Author: Elizabeth Hemingway

EPA Finalizes Rules to Ban TCE and Phase Out PCE Under the Toxic Substances Control Act

Posted on by Elizabeth Hemingway

BY: NICK HILL, LPG

On December 8, 2024, the Environmental Protection Agency (EPA) issued a groundbreaking final rule under the Toxic Substances Control Act (TSCA). This rule bans all uses of trichloroethylene (TCE) over time (with the vast majority of identified risks eliminated within one year) and bans the manufacturing, processing, and distribution of tetrachloroethylene (PCE or “Perc”) in commerce for all consumer uses and many commercial uses.

According to Federal Register 89 FR 102568, effective on January 16, 2025, the TCE ban will eliminate most consumer and industrial uses within one (1) year.  According to Federal Register 89 FR 103560, effective January 17, 2025, the PCE phaseout introduces a timeline that will eliminate all consumer and most commercial PCE uses within 10 years.

Understanding TCE and PCE

  • PCE and TCE are nonflammable chlorinated solvents that are volatile organic compounds (VOCs) with varying degrees of toxicity. PCE can biodegrade into TCE, and PCE may contain trace amounts of TCE as an impurity or a contaminant.
  • Both chemicals have historically been used in automotive repair, parts washing, manufacturing processes, and dry cleaning industries.

Key Impacts on Dry Cleaners

Both PCE and TCE have been readily used as part of the dry cleaning process for decades.  While many dry cleaners have been transitioning away from the use of PCE and TCE, some dry cleaners are still using these solvents today, especially as a spot cleaner.  For those clients who are using (or may be considering the use of) PCE and/or TCE, here are a few important notes:

  • All TCE use in dry cleaning will be prohibited after September 15, 2025.
  • All PCE use in dry cleaning will be prohibited after December 19, 2034, with the following roll-out of compliance dates:
    • New Machines: PCE use will be prohibited for dry cleaning machines acquired after January 16, 2025.
    • Existing Machines: PCE use in 3rd generation dry cleaning machines will be prohibited after December 20, 2027, and prohibited in 4th/5th generation machines after December 19, 2034.
  • Further details are available via the EPA PCE rule and TCE rule websites.

Compliance and Support

  • The EPA plans to release compliance guidance for the use of PCE in dry cleaning and for other industries affected by the TCE final rule.
  • Alternatives to TCE and PCE with comparable costs and efficacy to TCE and PCE are reasonably available, according to EPA evaluations.
  • Small businesses, including dry cleaners, may access transition funding if approved under President Biden’s Fiscal Year 2025 budget.

Additionally, the EPA will host a public webinar to explain what is in the PCE final rule and how it will be implemented on Wednesday, Jan. 15, 2025, at 12:30 p.m. EST.  Registration is available on the Final Regulation of Perchloroethylene under TSCA webinar page.

Next Steps for Businesses

While the EPA is allowing some uses of TCE and PCE to continue under stringent workplace safety controls for longer than the presented phaseout timelines in select industries, dry cleaning is not included as an exemption.  Therefore, dry cleaners who have not switched to non-chlorinated solvent options should begin preparing for the transition.  We will continue monitoring the TCE-PCE information that EPA shares to keep our clients informed.

We have partnered with dry cleaners for over 25 years to ensure our specialized environmental services protect the long-term interests and personal needs of dry cleaners. If you have questions concerning your dry cleaner, contact us today.

Addressing Indiana’s Housing Shortage: Unlocking Residential Development Opportunities on Brownfield Sites

Posted on by Elizabeth Hemingway

BY: STEVE HENSHAW, LPG

As we’ve traveled across Indiana, engaging with mayors and local leaders, the issue of growing a workforce without an adequate housing inventory continues to be front and center. In response, we’ve launched an initiative aimed at identifying potential residential redevelopment sites within city limits by focusing on Brownfield properties.

Brownfields—sites impacted by past industrial or commercial use—often have the potential to be transformed into thriving residential spaces. With our specialized tools and expertise, we can assist cities in revitalizing these properties, potentially cleaning up environmental contaminants at little to no cost to the city or its taxpayers. At this year’s AIM Ideas Summit, EnviroForensics CEO Steve Henshaw spoke on this topic during his workshop “Finding Your Diamond in the Rough by Looking Closer at Problem Properties.” By rehabilitating these sites, we aim to contribute to the solution for Indiana’s housing shortage while turning underutilized land into valuable community assets.

We look forward to continuing our work with Indiana’s cities to create sustainable, affordable housing solutions that benefit both residents and local economies.

To learn more about our work, explore our Brownfields Redevelopment services.

Preparing for PFAS in Commercial Real Estate

Posted on by Elizabeth Hemingway

BY: CASEY MCFALL, CHMM

You may (or may not) have heard of PFAS (per- and polyfluoroalkyl substances) and the recent U.S. EPA announcement designating two PFAS compounds as hazardous substances. There’s been a lot of doom and gloom posted about PFAS recently and while their hazardous substance designation will have effects that trickle down to commercial real estate, all is not lost. Below is a quick summary of what PFAS are and some immediate effects you may see in commercial real estate beginning July 8, 2024, when two (2) common PFAS compounds officially become hazardous substances.

WHAT ARE PFAS?

PFAS are a group of 9,000+ chemicals developed in the 1930s used in water-resistant textiles, paper products, non-stick coatings, and cleaning products. They are found in items like shampoo, cosmetics, non-stick cookware, stain-resistant or waterproofing products, fast food packaging, paints, and pesticides. Biosolids from sewer treatment plants, used as fertilizer, and aqueous film-forming foam (AFFF) used for fire suppression, can also contain PFAS. Electronic manufacturing and electroplating operations use PFAS too.

PFAS breaks down slowly in the environment, easily travel through groundwater, and can bioaccumulate in humans and animals. Research links PFAS exposure to health concerns in humans and animals.

REAL ESTATE IMPLICATIONS

Until recently, PFAS were regarded as emerging contaminants and were not officially listed as CERCLA hazardous substances. Two (2) common PFAS compounds (known as PFOA and PFOS) will become CERCLA hazardous substances on July 8, 2024.  Below are four ways the hazardous substance designation of these PFAS compounds may affect commercial real estate transactions going forward.

  1. Environmental screening levels for PFAS are very low and PFAS may be found at lots of properties. Studies have shown that PFAS can cause issues at very low levels in the environment; for example, common petroleum compounds are assessed at a part-per-billion (ppb) level; PFAS compounds are assessed at a part-per-trillion (ppt) level, a thousand times lower. PFAS do not easily breakdown and can readily travel when they encounter groundwater. PFAS may be present at many properties, even if the historical or current operations may not have directly used PFAS. Types of businesses that may have PFAS impacts includes, but is not limited to laundromats, car washes, dry cleaners, airports, firefighting training facilities, electronic manufacturers, oil refineries, plastic and paper mills, landfills, metal platers, and any business where non-stick or waterproofing applications are applied.
  2. PFAS will now be a consideration in Phase I ESAs. Historically, PFAS were considered out-of-scope items for Phase I ESAs, as the ASTM standard only calls for assessing CERCLA hazardous substances and petroleum products. Beginning July 8, 2024, the PFAS compounds PFOA and PFOS will need to be assessed during Phase I ESAs.
  3. A current Phase I ESA may identify PFAS as an environmental concern at properties where historical Phase Is may have not identified environmental concerns. PFAS were used in many processes and operations that were previously not considered issues. For example, laundromats (with no dry cleaning operations) and farm fields may have environmental concerns due to PFAS, whereas they may not have had issues previously. Other facilities, such as dry cleaners or electroplating operations, may have identified environmental concerns in their past Phase I and Phase II ESAs, but those historical reports likely did not address PFAS.
  4. Cost for environmental sampling (i.e., Phase II ESAs) may increase. PFAS sampling techniques can require increased time and stringent procedures to ensure cross-contamination will not occur. Laboratories will also need to analyze PFAS samples at extremely low levels, which will likely increase analytical costs. For example, analysis of groundwater for dry cleaning compounds is roughly $80 – $100 per sample. Current groundwater analytical costs for a PFAS sample can start in the high $300s and go up from there.

The bottom line is that the impending designation of PFAS as a hazardous substance may have far-reaching effects in the environmental world; however, this does not mean the sky is falling. Property owners and prospective purchasers should be aware of these upcoming regulations and a trusted environmental consultant can help guide you through the next steps.

EnviroForensics has a proven track record of helping business owners through environmental investigations and cleanup, often while business goes on as usual. EnviroForensics may be able to help find historical insurance to fund the investigation or connect you with third parties who can manage environmental liabilities for property owners or even purchase contaminated properties.

If you have questions regarding PFAS or any other environmental matter, please contact us at your convenience.

Casey McFall is the Director of Real Estate Services and Senior Scientist for EnviroForensics, LLC. Mr. McFall can be reached at 463-212-1815 or via email at cmcfall@enviroforensics.com.

Stephanie Deckard Joins EnviroForensics as Our New Director of Regulatory Compliance

Posted on by Elizabeth Hemingway

EnviroForensics is proud to announce that Stephanie Deckard has joined our team as Director of Regulatory Compliance. Stephanie brings over 20 years of experience in the environmental consulting field. She will lead a team with broad experience in industrial and municipal compliance, permitting, and obtaining entitlements when converting previously contaminated properties into housing and mixed-use development projects.

EnviroForensics’ CEO Steve Henshaw says, “Stephanie has an excellent understanding of the needs and priorities of our industrial and municipal clients and sees and anticipates their issues before they become problems.”

Chad Pigg Joins EnviroForensics Development Team as Director of Brownfields and Economic Development

Posted on by Elizabeth Hemingway

EnviroForensics is proud to announce that Chad Pigg has joined our redevelopment team as its Director of Brownfields and Economic Development. We have been specializing in the municipal sector to help revitalize brownfields and manage environmental claims.

EnviroForensics’ CEO Steve Henshaw says, “Chad understands the unique challenges that municipalities face in restoring contaminated properties to productive use.  He has a strong knowledge of how the funding mechanisms for municipalities work and how we can clean-up contaminated properties and create large tracks of land, within city boundaries, for developers bringing much needed housing to cities and towns”.

Chad Pigg brings over 25 years of experience in the municipal financing and environmental remediation field, starting at IDEM and later for the City of Anderson as Director of Operations for the Engineering Department, Brownfield Coordinator, and Executive Director of Economic & Community Development. Since 2008, he has been working in the private sector to develop comprehensive solutions to redevelopment challenges in both public and private sectors.

If you have any questions about Brownfields Redevelopment, contact us today.

 

Cleaning Up and Restoring Contaminated Properties for Development— Finding Valuable Property Amongst The Blight

Posted on by Elizabeth Hemingway

BY: STEVE HENSHAW

The American Midwest has been home to industry and agriculture since the beginning of the 20th century. Relying heavily on strong labor forces, accessible transportation routes, and a proximity to a significant portion of the nation’s total population, Indiana was a leader in manufacturing that involved steel, glass, and rubber to support the automotive industry. As plastics developed, so too did Indiana’s place as a leader in its manufacturing.

Factories sprouted up in cities and towns across the state, often built near the town’s center, so workers could walk to the factories. As the recession in the 1970s and 80s took its toll, and companies began moving manufacturing overseas, the lifeblood of these communities ceased, leaving behind decaying factories and decades of legacy contamination. Factories that once provided jobs by the hundreds became eyesores to communities, driving down property values, leaving environmental contamination, and robbing cities and towns of a vital tax base. Mayors, city councils, and economic development departments continue to grapple with these legacy problem sites.

Concurrently, there is a critical demand for housing stock. Virtually every municipality is grappling with a pressing demand for additional housing. Short of expanding the city limits and annexing land, finding 10, 20 and 30-acre tracts of land to build new housing is extremely challenging. It is for this reason that we believe these old legacy factories should be given new life as sites for residential and mixed-use developments.

EnviroForensics has been on the forefront of this resurgence, having remediated old manufacturing sites, while finding the money for the clean-up costs. A great example of this is in the City of Wabash, where Mayor Long, before he became Mayor, urged the authorities to do something with the former GenCorp. (now known as Aerojet Rocketdyne Holdings, Inc.) plant that sat in the heart of Wabash on 30-acres of land.

In 2007, the manufacturing plant’s shutdown marked the beginning of its downfall, culminating in job losses for more than 600 employees and the cessation of property tax payments. The property was then auctioned by the County. The owners stripped the building of its salvageable metals and demolished the building leaving behind piles of rubble. In addition, the soil and groundwater beneath the property is grossly contaminated with hazardous substances including chlorinated solvents and PCBs, posing a significant risk to human health.

The Indiana Department of Environmental Management pursued the company that caused the environmental contamination at the property; that company eventually responded by proposing an unsatisfactory cleanup plan that would leave a massive amount of contamination in place, put a deed restriction on the property, and prevent the property from ever being utilized for anything other than a park. While parks are great, Wabash already has a 25-acre park a stone’s throw from this property.

Mayor Long persisted in his efforts to guide the property back into productive reuse, and in November 2020, the City acquired title to the property from the County. The City then put together a team that included EnviroForensics, a law firm, and a development partner to assess what it would take to clean the property to a level that would support a mixed-use development while pursuing the company that caused the environmental contamination for the cost of clean-up. Reflecting on the collaborative effort, Mayor Long remarked, “As a government leader, you cannot be an expert in everything that comes your way. Networking with experts at events I have attended led to me finding the people who could get the job done for the City of Wabash.”

The City is poised to clean up the property, and the City’s development partner is scheduled to build 15 single-family houses, 42 starter houses (bungalows), and a 100-unit apartment complex to help address the City’s housing shortage. Properly addressing the contamination at the property is key for increasing housing opportunities for Wabash’s residences, increasing the city’s tax base, and cleaning up the environment. This optimal redevelopment far outweighs the value of leaving the contamination in place as a park.

This model of cleaning up contaminated properties and restoring them to residential and commercial use is not unique to this site, although you need a commitment from leadership in order to be successful. At EnviroForensics, we have worked to settle tens of millions of dollars of claims that have funded environmental clean-up and legal costs for hundreds of clients.  With the right set of facts, a skilled team, and a strong stakeholder, we can clean up environmental contamination and allow blighted sites new life as redeveloped productive properties. Emphasizing the importance of perseverance in these endeavors, Mayor Long stated, “While this was a daunting task, you have to take action to make cleanup happen, and you have to be in it for the long haul. I am thankful to have assembled a team on the environmental and litigation side with a wealth of experience who can best guide me in making appropriate decisions.”

If you have any questions about Brownfields Redevelopment or any other environmental matter, please contact us at your convenience.

The History of Dry Cleaning Solvents and the Evolution of the Dry Cleaning Machine

Posted on by Elizabeth Hemingway

BY: DRU CARLISLE

Perchloroethylene, also known as perc, has been around for nearly a century and it’s still the dominant solvent used by U.S. dry cleaners compared to hydrocarbons or alternative solvents like GreenEarth.

Here’s a timeline of dry cleaning solvent usage. Inventors and industrialists experimented with kerosene and gasoline-based cleaning through the 19th century. In fact, dry cleaning as we know it was discovered by Jean-Baptiste Jolly on accident when a kerosene lamp was spilled on a linen tablecloth in the late 1800s. As you can imagine, washing clothes inflammable liquid was not ideal. An American dry cleaner, Wiliam Joseph Stoddard, is credited with developing the first non-gasoline-based solvent but it was Michael Faraday, a prominent chemist, who discovered tetrachloroethylene, also known as perchloroethylene or “perc” which has been a solvent favorite for 80 years.

However, the number of dry cleaners using perc has started to go down. From the 1970s to 1990s a barrage of increasingly stringent rules and regulations covering dry cleaning operations and the use of perc, past and present took place. Over the past few decades, 80-85% of dry cleaners in the U.S. used to use perc. Now, about 60-65% of dry cleaners use perc and the rest now use hydrocarbons (20-25%) or alternative solvents (15-20%).

Perc is well-liked by dry cleaners because it is much more effective and quicker to use than hydrocarbon cleaning, which takes 75% more time to do the same cleaning that perc does for clothes. With these efficient attributes, it’s no wonder that perc has stayed as a popular choice for so long.

However, there are some downsides to using perc for dry cleaning:

  1. Perc is a very strong chemical, which is what makes it a great cleaning solvent, however, it can easily seep into the soil and groundwater beneath a dry cleaner with a few minor spills causing serious contamination issues. Additionally, perc doesn’t naturally degrade over time and without treatment perc will actually sink deeper and spread out farther, which creates a large plume of perc contamination.
  2. The historical perc regulations didn’t instruct the industry to handle and dispose of the chemical safely, which is a heartbreaking story because dry cleaners were following the proper regulations at the time, but they’re now on the hook for the contamination.
  3. Perc dry cleaning machines are expensive and can cost $60,000-$80,000, which is why they are a big expense for dry cleaners and are not replaced often. Additionally, the perc machine was considered to be an investment and an asset. Therefore, if a dry cleaner can’t afford a new machine nor sell their old perc machine, then they are most likely still using a Perc machine instead of a machine that can use alternative solvents.

THE EVOLUTION OF THE DRY CLEANING MACHINE

Now that we’ve covered the history of dry cleaning solvents, we’ll dive further into the evolution of the dry cleaning machine.

The dry cleaning machine as dry cleaners know it has gone through multiple generations of functionality and use. First, there were wet to dry machines, then dry to dry machines, then the current machine on the market, closed-loop machines. The different machine generations solved operational issues for dry cleaners and helped them use their dry cleaning solvents more effectively.

1ST GENERATION MACHINE

Wet clothes were transferred between the washer and dryer. Some systems did incorporate a separate vapor recovery unit, utilizing either a carbon bed or water cooled coils. Image Courtesy: Wauwatosa, Wisconsin

2ND GENERATION MACHINE

In the first dry-to-dry machines or second-generation machines, vapors are vented to the atmosphere from the machine washing drum when the machine is opened after the drying cycle. Again some machines utilized either a carbon bed or water-cooled coils. Image Courtesy: Newtone Drycleaners

3RD GENERATION MACHINE

These were the first “closed-loop” machines. The vapors from the dryer are routed to a refrigerated condenser for solvent recovery. Image Courtesy: Böwe Textile Cleaning

4TH GENERATION MACHINE

These closed-loop machines utilize both refrigerated condensers and carbon adsorbers to recover solvent vapors. Reducing the vapor concentration in the wheel to below 300ppm. Image Courtesy: Wauwatosa, Wisconsin

5TH GENERATION MACHINE

In addition to a refrigerated condenser and carbon absorber, these closed-loop machines have inductive fans and sensor-actuated lockout device that will not allow entry to the machine door, button trap, or filters until solvent vapors in the machine are below certain levels (generally 300 parts per million (ppm)). Image Courtesy: Oasis Max Clean

Dry cleaners are keenly aware that the use of perc has become as heavily regulated as nearly any other industrial chemical to date, and some have started to switch over to hydrocarbon or alternative solvents. As mentioned earlier, changing machines is a costly endeavor for dry cleaners and it’s understandable why they would prefer to keep using perc compared to other solvent options, such as hydrocarbon and alternative solvents like GreenEarth, K4, Sensene and wetcleaning.

While dry cleaners evaluate different solvent options and their future business plans, it’s important to prepare for addressing an environmental issue if it’s placed in your lap. The costs of addressing environmental contamination without funding though historical insurance can range up into the hundreds of thousands, sometimes even millions, which is why we recommend using insurance archeology, which is a small fraction of that cost, to locate insurance assets that can be used to cover the necessary environmental and legal costs associated with a cleanup. Being proactive means that you are in command of the situation and by being in front of the issue, you will save yourself a lot of stress and money.

As chlorinated solvent experts, we’ve helped hundreds of dry cleaners navigate their environmental concerns with little to no out-of-pocket costs to them. Our goal is to help our clients get out of a challenging situation without a large financial burden. We understand how challenging this process can be for business and property owners and have successfully helped our clients navigate through these often uncharted waters.

If you have any questions, please contact us.

 

 

Potential PFAS Designation to Alter Environmental Due Diligence Landscape

Posted on by Elizabeth Hemingway

BY: CASEY MCFALL, CHMM, AND DELANIE BREUER

A change is coming to the environmental due diligence world, which is anticipated to play a factor in how recognized environmental conditions (RECs) (i.e., known or potential environmental concerns) are identified in future Phase I Environmental Site Assessments (ESAs). The change is the potential designation of at least two per- and polyfluoroalkyl substances (PFAS) as a “hazardous substance” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund.

Most people, may not be aware of how this designation could dramatically alter Phase I ESA conclusions or significantly impact future commercial real estate due diligence. To assist with understanding the potential impacts of this designation, below are some of the frequently asked questions we’ve received from brokers, real estate agents, property owners, prospective purchasers and financial institutions regarding PFAS and its anticipated CERCLA designation.

WHAT ARE ENVIRONMENTAL DUE DILIGENCE AND PHASE I ESAS?

Often, prospective purchasers and financial lenders, will want a Phase I ESA completed for a property prior to the acquisition or finalizing lending. Completing a Phase I ESA correctly prior to a property purchase affords the purchaser some protection from liability for environmental contamination existing on the property prior to the purchase.

Very simply, a Phase I ESA is a commercial environmental assessment; the purpose is to identify known or potential environmental concerns for a property based on historical and current operations and nearby neighboring operations so they can be considered when negotiating and finalizing the transaction. Samples are not generally collected during a Phase I ESA: records are reviewed, a property visit is completed, and a determination is made on whether RECs exist on a property. Depending on the findings of the Phase I ESA, a Phase II ESA, (collecting environmental samples), may follow a Phase I ESA.

WHAT ARE PFAS AND WHY ARE THEY AN ENVIRONMENTAL CONCERN?

PFAS are a group of 9,000 or more chemicals that were first developed in the 1930s and are widely used in everyday products, including as the main ingredients in developing water-resistant chemicals textiles and paper products, nonstick coatings, and cleaning products. PFAS are also prevalent in aqueous film-forming foam (AFFF), which is used to suppress particularly volatile fires primarily by municipalities, airports and maritime fire departments. Electronic manufacturing and electroplating operations also used PFAS in their operations.

Historically, PFAS have also been found in many widely used items such as shampoo and cosmetics, non-stick cookware, stain-resistant or waterproofing products, fast food packaging, paints, and pesticides. Biosolids from sewer treatment plants, which can be used as fertilizer for farm fields, can also contain PFAS from the upstream sources that discharge to the municipal sewer system (i.e., personal machines or commercial laundry services used to wash “waterproof” clothing, industrial facilities that use PFAS chemical, etc.).

A PFAS compound can be identified by its carbon-fluorine bond, which is exceptionally strong and gives the compounds many of their useful properties. However, this also means PFAS substances are slow to break down in the environment. PFAS easily travel through environmental mediums like groundwater, and some PFAS can bioaccumulate in humans and animals. Though research on these compounds is ongoing, some studies have linked PFAS exposure to health concerns in humans and animals, which prompted the proposed CERCLA designation as a hazardous substance.

As noted, there are over 9,000 PFAS compounds, but the two most widely used and most studied PFAS are Perfluorooctane Sulfonate (PFOS) and Perfluorooctanoic Acid (PFOA).

WHAT DOES THE “HAZARDOUS SUBSTANCE” DESIGNATION MEAN AND WHY AREN’T PFAS ALREADY BEING ASSESSED AS PART OF PHASE I ESAS?

A hazardous substance designation means that the federal and state regulators can force environmental investigations and require cleanup or remediation of these substances when they are released to the environment, or some cases, when they are discovered on a property even if it is unknown when or how they were released. All chemicals proposed for hazardous substance designation must undergo a rigorous evaluation prior to designation.

Although PFAS have been around since the 1930s, only recently have scientists made a link between PFAS and their adverse health effects. Specifically, many of the studies have focused on PFOA and PFOS. These two compounds and their salts and isomers were first proposed for hazardous substance designation in September 2022. Currently, it is widely believed that the hazardous substance designation for these PFAS compounds will likely occur within the next 6 to 12 months based on an April 2023 notice from the U.S. Environmental Protection Agency (EPA).

When assessing properties for potential contamination through a Phase I ESA, industry standards do not require PFAS to be evaluated because they are not petroleum products or CERCLA-designated hazardous substances. The ASTM standard for preparing Phase I ESAs (ASTM E1527-21) states that only petroleum products or CERCLA-designated hazardous substances must be considered when identifying RECs. PFAS may be considered as an out-of-scope item, the same as asbestos-containing materials (ACM) or lead-based paint, but an assessment is not currently required.

HOW WILL THE PFAS HAZARDOUS SUBSTANCE DESIGNATION AFFECT COMMERCIAL PROPERTY TRANSACTIONS?

Properties that would not previously have had RECs identified in a Phase I may now have an identified REC based on the potential for PFAS contamination. Because PFAS has been so prevalent in manufacturing, and can move freely through the environment, this has the potential to impact many properties.

For example, laundromats that have never housed dry cleaning operations would be unlikely to have a REC identified in a current Phase I ESA. However, studies from Florida have shown that laundromats may have PFAS present from waterproof, or stain resistant coatings being stripped off from laundered clothes. Another pertinent example could involve farms that have applied biosolids from municipal sewer treatment plants as fertilizer on their fields. Studies have shown these biosolids may contain PFAS and have the potential to leach into soil and groundwater, thereby causing a potential environmental issue. Agricultural fields by-and-large have not been an environmental concern in Phase I ESAs, although this could change under the upcoming PFAS hazardous substance designation.

SHOULD I TEST FOR PFAS?

The answer to this question is “it depends.” The variables to be considered include the historical use of the property (i.e., could the operations have caused or contributed to PFAS in the environment); the historical use of nearby properties, from which PFAS could potentially have migrated; whether you own or are purchasing the property; and how the discovery of PFAS may impact you.

For example, in some states, even discovering a small amount of PFAS may trigger reporting and potential remediation requirements, so although a potential buyer may wish to test for PFAS, the seller may be less inclined.

The location of the property, and the applicable state and local regulations, also play a key role. In Indiana, for example, there are not currently requirements for PFAS testing during environmental investigations. However, in Wisconsin, state regulators require an evaluation of potential PFAS on the property. If PFAS is known or suspected to be present, the regulators may require testing, and reporting and potential remediation if any amount of PFAS is discovered on a property, regardless of the source of contamination. The best advice is to consult with your attorney and environmental consultant to determine the risks and benefits of PFAS sampling based on your circumstances.

If and when PFAS are designated as hazardous substance under CERCLA, the choice on whether to sample or not for PFAS will change to a requirement based on REC findings.

The bottom line is that the impending designation of PFAS as a hazardous substance may have far-reaching effects in the environmental world. This, however, does not mean the sky is falling. Property owners and prospective purchasers should be aware of these upcoming regulations and a trusted environmental consultant and attorney can help guide you through the next steps.

EnviroForensics and Fredrikson & Byron have proven track records of helping dry cleaners and laundromats through environmental investigations and cleanup, often while business goes on as usual. In some instances, EnviroForensics may be able to help find historical insurance to fund the investigation and cleanup.

If you have questions regarding PFAS or any other environmental matter, please contact us at your convenience.

Delanie Breuer practices environmental law at Fredrikson & Byron P.A. in Madison, Wisconsin. Ms. Breuer can be reached at 608-453-5135 or via email at dbreuer@fredlaw.com. Casey McFall is the Director of Real Estate Services and a senior scientist for EnviroForensics, LLC. Mr. McFall can be reached at 317-972-7870 or via email at cmcfall@enviroforensics.com.

As seen in Cleaner & Launderer.

How to Save a Transaction on a Contaminated Property

Posted on by Elizabeth Hemingway

BY: STEPHEN HENSHAW, LPG

Your business day starts out like any other; you grab coffee on your way to work and turn into the parking lot. But your heart sinks when you see a group of technical people standing near a small drill rig. Now you are worried sick that soil and groundwater samples will reveal the dreaded environmental contamination, and you’ll have no good options for the future.

This scenario is all too common in the drycleaning industry, but a bad outcome doesn’t have to happen if we step back and reflect for a moment. We can ask what is driving the investigation. This will help us understand why taking samples is a necessary and desired step. For example, is the investigation being required by a regulatory agency because there is a potential public health threat? Or is the investigation being driven by a lender involved with refinancing the property or in financing a buyer?

If the investigation is driven by the regulatory agency, you will want assistance in understanding the magnitude of the problem and how to minimize or mitigate the immediate public health threat. There are a number of steps that can be undertaken to address the public health threat, and these do not need to break the bank. Oftentimes, regulators will work with a dry cleaner; however, we recommend getting professional advice from an experienced and qualified environmental engineer to ensure that the requested work, usually expensive, is actually necessary.

Commonly, an investigation is driven by a lender, and different steps are taken to address their concerns.  Remember that when a lender is refinancing or lending money on a property transaction, they require a Phase 1 environmental site assessment.  If a dry cleaner is (or has ever been located on the property), a bank will require a Phase 2 investigation, which includes collecting soil and groundwater samples to analyze them for the presence of volatile organic compounds, or VOCs. If the solvent Perchloroethylene (PCE) and its chemical breakdown products, all classified as VOCs, are present, the levels will show up in a laboratory scan.

If VOCs are present in soil and groundwater samples, a lender will very likely walk away from the sale, because banks are typically risk averse. They don’t want to lend on a contaminated property when the value or collateral is in that property. They don’t want to be in a position to have to “take back” the property when the lendee defaults because no one will buy the contaminated site. If you’re the property owner, or are operating as a drycleaner on that site, all of the negative attention will be on you or your business as the reason the deal fell apart. Even if you can pay for the expensive environmental cleanup, with costs ranging between $500,000 to $2,000,000, regulatory site closure can take years.

One very effective solution is to buy an insurance policy called a Lender Liability Policy.  A Lender Liability Policy is designed to activate if the borrower defaults. This policy can enable the landlord (or a buyer) to get bank financing and help all parties get some breathing room. This is what a Lender Liability Policy does:

  • Covers the lender in the event the borrower defaults by paying the cleanup costs or paying off the loan balance;
  • Covers Toxic Tort claims from third parties;
  • Covers known and unknown site conditions;
  • Provides a lender comfort in financing on contaminated properties;
  • Allows for the policy to be transferred and assigned for the life of the loan (for a period typically less than ten years).

The cost of a $2,000,000 Lender Liability Policy may cost between $60,000 and $90,000. That cost will vary depending on factors such as the creditworthiness of the borrower, the loan amount, and the actual estimated cleanup cost. The cost of a policy, when compared to losing an asset entirely, is often the best solution for saving deals, but few drycleaners or their attorneys, know this option is available.

When you consider all things, a Lender Liability Policy is an excellent way to facilitate a loan on a property transaction or the refinancing of a property where environmental contamination is present (especially if the property is being used as collateral). Such a policy may help stave off an aggressive landlord and provide you with much-needed time to adequately deal with the environmental contamination. Knowing that a Lender Liability Policy can facilitate a property transaction or refinance and assisting the landlord in understanding these facts may be the difference between continuing business operations and losing your lease, making the day you see engineers taking environmental samples a day like many others.

If you have any questions, please contact us.

As seen in Cleaner & Launderer.

Indiana Finds Elevated Levels of PFAS in Drinking Water at Nine Small Utilities

Posted on by Elizabeth Hemingway

BY: NICK HILL, LPG

The State of Indiana recently reported finding per- and polyfluoroalkyl substances (PFAS) or “forever chemicals” above the 2022 federal advisory levels at nine community public water systems (CWSs) in Indiana. The sampling was performed by the Indiana Department of Environmental Management (IDEM) to comply with the United States Environmental Protection Agency (USEPA) proposal in 2022 for monitoring PFAS in drinking water nationwide.  

A CWS regularly provides drinking water to at least 25 residents on a year-round basis or has at least 15 service connections to residents.  These new results from the IDEM are from the second round (Phase 2) of testing at 59 smaller CWSs (serving less than 10,000 residents) across the state from November 2021 to December 2022.  The nine facilities with elevated PFAS include: Delphi Water Works, Crescent Hills Mobile Home Park, Leavenworth Water Company, Westport Water Company, Haubstadt Water Department, And-Tro Water Authority – District 1, Troy Township Water Association, Indiana American Water – Farmersburg, and Sullivan-Vigo Rural Water Corp. 

The IDEM is planning to complete additional testing at larger CWSs (facilities that service more than 10,000 residents) before the end of May 2023. The results from both rounds of IDEM testing and the IDEM’s PFAS sampling schedule are available on the IDEM PFAS website.

As more testing is completed and publicly available data is released in Indiana, and across the nation, we will continue to assess the findings and provide additional interpretations and guidance to our clients on the potential risks associated with PFAS contamination.  

If you have PFAS questions, please contact us.