This article examines the recent surge in PFAS- regulatory enforcement and private party suits, and where a responsible party may look for insurance coverage for this liability. PFAS are the so-called ‘forever chemicals’ because of their persistence in groundwater. In some states, PFAS groundwater contamination that pre-dates 1986 may be covered under a company’s pre-1986 historic general liability policies; in other states, coverage would only lie under pre-1973 policies. Moreover, currently available pollution insurance policies may provide coverage for PFAS liability.
- Introduction
Per or polyfluoralkyl substances (“PFAS”), the so-called ‘forever chemical,’ are currently the subject of increased scrutiny by environmental regulators, private party plaintiffs, and the insurance industry. This manmade group of synthetic chemicals, first developed in the 1930’s, is used in a wide variety of products, including fire-fighting foam, Teflon and food packaging. PFAS do not degrade and stay in the groundwater, and require substantial remediation. The New Jersey Department of Environmental Protection (NJDEP) recently sued two of the leading manufacturers of PFAS, and Orange County, California filed a PFAS suit on December 2, 2020. Regulators and water districts are now requiring testing for PFAS in environmental cleanups. The insurance industry is excluding it from coverage. A broad variety of companies will now face PFAS liability. The question then arises – will they have insurance coverage for this exposure?
- What Are PFAS?
PFAS or Per- and polyfluoroalkyl substances (PFAS) are a family of synthetic chemicals containing fluorine and carbon atoms that were first invented in the 1930s. PFAS have strong surfactant properties, meaning they reduce the surface tension between a liquid and another liquid or solid, and are thus effective in products which require fire resistance, and oil, stain, grease, and water repellency.
PFAS have been found in a wide variety of commercial and domestic products including firefighting foams, wire insulation, cleaners, textiles, leather, paper, and paints. Since their discovery, there have been thousands of PFAS compounds manufactured, distributed, and sold in the United States. Certain PFAS, most notably some of the perfluoroalkyl acids (PFAAs), such as perfluorooctanoate (PFOA) and perfluorooctane sulfonate (PFOS), are mobile, persistent, and bioaccumulative, and are not known to degrade in the environment. Early health studies found PFAS in the blood of occupationally exposed workers in the 1970s and reported detections in the blood of the general human population in the 1990s. These findings have led to the increased awareness of PFAAs in the environment, associated human exposure, and the potential for health effects. PFAAs (such as PFOS and PFOA) are found in the blood and serum of most people whether exposed in the workplace or not. This is attributed to widespread use, ability to bind to blood proteins and long half-lives in humans. Laboratory studies using animals and epidemiological studies of human populations show that exposure to some PFAS may be associated with a wide range of adverse human health effects.
Although some PFAS have been manufactured for more than 50 years, PFAS were not widely documented or te4sted for in environmental samples until the early 2000s. Early detection at low reporting limits was hindered due to analytical capability challenges arising from the unique surface-active properties of PFAS. Currently used methods for the detection of PFAS in the environment include EPA Test Method 537.1 for drinking water and modified EPA Method 537.1 for soil and ground water. These methods have detection limits in the part per trillion (ppt) level.
Many sources have released PFAS into the environment and impacted drinking water supplies in areas of the United States. Primary manufacturing facilities, such as the Solvay and Arkema facilities sued by NJDEP, produce PFAS and secondary manufacturing facilities use PFAS to produce goods. Due to the solubility and persistence of many PFAS, environmental release mechanisms associated with these manufacturing facilities include air emission and dispersion, spills, and disposal of manufacturing wastes and wastewater. Potential impacts to air, soil, surface water, storm water, and groundwater are present not only at release areas but potentially over the surrounding areas. The use of PFAS in fire-fighting foam has arguably had the greatest impact as a contaminant in the environment. In roughly 1966, aqueous film forming foam (“AFFF”) containing PFAS was patented as a method for extinguishing liquid hydrocarbon fires and other fires at military bases, airports, oil refineries, and firefighting training facilities. Since then, AFFF, and other Class B fluorine-containing firefighting foams, have been used for fire suppression of flammable liquid fires and flammable vapor suppression at fire training facilities throughout the United States, as well as at military installations and civilian airports. In 1969, the United States Department of Defense (DOD) issued military specification MIL-F-24385 (amended in 1992), which includes the requirements for AFFF liquid concentrate to contain either 3% or 6% PFAS. At the time of a release and/or discharge of AFFF, the AFFF concentrate containing PFAS is mixed with a water source to make a liquid foam solution. The foam solution is then aerated at the nozzle, yielding finished foam that is applied to a fire. The AFFF coats the fire, blocking the supply of oxygen and creating a barrier to extinguish the vapors. A film also forms to smother the fire after the foam has dissipated. Thousands of gallons of foam solution may be applied during a single release or discharge of AFFF. AFFF can be released into the environment in a variety of ways, including: releases of AFFF concentrate during storage, transfer, and testing; use of AFFF for firefighting, fire suppression/prevention and fire training; and leaks from foam distribution piping between storage and pumping locations. If it is not contained, the AFFF reverts from foam to the liquid solution of PFAS and water, and accumulates in sediment, soil, sewers, surface water, and/or groundwater.
- Current Regulatory, Enforcement and Litigation Environment
Currently, the federal government has no enforceable environmental regulations of any kind that address PFAS chemicals but the federal government has issued various health warnings and advisories about the human health effects of PFAS chemicals and guidance on cleanup standards. In May 2016, the United States Environmental Protection Agency (USEPA) issued a non-enforceable health advisory that established a maximum recommended concentration of PFOS and PFOA in drinking water at 70 ppt. In February 2019, the USEPA issued a PFAS Action Plan that responded to the public’s request for immediate action to address potential human health & economic impacts from PFAS. The plan establishes priority, short & long-term actions but no regulatory limits or controls on PFAS in the environment. In February 2020, USEPA issued an update to its PFAS Action Plan that contains goals and interim recommendations for establishing a screening level of 40 ppt to determine if PFOA and/or PFOS warrant further attention, using EPA’s PFOA and PFOS Health Advisory level of 70 ppt as the preliminary remediation goal (PRG) for contaminated ground/drinking water and listing PFAS as a hazardous substance under CERCLA, 42 U.S.C. 9601.
Although the Federal government has chosen not to formally regulate PFAS at the time of this writing, there are a number of States that have promulgated formal regulations concerning PFAS in the environment.
Drinking Water - New Jersey, New York, Michigan, New Hampshire and Vermont have set strict Maximum Contaminant Levels or MCLs for PFAS contaminants in drinking water. Most of the MCLs are in the ppt range and address PFOA and PFOS with certain additional PFAS compounds regulatory as seen necessary by the individual State.
Promulgated State MCLs for PFAS Compounds
Michigan – Adopted Regulation: 08/03/20
– PFNA – 6 ppt
– PFOA – 8 ppt
– PFHxA – 400 ppb
– PFOS – 16 ppt
– PFHxS – 51 ppt
– PFBS – 420 ppt
– HFPO-DA – 370 ppt
New Hampshire – Adopted Regulation: 10/1/19
– PFOA – 12 ppt
– PFOS – 15 ppt
– PFHxS – 18 ppt
– PFNA – 11 ppt
New Jersey – Adopted Regulation: 9/4/18 and 6/1/20
– PFNA – 13 ppt
– PFOA – 14 ppt
– PFOS – 13 ppt
New York – Adopted Regulation: 7/30/20
– PFOA – 10 ppt
– PFOS – 10 ppt
Vermont – Adopted Regulation: 3/17/20
– Sum of PFOA, PFOS, PFNA, PFHxS, PFHpA – 20 ppt
Ground Water - Although MCLs can apply to ground waters that serve as a source of drinking water, several states have established independent ground water standards for PFAS chemicals that can be used as a ground water quality standard or as a cleanup standard. For example, New Jersey has enforceable groundwater quality standards for PFOS, PFOA and PFNA that serve as the State’s ground water cleanup standards. If detected in ground water by licensed site remediation professional (LSRP), the LSRP has an obligation under New Jersey law to make a discharge notification to the NJDEP. Once notified, NJDEP’s robust cleanup process is put in motion requiring among other things, a receptor analysis, remedial investigation and remedial action to support final cleanup of the site through the issuance of a Remedial Action Outcome (RAO) document.
Soil – Several States have established soil screening levels and/or standards for ground, surface and drinking water protection for soils overlying ground water aquifers or soils located near surface water bodies. Other states have established direct contact and ingestion risk-based soil standards for protection of human health. California and Minnesota have “antidegradation” policies aimed at protecting the quality of groundwater. These polices can be used in decision making for site remediation and cleanup, discharge limits under permits and for economic development of the site and/or area in which the policy applies.
As one might expect, litigation has commenced in various forums against parties responsible for the manufacture, distribution, formulation and use of PFAS. Litigation involving Aqueous Film-Forming Foams (AFFF) has been the most pervasive since the use of AFFF in firefighting, fire suppression and fire training has led to the direct contamination of soil, surface water, ground water and sediments at facilities where AFFF has been discharged during use or while being stored. In late 2018, AFFF product liability cases from all over the country have been consolidated in a Multi-District Litigation (MDL) in the Federal District Court for the District of South Carolina (Charleston). See Aqueous Film-Forming Foams Products Liability Litigation, MDL No. 2873. This transfer was requested by the defendants in the case for the convenience of all parties because the cases involved common questions of fact, similar discovery needs, and similar defenses. Plaintiffs in the MDL include public and private water providers, State/Sovereign entities that are trustees of their natural resources, property damage plaintiffs including airports and fire-fighting training centers, individual residents and firefighters who may have been harmed by exposure to AFFF. The defendants in the MDL include PFAS/PFOA Manufacturers, AFFF Manufacturers, Airport Operators and Owners, State Agencies, the U.S. Government (Military Bases) and Municipalities.
Site remediation enforcement actions have also been aggressively pursued by various state governments. On May 25, 2019, the State of New Jersey issue a State-wide Directive, Information Request, and Notice to Insurers (aka a Spill Act Directive) to a number of chemical manufacturers to notify the companies that the State believes them to be responsible for the “significant” contamination of New Jersey's natural resources, including the air and waters of the State, with PFAS chemicals. The respondents include Solvay Specialty Polymers USA, LLC, several entities associated or formerly associated with E.I. du Pont and Dow Chemical and the 3M Company. Under the broad provisions of a number of New Jersey environmental statutes[1], NJDEP ordered the respondents to pay past costs that exceed $3,000,000 plus additional future costs to be incurred by the State, assume responsibility for operation and maintenance of point of entry water treatment systems (POETS) at a number of sites in South Jersey, perform additional investigation and cleanup work, develop remedial costs estimates, post financial assurances, meet with the NJDEP on developing future costs, provide historical manufacturing, use and financial information to NJDEP and estimate the dollar amount of all damages not related to the State’s claims. The State’s enforcement powers include liability to the Department in an amount equal to three (3) times the cost of arranging for the cleanup and removal of the discharge, the placement of liens on Respondents' real and personal property, and penalties of up to $50,000 per day per violation.
The State also reserved its right to bring an action in the New Jersey Superior Court for appropriate relief and to directly sue any bond, insurer or any other person providing evidence of financial responsibility directing the Respondents to put their insurers on notice of such. (see N.J.S.A. 58:10-23.lls).
In April 2019, Solvay responded to NJDEP stating that there was no credible basis for NJDEP to assert that Solvay is responsible for Statewide PFAS contamination because Solvay only operated a single manufacturing facility in the State (located in West Deptford, Gloucester County, New Jersey) and that Solvay never manufactured PFAS. Solvay also responded that it has been investigating and remediating PFAS impacts potentially attributable to its West Deptford Facility since 2013 at a cost of more than $25 million to date. Further, Solvay agreed to take on certain elements of the work outlined in the Directive; namely, providing NJDEP with information on the historic use of PFNA and PFOA, discuss the past and future costs claims with the Department, assume the operation and maintenance of certain POET systems, sample additional potable wells and submit an updated Remediation Cost Review and Remediation Funding Source/Financial Assurance Form.
Citing to evidence of widespread contamination caused by Solvay’s activities at its West Deptford Site, and Solvay’s repeated refusal to comply with New Jersey’s “numerous” directions to investigate all contamination from the Site and to pay for the treatment of all contaminated drinking water, on November 10, 2020, New Jersey filed a lawsuit against Solvay and the previous site owner, Arkema, Inc.[2] in New Jersey Superior Court in Gloucester County. The lawsuit alleges that the defendants’ industrial processes, discharges, emissions, and waste disposal practices, resulted in wide spread contamination of the site and the surrounding area with numerous hazardous substances and pollutants, including but not limited to semi-volatile organic compounds (“SVOCs”), volatile organic compounds (“VOCs”), metals, polychlorinated biphenyls (“PCBs”), and PFAS. The lawsuit further alleges that hazardous substances have been detected in drinking water, groundwater, surface waters, sediments, soils, air, fish, plants, and other natural resources including the Delaware River.
In addition to its allegations, the State made two declarations in a footnote in the complaint. First, the State explicitly reserved its claims to remediate and restore the Delaware River, and recover the costs and damages associated with doing so, until the investigation of the River was more fully complete. Second, State made it clear that it was not asserting claims, costs, or damages associated with aqueous film-forming foam (“AFFF”). The latter declaration is presumably a message to the court and the defendants that this case should not be joined in the MDL action in South Carolina. The State’s claims for relief include injunctive relief and the recovery of damages under both New Jersey’s environmental statutes and common law. These include damages, costs and injunctive relief relating to the investigation, cleanup, and removal of discharged hazardous substances; the restoration of natural resources; compensation for the lost interim value and benefits of natural resources; the institution of corrective measures, operating and maintaining the various POET systems, and ceasing all unpermitted discharges of hazardous substances among numerous other claims for relief.
References
You Have a PFAS Problem: How PFAST Do You Have To Act? Fall AEA Conference, November 2019
Fall Insurance PFAS Webinar, First Environment, November 2020
PFAS, Interstate Technology & Regulatory Council (ITRC) Per- and Polyfluoroalkyl Substances (PFAS) Team, April 2020
EPA’s PFAs Action Plan: Program Update, February 2020
EPA’s PFAS Action Plan, February 2019
NJDEP Directive No. 20190325, March 2019
HTTPS://FIRSTENVIRONMENT.COM/WP/NEWS/MICHIGAN-JOINS-NJ-AND-NY-PFAS-MCL
HTTPS://FIRSTENVIRONMENT.COM/WP/NEWS/NEW-YORK-FINALIZES-MCLS-FOR-THREE-CONTAMINANTS-OF-EMERGING-CONCERN
ITRC Residential Soil Standards and Guidance Values for PFAS, March 2020
- Coverage for PFAS Under Historic Insurance Policies
Insurance coverage for PFAS liability may exist under historic general liability policies. General liability policies provide coverage for property damage, and every state has held that groundwater contamination constitutes covered property damage. Coverage will exist under the policies in place during the years in which the groundwater contamination continues to occur, irrespective of when the claim is made. The key issues affecting coverage for PFAS liability arise from pollution exclusions.
The insurance industry introduced the ‘sudden and accidental’ pollution exclusion in about 1973. The insurance industry introduced a more sweeping, ‘absolute’ exclusion generally in 1986. The 1973 exclusion bars coverage for chemical releases unless the release is ‘sudden and accidental.’ Courts nationally are split on the application of this exclusion. It is possible that under some versions of the absolute pollution exclusion, coverage may still exist for product liability claims.
In some states, including New York and California, the courts have applied a strict temporal connotation to ‘sudden and accidental,’ and have foreclosed coverage for groundwater contamination unless it is the result of an explosion or other ‘boom’ event. In those jurisdictions coverage will usually only exist if the groundwater contamination caused by PFAS commenced prior to 1973. See, e.g., Northville Indus. Corp. v. National Union Fire Ins. Co., 679 N.E. 2d 1044 (N.Y. 1997).
Even in these jurisdictions circumstances may exist where a policyholder can argue that PFAS groundwater contamination is sudden and accidental and therefore covered despite this exclusion. For example, if PFAS is used to put out a fire, resulting in the entry of PFAS into the groundwater, a court may look at the short duration of the PFAS use to determine that the contamination is sudden and accidental. Companies with PFAS liability must carefully examine the source of the contamination to see if it can qualify as sudden and accidental.
Courts in other states have held that sudden and accidental is only a reiteration of the insurance requirement that damage be unintended and unexpected. In those states, which include New Jersey, Illinois, West Virginia and Wisconsin, insurance coverage can exist for PFAS liability even if there was no “boom” event if the groundwater contamination commenced prior to 1986. See e.g., Just v. Land Reclamation, Ltd., 456 N.W. 2d 570 (Wis. 1990).
1986 is the key cut-off date because the insurance industry introduced in that year the so-called absolute pollution exclusion, which does not contain a ‘sudden and accidental’ exception. This exclusion will foreclose coverage for PFAS liability.
The existence of these pollution exclusions leads to a subsidiary concern, known as the non-availability issue. Under the law of most jurisdictions, if groundwater contamination continues over forty years, each of the insurance companies that provided coverage during that period must respond. This leads to the issue of how to allocate the damages that occurred during that period among the insurance companies and the policyholder.
Let us assume that a company used PFAS that entered the groundwater beginning in 1980, and is in a jurisdiction that does not apply the sudden and accidental pollution exclusion. That company is then sued in 2020 for PFAS contamination. The company has insurance coverage from 1980 to 1986. The question then arises, who is responsible for the years from 1986 to 2020, when environmental insurance was not available in the marketplace - the policyholder or the insurance company? Courts have reached diametrically opposed positions on this issue.
In Honeywell, the New Jersey Supreme Court held that it was unfair to penalize the insured company for not having insurance after 1986 when that coverage was not available. As a result, the court held that the insurance companies from 1980 to 1986 were liable for the entire exposure, with no allocation to the insured for the uninsured years.
In KeySpan, the New York Court of Appeals reached the opposite conclusion. The court held that the policyholder was responsible for the allocation to the post-1986 years. Thus, in New Jersey, the policyholder would have full coverage, while in New York, under the same facts, only for six of the 40 years.
Since coverage only can exist under pre-1986 or pre-1973 general liability insurance policies, the question arises as to how companies will find their old insurance policies. First, copies of the actual policies are not necessary – a company can prove its insurance policy history through secondary evidence. In most states the standard for proving the existence of insurance policies is the preponderance of evidence. See e.g., Borough of Sayreville v. Bellefonte Ins. Co., 320 N. J. Super. 598 (App. Div. 1998) (although some states may require clear and convincing evidence.) In states that only require the preponderance of evidence, very little secondary evidence may be necessary to prove the existence of insurance policies. See, e.g., E. M. Sargent. Since general liability policies usually employ standard language, a company can use an expert to set forth what the terms and conditions of the policy would have been.
Finding the policies or even secondary evidence may be challenging. A few companies may have records of their decades-old insurance policies, but this tends to be rare. Insurance brokers are also a potential source of information on old policies.
Many companies facing long-tail liability retain an insurance archaeologist to find evidence of old policies. These are people who are expert in knowing where to look for such evidence, and they are often successful.
Any company facing PFAS liability should immediately provide notice of the claim to its pre-1986 insurance companies. While many states have policyholder-friendly law on the effect of late notice, late notice can still foreclose coverage without a showing of prejudice in some jurisdictions. Companies that do not know who the identity of their pre-1986 insurance companies should consider retaining an insurance archaeologist.
Companies should also review choice of law and choice of forum issues. Assume that a company headquartered in New York is sued by the New Jersey Department of Environmental Protection. If that company sues its insurance companies in New Jersey, it will have full coverage under its pre-1986 policies. If the company’s insurance company sues it first in New York, the company will only potentially have coverage under its pre-1973 policies and, moreover, New York law bars coverage if there is late notice of the claim to its historic insurance companies. Preparing a strategy for pursuing coverage is critical.
V. Current Pollution Policies:
While the historic CGL policies may provide coverage for legacy PFAS-related matters, there may be another avenue for coverage – current Pollution Policies.
As noted above, as pollution exclusions were added to standard property and casualty policies, coverage for pollution exposures has primarily shifted to a stand-alone Pollution Insurance marketplace place. Starting with three carriers in the 1990’s through mid-2000’s – there are now over 30 insurance carriers that offer standalone Pollution policies. There are primarily two “families” of Pollution policies – 1) those policies that address fixed-site pollution exposures (those exposure either on, at, or migrating from a fixed-site – and associated waste and transportation exposures); and 2) those policies that address pollution exposures caused by, or arising out of, contracting operations. The first category of pollution policies is generally referred to as “Site Pollution” policies; the second category is referred to as “Contractors Pollution Liability” policies. For purposes of a PFAS claim discussion, “Site Pollution” policies will most likely be implicated – and will be the focus of our discussion.
Each carrier that offers these policies has their own unique policy form, which means that no one carriers’ form is like another’s. With that said, there are some common characteristics between all the carriers’ forms:
Site Pollution
- Provides coverage for pollution conditions on, at, or migrating from covered locations
- Insuring agreements differ between the carriers – but typically include (either in the base form, or via endorsement) the following types of coverage grants:
- Cleanup costs – first party/discovery trigger (where the insured discovers the pollution condition and incurs cleanup costs directly), as well as cleanup costs as a result of a third-claim claim. The standard for cleanup is generally “as required by environmental laws”, or in the absence of environmental laws – as recommended by an environmental professional
- Third party claims for bodily injury and property damage (include loss of use/NRD) – including legal defense expense
- Business Interruption and Extra Expense solely resulting from a pollution condition
- Transportation of the Insured’s products, goods, material, waste – typically to and from the covered location
- Waste Disposal Activities at Non-Owned Disposal Sites – where the waste is from a covered location
- Crisis management response coverage
- Coverage is written on a claims-made and reported basis
- CMR policies provide coverage subject to a retroactive date – which limits coverage for pollution conditions that commence after an identified retroactive date
- All claims must first be made, or the pollution condition must first be discovered, during the Policy period. In both instances, the pollution condition/claim must be reported during the current policy period
- Forms usually heavily underwritten, with many endorsements that modify the coverage
- Coverage is often negotiated on a multi-year basis
Generally, the definition of Pollution Condition will always include the following:
Pollutants - any solid, liquid, gaseous or thermal irritant, or contaminant, including smoke, soot, vapors, fumes, acids, alkalis, chemicals, hazardous substances, hazardous materials, or waste materials, including medical, infectious and pathological wastes, at levels in excess of those naturally occurring.
Pollution Condition – the discharge, dispersal, release, escape, migration of seepage of a Pollutant on, in, into, or upon land, the atmosphere, any watercourse or body of water including surface water or groundwater.
While it certainly clear that PFAS would be considered a “pollutant” under a Pollution Policy, and the PFAS impact to groundwater meets the Policy requirement of a “pollution condition”, whether or not a Pollution policy responds to a PFAS claim is dependent upon on many other factors.
As noted above – Site Pollution policies provide coverage for pollution conditions at, under or migrating from a covered location. In addition, coverage can also extend to the Insured’s waste disposal activities at non-owned waste disposal facilities. In the event an Insured receives a claim involving PFAS – the scope of potential coverage is implicated by the following:
- Is PFAS at, under, or migrating from a covered location?
- Is there a retroactive date applicable to the covered location? Or to waste disposal activities at a non-owned disposal site?
- As PFAS claims may implicate predecessor entities – are those entities included as Insureds under the Policy?
- Coverage for cleanup costs is subject to what is “required by environmental law” - is there applicable “environmental law” regarding PFAS cleanup standards?
- Is the remedy requested covered by an insuring agreement? Claims for injunctive relief, or fines and penalties, may/may not fall within the Pollution Policy’s insuring agreements
- Is there an exclusion added for PFAS, or PFAS related chemicals?
- As these policies are written on a claims-made and reported basis – was PFAS discovered during the Policy Period? Did the Insured receive a claim during the Policy period? Was the carrier provided proper notice?
- Notwithstanding the Insuring Agreements and exclusions – has the Insured complied with the additional Pollution Policy provisions regarding the need to obtain the carriers’ prior consent to retain counsel, or to perform cleanup?
To date, we’ve seen PFAS related claims from manufacturers, property owners/tenants, airports, landfills, municipalities – these claims range from regulatory action, NRD, class action lawsuits alleging bodily injury, diminution in value, loss of use, and environmental damage to third party property. We’ve even seen regulators requiring PFAS sampling prior to issuance of NFA on non-PFAS related cleanups. If an Insured receives a claim for PFAS, it’s imperative to report the matter to the insurance carrier immediately, to protect whatever coverage may be available.
While there may be coverage under current Pollution policies for PFAS claims – Pollution carriers are beginning to scrutinize PFAS exposure, resulting in policy limitations – or full out exclusions – for PFAS. Policy applications now include questions regarding whether PFAS has been manufactured, stored, or used at a covered location; and also whether the Insured has had any firefighting training/drills, or fires, at covered locations – which would implicate the use of aqueous firefighting foam at a covered property. From a carriers’ perspective – these application questions not only provide the basis for PFAS policy limitations and exclusions on an upcoming renewal policy …but in the event of a claim, claim adjusters pull the applications to determine whether the Insured fully disclosed information. In the event the insured did not fully disclose information on the application – the carrier could reasonably deny coverage based on non-disclosure.
- Conclusion
PFAS liability is here, and will only increase in the foreseeable future. Regulators have targeted PFAS in groundwater, and their enforcement activities will rise substantially. Many companies that use products that contain PFAS, and not just PFAS manufacturers, face liability, for example, fire departments and airports that use PFAS-containing fire-fighting foam. PFAS cleanup efforts are difficult and costly. Groundwater contamination is covered by historic general liability policies and may be covered by current pollution policies. Any company with PFAS exposure must examine its historic and current insurance programs to see if they afford coverage. Such coverage analysis is complex, and companies should utilize insurance professionals to assist with this task.
Robert D. Chesler is a shareholder in Anderson Kill's New Jersey office. Bob represents policyholders in a broad variety of coverage claims against their insurers and advises companies with respect to their insurance programs.
[1] Including N.J.S.A. 13:10-1 et seq., the Spill Compensation and Control Act ("Spill Act"),
N.J.S.A. 58:10-23.11 et seq., the Water Pollution Control Act ("WPCA"), N.J.S.A. 58:l0A-1 et seq., the Air Pollution Control Act ("APCA"), N.J.S.A. 26:2C-1 et seq., and the Solid Waste Management Act ("SWMA") N.J.S.A. 13:lE-1 et seq.
[2] Arkema’s predecessor entities include Atochem North America, Inc., Elf Atochem North America Inc., and Pennwalt Corporation who owned the West Deptford site from 1970 to 1990.
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