THE PROCESS OF REGULATING PFAS CONTAMINATION IS HEATING UP
BY KRISTEN DRAKE & JEFF CARNAHAN
Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are part of a very broad chemical group that have found their way into commercial and industrial use due to their unique chemical properties that repel oil and water and resist temperature, chemicals, and fire. This means PFAS are everywhere. Also, PFAS are known as “forever chemicals”, which means concerns surrounding PFAS will not be going away anytime soon. Federal and state regulators are looking closely at PFAS exposure, and several studies are being conducted that will result in additional regulations.
As an emergent contaminant resistant to degradation and requiring substantial remediation, PFAS are currently the subject of increased scrutiny by environmental regulators, private party plaintiffs, manufacturers, and the insurance industry. Currently, the federal government has no enforceable environmental regulations of any kind that address PFAS chemicals, but recently, the federal government has issued interim health advisories about the human health effects of PFAS chemicals. As the federal government narrows in on acceptable screening levels, the EPA is preparing to propose new mandatory standards for PFAS chemicals in the fall.
Several states aren’t waiting for federal regulations concerning PFAS in the environment and are pushing forward with demands to sample environmental media for PFAS at some active remediation sites. Now, is the time to address PFAS exposures and seek out coverage.
HISTORICAL COMMERCIAL GENERAL LIABILITY INSURANCE SHOULD BE TENDERED TO PAY FOR PFAS INVESTIGATION, CLEANUP, REMEDIATION, AND LEGAL DEFENSE
Those who used or interacted with PFAS during their business operations can face a variety of exposures due to PFAS including product liability, bodily injury, and environmental cleanup claims. Insureds should be ready to use their commercial general liability (CGL) policies written prior to 1986 to pay for the investigation, remediation, and legal defense of PFAS.
Three reasons why PFAS related damages fit into the pollutant pre-exclusion:
1. Older CGL policies typically apply to an “occurrence” rather than “claims-made basis”, which means the policies in place when there was property damage during the policy period should continue to apply, even if the liability does not appear until decades later. So, for substances now seen as “emerging contaminants” that have been in the soil, groundwater, or otherwise since the 1960s, 1970s, or 1980s, CGL policies from those years can pay for environmental investigation, cleanup, and legal defense. This means older CGL policies insure business owners against claims for property damage like contamination and bodily injury. Similar claims involving PFAS should be no different.
2. Older CGL policies, prior to 1986, did not include the absolute pollution exclusion (including PFAS). This means older CGL policies can cover long-tail claims, such as environmental, investigation, cleanup, and legal counsel fees. Again, similar claims involving PFAS should be no different.
3. Applicable CGL insurance policies never expire. PFAS claims don’t change this fact.
If you feel that you or your business may gain liability from the formal regulation of PFAS chemicals as hazardous substances, contact PolicyFind as soon as possible to get your historical CGL portfolio in order.
PolicyFind is watching the development of insurance coverage related matters regarding PFAS and very closely, not only for bodily injury claims but also for property damage claims related to the investigation and cleanup of subsurface contamination. Significant rulings and opinions will be shared in future blog posts. For questions or more information, please contact us.
Kristen Drake brings more than a decade of research and managerial experience in broadcast journalism to the field of insurance archeology. Since joining the PolicyFind team in 2015, Mrs. Drake has successfully documented liability insurance programs on behalf of municipalities, manufacturers and dry cleaners. She continues to translate her expertise in source procurement and digital fact-finding, performing insurance research activities at a very high level, providing on-time execution of contracted performance goals.
Jeff Carnahan is a Licensed Professional Geologist (LPG) with over 20 years of environmental consulting and remediation experience and is currently serving PolicyFind and our clients as President. Jeff has contributed to the success and growth of PolicyFind through strategic market analysis and corporate risk management, as well as encouraging and upholding a superior level of technical expertise. Throughout his career Jeff has provided technical support to the legal community. He has served as a consulting and testifying expert regarding the cause, origin, timing, and cost of environmental releases, as well as cost-recovery claims on behalf of insurance policyholders.