Performing Due Diligence to Manage PFAS Liability Risk: Current Trends and Best Practices

Dane: Hello and welcome, everyone. My name is Dane Menke. I am the Digital Marketing Manager here at REGENESIS and Land Science. Before we get started, I have just a few administrative items to cover. Since we’re trying to keep this under an hour, today’s presentation will be conducted with the audience’s audio settings on mute. This will minimize unwanted background noise from the large number of participants joining us today. If the webinar or audio quality degrades, please disconnect and repeat the original login steps to rejoin the webcast. If you have a question, we encourage you to ask it using the question feature located on the webinar interface. We’ll collect your questions and do our best to answer them at the end of the presentation. If we don’t address your question within the time permitting, we’ll make an effort to follow up with you after the webinar. We are recording this webinar and a link to the recording will be emailed to you once it is available. In order to continue to sponsor events that are of value and worthy of your time, we will be sending out a brief survey following the webinar to get your feedback.

Today’s presentation will focus on performing due-diligence to manage PFAS liability risk. With that, I’d like to introduce our presenters for today. We’re pleased to have with us today Ned Witte, attorney and shareholder with the Godfrey & Kahn Environmental Strategies Practice Group. Ned represents clients concerning environmental due diligence and liability allocation in transactions, enforcement defense, brownfields development and Superfund matters. Ned has particular experience concerning per and polyfluoroalkyl substances, or PFAS, representing clients at multiple PFAS sites in Wisconsin. Ned serves as co-chair of the public policy and Citizens Advisory Committee to the Wisconsin PFAS Action Committee which is developing the 2020 Wisconsin PFAS action plan.

We’re also pleased to have with us today, Ryan Moore, Senior Technical Manager and PFAS Program Manager for REGENESIS. Ryan has 20 years of experience as an environmental project manager and laboratory account executive relating to multimedia contamination sites throughout the U.S. His experience has focused on-site investigations of soil and groundwater contamination, corrective action evaluations, operation and maintenance of remediation systems, large soil removal remedial projects, institute groundwater and soil treatment, vapor intrusion assessments, environmental laboratory operations such as QA/QC evaluations, data interpretations, and business development. All right. That concludes our introduction. So, now I will hand things over to Ned Witte to get us started.

Ned: Thank you, Dane. This is Ned Witte, Godfrey & Kahn Law Firm, speaking to you today from Milwaukee, Wisconsin. It’s a great privilege to be here with you virtually. I think we’re all getting used to virtual communications now through many different means. And so happy to be here with you and to share with you what I know, what I’ve learned, and hopefully, develop some thoughts on best practices related to this important topic. Before I get started, I just wanted to thank REGENESIS for arranging this webinar and for undertaking the heavy task of the logistics in preparing for this. The promotion has been fantastic and they’ve done a very good job of making all of us look good, and so I’m grateful for that. It made us look good, even though we’re coming up now on seven or eight weeks following kind of the corona shutdown, and so we’re all looking a little messier than we did when we started this process. On that topic too I just want to acknowledge and recognize for all of you the efforts that you’re putting in remotely to get things done in this very challenging time, and I wish you all the best and hope that you and your family and professional circle and friends are doing well and holding up okay. We all look forward to the process of getting back to normal.

So, the topic today, as Dane mentioned, is performing due diligence to manage PFAS liability risk, current trends, and best practices. And what I’ll be doing today is sharing with you the experiences that I’ve had in addressing PFAS and deals. But I’ve also had the good fortune of being able to interview and speak with a number of professionals in the environmental consulting industry and to learn from them and I wanna share with you what I’ve heard from them. So, I think that’s really important to understand what is actually going forward on the ground and what is practical on what is happening so that we can all learn from that and ideally take that forward to the next deals that we work on. By way of context, you know, I think that it might be valuable to think about this and sort of that maximum of the seven stages of grief because I think that it fits in well with the world of PFAS and, you know, depending upon your knowledge background and experience, there may be more or less stages of grief, but this model seemed to fit in awfully well with the analysis that I’m thinking about.

And, you know, I’m gonna use an example of a project that I have been working on for a number of years, but it really came full circle into the world of PFAS. In the middle of 2018, having already worked on this matter for a number of years, a municipal client here in the state of Wisconsin where we have taken a brownfield site and having looked at it in the context of a race order and demolition requirement, ultimately getting a third-party to help pay for that. We were thinking that it was gonna be basically sort of a taken down to the slab kind of site and leave it there. But it actually became an attractive site for the National Basketball Association, they developed a developmental league, G-league arena on the property.

And so things were looking good and we were basically working toward conveying that property to a purchaser to the developer. When in the middle of 2018, we received a communication from the DNR, even after we had already received our closure letter, but we were striving towards kind of the Cadillac level cleanup known in Wisconsin as the voluntary party liability exemption. And we had gotten to the point where we were basically gonna be pursuing the VPLE certificate of completion by which, effectively all responsibility would be shifted to the state of Wisconsin and our client and future owners would be released from liability when we received a letter saying, “If you want your VPLE, you’re gonna need to investigate for PFAS. And that led to the first stage of grief which was shock.

Few of us had ever heard of PFAS before. And so this was, you know, kind of a shot out of the dark and there was great alarm and confusion related to that, leading to the next stage, denial. Surely, they must have the wrong site. This cannot be our property where there is no…as we learned quickly about what PFAS was, there could be no connection to our site because this wasn’t a site that had been used for, you know, application of PFAS containing products or use of any, you know, stain-resistant and stick-resistant products. No fire had occurred on-site, so clearly had to be the wrong site. And with that came, obviously, anger on the part of our clients that where they had been so close, suddenly, they were now at a position of having to investigate for this relatively unknown substance.

Bargaining is the next stage of grief. And our client engaged us to actively communicate with the Department of Natural Resources to tell it simply how wrong it was that we didn’t think that it had the legal authority to, in fact, require our client to perform investigation for PFAS at the site. We explained the legal standard of the voluntary party liability exemption as well as other administrative law to effectively say, “You can’t do this to us.” The door was slammed in our face, however, and effectively the Department of Natural Resources said, “If you want to get this closure, this final closure, you will need to conduct an investigation for PFAS.”

Ironically, the sixth stage of grief under this paradigm is testing. I don’t think they mean physical testing, but instead perhaps probing and evaluation whether there’s an alternative, but I think it kind of fits in this situation because the possibility was, “Do we want to actually do testing?” And in our case, we decided that we did not want to do testing because we didn’t want to deal with the uncertainty and unknown related to what to deal with a detection of PFAS at our site, and so, therefore, we ultimately arrived at the seventh stage of grief, which was acceptance. And I think that we’ve now come to accept, you know, kind of the current state of affairs that this is where we are. PFAS is here to stay and it’s a substance that we’re going to need to continue to manage going forward. And in the case of my site that I’m talking about, two years later we actually have not conducted the investigation because we’re still trying to figure out exactly how we want to manage that particular challenge in this issue.

The quick overview of the presentation that I wanna provide for you today is really to focus on how PFAS is handled in environmental due diligence. We’ve developed an industry-standard of how to investigate for the potential presence of hazardous substances under current use and historic use and ownership of properties, but this is a whole new issue, and it’s creating a lot of challenges. So, thinking about how it is handled is gonna be critical. I will be talking a bit today about the regulation of PFAS as a circle hazardous substance or not, and how that has a bearing on the process of conducting phase one environmental site assessments. If PFAS is not a hazardous substance, is it within the phase one protocol and scope? We’ll get into that and talk about ways that that can be constructively managed within the due diligence process. What are buyers requesting in phase ones and what are lenders and investors requiring and look for?

Next, if PFAS is identified in the due diligence, and if it’s identified as the equivalent of a recognized environmental condition, what are buyers requesting for phase twos? And as importantly, what are sellers allowing? Because that’s gonna be really a critical evaluation and I think you’ll hear from me that, you know, this is causing deals to slow down because of seller concern related to the potential presence of PFAS. But where that investigation is performed, where phase two is allowed or where other procedures would otherwise allow for phase two to be conducted and PFAS is detected, what is that going to mean particularly here in the United States now where we have such a varying degree of development of groundwater standards?

If PFAS is identified, how is it gonna be managed in a deal and in the deal language? Again, we have some fairly developed standards on how to address environmental conditions, but, you know, whereas something had been kind of running pretty well, that is, you know, in the deal, the industry deal, all of a sudden, we’ve got this new substance which is really causing a lot of challenges. And then I wanna share with you some additional thoughts on other tools that might be available, whether you can use brownfield voluntary programs such as the one that I identified. Is insurance available, you know, for new policies, new coverage for PFAS conditions? And what are some of the best practices that you can think about and you can employ going forward into transactions that you work on?

I wanna just pause for a moment and sort of talk about why this is so important. And it really is because of the need to intelligently creatively allocate risk in transactions. That’s the real benefit of conducting environmental due diligence is that it enables all parties to be as informed as possible and to address those risks in ways that are going to be functional, not only for the purposes of getting a deal done, but also effective as that deal evolves into the post-closing world so that if somebody comes back and looks at the transactional documents, how are those gonna be interpreted? How’s that gonna be handled going forward? This really comes down to economic development. And I think, you know, in this topsy-turvy world in which we live right now, I think that certainty is something that is critical. And so I think that, particularly in the world of Brownfield redevelopment, but also just in commercial transactions, I think that understanding and managing this risk is gonna be very important. And so, therefore, that’s why it’s really critical to understand how to manage PFAS issues in due diligence. And it really comes down to, as I’ve used the term uncertainty several times, but it’s a matter of trying to eliminate as much uncertainty as possible. And so that’s what hopefully we’re gonna learn a little bit more about today.

I’m not gonna give you the PFAS 101 here because I think that everyone who’s come to this conference today, this webinar today has some of the background in this, and so I’ll assume that everyone has a pretty good working knowledge of PFAS. But I want to kind of set the table by talking a little bit about how this is a particularly challenging issue within the context of federal regulation or lack of regulation of PFAS and then state stepping up and trying to address that, but in doing so, we wind up with a very varied landscape of potential regulation. So, going back, we have kind of start with 2018. And I point to this picture often and note the irony that in 2018, May of 2018 the U.S. EPA held the PFAS National Leadership Summit. And I know how hard U.S. EPA workers and representatives have devoted their time to try and to address many, many different issues including PFAS.

But I point to this with some degree of irony simply because there really wasn’t much leadership here. And instead, the U.S. government effectively looked at the states effectively and said, “We’re not gonna set an MCL or a maximum contaminant level for PFAS and we will leave it up to you, states, to sort that out and to identify how you want to.” The only sort of guideposts that came out of this was from the federal government in the form of the Health Advisory Level of 70 nanograms per liter or 70 parts per trillion. And, you know, we hear many different points of reference about drops of pure PFAS in an Olympic-sized swimming pool. The point of reference that I think is most sort of visually available to me is thinking about time and 70 parts per trillion is like waiting 32,000 years for one minute. It could be 60 seconds, it could be 70 seconds, but if you’ve waited 32,000 years, I’m not sure anyone’s really counting anymore. But just shows you how infinitesimal we’re talking about as far as a level of detection, a level of regulation.

So, a year passes, and one year later, the U.S. EPA issues the PFAS action plan. And, you know, this was a significant step forward because it basically was coming off of a long period of silence. But, you know, I wanna highlight the two… There’s sort of two of the four legs of the stool here that I think are particularly important to note. One of the objectives of the PFAS action plan was to propose a national drinking water standard or MCL. And we didn’t hear much from EPA in regard to that for a long time. In February of this year, EPA initiated the process under the Safe Drinking Water Act to effectively come up with drinking water standards for two PFAS compounds, PFOA and PFOS. And that’s a good step, but I think that we also have to appreciate that that’s a long timeframe that we’ve set out on here. So, that’s potentially a five-year process before a federal MCL will be in place.

So, that’s not gonna be the answer to the problems and the challenges that your clients and my clients are facing as far as what is the federal standard for this. Another important element of the PFAS action plan was the desire to identify certain PFAS hazardous substances under the Comprehensive Environmental Response Compensation and Liability Act or CERCLA. And again, that’s something that, you know, we’ve seen a little bit of action on but not a lot. And so where we are right now is that we don’t have PFAS compounds specifically listed as CERCLA hazardous substances, which, again, you know, leaves us with a bit of confusion as to where we are and what to do with this.

As such, that left us with the states taking up this responsibility and this task of identifying regulations and potentially MCLs or other standards to address groundwater contamination within their states. That’s a good thing, but it also has led to a tremendous disparity and difference of regulation. As you see from the figure of the United States, there are some states have gone pretty far, you know, to come forward with their own standards. Some states have not done much at all. And what you’ll basically find is that some states have picked up the 70 parts per trillion U.S. EPA Health Advisory Level as their standard. Other states have moved forward on their own to develop their own MCLs. And I might highlight a couple of those. California has a very aggressive low standard 14 parts per trillion, 30 parts per trillion for PFOA and PFOS respectively. New York, very low, 10 parts per trillion. New Jersey just within the last month or so has passed and promulgated their standards and those are now out and enforceable.

I’ve got an asterisk next to New Hampshire because as many of you know and kind of as an interesting point of reference to identify New Hampshire has come forward with its standards, but those are subject to legal challenge by three 3M Corporation as being improperly promulgated and, you know, not based in adequate science. So, I think that that’s gonna be an interesting state to monitor and observe. Again, you know, what’s important about this? Why does it matter, you know, if different states treat things differently? Well, you have to know what is happening within those states when you’re working on a deal to understand, “What does the potential presence of PFAS within the due diligence context mean?” And if you find PFAS is present, what does it mean for that given state particularly in a situation in which the state hasn’t gotten to the point yet of developing enforceable standards?

But, you know, imagine a situation also where you’re working on a multi-state transaction and you have some states that are using the 70 parts per trillion HAL. You have some states that are in the midst of developing their own standards, but have not yet gotten there. Other states that may have, you know, in fact, enforceable standards in place. This is unique because there are not many other substances and concerns that will lead to such a varied degree of consideration.

I mentioned that, you know, the way that I prepared for this and in order to gather what I thought was the most relevant and practical information, I interviewed a number of environmental consulting firms. I just wanna give them a shout out here because they’re very helpful input and I’ve had the good fortune to work with professionals from each one of these firms that matters around the country. And so I just want to thank AECOM, Geosyntec, GZA GeoEnvironmental, Ramboll and TRC for the time that they shared with me to talk about these challenging issues. What I heard from them and what I’ve learned is that, you know, we’re all kind of creating responses to this. And, you know, with respect to PFAS, there’s a wide range of approaches to dealing with it, practices that they are implementing, programmatic approaches, protocols that they’re putting in place and other specific means of dealing with PFAS and handling this within their scope of work that they’re proposing to do for phases ones and, you know, within their sort of internal standards that they want to employ as they move ahead.

When I interviewed the firms, the topics that I wanted to discuss and wanted to understand was, “How is your firm handling PFAS and due diligence? Are you treating PFAS as a hazardous substance and an issue that would otherwise come up within the phase one scope and framework? What are your clients asking for? And what do they know? How intelligent and how sort of informed are they about PFAS? What about lenders?” I think what a lot of us have seen in our practice and then in my practice over 30 years is that you kind of have to follow the money and when you may have a client that, you know, is anxious to get a deal done, and they may be willing and they may have a tolerance for risk that, you know, works well within their company framework. But if somebody is putting money forward to get that deal done, a lender, they may have a very different risk tolerance. So, I wanted to understand what lenders were thinking about. What are you finding when you’re conducting phase ones and when you’re evaluating for the presence of PFAS as a condition out of property? If that leads to a phase two, what are you finding in your phase twos? And how are you managing these particular issues in the overall scope of performing environmental due diligence?

Okay. Big deal here. Is PFAS a CERCLA hazardous substances within the phase one scope? And to understand the sort of significance of this, you kind of have to put on your ASTM hat a little bit and understand what the objective of phase one is and what the standards are that have been basically accepted as conducting due diligence. People perform phase ones for, you know, a number of different reasons or maybe to satisfy wonder, maybe, you know, because that’s what their acquisition practice dictates. But a kind of an underlying principle of why phase ones are performed is to conduct all appropriate inquiry, which is a term of art coming out of the CERCLA law. And it really is, you know, a process of flushing out current and historic use and ownership in order to evaluate the possible presence of releases of hazardous substance at a property.

But when you think about it in the context of the all appropriate inquiry standard, the reason why someone wants to perform a phase one is to perform a level of investigation to meet a standard, a threshold to then be able to qualify for certain statutory exemptions from liability that are identified in the CERCLA law. And those particular exemptions from liability would be as an innocent landowner where a party that is the owner or operator of a facility that otherwise would be subject to CERCLA jurisdiction because of the presence of hazardous substance can show that at the time that they acquired that property, they did not know and had no reason to know of the presence of hazardous substance at that site. And the way that they show that is I did a phase one, and it met the ASTM standard, and I therefore performed all appropriate inquiry. I didn’t know that that contamination was present, and therefore, I ought to be exempt from liability.

The other two categories of parties that are interested in conducting all appropriate inquiry would be a contiguous property owner, that’s someone who owns a property that’s affected by the migration of contaminants from an offsite source or someone who wants to meet the standard of being a bonafide prospective purchaser, basically, wants to perform investigation, but not necessarily, you know, trip over a wire where they become responsible. So, these parties will perform all appropriate inquiry in the form of ASTM, E1527, phase one environmental site assessment. And that is, you know, kind of the golden standard that’s out there right now. But the question is if you perform an ASTM phase one, does that meet all appropriate inquiry?

And the answer is right now, no, it does not because the ASTM process is designed and if you look at the ASTM standard, a 1527 standard, the goal is to identify recognized environmental conditions. And what is a wreck? A wreck is the presence or, you know, sometimes referred to as the likely presence of hazardous substances or petroleum products. And for the purposes of that definition, a hazardous substance under the ASTM standard is a CERCLA hazardous substance. And as we stand right now, as you heard when, you know, we’re looking at the PFAS action plan from the federal government, part of that goal was to identify certain PFAS substances as CERCLA hazardous substances. But for now, they are not identified and they’re not show up in what many of you know is the list of lists. So, therefore, an off-the-shelf phase one under the ASTM standard would not include an evaluation for PFAS. I don’t think everyone knows that. And I think, you know, it’s something that is still evolving and still relatively new, but I think that you and your clients and you as the clients need to be aware of that.

One other concern too that I think is kind of a nuance is that I think that we all have to be very thoughtful and careful about the possibility that a funding from the federal government that is coming from a Superfund grant or a Superfund revolving loan fund to a municipality and then passed on to developers or to, you know, other efforts to try to address contamination. One needs to think very carefully about whether that federal money in the form of a Superfund loan or grant is appropriately directed toward PFAS response because if it’s not a CERCLA hazardous substance, it arguably is not within the framework of that program. So, keep an eye on that as well.

So, if PFAS is not in the phase one context, you know, how is it handled and are there sort of efforts to try to fill that gap? This is not an entirely new issue because, as many of you know, a classic substance that is not within the phase one scope is asbestos. And so, you know, the consulting industry and users of phase ones have found ways to work around and work through that by, you know, identifying asbestos as a non-scope consideration whereas a special scope add-on to the phase one process. Right now, ASTM is working on updates to the phase one process, a group or a committee that’s called the ASTM 2021. Revision is currently in process. I’m surfing on a group that’s called the ASTM E50 AC417 committee. And what we’re doing is we’re providing some of that information into the ASTM 2021 effort to try to clarify how to manage PFAS in due diligence exercises.

Another, you know, kind of organic element or tool that’s available is state databases that are available that, you know, have kind of sprung up. In Wisconsin, for example, the Wisconsin Department of Natural Resources maintains what is known as the Bureau of Remediation and Redevelopment Tracking System. It’s an online database. Local practitioner, state practitioners refer to that as BRRTS. And BRRTS is a great tool because it identifies any site where hazardous substances have been identified and have also been…that site has been notified or reported to the State Department of Natural Resources. But now, DNR has a special search function by which you can search for PFAS specifically. And so I think that’s gonna be…it’s a growing list and I think it’s gonna be an important tool for evaluating the potential presence of PFAS and due diligence. Another great example is California and the Water Resources Control Board, which through its broader authority has performed or required investigations at PFAS suspect sites across the state. And so those have included landfills that you see here in the orange squares, chrome plating facilities in the kind of the gray diamonds, and then airports. And as we know from our experience with PFAS, these are sort of the higher priority target concerns.

On that topic, you know, when I spoke with the consultants, you know, what I heard was that there are four areas in particular that, you know, are kind of high on the list and alarms go off if the phase one due diligence is looking at these particular types of facilities. The first type is facilities that produce PFAS. No, these are the major players, the 3Ms and Minnesota or the [inaudible 00:31:02] and North Carolina, sites that are actually, you know, produced and managed and handle PFAS. Next category is facilities that have used or incorporated PFAS into the manufacturer of products. Aqueous film forming foam or AFFF and the management and handling of that. Here in the state of Wisconsin we have, you know, a classic example of that in Marinette, Wisconsin where Tyco Fire Products has handled PFAS in AFFF over time in order to test the efficiency, effectiveness of that in suppressing and keeping fires out. But in doing so, it’s led to a lot of releases of PFAS in that particular area. It’s a sign of great concern for the state government and for the responsible parties.

Third category is facilities that have utilized PFAS as an element of the manufacturing process. And in that figure from California, you know, you saw that platers were identified as a principal concern, which is because platers have used PFAS in a solution as part of a miss-suppressant function and that PFAS has found its way into releases at plating facilities as well as, you know, wound up being present in some of the infrastructure in the sewers related to plating facilities.

And finally, the fourth category is facilities that have assembled products that contain PFAS. I think a good example of this is nonstick cookware. One of the sites that I’ve worked on that is, you know, probably number two or three in the state of Wisconsin as far as I’m concerned is a site where we represent a municipality where there was previously a leading manufacturer of pots and pans and nonstick cookware. And we’re finding quite a bit of PFAS in many locations in which we look. So, you know, the consultants that I spoke with, you know, they’re using this as kind of a threshold kind of gating list of how to attend to these. These will raise red flags. And certainly, at first two, you’re looking at a strong likelihood of needing to do a phase two, if not at all four. There are other facilities as well, you know, that I’ve heard about and that I’ve seen. And some of them are listed here where wastewater treatment plants and municipal POTWs have handled effluent and sewage and then gone through the exercise of treating that and producing sludge biosolids that are land applied as fertilizer in agricultural fields.

I think this is a coming concern and this is gonna be an issue that’s gonna have to be managed. In addition, airports and military bases where AFFF has been used for firefighting. These are gonna be concerns. Any areas where firefighting events have occurred and where AFFF might have been employed. We’ve had sites, you know, where we had utility fire in the city of Madison, Wisconsin last summer. And unbeknownst to many, it turned out that AFFF was utilized in the effort to put that fire out. But not only is it the areas where these happen, but it’s areas downgradient of those. Ditches and surface water conveyances are all gonna be important concerns.

So, the consultants have told me that, you know, what this is leading to is really an important and high-level discussion with their clients and users of the phase ones as far as what their interests are and what they want. And what they’ve told me also is that, you know, this is kind of all over the board. You’re getting a full range of responses and expectations from the parties depending upon their particular interest in these projects. Buyers are very risk-averse and, therefore, will be very conservative and, you know, once they know that PFAS is a potential concern at a site, they will definitely want that included and they want to make sure that that is thoroughly evaluated. Sellers, you know, the other side of the coin. They’re not as interested. They really, you know, don’t want to know about PFAS if they don’t have to. And they’re not interested in being the trailblazers and they wanna, you know, as much as possible, sort of resist the desire to peel back the puppet to see what’s underneath it.

The other thing that I heard that I think is very interesting from the consulting firms that I interviewed is that it’s difficult to rely upon a seller’s knowledge because this is such a new issue. And, you know, I think that sellers may not be aware of what the prior use of their site may have been because PFAS is hard to sort of contextualize. I think another angle on this too that I think you’re all probably already attuned to, but I think that we need to keep an eye on is that, you know, you cannot pick up an old phase one and say, “Is PFAS a problem?” I mean, the only way that that’s gonna be an indication for you is understanding what the use was and what the potential presence of PFAS based upon site activities were. But you’re not gonna find any, you know, phase ones, phase twos from older than two years, you know, maybe even less than that as far as an awareness and an intelligence about what might be present at the site in the way of PFAS.

My municipal clients are very sensitive to PFAS and this kind of harkens back to the alarm about contaminated sites and the desire not to acquire those. Interestingly, what the consultants that I interviewed shared with me is that they’re still kind of getting…lenders are still getting up to speed and they’re not as aware as one might think. The term I even heard was calculated ignorance about, you know, the presence of PFAS and the desire to look further. But I’m also getting the sense that, you know, the other financial interests in the form of investment bankers, portfolio companies, the ones that I’ve spoken to, we’ve hosted seminars, very attuned and very interested and want to know what’s going on. Investigations where the phase ones have been performed and where PFAS is a potential concern. The consultants are telling us that it’s prevalent and significant and deals. And I think it’s really a… Once it is present, it’s gonna be a dominant factor particularly if there’s a reason, you know, like one of those four categories of different site uses.

In talking with the consulting firms, I also understood that there’s really sort of limited experience with how the potential awareness and an identification of PFAS as a wreck equivalent leads to a phase two investigation. And I think that the reason for that is that a lot of sellers are kind of shutting down. And if PFAS is identified as a phase one wreck-type concern, I think the sellers are saying, “No, thanks.” Unless there’s a compelling reason to move forward, they really don’t want to conduct the investigation. And if the deal fails, be left with a site, you know, on which PFAS is known to be present. Where phase twos have been performed, though, my understanding from the consulting industry is that wherever they’re looking, they’re finding it. And so it’s gonna be a challenging issue, I think for all of us as we move forward.

I think an elephant in the room, also, that we’re gonna have to deal with is, you know, if you’re performing a phase one and you’re looking at a site that’s already been closed, but PFAS was not part of the realm of concerns that was investigated and if you have a site that was otherwise a likely candidate for the presence of PFAS, I think not unlike what we saw with vapor intrusion within the last 5 to 10 years. I think that we’re gonna see that PFAS is a concern as it relates to sites that have already gone through a regulatory closure process. And, you know, I think that’s gonna be also a very important issue as it relates to CERCLA sites that are under a five-year review cycle because they may not have had PFAS even as a concern in the past, but now going forward, I think that we’ll see that they will be present within those five-year review cycles.

Since PFAS is not an element specifically within the phase one reports, I wanted to understand how are you, consulting firms, handling the issue of PFAS in your phase one evaluations or your environmental due diligence? And there are certain tools. This, again, sort of as a parallel to the asbestos context, one way is to handle it as what is known as a non-scope consideration. And that’s exactly what it sounds like. That’s called out in the ASTM standard. It’s a way to specifically recognize conditions and circumstances that are not part of the phase one scope. And I think that we’ll see that this is probably a way that the ASTM 2021 function is going to look at this, you know, as calling out emerging contaminants under non-scope considerations until they, you know, wind up being potentially regulated as hazardous substances.

The next way would be business environmental risk. And as many of you know, that is a risk with material environmental impact on a business, but it’s not an issue that is otherwise subject to the ASTM phase one scope investigation framework. Other ways might be in other noteworthy condition, that’s not a term of art under ASTM, but I think that, you know, the consulting industry has kind of adapted to recognizing that as a potential concern. And then I also heard from one consultant that they’re trying to handle this in kind of a one-off-basis where they will conduct a PFAS specific investigation through the phase one and potentially phase two process and then handle that in a side letter or kind of a side exercise with their client. And there can be a potential desire to try to treat that as privileged. I put in a question mark there just because I think that we need to be cautious about assuming that something is privileged just because it’s called that, be very careful in communicating with counsel and understanding state-specific standards as far as what qualifies a communication for privileged status.

If a phase two is performed and detects PFAS, you know, where does that leave you? And as lawyers love to say, it depends. And I think I’ve got sort of along the spectrum, three potential examples of where this might leave you. Consider New Jersey, they now have developed and implemented and enforceable MCLs, therefore, you know, you do have standards against which the detection of PFAS could be specifically measured. However, as those of you who have worked in New Jersey, and I have, know that once you get into the ISRA process, it’s gonna be very, very challenging. And I think that, you know, dealing with a new contaminant like this in any state is gonna be tough, but I think that’s gonna be very, very burdensome to work through.

Then think about Michigan, you know, which is very sophisticated, very ahead of the curve with regard to PFAS. They’re working on developing MCLs. They’re probably gonna get there, you know, in the next year or two. And they have a very sophisticated process, again, with kind of like New Jersey called the baseline environmental assessment process, but that too is, you know, very administratively burdensome, and so I think it’s gonna be challenging. Here we don’t have developed standards yet. We have a very formalized program in the BEA process, but it’s gonna be tricky to move forward.

But then, you know, at the other end of the spectrum, we’ve got a state like mine, Wisconsin, we don’t have groundwater standards yet. They have been promulgated. We’re looking at a 20 parts per trillion enforcement standard. But we’re probably at least two years out from getting those in place. In the meantime, we have a very bright line responsibility for notifying the Department of Natural Resources of a release actions taken thereafter. But a high degree of caution on the part of the Department of Natural Resources and I think great challenge and uncertainty as far as managing conditions like that going forward into deals. So, I think it’s gonna take a lot of creative and productive communications with the state government in order to work through those.

Managing the PFAS risks and deals, you know, is probably not too dissimilar from anything else that you all have worked on and that we’ve worked through in transactions. The common approaches that the buyer wants to investigate and identify as much as possible but also leave behind as much of the responsibility with the seller as possible. And on the flip side, the seller is basically saying, “If I open my books, if I allow you in to conduct the investigations that you need to in the form of your phase one and potentially phase two, once you’ve conducted that investigation, I don’t wanna be responsible for any more than what I’ve taken a hit on or what I’ve agreed to clean up or dealt with in some other contractual responsibility.” So, after I’ve done what I need to, I wanna be released, including as state standards or federal standards change. And so, you know, that’s gonna be part of the challenge is, how do you deal with situations where we don’t quite yet have formal standards in place, and meanwhile, we’ve got deals that need to be closed and business expectations that need to be addressed? I think the key is, the second point, everyone’s alarm and sense of anticipation and anxiety is very high with regard to these concerns, and so I think you’ll see that going forward as you work through transactions.

What other tools could potentially be used to save the deal? Is insurance available? Could new policies be written to cover PFAS risk? Possibly. I was surprised when I reached out to an insurance broker that we work with frequently, and he said that, yes, he’s aware that policies are being written, you know, it’s very case-specific, dependent upon the circumstances, they may be limited terms, they may be expensive. But that’s one way to try to save the deal is to work with insurance. But I caution anyone to make sure that you think about that as early as possible and deal with it as proactively as possible because it’s not gonna be something that’s gonna be easy to sort out. I think, also, very important tool, the state brownfield voluntary cleanup programs. I mentioned the VPLE program in Wisconsin before. I’m also working on a matter in South Carolina, the voluntary cleanup contract program. So, these are things that I think are very functional, but I think that, you know, you’re gonna have to have a very robust communication with the state agencies and make sure that, you know, everything is known and you tie it down as well as you possibly can because no one wants to be sort of left with the responsibility for these circumstances.

In conclusion, I just like to sort of leave you with some best practices. I think that, you know, what you need to do is to make sure…we need to make sure that our clients are supported by a very informed and intelligent and experienced team. And that includes both the technical side and the legal side. One consultant told me that, you know, law firms are bringing in more savvy. I think they’re just trying to be nice. But they also said that lawyers are bringing, you know, a higher degree of risk and tolerance to deals because of our, you know, sort of sensitivity and desire to not have our clients be exposed for conditions. Next, make sure that you wrap PFAS into the site assessment process. Either tie it in as a non-scope consideration business environmental risk, you know, whatever you wanna call it, but make sure that it specifically is tied into the phase one due diligence process as a recognized item. You’re gonna have to identify what the law is of the state that you’re working within and what are the status of federal law and how’s that gonna be applicable. Stay well abreast of changes that are coming and that are gonna be happening while you’re working on this. But also think about, you know, what if the law changes afterwards? How are you going to manage that? And then, you know, my last slide there, I was talking about creative tools, insurance and brownfields. I think that you need to be as creative as you possibly can in how you address these issues.

So, I’d like to thank the consultants that I interviewed and spoke with, again. I’d like to thank REGENESIS again for putting this together. My contact information is available. You should feel free to contact me anytime. I’d be happy to answer further questions. And also, you know, hopefully, I’ve helped you learn a little something today, but I’d also be very anxious to learn from you. So, thanks again. That concludes my portion of the presentation and I’d like to transfer it over to Ryan Moore from REGENESIS.

Ryan: Okay. Thank you, Ned. This is Ryan Moore. I’m a Senior Technical Manager with REGENESIS and also the PFAS Program Manager. I come to you guys from Northwest Indiana just outside Chicago. Today I’m gonna talk a little bit about PlumeStop and liquid-activated carbon and how we utilize the technology to address PFAS in situ. On the agenda, we’re gonna talk just briefly about the technology itself, some strategies with using PlumeStop for PFAS, some considerations for PlumeStop in the design phase, and then also finish up with a field case study.

So, PlumeStop, colloidal activated carbon. I’m not gonna get into a lot of the many details on the technology itself, it’s been around for many years now, but just kind of some of the basics. It’s activated carbon that is milled down to the size of red blood cells, one or two microns in size, multiple orders of magnitude smaller than granular activated carbon. The activated carbon is suspended as a colloid and a water polymer solution and this allows it to distribute wildly under low pressure. The small particle size as well provides extremely fast option of contaminants. In essence, what we wanna do is create a purifying filter of the aquifer. Not just for PFAS sites, but for almost every site that we utilize PlumeStop on. We’re trying to address a couple main concerns. One, we would like to coat the contaminant and the aquifer where the contaminant migrates through. And by treating that flux zone, we’re really trying to also protect against back diffusion from low permeable zones and additional infiltration from above. The strategies when utilizing, in most cases, for PFAS is kind of putting together an interceptor barrier for mitigating against the sensitive receptors. A lot of times these receptors are surface body waters, it could be drinking water, supply walls, neighborhoods, or just, you know, coming onto the property boundary of a site.

The modes of action with PlumeStop as it relates with PFAS. This is dynamic absorption. This is not a permanent immobilization. And the contaminant does continue to migrate through. But what we’re trying to really do is look at the retardation factor of what PlumeStop gives to the aquifer. So, if there’s a retardation factor of one, which is movement at the same speed is groundwater, naturally, in many aquifer systems, PFAS has retardation factors between 3 and 20. So, retardation factor three means that the contaminant would move at one-third the speed that of groundwater and retardation factor 20 is moving one-twentieth the speed that of groundwater. By utilizing PlumeStop, in many cases, we’re achieving huge retardation factors and in some cases up to 10,000. So, we can retard that PFAS movement up to one-tenth thousands of the speed of groundwater. And that results in treatment that can last for decades. We have a tool in our design process called PlumeForce, and we go through this modeling process with inputs of the site-specific details that really help us look at the longevity. Also, there are third-party studies out there where they’ve applied PlumeStop for PFAS sides and then went back and really looked at the modeling and the isotherm data to say, “How long will this work?” And there’s actually some scientific articles available to show that, yes, we can achieve reductions for years to decades to come.

So, why use PlumeStop? First off, PlumeStop is a very low-cost alternative to pump and treat systems. There’s no long-term operation and maintenance. Yes, you do have some monitoring, but you’re not sending a guy out every week to keep equipment running. If you do have to reapply, it’s typically gonna be decades after the initial treatment. I’d actually looked at some cost analysis that was done on another site. And the cost of PlumeStop was as low as about 6% of what the long-term or 20-year maintenance of a pump and treat system. Additionally, the PlumeStop technology is really set up well to be combined with future technologies. This is an evidence where we can combine the PlumeStop with our S-MicroZVI technology and really have a destructive mechanism with the PlumeStop or absorption mechanism for chlorinated solvents sites. And we really think that that may be the case down the road with PFAS as well.

So, considerations when using colloidal activated carbon or PlumeStop. First, with PFAS specifically, we need to understand the ratio of the short-chain and long-chain compounds. Obviously, the longer chain compounds will have more affinity to activated carbon versus the short-chain. So, understanding that is the real key. We also need to understand the contaminant flocks. What’s the groundwater velocity of the area we wanna treat? What are the concentrations of this same area, you know, coming through there? The presence of non-target compounds. Many of the PFAS sites projects that we look at are co-mingled. They might be co-mingled with chlorinated solvents or petroleum hydrocarbon. So, an example, if you had benzene fluxing through an area that you’re trying to treat, the benzene might be low level, it might be below any regulatory standard. However, it’s still going to exhibit a demand on the curve. So, we really need to understand what that demand is to make sure we design around it.

And then the last consideration is really the application. We take a lot of steps in the design process phase to really understand a project site. We put together some assumptions within the design, but then we also implement a program what we called design verification testing to really verify that our assumptions are correct. And if not, we make adjustments during this phase prior to going out into the field for the application. We’re trying to build an underground fence and if there’s a large hole in your fence, the site could really look as a non-performance because you didn’t verify certain factors.

So, the case study that I’m gonna talk about is the Camp Grayling Army Airfield. I wanna take a moment here and just really recognize the Michigan Veterans Affairs Office and Patty Lyman with that office in Lansing, Michigan. She’s been key in terms of bringing us on at the site and allowing us to test PlumeStop for PFAS specifically. So, Camp Grayling Army Airfield is in North Central Michigan. The facility is one of the largest National Guard training facilities in the country. And the area that we’re working in, it’s had the historical releases of petroleum hydrocarbons, chlorinated solvents. And then in 2016, they became aware of what PFAS might be at certain sites like theirs. They went on and tested for it and they did find it. The area that we’re actually working in, it’s called the former bulk storage location. And it’s kind of this blow-up here we’re working down over the green field area south of where the former tanks were at.

The aquifer, the Santa gravel aquifer, we had some clay layers around 27, 25 feet and then some additional sand below that and some more confining clay even deeper. Groundwater seepage velocity was calculated to be about 250 feet a year. And our treatment interval for the pilot test was 15 to 27 feet. This was a co-mingled plume that had PCE at about 10 parts per billion, and then total PFAS around 130 nanograms per liter. The sensitive receptors for this site, there was a nearby residential area, some farther downgrading at surface party waters. And then there were also along the property boundary, there’s a kind of rail line here that it’s kind of easy to see there in the blow-up.

So, for this project, we really wanted to kind of test a simple plume cut-off barrier where you would install a series of injection points and place the PlumeStop and then as groundwater migrates through, it will clean up that water and as it discharges through the PRB. This is kind of a look of the setup. We had a series of nine injection points about six feet of par in this kind of arc fashion. There was about 42 feet across. The arc was just to account for any changes in groundwater flow through this treatment area. There were a series of wells that were installed, a few upgradient and a few downgradient, and they were screened to five-footer intervals, so we can really kind of get an idea of what was going on at more specific intervals. Additionally, the black squares that you see, these were searcher core locations where we would actually advance borings post-application to try to verify a distribution of the PlumeStop.

And what I wanna show you here is just an example of one of these cores. The top right is the zero-foot mark and the bottom left is the 30-foot mark. And then, again, our treatment interval was about 15 to 27 feet. So, what you really see in this core is where we tried to treat you’re getting a good visual indication of distribution from the PlumeStop. The areas above our treatment interval is kind of more of that tan beige color. That was the more native color of the standard geographer. We also will go out and gauge nearby monitoring wells or take additional samples of the soil cores and add them to some vials, shake them up and kind of get an idea, “Do we have a good indication of distribution of the PlumeStop?” If we do pull a water sample and it’s black like you see here in the center, we have a field test kit that we can take that sample water that’s got the PlumeStop in it, do some calculations and delusions to try to really figure out how much PlumeStop did we achieve. And that’s really good for trying to understand the ROI of the injection process.

So, onto the data. I’m only gonna show the PFAS data today, but just so you know, the PCE data looks very similar to the PFAS data. So, the application occurred at day zero. The first data that I’m showing here, these are the two upgradient wells. So, it’s kind of… What’s fluxing into our treatment area? And as you can see, they’ve bounced around a little bit, but overall, they’re about what they started where the contributions are about where we started the process. Now, the downgradient well locations. These initial data sets here are 6 feet and 16 feet downgradient. And as you see, we achieve rapid reductions to the detection limits very, very quickly. So, the first sampling events for these walls post-application resulted a non-detect for total PFAS.

Additionally, after about six months, the questions started to get and asking, “Well, how far downgradient are we actually gonna see this effect?” And so at about six months, we installed a series of new monitoring wells at 25 feet and 45 feet downgradient to say, “Okay. How far is this effect actually working?” And as you can see, this next set of data that just popped up, these are the results from those wells much farther downgradient. You can see there was a little bit of detection in one of the wells in the first monitoring event which is, again, about that six-month period. But what you notice right away is that even that small detection, it’s much lower than what the overall PFAS concentrations are that are flexing into this system. So, this is showing that we are achieving results much farther downgradient faster than what we anticipated initially.

So, just a quick summary. This has been a very successful test. We’re able to verify distribution of the colloidal activated carbon. We sustained reductions for both PFAS and PCE over time. This is anticipated to last for decades. And again, it’s a low-cost alternative for remediation or mitigation of risk compared to a large scale pump and treat system. And then just overall, from PlumeStop or colloidal activated carbon as well, it’s very flexible, it’s easily deployable in the field, and it’s very effective for PFAS treatment. With that, I’m concluding my portion. And thank you for your time today. And thank you again, Ned, for your informative presentation.

Dane: All right. Thank you very much, Ryan. That concludes the formal section of our presentation. So, at this point, we’d like to shift into the question and answer portion of the webcast. Before we do this, just a couple of quick reminders. First, you will receive a follow-up email with a brief survey. We really appreciate your feedback, so please take a minute to let us know how we did. Also, after the webinar, you will receive a link to the recording as soon as it is available. All right. So, let’s circle back to the questions. If we’re unable to get to your question today, we will make an effort to follow up with you after the webinar. All right. So, first question is for Ned. And Ned, the question is, if PFAS is detected but at concentrations that are below an applicable state standard or below the federal Health Advisory Levels, how can a buyer address this in the deal documents? And then a follow-up question to that is, what about where PFAS is detected during a buyer’s due diligence but the state hasn’t yet adopted groundwater standards?

Ned: Thank you, Dane. That’s a great question. Great questions. And I think that it’s gonna be very dependent upon the particular strength or leverage of that buyer, if I’m representing that buyer in that transaction, as to how to manage that circumstance because it’s one thing where a buyer and seller can look at a problem and at least measure it against an applicable standard and at least have a basis for agreeing or disagreeing about the way to treat something and who’s going to bear the responsibility for it. I think that in that situation where in the first case we’ve got something that is below an applicable standard, I think at the very least, if I were representing a buyer, I’d wanna understand what has been identified and can we identify something as being a baseline? I think that, you know, given the moving target as it were of PFAS regulation and brown water standards and state standards, you know, I’d want the seller to be responsible to the extent that those conditions changed and wound up being elevated and above the applicable state standards and, you know, important too from a technical standpoint, I’d wanna make sure that we, in fact, have the issue fully defined because, you know, it may be that we’re only on the cusp or one edge of an area of contamination. So, you know, again, the reason for all this is that I’m representing the buyer, I’d like to know that the seller is gonna be responsible if standards change or circumstances change given the fact that we already did identify the presence of PFAS.

I think on the subject of, you know, a state that doesn’t have standards yet a lot of those same concerns apply, if I were representing the buyer, I’d like to potentially see if the seller would allow me to communicate with the state to explain the circumstances and where we are. And then, you know, there’s a possibility to that if the state doesn’t have standards, there may be mechanisms or approaches in place for my client and with its technical team to develop site-specific standards for what is an allowable concentration of the given PFAS compounds at that location. But it’s gonna be a little bit of the Wild West there as far as trying to manage that in the context of an absence of state standards. So, I hope that’s helpful.

Dane: Okay. Thank you very much, Ned. So, here is a question for Ryan. Ryan, the question is, is PlumeStop more effective for short chain or long-chain PFAS?

Ryan: Yeah. That’s a good question. So, it’s all gonna come down to the specific compounds affinity to activated carbon. And so naturally, the long-chain PFAS compounds will have a higher affinity than the short-chain compounds. However, during our design process, we’re really trying to understand that ratio of the long-chain short-chain combination for the total system that we’re trying to treat and overcome any shortfalls or procedural falls on the affinity of the short-chain carbons to the activated carbon. So, it’s something that we have to look for, we have to really understand it in the design process and then to overcome any potential effects of the short chains breaking through. Additionally, a lot of the many…or many of the short chains actually don’t have the standardized laws compared to, like, something that’s longer chain like a PFAS versus the PFBA, for example. So, it’s something that you have to look at. And the question… Yeah. There is a difference.

Dane: All right. Okay. Thank you, Ryan. So, here’s another question. And this is a question for Ned. And the question is, can a seller allow a buyer to conduct a test for PFAS and ask the buyer not to tell it what the results are?

Ned: That’s an issue that comes up frequently, not just in the world of PFAS. And it’s obviously gonna be sort of dependent upon state standards and what the contract provides between the parties. Even if I were representing the seller in that circumstance, it’s a difficult project to manage where you effectively tell someone to do their investigation, but don’t share the results with me because you think about the next things that are gonna happen, the buyer is gonna say, “I’d like a price reduction,” or, “I don’t wanna do this deal anymore,” or, “I want you to be responsible for all pre-closing conditions.” And unless the seller has the same level of knowledge as the buyer, it’s gonna be awfully difficult to negotiate in the dark. And one could also argue that if a buyer says the deal is off and walks away, depending upon what outstanding circumstances or contingencies were left, it’s possible to argue that the seller has constructive knowledge of a condition that’s present there. And as hard as it is to deal with, it might just be that a seller has to bite the bullet and realize that sophisticated buyers are gonna want to conduct adequate due diligence and that’s gonna typically be most functional and productive if everybody knows what’s happening.

Dane: Okay. Thank you very much, Ned. So, here is another question for Ryan. And Ryan, the question is, what happens to the PFAS once it is on the carbon?

Ryan: Yeah, good question. So, if you remember back in the presentation, I kind of talked about being a dynamic situation. So, the PFAS is not [inaudible 01:08:06] so it will continue to migrate through the treatment zone. So, the PlumeStop, you know, part of that never really gets spent in the sense that it remains part of the aquifer and continue to absorb contaminants, but the PFAS will continue to migrate through as well. And so maybe over time, if that absorption becomes filled up or if that migration has migrated or the contaminant has migrated through the treatment zone, you may have to come back and reapply some PlumeStop and select areas based upon what the monitoring would show. Most likely, in many cases, this is projected to be, you know, maybe decades after the initial treatment.

Dane: All right. Thank you very much, Ryan. And thank you too, Ned. That’s gonna be the end of our chat questions. We apologize if… It looks like we went a little bit over. We had a lot of great questions. If we did not get to your question, someone will make an effort to follow up with you. And if you’d like more information about law services from Godfrey & Kahn, please visit gklaw.com. If you’d like more information about remediation solutions from REGENESIS, please visit regenesis.com. Thanks again to Ned Witte and Ryan Moore. And thanks to everyone who could join us. Have a great day.