Creosote and pentachlorophenol wastewaters discharged to unlined surface impoundments have resulted in groundwater contamination in the vicinity of an industrial site near Pensacola, Florida. Total phenol concentrations of 36,000 microgm/liter have been detected 40 ft below land surface in a test hole 100 ft south of an overflow impoundment but less than 10 microgm/liter 90 ft below land surface. Samples collected in test holes 1,350 ft downgradient from the surface impoundments and 100 ft north of Pensacola Bay, above and immediately below a clay lens, indicate that phenol contaminated groundwater may not be discharging directly into Pensacola Bay. Phenol concentrations exceeding 20 microgm/liter were detected in samples from a drainage ditch discharging directly into Bayou Chico. Microbiological data collected near the test site suggest that an anaerobic methanogenic ecosystem contributes to a reduction in phenol concentrations in groundwater. A laboratory study using bacteria isolated from the study site indicates that phenol, 2-methylphenol, and 3-methylphenol are significantly degraded and that methanogenesis reduces total phenol concentrations in laboratory digestors by 45%. Pentachlorophenol may inhibit methanogenesis at concentrations exceeding 0.45 milligm/liter. (USGS)