PFAS, or per- and polyfluoroalkyl substances are a group of synthetic organic molecules, primarily consisting of perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate acid (PFOS). In both cases, the chemicals consist of “chains” of eight carbon atoms attached to fluorine and other atoms. This group of molecules proved to be extremely useful for a wide range of manufacturing and industrial applications due to its resistance to heat, water and oil, and inability to biodegrade easily. These include (but are not limited to) cookware such as Teflon pans, pizza boxes and food wrappers, stain and water repellents, polishes, waxes, paints, carpeting and furniture, semi-conductors, medical devices and as a metal plating bath. PFAS has also historically been used as a mist-suppressant in plating operations. One of their main uses has been in aqueous film forming foams (AFFF) used for firefighting, and at military installations and commercial airports. Use of PFAS in fire-retardant foams has been one of the most prolific vectors of widespread contamination of water.
Michigan Exposure and Health Concerns
Ground and surface water contamination and human exposure to PFAS is currently a large concern in Michigan and throughout the U.S. Studies by the Social Science Environmental Health Research Institute at Northeastern University has documented PFAS contamination at 94 sites in 22 states (so far) and have provided an interactive site tracker to monitor future results. An analysis by the Environmental Working Group (EWG) of EPA drinking water sampling from 2013-2016 showed that 194 systems serving 16 million people have been impacted by PFAS to date.
Anecdotally, we are hearing about more and more sites being discovered with PFAS contamination. PFAS contamination has generally been equated with widespread, regional groundwater plumes attributed to either “mega manufacturers” like Wolverine World Wide, Federal and/or military bases, airports, or fire departments where fire- fighting foam is used. High levels of PFAS were found in a white foam coating the water near the former Wurtsmith Air Force Base in Northern Michigan. PFAS drinking water contamination is a wide spread concern in Western Michigan, near the former manufacturing site for Wolverine World Wide shoes. High levels were also found earlier this year in drinking water near a paper mill in the Kalamazoo area, to name a few.
But PFAS use has a much broader footprint in the industrial and manufacturing marketplace. Recently, as part of routine monitoring, MDEQ identified elevated PFOS levels in the Flint River. Further investigation traced the PFOS to the Lapeer Waste Water Treatment Plan (WWTP), and further to the Lapeer Plating and Plastics (LPP) facility. LPP is a decorative chrome plating facility that discharges process wastewater to WWTP. Plating facilities historically use PFOS containing mist-suppressants in their industrial processes to meet hexavalent chromium air emissions requirements. More are being discovered each month. Other plating facilities in Manistee and in Cascade Township have also been identified by MDEQ as contributing to PFAS groundwater contamination.
The potential health effects from PFAS in humans in not yet well-understood by scientists. However, studies have indicated that high levels of exposure can result in functional changes in the liver, thyroid and pancreas. The Centers for Disease Control has issued warnings that PFAS may impact growth and development, reproduction, thyroid function, immunity and higher rates of certain cancers.
What are current regulatory guidelines?
An earlier form of the PFAS chemical class, known as long-chain PFAS, was banned from manufacture in the early 2000s following lawsuits (namely against Scotchgard manufacturer 3M for and against Teflon manufacturer Dupont and public outcry. The chemical industry has since created a short-chain version of PFASs, removing a carbon molecule from the original, but retaining the same manufacturing properties. Currently, the federal government does not regulate short-chain PFASs. But the chemical class is on the EPA’s list of “unregulated contaminants.” The substances are monitored and the EPA can issue notices in instances of potential public danger.
The EPA has no current enforceable standards for healthy levels of PFOS and PFOA in drinking water, but in 2016, released a Drinking Water Health Advisory (HA) of 70 parts-per-trillion (ppt) for either PFOA or PFOS, or when both are found in a combined concentration. This is the same guideline that has been adopted by the State of Michigan.
MDEQ has established a website to keep track of newly discovered PFAS sites across the state. In 2018, the Michigan Department of Environmental Quality (MDEQ) Remediation and Redevelopment Division (RRD) established cleanup criteria for groundwater used as drinking water of 70 parts per trillion (ppt) of perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), individually or combined as part of a growing concern about the safety of drinking water in Michigan, which was adopted from the United States Environmental Protection Agency’s Health Advisory.
What should Michigan CRE stakeholders know?
As scientific knowledge and state and federal guidelines evolve, what should property owners, developers and lenders know to manage risk and lower liability?
Environmental professionals will have to consider PFAS more as part of their environmental due diligence and subsurface investigations for CRE transactions, especially when sites have current or historical industrial usage linked to PFAS contamination. The identification of PFAS contaminant impacts related to historical plating operations and known historical use in other industries dictates that potential PFAS contaminant impacts be considered as part of the environmental due diligence process. Sampling and analyzing for PFAS chemicals is complex, but also manageable if performed by knowledgeable environmental professionals.
As to how this many impact current transactions or deals, just be aware that this is an evolving issue and it may come up more frequently during due diligence. Partner’s environmental professionals are on top of the latest information! Rely on an experienced, knowledgeable local environmental consultant, familiar with Michigan State regulations, sampling procedures, and ever-changing Due Care obligations.
Finally, remember that the best way to lower transactional risk is to always engage with qualified and informed environmental consultants to perform careful, meticulous due diligence assessments.