In recent years, there has been no shortage of articles and conferences on the coming wave of PFAS litigation, and with good reason. Heightened scrutiny and tightening regulation by USEPA, the ever-growing AFFF MDL, and the likely listing of PFOA and PFOS as “hazardous substances” make the discussion warranted. Amidst all the explanations of what PFAS are and the litigation risks, one issue that certainly needs to be considered is the consequences of new CERCLA liabilities and “reopener” liabilities once PFOA and PFOS are designated hazardous substances.
When CERCLA was passed in 1980, it did not originally address the finality of settlements for the cleanup of contaminated sites. Some early settlements provided a complete release from all future CERCLA liability, but that changed within a few years. In the 1986 amendments to CERCLA, section 122(f)(6), 42 U.S.C. § 9622(f)(6)(1) permanently made the change to require “reopeners” in all but a few limited circumstances.
As a result of these “reopener” provisions, parties that have settled CERCLA claims with EPA have had to live with the risk that new claims may be asserted to address new cleanup demands arising from previously unknown site conditions or regulatory changes. Reopeners can be triggered in many ways, including new chemical testing and detection methods, new risk assessment standards, newly discovered waste, natural disasters, and perhaps most prominent, new and emerging chemicals of concern, such as PFAS.
Any of these changes may lead EPA to consider triggering the “reopener” provisions of a Consent Decree, and with PFOA and PFOS on track to be listed as CERCLA “hazardous substances” sometime in 2023, reopeners based on the presence of these substances seem increasingly inevitable. In instances where reopener liability is triggered at a site, private parties and insurance providers can take many steps to protect their interests and respond to the demands of reopener liabilities, such as:
- Review the Consent Decree and reopener language: Although required after the 1986 CERLCA revisions, reopener language is not the same in every CERCLA settlement document. In recent years, EPA has mandated that settling parties accept the standard reopener language in model administrative orders and consent decrees, but historically, there was more discretion in some instances. For example, in the 1980s and 1990s, there was somewhat more leeway to negotiate reopener provisions that were more limited in scope. This leaves the possibility that arguments to limit a party’s potential liability even when EPA alleges that a reopener has been triggered.
- Evaluate a “divisibility” defense with counsel: Among the important findings in Burlington Northern and Santa Fe Railway v. United States, 556 U.S. 599 (2009) was the finding that joint and several liability for conditions at an NPL site is not automatic. For reopeners, this means that a party may argue that the substances and conditions that give rise to a reopened liability claim are attributable to others. For instance, if the detection of certain PFAS, say PFOA, is the only reason for remedial action/feasibility study (and the costs associated with the RI/FS), then a party that did not contribute PFOA substances has the opportunity to prove its “innocence,” leaving others to bear the risk of new CERCLA liability. Therefore, knowing the substances or materials contributed to a site by a party has increased importance and should be determined as soon as the possibility of a reopener for PFAS, or any other substance for that matter, is being considered.
- Reengage the existing settling parties: Parties and counsel that took part in the original settlement at a contaminated site may have changed over time. That is particularly true for sites where the Consent Decree was entered in the 1980s and 1990s. Those still viable and active can use their historic knowledge to work together, forming an organized and efficient team for addressing reopened liability claims. For others, investigating corporate name changes, mergers, liability transfers by other means, and even bankruptcy status of prior settling parties becomes a critical part of dividing liabilities among responsible parties.
- Take the Time to Review Bankruptcy releases: Invariably, as time passes some of the settling parties to a CERCLA site will have filed for bankruptcy. For those settling parties that are discovered to have gone through bankruptcy, the terms of any bankruptcy discharge order must be evaluated. The discharge of environmental liabilities, which is often accomplished through the bankruptcy process, cannot be taken for granted. It is important to review the discharge orders to determine if the CERCLA reopener liability has been discharged.
- Preserving insurance coverage: Finally, if a responsible party has not exhausted its insurance coverage at a particular site for the occurrence, then timely notice to the carrier is an essential step to securing coverage that may help fund the party’s CERCLA liability. It is also possible that a new CERCLA claim and Special Notice Letter from USEPA triggered by a reopener event will, in many instances, trigger new coverage. Therefore, policies old and new should be reviewed for potential coverage.
The widespread use of PFAS over several decades, along with the increasing likelihood of PFOA and PFOS listing as CERCLA “hazardous substances,” makes it very likely that a run of reopeners to investigate and remediate these substances is almost here. Indeed, at some sites, USEPA is already asking that PFAS be investigated as part of ongoing investigations. Being mindful that reopeners for PFOA and PFOS remediation are likely coming, knowing what steps to take when a reopener notice comes will be critical and may lead to cost-saving measures for responsible parties as expensive remediation plans are required to be put in place.
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