In 2021, the Biden Administration announced the EPA’s PFAS Strategic Roadmap, laying out many steps that it would take to protect Americans and the environment from PFAS chemicals it considers harmful. Two important components of the plan were just recently announced. On April 10^th, the U.S. Environmental Protection Agency (“EPA”) set legally enforceable maximum contamination levels for six per- and polyfluoroalkyl substances (PFAS). Then on April 19^th, the EPA designated two PFAS compounds, PFOA and PFOS, as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”).

These actions come on the heels of my recent speaking engagement, “Five ‘Forever’ Fights: The Top 5 Coverage Issues for PFAS Claims”, which is the subject of a recent blog written by my colleague, Nancy Gutzler. One of the themes of the presentation was the evolving landscape of the science, liability, and insurance issues surrounding PFAS claims. While some states have introduced and/or adopted policies addressing PFAS and maximum water containment levels in drinking water, there are quite a few that have not. Therefore, I was not surprised when the EPA designated two PFAS compounds, PFOA and PFOS, as hazardous substances under CERCLA and set maximum contamination levels for others in drinking water.

The legally enforceable maximum contamination levels will force water providers to test for and take measures to reduce PFAS, while the hazardous substance designation imposes strict standards on the required reporting of PFOA and PFOS releases and grants a broad range of remedies to the EPA, including pursuing potentially responsible parties (“PRPs”) to fund or reimburse cleanup at Superfund sites. Notably, the EPA also released guidance designed to offer some protection to so-called passive receivers of PFAS, such as water systems sewer systems, municipal landfills, and farms; it isn’t clear how much protection the guidance will give to manufacturers, property owners, and other companies.

One theme driven home from the Perrin Conferences Environmental Risk and PFAS conference is that there is still no clear consensus on neither what constitutes a PFAS chemical nor which PFAS chemicals are actually harmful. The public discourse will often use PFAS generally, but parties seeking to bring claims for bodily injury and property damage will likely need to get specific about which chemical(s) caused which harms – a challenge given PFAS’s ubiquity.

What Now?

PFAS compounds have been used across many industries up and down the supply chain. Their ubiquity combined with the strength of the chemical bonds has earned them the nickname “forever chemicals”. While the EPA does not currently anticipate opening any new Superfund sites because of the new rule, it is easy to predict how PFAS contamination could complicate existing site cleanups, leading to higher costs and perhaps shifting PRPs liability shares. There is also a risk of site re-openings where PFAS contamination had not been previously considered. Again, the EPA notes that there are no planned site re-openings as of now, but PFOA and PFOS testing will likely be included in five-year monitoring plans going forward.

Who Might be Impacted?

All manner of businesses could be impacted by the EPA’s new rules. First and foremost, companies that used PFOA or PFOS in their manufacturing processes, even if use was discontinued decades ago, may be targeted for clean-up actions. In addition to the companies that manufactured PFOA and PFAS, manufacturers of products that used these chemicals – textiles, leather, paper, cosmetics, household cleaning products and food packaging to name a few – will also be in the spotlight. Such concerns carry over to anyone looking to acquire, sell, or invest in these companies and/or their properties.

How Can Companies Prepare?

A natural first step is to conduct internal research to understand which predecessors, subsidiaries, and legacy operations might be impacted by PFAS risks. Along the way, it would be prudent to collect any references to insurance policies, prior coverage litigation, financial records, claims files, or other records that might still exist that would help to piece together what insurance might respond. Insurance archaeologists can help if records are difficult to access or analyze. In the best-case scenario, it may be that the company never needs this information, but if a claim is filed, the company will be glad to have the insurance information readily on hand so they can notice the insurers and secure a defense.

PFAS claims are complex and will require large amounts of medical and exposure information to evaluate their value. Companies facing more than a few such claims will want to implement experienced claims handling procedures to streamline reporting to stakeholders and defense counsel.

Impact of Loper Bright Enterprises v. Raimondo

It is clear to me that PFAS regulations of some kind are here to stay and that restrictions on the use and disposal of them are likely to become more burdensome. Nevertheless, I’d be remiss not to mention the impact of the end of the Chevron doctrine from the Supreme Court’s recent Loper Bright decision. I’m neither a constitutional scholar nor an attorney, but one obvious outcome will be more litigation over environmental rules. The ambiguity surrounding PFAS chemicals seems especially ripe for challenge, and I would guess that further revisions to the existing rules will occur.

Conclusion

PFAS litigation is here to stay; in fact, it has already resulted in more than $10 billion in settlements! Reporting and remediation requirements continue to evolve at the state and national level and current methods for remediating PFAS are expensive. In addition to considering PFAS liabilities in M&A and other transactions, companies should be prepared to pursue available insurance to mitigate the cost of defending and potentially settling such claims.