Tag: EPA

PFAS, Imminent National Standards, and the Value of Locating Old CGL Policies

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BY: KRISTEN DRAKE

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. As a 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. 

On March 14, 2023, it was announced that the Biden-Harris Administration will be proposing the first-ever national standards for six (6) per- and polyfluoroalkyl substances (PFAS) or “forever chemicals”. In addition, the U.S. Environmental Protection Agency (EPA) Office of Enforcement and Compliance (OECA) held its first of two public listening sessions to obtain general comments about their proposed plans for enforcement of PFAS under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and the financial obligations for responsible parties of PFAS contamination to further their development of a CERCLA PFAS enforcement discretion policy. Both actions build on President Biden’s PFAS pollution action plan and the EPA’s PFAS Strategic Roadmap, which were started over two years ago with the objectives of controlling and addressing PFAS pollution and holding PFAS polluters accountable to safeguarding public health and advancing environmental justice.

While progress is being made, additional questions arise on the future of PFAS regulation implementation and the potential financial obligations and risks to municipalities and other sectors. For instance, we do not have a clear understanding of who will be held responsible for funding the cleanup of PFAS contamination via the aqueous film forming foam (AFFF), a.k.a. firefighting foam, releases at many airports and fire departments, since the EPA is proposing to exempt these entities.

HISTORICAL COMMERCIAL GENERAL LIABILITY INSURANCE SHOULD BE LOCATED AND TENDERED TO PAY FOR PFAS INVESTIGATION, CLEANUP, REMEDIATION, AND LEGAL DEFENSE

Those who used or interacted with PFAS during their business operations and/or property ownership can face a variety of exposures due to PFAS – including product liability, bodily injury, and environmental cleanup claims. Policyholders should be ready to find and use their commercial general liability (CGL) policies written prior to 1986 to pay for the investigation, remediation, and legal defense of PFAS.

There are three reasons older CGL policies can protect business and property owners against claims for property damage and bodily injury:

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, as it relates to PFAS that have allegedly 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.

2. Older CGL policies, issued prior to 1986, did not include the absolute pollution exclusion. This means older CGL policies can cover long-tail claims (including PFAS), such as environmental, investigation, cleanup, and legal counsel fees. 

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 very closely, not only for bodily injury claims but also for property damage claims related to the investigation and cleanup of subsurface contamination. Significant developments will be shared in future blog posts. For questions or more information, please contact us.

District Court Sends Valentine to Washington State Policyholders Finds that PRP “Scarlet Letters” Trigger Duty to Defend

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David A. O’Neill, JD

PolicyFind

 

On February 10, 2017, the U.S. District Court for the Western District of Washington issued its opinion in King County v. Travelers Indemnity Co. et al.  The District Court held in that case that letters from state and federal regulatory authorities designating the County as a PRP at a property damage site were the “functional equivalent of a suit,” triggering its insurers’ duty to defend under its historical general liability insurance policies.

Although its insurers argued that mere PRP notice letters were not “adversarial and coercive” enough to trigger a duty under their policies, the District Court found that the USEPA and Washington State Department of Ecology had “assumed an adversarial posture by exercising their statutory authority to designate King County as a strictly-liable PRP.” In its opinion, the court reasoned: “Once a party bears the scarlet letters ‘PRP,’ it may be called upon at any time to assume responsibility for the cleanup effort.”

Noting that both CERCLA and the Washington state MTCA are “strict-liability schemes that require responsible parties, once notified, to participate in and fund all remedial action,” the District Court found that once notified,  “It makes no difference whether an insured voluntarily cleans up contamination or waits until government intervention—it is liable either way.”

The King County decision relied on the Washington Court of Appeals 2014 ruling in Gull Industries v. State Farm. In that case, the court had found that the term “suit” in general liability policies was ambiguous and may encompass claims for administrative enforcement actions if they are “adversarial and coercive” in nature.  Noting that the Gull Industries decision had gone for the insurer, Travelers argued that the PRP notices in the King County case were “exactly the type of letter that the Gull court expressly found did not trigger a duty to defend.” The District Court however distinguished between the letters in Gull and those in King County, noting that the agency letters to Gull Industries stated that it had not yet determined that it was a PRP, while in the King County case the PRP designation was clear. The DOE’s letter in Gull had been a “passive acknowledgement” that voluntary remediation was underway. The Kings County letters clearly identified it as a PRP.