Is Your Business at Risk? PFAS Litigation and Your Business Survival
Per- and polyfluoroalkyl substances (PFAS), aka “forever chemicals,” have become a critical issue for businesses worldwide. These chemicals bioaccumulate in the environment and living beings and persist for a long time.
While PFAS have been used in various products, from firefighting foams to water-resistant clothing, their long-lasting effects pose serious health risks and environmental concerns. Consequently, PFAS-related lawsuits are spiking, targeting manufacturers and businesses indirectly exposed to PFAS through their supply chains.
As litigation ramps up, understanding the implications for your business is essential. Your business could be at risk, even if you don’t directly handle these chemicals. Any contamination in materials, processes, or products could put you in the crosshairs. Staying informed about PFAS litigation can help you protect your business and prepare for regulatory changes.
Understanding the PFAS Threat
Studies have linked PFAS exposure to serious health problems. These include immune deficiency, liver cancer, and thyroid abnormalities. This has prompted regulatory agencies, like the Environmental Protection Agency (EPA), to act.
The EPA only recently proposed stricter drinking water standards for certain types of PFAS. This reflects a growing trend towards aggressive regulation and potential bans on PFAS. These changes in the regulatory landscape are impacting businesses across various industries. A 2023 Reuters article emphasized that companies need to be aware of these shifting regulations and proactively address potential PFAS risks.
For instance, there have been instances involving legal action against brands claiming their products to be environmentally safe, natural, or healthy. This makes the situation challenging if a company has adequate resources to research or create the safest products.
Who’s at Risk From PFAS Litigation?
PFAS litigation is expanding rapidly, impacting industries beyond those typically associated with PFAS production. The most obvious targets are the manufacturers of firefighting foam and industrial chemicals. Several manufacturers, including 3M, Chemours, and DuPont, are already facing prosecution thanks to the AFFF lawsuit. However, the legal focus is broadening.
If your business uses PFAS in its operations, even if you don’t produce them, you could face legal challenges. The financial scope of PFAS-related lawsuits now reaches billions, with major corporations and smaller businesses facing potentially massive settlements. Just last month, TruLaw revealed Carrier Global Corp signed three settlement agreements worth $615 million to settle some AFFF lawsuits. The settlement will cover AFFF MDL claims in South Carolina.
Moreover, the trend shows no sign of slowing. As awareness grows and scientific research advances, more communities and regulators are pursuing legal action against companies for PFAS-related pollution. The ripple effects of these lawsuits can be substantial. It can extend to industries relying on water-resistant coatings, packaging, and other PFAS-laden materials.
Assessing Your Business’s PFAS Risk Exposure
Understanding your business’s exposure to PFAS risk requires assessing your operations and supply chain. PFAS chemicals are often present in textiles, polymer coatings, and food packaging.
Recently, Common Dreams reports that an attorney warned the plastics industry about the impending corporate civil PFAS litigation. Some of this litigation has already begun, and according to reports, it could lead to astronomical settlements. On top of this, the Public Employees for Environmental Responsibility (PEER) is demanding the EPA to rectify bogus reports in its 2023 agency publication.
Similarly, Insurance Business magazine suggests reviewing past commercial general liability (CGL) insurance policies to determine if you have coverage for PFAS-related claims. Usually, older agreements, like those negotiated before the Broad Form Pollution Exclusion was enacted during the 1980s, might cover PFAS damages. Current policies don’t cover due to pollution or PFAS-associated exemptions.
You can also invest in a pollution liability policy as standalone coverage. These two policies are your only hope for any PFAS-related litigation coverage. You should also audit your supply chain to determine if any materials, processes, or suppliers are PFAS-contaminated. This process includes reviewing contracts and communicating with suppliers to identify potential PFAS sources and mitigate risks. In cases of contamination, legal claims may arise.
Lawsuits involving such claims disrupt companies across industries, with significant financial repercussions. Awareness of these trends and understanding your supply chain can help you take proactive measures to minimize exposure.
How PFAS Litigation Can Impact Business Survival?
The financial impact of PFAS litigation extends far beyond legal fees. If PFAS contamination is found near your property, its value could drop. Customer trust might suffer if your products contain these chemicals. Supply chain partners might cut ties to avoid liability risks. Costs related to compliance, insurance premiums, and cleanup efforts can strain small and medium-sized businesses.
Insurance coverage for PFAS-related liabilities is becoming harder to secure as insurers recognize the scale of the risk. In some cases, premiums have increased or coverage has been excluded altogether for PFAS claims, leaving companies to bear the burden alone. These increased costs can harm overall business performance and shareholder value.
The PFAS contamination-tied environmental liability has already driven up the business costs for many companies. Business owners should understand the potential burden and proactively protect their companies’ financial health as legal and fiscal pressures mount.
Steps to Protect Your Business
A key approach to minimizing PFAS-related risks involves building a resilient business strategy including regular monitoring, testing, and strong supply chain oversight. To do this effectively, it’s important to:
- Evaluate your current exposure
- Update your contracts to address PFAS liability
- Seek legal counsel for a compliance review
- Report any PFAS contamination to the EPA
- Plan for alternative materials or processes
Consider working with environmental consultants to develop a PFAS management plan. They can help identify risks you might have missed. These factors can strengthen your defense against potential PFAS-related lawsuits and reduce the likelihood of financial strain from unexpected contamination.
Frequently Asked Questions
Q1. If my business is facing a PFAS lawsuit, what should I do?
First and foremost, don’t panic! Seek legal counsel immediately. An experienced environmental lawyer can help you understand your rights, assess your options, and manage the complexities of PFAS litigation.
Q2. What are the potential penalties for companies violating PFAS regulations?
The penalties can vary depending on the specific violation and the governing regulations. Depending on the case, they can include fines, mandatory cleanup costs, and criminal charges. Ensure you follow all applicable PFAS regulations to avoid these severe consequences.
Q3. Are there any government resources available to help businesses address PFAS risks?
Yes, several government agencies offer resources and guidance on PFAS. The EPA provides information on PFAS regulations, health effects, and risk management strategies. You can also find helpful resources from your state’s environmental agency.
PFAS-related risks are increasingly threatening businesses across various sectors, financially and legally. Regulations are becoming stricter, and public awareness is growing. As PFAS litigation intensifies and regulations tighten, understanding your risk exposure and taking proactive measures to reduce it are essential. It just might help your company survive.
Stay informed about PFAS regulations, as they often differ by state. Your business strategy must adapt to these evolving requirements. In the face of rising PFAS litigation and regulatory scrutiny, immediate action is key. Remember, addressing PFAS risks today protects your business tomorrow. Take these steps seriously, your company’s future might depend on it.
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