As most affordable housing developers know, under the Department of Housing and Urban Development (HUD) Multifamily Accelerated Processing (MAP) Guide, developers are required to prepare, among other things, a Phase I Environmental Site Assessment (ESA) that satisfies the so-called Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) “all appropriate inquiry” rule found at 40 C.F.R. Part 312.

Dianne R. Phillips
Dianne R. Phillips

On Dec. 15, 2022, the Environmental Protection Agency (EPA) published its Final Rule amending these CERCLA regulations to adopt the 2021 version of the American Society for Testing and Materials (ASTM) standard practice for Environmental Site Assessments, E1527-21, effective Feb. 13, 2023. That means after Feb. 13, 2023, developers should require use of the updated standard, E1527-21, for all new projects. Under the final rule, the now-retired standard, E1527-13, will remain effective for a one-year grace period until Feb. 13, 2024. For closings anticipated to occur after Feb. 13, 2024, the current ASTM standard E1527-21 must be followed to comply with 40 C.F.R. Part 312.

For the first time, the ASTM standard addresses emerging contaminants, such as per- and polyfluorinated compounds known as PFAS. These are contaminants that have not (yet) been designated as a CERCLA hazardous substance but may be regulated under state law or may simply be a concern due to the evolving understanding of these contaminants. If a developer is commissioning a Phase I ESA in a state where emerging contaminants, such as PFAS, are an issue, typically (and in conformance with the ASTM standard) the environmental professional (EP) will not identify the contaminants as a potential environmental risk unless explicitly added to the EP's scope of work. ASTM continues to consider these compounds to be "non-scope" until such CERCLA designation occurs. ASTM addressed this issue indirectly via a footnote in Section 1.1.4 of the standard by reminding users and EPs that there may be other state requirements, including those that may define emerging contaminants as hazardous substances:

Many states and other jurisdictions have differing definitions for terms used throughout this practice, such as “release” and “hazardous substance.” If a Phase I Environmental Site Assessment is being conducted to satisfy state requirements and to qualify for the state (or other jurisdiction) equivalent of LLPs, users and environmental professionals are cautioned and encouraged to consider any differing jurisdictional requirements and definitions while performing the Phase I Environmental Site Assessment. Substances that are outside the scope of this practice (for example, emerging contaminants that are not hazardous substances under CERCLA), may be regulated under state law and may be federally regulated in the future. Although the presence or any release/threatened release of these substances are "non-scope considerations" under this practice, the user may nonetheless decide to include such substances in the defined scope of work for which the environmental professional conducting the Phase I Environmental Site Assessment is engaged. See Section 13.1.2 .

Users in the growing number of states that are regulating PFAS under one or more of their regulatory programs should consider adding these to their consultant's scope of work as a non-scope item per of the standard. Many EPs have developed PFAS-specific checklists to review with their clients to determine whether to add such an investigation to their Phase I ESA. Multiple factors go into such a decision based upon the state where the project is located; the history of site conditions, including past industrial use or historic filling activities; and whether groundwater serves as a source of drinking water.

In addition, developers should follow EPA’s proposed CERCLA rulemaking and related actions regarding PFAS. Specifically, EPA's pending Proposed Rule to designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as hazardous substances under the CERCLA published in the Federal Register on Sept. 6, 2022, is expected to be finalized in February 2024, according to EPA’s Spring 2023 Unified Agenda. In addition to the PFOA/PFOS CERCLA designation, on April 12, 2023, EPA released an Advance Notice of Proposed Rulemaking (ANPRM) published in the Federal Register, seeking public input and data to assist in the consideration of potential development of future regulations pertaining to per- and polyfluoroalkyl substances under CERCLA. Specifically, through this ANPRM, EPA is seeking data and comment on development of future CERCLA regulations related to:

(1) Seven specified PFAS and their salts and structural isomers, or some subset thereof, which include: • Perfluorobutanesulfonic acid (PFBS), CASRN 375-73-5;
• Perfluorohexanesulfonic acid (PFHxS), CASRN 355-46-4;
• Perfluorononanoic acid (PFNA), CASRN 375-95-1;
• Hexafluoropropylene oxide dimer acid (HFPO-DA), CASRN 13252-13-6 (sometimes called GenX);
• Perfluorobutanoic acid (PFBA) CASRN 375-22-4;
• Perfluorohexanoic acid (PFHxA) CASRN 307-24-4; and
• Perfluorodecanoic acid (PFDA) CASRN 335-76-2.

(2) Precursors to PFOA, PFOS, and other PFAS listed above.

(3) Categories of PFAS.

EPA has several other regulatory initiatives beyond the CERCLA proposals that may impact affordable housing developers in the future, including most notably the proposed National Primary Drinking Water Regulation, especially if the project is located in one of the communities with PFAS exceedances as identified in initial data released from the Unregulated Contaminant Monitoring Rule project. Approximately 8% of the 2,000 water systems reporting had exceedances (over the EPA Health Advisory) for PFOA or PFOS. While we are years away from a possible effective date of the proposed EPA rule when monitoring and treatment will be required for drinking, some states, including my home state of Massachusetts, have already imposed mandatory drinking standards for certain PFAS chemicals. Understanding these requirements, as well as the potential data in the project community will be important to understanding whether a potential “point-of-entry” or “POET” system might be required to be installed in any new or existing project. These systems, while generally effective, can be expensive to install, operate, and maintain.

In summary, ignoring PFAS as an emerging contaminant can be detrimental to a project and a project budget, both things affordable housing developers are keenly attuned to.