There are a number of stories in the news right now centering on the discovery of PFAS chemicals in manufactured items or in groundwater near industrial sites. There is also shocking information about microplastics found in the seafood we consume and cancer-causing substances in household weed killer. While the EPA is aware that these substances may be harmful to people, animals, and the environment, and has developed dozens of regulations to address some toxic substances, we still face the reality that we haven’t been able to fully measure the impact of these materials, nor do we know what it will take to effectively clean them up.

When a pollution condition occurs, the term “action levels” is often used to represent the allowable concentration of a contaminant in the environment. This standard determines how and to what extent the area should be cleaned up or monitored, taking into account the chemical makeup of the substance and how it must be handled. But contaminants do not all behave the same way in the environment, and with some of these newer substances, this creates a big challenge in regulating them. Some, such as volatile organic compounds or petroleum hydrocarbons, can break down within a reasonable amount of time (i.e., less than an average human life-span) through a process generally known as “natural attenuation.” Others persist for much longer, perhaps hundreds or thousands of years. Because “forever chemicals” such as PFAS are extremely persistent, widely used, and have been unregulated for decades, they are found in many more places than just near the facilities that have manufactured or utilized them in their operations. Additionally, PFAS cannot be removed by wastewater treatment facilities, so these chemicals have found their way into the agricultural products from farms that utilize sludge for fertilizing their fields. While this is undesirable in plant products, it is even worse in animals that bio-accumulate the chemicals in their eggs, milk, or meat.

Another challenge in regulating new chemicals is that unlike other countries, the U.S. sets a very high bar for proof of harm, which must be demonstrated before regulatory action can be taken. It is this position that has led to many substances being banned or phased out in other countries while they are still widely used in the United States. We may have some robust systems in place for compliance and enforcement, but it often takes an extremely long time for a law or regulation to even be passed.

Although the EPA has an extremely stringent process to examine contaminants and is arguably the governing agency to set pollution standards, they do not review and handle all environmental matters. Many concerns are kicked over to other federal, tribal, state, or local agencies. Topics ranging from landfills and nuclear waste, to wetlands and wildlife concerns are often referred to state environmental agencies or health departments.

What does all of this mean for environmental insurance?

The discovery of harmful substances and their effects on the world is not a new concern. The EPA and other agencies have a number of pollution issues they are analyzing and have worked to create regulations for. Establishing standards for these contaminants is a complicated process and one that will continue to develop as people become even more environmentally conscious.

Our environmental carriers have varying appetites when it comes to these emerging contaminants of concern. Some are applying a PFAS exclusion on Site Pollution policies or offering coverage only on a limited basis while others are actively writing risks that have these exposures, mostly on a case-by-case basis. Many of our markets are closely watching issues surrounding microplastics, glyphosate, and hormones in drinking water, from chemical, pharmaceutical, and agricultural companies. Until there is a clearer picture on when standards will be enacted and what concentrations will require remediation, most underwriters will take a conservative approach to writing these risks. We will continue to seek information on these substances and examine how emerging contaminants are changing the environmental insurance marketplace.