Trichloroethylene

Trichloroethylene (TCE) is a volatile organic compound that was, after extensive study, identified as a human carcinogenic and a cause of several health problems. Much of the TCE used in the United States is as an intermediate chemical used in the manufacture of refrigerant solutions, while some is employed as a solvent for metals degreasing, in dry cleaning operations and as an ingredient in consumer products. The chemical evaporates easily but can stay in the soil and the groundwater for long periods. The Environmental Protection Agency (EPA) has promulgated a number of rules intended to address TCE contamination. TCE-related litigation may involve allegations of bodily injury. Insurance disputes may arise over the pollution exclusion, trigger of coverage, occurrences, and expected/intended.

Background

Along with its main applications of the vapor degreasing of metal parts and as an extraction solvent, TCE is used in adhesives, rug cleaning solutions, typewriter correction fluids, spot removers, paint strippers and other consumer products. TCE has been detected in ambient air, groundwater and drinking water. Metal-fabrication and cleaning plant employees are thought to be the most likely to experience exposure to high amounts of TCE, but fumes from -- or ingestion of -- contaminated groundwater may also expose people to TCE. The chemical can be measured in human exhaled breath, blood and urine. The human body will process TCE fairly quickly, but some of the chemical will accumulate in fat, and continued exposure makes it harder for the body to break down the chemical. Both the Environmental Protection Agency (EPA) and the International Agency for Research on Cancer (IARC) classify trichloroethylene as a human carcinogen, leading several chemical companies to develop substitutes for TCE.

Injuries and Damages

The EPA has noted that TCE is “carcinogenic to humans by all routes of exposure.” The health concerns raised by TCE exposure include its effects from both short and extended exposures on the developing fetus. High concentrations of TCE vapors can cause irritation to the respiratory system and skin, lightheadedness, drowsiness and headaches. Prolonged exposure has been implicated in liver, kidney, immune system and central nervous system problems.

A 2011 EPA document noted that there was “’an extensive body of evidence’ on the neurological effects of TCE exposure in humans, including nerve function, psychomotor effects, visual and auditory effects, cognition, memory, headaches and dizziness. Studies involving experiments with rats and evidence from humans have shown that TCE can play a role in the development of Parkinson’s disease.” [TOXICOLOGICAL REVIEW OF TRICHLOROETHYLENE (EPA/635/R-09/011F) (CAS No. 79-01-6)]

Legislation and Regulation

The EPA has issued several rules about TCE use. In January 2017, the EPA proposed banning TCE use in vapor degreasing, based on a 2014 chemical risk assessment done under the Toxic Substances Control Act (TSCA). In December 2016 the EPA sought a ban on certain uses of TCE after assessing the health risks of employing TCE as an aerosol degreaser and spot cleaner. Also in 2016, the EPA placed TCE on the list of chemicals to be evaluated first for “other remaining uses” under the amended TSCA. Following that, the EPA issued a “Significant New Use Rule” mandating that the EPA be notified before TCE was used in certain new consumer products, a rule intended to give the EPA a chance to assess any effort to resume or begin certain new consumer uses of TCE and take action to prohibit or limit those uses if indicated.

Despite these proposed bans, as of October 2019, none of them have been implemented. Actions by the Trump Administration have led the delay and even shelving the bans against TCE. A new risk assessment ordered in June 2018 on the effects of TCE will further postpone any ban for years.

In 2019, Congress proposed the Veterans Exposed to Toxic PFAS Act. This bill would allow veterans who were exposed to toxic chemicals, including TCE, to be eligible for disability payments and medical treatments. The bill is currently in committee; it was introduced in the previous session of Congress and failed in committee.

Liability and Insurance

Coverage issues raised by TCE claims include trigger of coverage, number of occurrences, expected/intended, and the pollution exclusion.

Associated Aviation Underwriters v. Wood
In Associated Aviation Underwriters v. Wood, 209 Ariz. 137 (Az. App. Ct. Sept. 29, 2004) 1,600 plaintiffs sued Hughes Aircraft, alleging injuries from TCE. Hughes had stored TCE in unlined vats that leaked. Hughes sued the City of Tucson (“City”) and the Tucson Airport Authority (“TAA”). The claims were submitted to insurers. The claimants entered into an agreement with the City and the TAA for $35 million; the TAA and the City assigned the rights to their policies to the claimants. The Court found that a continuous trigger insurance coverage theory was applicable to the claims, and that the agreement entered into by the claimants with the City and TAA foreclosed arguments about whether the claimants had sustained bodily injuries.

Keystone Consolidated Industries v. Employers Ins. Co. of Wausau
The pollution exclusion was at issue in Keystone Consolidated Industries v. Employers Ins. Co. of Wausau, 470 F. Supp. 2d 873 (C.D. Ill. Jan. 24, 2007). Keystone’s pre-1972 policies did not contain a pollution exclusion. The Court held that even if it could conclude that the company intended to release TCE into the environment, it was not convinced that the company’s pre-1972 knowledge of the risks that TCE posed to humans translated into foreseeable knowledge of TCE’s capacity to contaminate the environment. While employees knew that TCE posed certain dangers to people, that knowledge was insufficient to conclude as a matter of law that the company “knew or should have known that dumping TCE would result in environmental contamination of its property; i.e., that its injury was reasonably foreseeable such that it was not unexpected or intended and therefore not an occurrence under the policy.” The Court went on to hold that for the policies which contained qualified pollution exclusions, there was no coverage if the company intentionally released contaminants into the environment or if spills were a routine and ordinary part of their business. The Court held that issues of fact precluded summary judgment on this issue for one site but granted the insurer summary judgment on two other sites, finding that the insured bore the burden of establishing an exception to the exclusion, and that the insured had not provided any evidence of sudden and accidental releases.

Cadet Manufacturing Co. v. American Insurance Company
In Cadet Manufacturing Co. v. American Insurance Company, No. C04-5411, 2006 U.S. Dist. LEXIS 51241 (W.D. Wash. July 26, 2006), Cadet’s insurer Granite State asserted that there was no property damage during its policy periods because the groundwater contamination from TCE had achieved a steady state by 1977, prior to the issuance of its policies. Granite State argued that the term “property damage” required the creation of damages during the policy period, not just the existence of damaged property. The Court held that the language of the policy was ambiguous and resolved the ambiguity in favor of the insured, finding property damage. It noted that an additional basis for finding coverage was Washington state’s adoption of a “continuous trigger” theory with respect to insurance coverage. The Court also held that testimony of employees that property damage was unintended, and the fact that the adverse effects of TCE were generally unknown at the time, meant that the event was not expected or intended from the standpoint of the insured.

Litigation

TCE litigation may feature claims of bodily injury related to exposure. In 2016, a Missouri federal court jury awarded $7.6 million in compensatory damages and $13 million in punitive damages to a plaintiff who alleged that she developed an autoimmune disorder from exposure to TCE waste illegally dumped near her home by a ball bearing manufacturer, although the punitive award was overturned in April 2018. [Kirk v. Schaeffler Group USA Inc., No. 3:13-cv-05032 (W.D. Mo. March 22, 2016)]. Litigation may also involve claims of contamination of groundwater sources by TCE runoff and vapors, and TCE-caused deterioration in property values.

Most recent is the case around the water contamination in Orange County, CA. Complaints have been filed with the court regarding negligence on the part of several companies in the contamination of water systems with chemicals such as TCE. No decision has been made as of October 2019.

Future Outlook

Some industry observers are considering whether the EPA will be pressured to issue comprehensive national standards relating to TCE exposure and the cleanup of contaminated sites. While the EPA currently limits TCE concentrations in drinking water, some states have adopted stricter standards. Also, environmental contamination experts note that the extent to which TCE rises out of groundwater and soil as a vapor has been under examination and may lead to more stringent clean-up requirements. Insurers need to monitor developments with respect to the health effects of TCE and the possibility of additional clean-up costs at sites that have been previously addressed.

In the News

2017

• Trump administration delays bans of toxic solvents - Cheryl Hogue, Chemical and Engineering News (12/20/2017)
  

  The Trump administration is delaying the Environmental Protection Agency’s plans to ban high-risk uses of three hazardous solvents. Those plans took shape in the waning days of the Obama administration. That’s when EPA proposed the ban on methylene chloride and N-methylpyrrolidine (NMP) in paint strippers and trichloroethylene (TCE) in aerosol spray degreasers, spot-cleaning agents in dry cleaning, and vapor degreasing. These uses put people at risk for cancer and neurodevelopmental effects, the agency determined. . . . If finalized, the restrictions would mark the first time EPA has prohibited uses of a commercial chemical in more than a quarter-century. In addition, they would be the first such regulations since Congress amended the Toxic Substances Control Act (TSCA) in 2016 to boost EPA’s authority to control high-risk uses of chemicals. . . . However, the Trump administration on Dec. 14 quietly said it will indefinitely postpone finalizing the planned ban of TCE uses and, at some unspecified time in the future, recast the proposed regulations for methylene chloride and NMP. Such changes could include withdrawing the proposals on methylene chloride and NMP, leaving the two chemicals unregulated.

   

2016

• US EPA Issues Significant New Use Rule for TCE (trichloroethylene) in Consumer Products - Stephen A. Owens and Reed W. Sirak, The National Law Review (04/26/2016)
  On April 8, 2016, US EPA issued a final significant new use rule (“SNUR”) for trichloroethylene (“TCE”). The TCE SNUR requires anyone manufacturing, importing or processing TCE for use in a consumer product to notify EPA at least 90 days before commencing any such manufacturing, importation or processing.

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