September 20, 2021

Volume XI, Number 263


September 17, 2021

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PFAS and Credit Transactions: Are You Protected From Environmental Liability?

PFAS (Per- and polyfluoroalkyl substances), noted for its use in older non-stick cookware, fabric stain preventers, and numerous other industrial applications, is fast becoming a major environmental contaminant that is expensive to investigate and even more costly to remediate. In Wisconsin, Governor Evers’ budget lists this chemical by name in seeking funding to prioritize likely PFAS contaminated sites and to hire two new managers to solely address PFAS. The Wisconsin Department of Natural Resources (WDNR) already is addressing several PFAS sites across the state with more likely to emerge.

Testing for PFAS is very expensive due to limited laboratory capacity, and cleanups are even more costly due to the very low regulatory levels and limited cleanup options. Called an “emerging chemical,” potential PFAS liability is upsetting the previously stable redevelopment world given the high cost liability associated with PFAS.

For the lending community, the risks of PFAS contamination are a reminder of the early 1990s, when lenders unknowingly acquired cleanup liability in dealing with underperforming loans to businesses.

In order to assure continued lending, states like Wisconsin adopted “lender liability exemption” statutes to protect creditors from inadvertently “acquiring” environmental liability. These lender exemption laws, however, tend to be more than 20 years old. A recent review of the Wisconsin lender liability exemption by the Wisconsin Brownfields Study Group concluded that the law’s narrow definition of “lender” and “lending activities” did not reflect current commercial practices. Also, lenders were not necessarily following the statutes’ procedural requirements necessary to avoid cleanup liability but rather lenders were willing to accept the potential liability risk. Whether it is prudent to continue that practice in the face of growing PFAS liability concerns is questionable.

Given the potential inadvertent “acquisition” of high cost PFAS cleanup liability, it is important that those extending credit verify they qualify as “lenders” under these state laws and are engaged in qualified “lending activities.” Also if dealing with a nonperforming loan, verification that all required procedures and notifications mandated by the lender exemption statute are satisfied will be essential to avoid the imposition of potentially high cost cleanup liability.

© 2021 Foley & Lardner LLPNational Law Review, Volume IX, Number 101

About this Author

Jason Childress, Director of Public Affairs, Foley and Lardner Law Firm
Director of Public Affairs

Jason M. Childress is a public affairs director with Foley & Lardner LLP. He is a seasoned political strategist who began his career in 1994 and has since counseled numerous state and federal elected officials and candidates on a wide variety of political matters. He is a member of the Government & Public Policy Practice based in Madison, Wisconsin.

Mr. Childress joined Foley after six years as the executive director of the State Senate Democratic Committee. In this role, he served three Senate Democratic leaders as their chief political and campaign strategist and managed...

Joseph K. Leibham, Foley, Public Affairs Director, Legislative Lobbying Lawyer, Media Relations,
Director, Public Affairs

Joe Leibham is a public affairs director at the national law firm of Foley & Lardner LLP. The former state senator manages the public affairs practice in Wisconsin. In that capacity, he represents numerous corporate and nonprofit clients before the legislature, the governor's office and state agencies in Wisconsin. His public affairs practice includes legislative lobbying, media relations, grassroots advocacy, rulemaking and agency procurement.

Mr. Leibham represented the residents of the 9th Senate District, encompassing parts of Sheboygan...

Mark A. Thimke, Foley Lardner, Environmental Lawyer,

Mark A. Thimke is a partner and environmental lawyer with Foley & Lardner LLP. His practice encompasses all major environmental programs, including hazardous waste, Superfund, the Clean Air Act, air toxics, and wastewater. Mr. Thimke has been involved in Superfund matters ranging from landfills, municipal well fields, and the investigation and cleanup of river and harbor sediment remediation areas, representation of dischargers on issues involving water toxics limitations, and the development of a detailed anti-degradation policy, and work on several major air...