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Proposed EPA Superfund rulemaking on PFAS chemicals could spell major liability issues for insurers, businesses, and property owners

8/10/23

By: Kevin G. Kenneally and David M. Harding

The EPA is currently seeking public comment on a proposed rule to expand the hazardous substances designation to certain per- and polyfluoroalkyl substances (PFAS) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as “Superfund.” This CERCLA designation, and potential resulting EPA funding for remediation, could mark a new wave of Superfund enforcement and litigation against corporations and insurers reminiscent of that experienced in the 1980s and early 1990s. Environmental advocates allege a link between PFAS “forever chemicals” and a variety of harmful health effects from PFAS contamination in water systems, air, soil, and food sources. The Administration advocates a governmental response to the alleged contamination as well as enforcement actions against PFAS manufacturers, users, and other Potentially Responsible Parties (PRPs) and their insurers to fund cleanup of property, groundwater, rivers, and streams. This proposal follows a recent increase in lawsuits involving PFAS contamination and exposure across the country and recent multi-billion-dollar settlements by PFAS makers involving water suppliers and water districts. 

Of interest to corporations and insurers will be whether funding the cleanup costs will follow the pattern of the earlier Superfund litigation, widely viewed as unduly expensive and time consuming to resolve. The original rulemaking under CERCLA had a famously broad liability scheme that imposed retroactive strict liability, often joint-and-several liability, upon categories of polluters and innocent parties with ties to hazardous waste sites. 

In the proposed expansion under CERCLA, a key question posed for comment to the EPA is whether all PFAS-related substances can, or should, be categorized as a singular group or category. This categorical concentration, if adopted, could lead to a designation of all PFAS and PFAS-based derivatives as hazardous substances under CERCLA, opening the door for potential liability for entities guilty of or in privity with those responsible for creating, distributing, or releasing PFAS. Public comment on the expanded rule was extended to August 11, 2023.   

PFAS are characterized by their synthetic and long-lasting nature and have received heightened media attention over the last several months because of large settlements in litigation brought by water districts, consolidated in federal court in South Carolina. PFAS are man-made chemicals that have been used widely in consumer products and industrial processes for the last 80 years.  

The EPA has the authority to identify parties that they believe are responsible for releasing hazardous substances into the environment. These PRPs are financially relied upon as a restorative funding source for Superfund sites to either remove a hazard or remediate it. Given PFAS’s universal presence in our environment, the EPA seeks to utilize powers under CERCLA, if the proposed rule is adopted, to remediate newly designated PFAS Superfund sites. Expenses for the remediation could be recovered from PRPs, creating significant financial liability for any entity manufacturing, handling, distributing, or otherwise using PFAS or PFAS-containing products, and the attendant costly environmental litigation that characterized prior CERCLA litigation.   

Some businesses and municipalities have already incurred expense for remediation and treatment systems as a way to mitigate risk and potential loss, which plaintiffs may seek as damages in litigation. Reverse osmosis, activated carbon, ion exchange, and high-pressure membranes are just some of the processes and technologies being utilized to address PFAS contamination. The legal liability facing those who may be responsible for PFAS exposure is not yet addressed for most sites. 

Much of the ongoing litigation has focused on specific products or industries, such as the Aqueous Film-Forming Foam Multi-District Litigation (AFFF MDL No. 2873), pending in Charleston, S.C. involving fire-fighting materials. It is estimated that there are currently over 8,000 PFAS-related cases being litigated in the United States, but the cleanup of PFAS-affected sites could vastly expand the volume of cases. Further, depending on the venue and jurisdiction, inclusion of a broad PFAS category on the hazardous substance list could create a substantial increase in personal injury suits related to contaminated groundwater. Commentators are watching these developments because such CERCLA rule changes by the EPA could lead to litigation exceeding that of the Superfund litigation of the last century.  

For more information, please contact Kevin G. Kenneally (KKenneally@FMGLaw.com), David M. Harding (David.Harding@FMGLaw.com), or members of the FMG PFAS Litigation Team.