will gain broader authority to mandate investigation and cleanup of PFOA and PFOS.
Locally, this past spring the Minnesota Pollution Control Agency (MPCA) issued its PFAS Blueprint and Monitoring Plan, which affects Brownfield and Superfund programs. The Plan states PFAS “may pose a substantial threat or potential hazard to human health or the environment and are therefore hazardous wastes as defined in Minn. Stat. § 116.06, subd. 11, clause (b).” Accordingly, PFAS are now considered hazardous substances under the Minnesota Environmental Response and Liability Act (MERLA), Minn. Stat. § 115B.02, subd. 8.
The MPCA indicated that it will evaluate PFAS impacts via the same risk-based approach used for other hazardous substances, and will release further cleanup guidance next autumn after gathering closed-door feedback and questions from stakeholders. Until then, the MPCA will be using the PFAS Monitoring Plan framework.
These regulatory actions will have significant impacts on commercial real estate transactions. Many Minnesota commercial real estate professionals and attorneys recall how the MPCA’s drastic changes to vapor intrusion Best Management Practices (BMPs) in 2013-2017 resulted in some of the most restrictive vapor intrusion guidance in the country. Property owners found themselves “voluntarily” installing expensive vapor mitigation systems to maintain the liability protections previously afforded by No Association Determinations (NAD), or to support a new NAD for a prospective purchaser. Owners learned that their old NADs did not provide any liability protection for soil vapor impacts, despite taking appropriate steps to protect themselves from cleanup liability by completing All Appropriate Inquiries and securing a statutory release of liability before taking title.
So, what will be the effects of the EPA’s and MPCA’s moves to regulate PFAS as hazardous substances? For starters, the MPCA has signaled that at certain properties Responsible Parties entering the Site Remediation Program will be obligated to address PFAS by considering current and historical land use as well as other factors, such as migration of PFAS from off-site sources. MPCA lists 50 industry categories associated with PFAS use and releases. The MPCA will also be screening incoming sites to assess whether any nearby properties, such as landfills, may have resulted in migration of PFAS contamination. Responsible Parties will be required to address PFAS at sites that meet MPCA criteria.
For parties voluntarily evaluating sites for PFAS, the MPCA has stated their obligations will depend on the specific proposed actions to be taken at the site and the type of assurance letter requested. Voluntary, non-responsible parties will be eligible to enroll in the Voluntary Brownfields Program (VBP) to facilitate liability assurances, such as a NAD or No Further Action, or to receive technical assistance or other approvals, e.g., Response Action Plans for redevelopment projects.
Of the more than 12,000 PFAS compounds, the MPCA currently regulates only a handful, and the EPA has developed lifetime health advisory levels for only six. The EPA is expected to announce Maximum Contaminant Levels (MCLs) for PFOA and PFOS this year, and we can expect many additional compounds to come under regulation as more toxicological data becomes available.
What should real estate professionals in Minnesota be doing? When should a property owner or buyer test for PFAS?
First, recognize that PFAS are environmentally ubiquitous. A recent Stockholm University study[3] found PFAS present in rainwater above regulatory guidelines everywhere on Earth, even in remote Antarctica and the Tibetan Plateau. The MPCA will be identifying ambient background levels for PFAS statewide so that its brownfields unit can identify contaminated sites to drive cleanup decisions based on actual risk. Where and how you test have never been more important. Avoiding cross-contamination during sampling and generating reliable forensic data will add time and expense, so buyers need to plan accordingly.
Second, the MPCA will address PFAS differently for non-Responsible vs. Responsible Parties, which could affect when and why parties choose to test for PFAS. “Buyer beware” rings particularly true with PFAS today. Purchasers should proactively assess PFAS risk and seek to secure NADs for identified PFAS releases. Landlords and tenants should review their portfolios/operations to identify and mitigate PFAS risk.
Finally, property owners should not assume that they’ll be able to just live with this contamination, and that regulators won’t force a cleanup. As an example of how Minnesota officials are thinking about PFAS, consider the recent launch of a first-in-the-nation large-scale PFAS groundwater cleanup in the town of Lake Elmo, using a technology called surface activated foam fractionation (SAFF). MPCA Commissioner Katrina Kessler said the project “marks the beginning of a new era for PFAS clean-up in Minnesota.” With a cost of $790,000 to purchase the SAFF system, state regulators are sending a clear message that they will act aggressively to take on PFAS cleanups. Everyone involved in commercial real estate transactions needs to prepare for a new era of environmental due diligence.
[1] (Environmental Science & Technology Letters (2020), 7 (12), 931-936CODEN: ESTLCU; ISSN:2328-8930. (American Chemical Society)
[2] Environ. Sci. Technol. Lett. 2022, 9, 11, 983–990 Publication Date: October 12, 2022
[3] Environ. Sci. Technol. 2022, 56, 16, 11172–11179, Publication Date: August 2, 2022
Sean Leary is an Associate Principal and District Office Manager for Vieau/GZA of Minneapolis. In addition to leading GZA’s Minneapolis office and serving as Vice President for Transaction Risk Management, Mr. Leary is also an ASTM International Instructor on Environmental Assessments and serves on the Environmental Bankers Association Board of Governors.
