Perfluoroalkyl and polyfluoroalkyl substances, commonly referred to as PFAS or PFOS, have been a key ingredient in numerous industrial and consumer products for decades. These man-made chemicals are prevalent and are also known for their longevity in the environment. More recently, PFAS have been the focus of thousands of lawsuits alleging personal injury and property damage. Some insurers have already questioned whether PFAS could rival asbestos in scope and bottom-line impacts. It is a legacy that confronts manufacturers and other defendants and insurers today.
This article provides a primer on PFAS, including the current regulatory framework and litigation landscape. We also identify some key emerging coverage issues insurers should be aware of when dealing with PFAS claims under liability and first-party property policies.
Background on PFAS
PFAS are a group of synthetic chemicals that have been used in various industries since the 1940s. PFAS have a chemical structure that makes them useful for certain applications, but also particularly problematic as an environmental contaminant. In simple terms, PFAS molecules have an affinity for both water and soil. Once released into the environment, PFAS can cause significant and long-lasting contamination, such that they are commonly referred to as the “forever chemical.”
PFAS have been used in a multitude of products since they were created by a DuPont scientist in 1938. For example, PFAS have been utilized as stain resistant coatings (e.g., Teflon, Scotchguard and Gore-Tex); in chemical, automotive and electronic industries; in firefighting foam; in food packaging to resist oil and moisture; and in polishes, waxes and cleaning products. Studies suggest that up to 99% of all people have detectable levels of PFAS in their blood serum. Some studies have linked PFAS to such illnesses as kidney cancer, liver damage, testicular cancer, thyroid disease and pregnancy induced hypertension. There are also studies which suggest that PFAS affect birth weight, cholesterol levels and immune systems.
Fueled by increasing public awareness of the threat from these substances, federal and state environmental authorities, along with legislative bodies, have begun to regulate PFAS under environmental statutes and regulations.
The federal government’s response to the PFAS problem is summed up in the EPA’s “Action Plan” adopted in April 2019. The Action Plan established several “priority actions” the EPA intends to undertake when feasible. One is to begin designating PFAS as “hazardous substances” under CERCLA (the Superfund statute). This would subject parties responsible for PFAS contamination to the suite of enforcement actions available to the EPA under CERCLA, including administrative orders to clean up PFAS contaminated sites. A second and related action item is to establish a “Maximum Contaminant Level” (MCL) for PFAS in soil and groundwater. This would provide the basis for enforcement and would serve as a guideline for state action, unless a state has set a more stringent standard.
It usually takes several years for a contaminant to be designated as a hazardous substance and to have an MCL assigned. In the meantime, the EPA has established a drinking water health advisory for water systems in the United States. The EPA advises that where concentrations of PFAS in drinking water exceed 70 part per trillion (PPT), the water system should advise consumers of the risk and consider taking action to remediate the contamination.
Congress has also gotten into the act. Pressure has been placed on Congress to address PFAS as a result of the widespread publicity and the increasing bodily injury litigation involving these substances. In 2020, Congress imposed new requirements and restrictions regarding PFAS in the National Defense Authorization Act, including requiring public water agencies to monitor for PFAS contamination. Also, Congress has been pressuring the EPA to accelerate its process for formally designating PFAS as CERCLA hazardous substances and establishing an MCL.
There is also a great deal of regulatory activity at the state level. Fifteen states have established some type of standard and guideline for PFAS in soil and groundwater. For example, this past summer, New York and New Jersey listed PFAS as hazardous substances under their regulatory regimes and set an MCL of 10 PPT in the case of New York and 13-14 PPT in New Jersey, depending upon the particular substance.
Also, a number of states have filed lawsuits or initiated enforcement actions against manufacturers and users of PFAS for causing contamination at various sites. Over the next several years, we can expect to see an acceleration of state regulation of PFAS and enforcement actions.
JD Supra, 8 February 2021