Written by Chris J. Williams & Leland P. Frost

Owners and operators of property contaminated by hazardous substances as defined and designated by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) are subject to strict and joint liability, even if they did not cause or contribute to the contamination. That is, unless they establish one of the CERCLA liability defenses: Innocent Landowner, Bona Fide Prospective Purchaser, or Contiguous Property Owner. Establishing those CERCLA liability defenses requires satisfying the 40 C.F.R. Part 312 "all appropriate inquiries" requirement under the ASTM E1527-21 standard, which now involves a polyfluoroalkyl substances (PFAS) analysis in Phase I Environmental Site Assessment (ESA) reports.

The potential for property owner and operator CERCLA liability was expanded by the Environmental Protection Agency’s designation of two PFAS—perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), including their salts and structural isomers—as “hazardous substances” under CERCLA as of July 8, 2024. Now that PFOA and PFOS are designated as CERCLA-defined hazardous substances, they are within the scope of the ASTM E1527-21 standard and should be evaluated as part of “all appropriate inquiries” for Phase I ESA reports to qualify for CERCLA liability defenses. CERCLA’s strict and joint liability is particularly problematic for properties that may be contaminated by PFAS because PFAS have a long history of widespread use and have been found all over the world, including in locations where there are no immediate known sources of PFAS.

The July 8, 2024 deadline for Phase I ESAs to include an evaluation of the potential presence of PFOA and PFOS has come and gone; however, more than two months later, we are still seeing Phase I ESA reports that do not adequately incorporate the required due diligence for PFOA and PFOS. A Phase I ESA should include the results from screening PFAS regulatory databases, such as Environmental Risk Information Services (ERIS) and EPA’s PFAS Analytic Tools. Based on the information in the PFAS regulatory databases, a Phase I ESA report should clearly state whether listings were identified indicating the presence or likely presence of PFOA or PFOS at levels exceeding the reportable quantity or background ranges at the subject property, adjoining sites, and/or other nearby sites within the standard search distances.

If “all appropriate inquiries” are properly performed under the ASTM E1527-21 standard, including PFAS regulatory database reviews for PFOA and PFOA, a Phase I ESA report could provide property owners and operators with strong arguments for CERCLA liability defenses. Even then, given the evolving nature of science and regulatory oversight of PFAS, additional sources of PFAS contamination may exist that are not identified by the limited screening tools, but having a Phase I ESA report to support a CERCLA liability defense is certainly better than no defense.

KMCL provides this information for educational purposes only. This article should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.