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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.
PFAS Tort Litigation
The case that laid the groundwork for modern day PFAS litigation was Leach v. E. I. du Pont de Nemours & Co., No. 01-C-698 (Wood County W. Va. Cir. Ct.). Leach was a class action lawsuit filed on behalf of approximately 80,000 residents who lived in close proximity to DuPont’s Washington Works manufacturing complex. The plaintiffs alleged that they had sustained bodily injury from water contaminated by the chemical C-8 (PFOA), a type of PFAS that is used in the manufacturing of Teflon. The Leach action and the Washington Works facility are the subject of the 2019 feature film “Dark Waters.”
In 2005, the Leach court approved a unique settlement agreement under which DuPont was required to fund a health project to gather data from the class members and a panel of three epidemiologists jointly chosen by the parties (the Science Panel), to analyze that data, and to determine whether a “probable link” existed between PFAS exposure and any diseases. In 2011, the Science Panel determined that a probable link existed between PFAS exposure and several diseases: kidney and testicular cancer, pregnancy induced hypertension, preeclampsia, thyroid disease, ulcerative colitis and high cholesterol (Probable Link Diseases).
Thereafter, approximately 3,500 members of the original Leach class, each of whom had developed one or more of the Probable Link Diseases, filed bodily injury and wrongful death suits in Ohio and West Virginia courts. Those suits were consolidated into MDL 2433 in the United States District Court for the Southern District of Ohio in In Re: E.I. du Pont de Nemours and Co. C-8 Personal Injury Litigation. DuPont took three bell weather cases to trial: Bartlett v. E.I. du Pont de Nemours & Co., Freeman v. E.I. du Pont de Nemours & Co., and Vigneron v. E.I. du Pont de Nemours & Co. All three resulted in substantial plaintiffs’ verdicts.
Eventually, DuPont and its successor at the Washington Works facility, the Chemours Company, settled the remaining cases in MDL 2433 for $671 million. Additional class plaintiffs would later file new cases in the MDL, which remain active today.
Aqueous film-forming foams (AFFFs), used for many years in fire suppression and firefighting training exercises, have recently become a primary target of PFAS suits. In 2018, MDL 2873 was formed in the United States District Court for the District of South Carolina to manage product-liability cases arising out of the manufacturing and/or use of PFAS-containing AFFFs. It is comprised of well over 500 cases, brought by individual, corporate, and municipal plaintiffs. The claims allege property damage and bodily injury (or at least a likelihood of future injury), and seek, for example, compensatory damages, medical monitoring, punitive damages, and injunctive relief.
Outside of MDL 2873, plaintiffs are filing PFAS cases in numerous jurisdictions. Interestingly, some recent cases are implementing the Leach plaintiffs’ strategies. For example, Hardwick v. 3M Co. et al. is a class action suit in which the lead plaintiff, a former firefighter, alleges that exposure to PFAS in firefighting foam and equipment caused bodily injury. The Hardwick plaintiffs seek the formation of a new panel of scientists to further study the effects of PFAS on human health, and medical monitoring. If a new science panel establishes additional probable links between PFAS exposure and other diseases, there could be an evidentiary foundation for future lawsuits.
PFAS Governmental Enforcement
In the last few years, several state and local governments have led the charge with respect to enforcing environmental laws against manufacturers and commercial users to compel them to clean up widespread PFAS environmental contamination. For example, in MDEQ v. Wolverine World Wide, Inc., the Michigan Department of Environmental Quality (MDEQ) sued a shoe and boot manufacturer, seeking declaratory and injunctive relief directing it to: (1) investigate the extent and location of its releases; (2) develop and implement plans to sample and analyze affected drinking water sources; and (3) provide alternative safe drinking water to residents affected by the contamination, among other things. The MDEQ’s claims included a claim pursuant to the citizen’s enforcement provision of the federal Resource Conservation and Recovery Act (RCRA), a claim under the Michigan Natural Resources and Environmental Protection Act, and a claim for common law nuisance. In December 2019, the Michigan Attorney General announced that the case had settled for $69.5 million. Several additional cases filed by state and local governments against PFAS manufacturers and commercial users remain pending. Given the ubiquity of PFAS environmental contamination, and that the EPA has begun to focus on PFAS as a serious persistent environmental contaminant, additional enforcement actions are almost certainly forthcoming.
Insurance Coverage Issues Pertaining to PFAS
CGL Policies. PFAS claims can present a host of potential issues under commercial general liability policies. The following is a brief summary of some of the major issues.
Because PFAS have been used for decades, both legacy general liability policies and more recent policies may potentially be implicated for a given claim. For a claim under legacy policies, it will be important to determine, as a threshold matter, whether there is a prior environmental settlement agreement that might apply to the claims. Another key consideration is the status of policy limits. Many PFAS claims are being advanced on a products liability theory. It will be important to determine whether there has been any impairment or exhaustion of the products aggregate limits in the policies at issue, particularly under legacy policies, which typically contained products aggregates, but sometimes did not contain aggregates for premises and operations exposures.
Another major issue is the potential application of pollution exclusions or other exclusions for injury caused by hazardous substances. Careful attention must be paid to whether such exclusions would be held to apply to claims for bodily injury resulting from exposure to PFAS under the relevant facts and the applicable law. An analysis of that issue is beyond the scope of this brief overview. Suffice it to say that the law on the application of pollution exclusions to bodily injury claims due to exposure to hazardous substances will vary by jurisdiction.
Other potentially important coverage issues are whether there is “bodily injury” within the meaning of the policies at issue, and when that injury occurs for purposes of “triggering” insurance coverage. Many of the cases filed to date include claims for medical monitoring, which presents its own set of issues. Because PFAS claims are typically “long-tail” in nature, allocation of defense and/or indemnity costs could be a significant issue.
Pollution Liability Insurance. Pollution liability policies have been around for many years and, while they take on many different forms and contain different coverage grants, they are also more specialized to different industries or insureds. Therefore, close attention should be paid to the coverage grant in policies, including whether a policy is written on a “claims made” or “occurrence” basis. Many pollution liability policies are issued on a “claims made basis,” which could be determinative of whether coverage may exist.
However, other pollution liability policies are written on an “occurrence” basis for “product pollution, hostile fire and contractors’ pollution liability” claims. Thus, if there are underlying PFAS claims for products liability – like the firefighting foam claims – there is a potential for coverage under such pollution liability policies. Generally, however, this coverage is potentially “triggered” only to the extent that the “pollution condition” or the “bodily injury” or “property damage” first take place during the policy period. This raises the question of when that “pollution condition,” “bodily injury” or “property damage” first took place. This will lead not only to issues about indemnity obligations under the policy, but also issues relating to the duty to defend.
In addition, pollution liability policies often contain several exclusions that may be relevant to PFAS claims, including (1) the expected or intended exclusion; (2) an exclusion for property damage to or a pollution condition on, at or under property you own, rent or occupy; (3) an exclusion “arising out of or related to a pollution condition on, at, under or migrating from a non-owned disposal site;” and (4) exclusions for claims arising out of or related to criminal fines, or punitive, exemplary or multiplied damages or any claims for injunctive relief.
First-Party Property Policies. For insureds seeking coverage for investigation and remediation expenses under first-party property policies relating to PFAS contamination, a few potential barriers to coverage exist. First, property policies generally insure against direct physical loss or damage to covered property. Some courts have held that the existence of pollution, and/or costs to remediate pollution on an insured property, without any actual direct physical damage to the property, are not covered. Other courts have taken the opposite view, and held that the costs to remediate pollution did constitute direct physical loss or damage. Insurers faced with a claim for investigation and/or remediation under a first-party policy should review the law in the applicable jurisdiction.
Several exclusions also potentially bar or limit coverage. This article cannot address all potentially applicable exclusions and provisions, so care should be taken to review the policy in detail and consult counsel as appropriate. By way of example, many first-party property policies contain a Land and Water Exclusion, which courts generally hold bars coverage for soil or groundwater remediation. First-party property policies also may contain pollution exclusions, and/or Remediation Expenses Exclusions, which could bar coverage for PFAS remediation. That said, some policies contain limited coverage for pollution clean-up and removal, but coverage only exists where all policy conditions are met (i.e., (a) claim reporting within 180 days of (b) a Covered Cause of Loss).
Consistent with its nickname, the “forever chemical” is poised to be a source of claims for years to come. Insurers should prepare now by developing a plan for dealing with these claims under multiple lines of coverage.
 Research on Per- and Polyfluoroalkyl Substances (PFAS), Safer Chemicals Research, US EPA.
 Jansen, Kerri, “Forever Chemicals” No More? These Technologies Aim to Destroy PFAS in Water, Chemical and Engineering News, Vol. 97, Issue 12 (Mar. 25, 2019).
 Richter, Lauren, Non-Stick Science: Sixty Years of Research and (In)action on Fluorinated Compounds, Sage Journals, (Sept. 20, 2018).
 U.S. Environmental Protection Agency, Drinking Water Health Advisory for Perfluorooctanoic Acid (May 2016).
 Agency for Toxic Substances and Disease Registry, Per- and Polyfluoroalkyl Substances and Your Health.
 See EPA 823-R-18-004 (February 2019).
 See EPA 800-F-16-003 (November 2016).
 Section 1790, National Defense Authorization Act for Fiscal Year 2020, 116th Congress (2019-2020).
 See generally, Michigan Joins New Jersey and New York as Latest State to Finalize MCLs for Contaminants of Emerging Concern, First Environment (August 17, 2020).
 See, e.g., Baker v. St. Gobain Performance Plastics Corp. & Honeywell Int’l, 1:16-cv-0917 (N.D. N.Y.), and Sullivan v. St. Gobain Performance Plastics Corp., 5:16-cv-125 (D. Vt.) (class action suits alleging that defendant’s manufacturing operations caused PFAS contamination to local drinking water supplies).
 2:18-cv-01185 (S.D. Ohio 2018).
 See, e.g., Minnesota v. 3M Corp., 27-cv-10-28862 (Hennepin County Dist. Court) (state claims against PFAS manufacturer pursuant to Minnesota Environmental Response and Liability Act, and the Minnesota Water Pollution Control Act, for discharge and disposal of PFAS-contaminated waste settled for $850 million). Some state actions have relied primarily on common law theories of liability instead of environmental protection laws. See, e.g., Ohio v. E.I. du Pont de Nemours & Co., 180T32 (Ct. Comm. Pleas Wash. County, Ohio) (asserting claims against PFAS manufacturer for negligence, public nuisance, statutory nuisance, and trespass).
 1:18-cv-00039 (W.D.M.I. 2018).
 See Great Northern Ins. Co. v. Benjamin Franklin Federal Savings & Loan Assoc., 793 F. Supp. 259, 263 (D. Or. 1990), aff’d, 953 F.2d 1387 (9th Cir. 1992) (cost to remove asbestos not direct physical loss or damage, but purely economic damage); Pirie v. Federal Ins. Co., 696 N.E.2d 553, 554 (Mass. App. Ct. 1998) (holding no coverage for legally required de-leading, because it did not constitute a directly physical loss or damage).
 See, e.g., Yale Univ. v. CIGNA Ins. Co., 224 F. Supp. 2d 402, 413 (D. Conn. 2002) (holding that insured’s claim to remediate friable asbestos and non-intact lead-based paint constituted physical loss or damage to property); United Technologies Corp. v. American Home Assurance Co., 989 F. Supp. 128, 142-44 147 (D. Conn. 1997) (holding that contamination is a covered peril under an all-risk policy, soil constituted covered property but groundwater did not, and “declin[ing] to find as a matter of law that money expended to comply with the government orders to investigate the nature and scope of the necessary remediation of [the insured’s] contaminated property does not constitute physical loss or damage”).
 Sometimes, land and water coverage is barred by a limitation in the insuring agreement instead of an exclusion.
 See, e.g., Royal Ins. Co. v. Bithell, 868 F. Supp. 878, 881 (E.D. Mich. 1993) (holding that damage to soil from raw sewage not covered where the policy “clearly states that ‘this coverage does not apply to land, including land on which the dwelling is located.’”); Horning Wire Corp. v. Home Indem. Co., 8 F.3d 587, 589-90 (7th Cir. 1993) (holding that land exclusion barred coverage for remediation of cresylic acid contamination in soil); CF Benjamin v. State Farm Ins. Co., 2017 U.S. Dist. LEXIS 131078, **32-33 (D.N.J. Aug. 17, 2017) (finding no coverage under a first-party property policy for costs associated with remediation of contaminated soil where the insuring agreement expressly barred coverage for damage to land).