The Martha’s Vineyard Airport is looking at hiring the New Jersey–based consulting firm R&B Consulting to investigate possible opportunities for reaching a settlement on decades-old liability insurance related to per- and polyfluoroalkyl substances (PFAS).
According to John Malanchuck, partner at Eisenstein Malanchuck LLP, his law firm has worked with environmental consulting firms for many years to reach settlements on general liability insurance policies, and reimburse entities that have been financially affected by pollution. The consulting firm and the law firm work together on environmental insurance negotiations for clients.
Prior to the introduction of pollution exclusions after 1972, Malanchuck said, general liability policies included coverage for damages caused by pollution.
In the case of Martha’s Vineyard Airport, Malanchuck said that in order to find grounds to file a claim, the airport would need to document when the first aqueous film-forming foam concentrates (AFFF) were used in aircraft firefighting foam.
The foam has been attributed as the cause of localized spread of PFAS through groundwater and into private wells, after an in-depth investigation was conducted by engineering and consulting firm Tetra Tech in 2018 on behalf of the airport.
“If you can document when the first use of foams were, and if it was before 1972, you can probably make a claim,” Malanchuck said.
The first step toward a possible claim and settlement, Malanchuck said, will be to dig through old meeting minutes and financial documents to determine what insurance companies were being retained by the airport, and under what coverage.
“We have to find your old insurance policies that are nearly 50 years old. It’s not always that easy, but being an airport, there are only so many companies that write airport insurance, so that should narrow the search a bit,” Malanchuck said. “We typically start with the board of directors’ meeting minutes from ’72 and work our way backward, looking for clues to who you bought insurance from.”
If Malanchuck and his team fail to find a sufficient basis to make a claim, he said, the airport would be the first to know, as the work is being done on the law firm and the consulting firm’s dollar.
If they do find enough information to make a case, the airport would not pay “a single cent” until the settlement is issued and the money is in hand. At that point, Malanchuck said, his team would ask the airport to pay 35 percent of the overall collection for services rendered.
Malanchuck stressed that although his team is a law firm, this case would be seen as a “financial negotiation, not a litigation.”
“Yes, we are a law firm, but we don’t litigate these cases. Pretty quickly after we get our first meeting together, we start to set the floor and set the ceiling on both sides of the table, and then ratchet things down until we find a price that is an acceptable offer of settlement for you and it’s an amount of money that the insurance companies are willing to pay,” he said.
According to Malanchuck, his firm has worked with O’Hare International Airport and Midway Airport in Chicago, and he also did a pollution settlement case in New Jersey for the Monmouth County Airport, where a separate business had been manufacturing electronics equipment and had “all sorts of pollution problems.”
“We ended up with a fairly nice settlement,” he added.
According to Malanchuck, it would take about six months to gather the information to support and file the claim, and around 18 months to work through the negotiation process, finalize the claim, and get the airport the money.
The amount of money the airport could receive is based on the amount of liability, and the quality of insurance purchased by the airport before 1972.
“If you bought insurance on the cheap, and you have insolvent carriers, there may be gaps in your coverage, and those are not going to be paying you any claims,” Malanchuck said.
In order to make filing a claim worthwhile for the consultants and the airport, Malanchuck said, he usually looks for the possibility of at least $1 million in recovery money, “so if you pay us $350,000 out of that, you still have $650,000 left over.”
He said that any and all environmental issues that the airport has had, or anticipates having in the future, should be included in the claim submission.
Airport director Geoff Freeman said he is going to work on going back in ledger entries and other financial archives to locate any information pertinent to the claim.
In other business, Freeman said general air traffic in October was up 16 percent compared with 2019, which he said is “quite an impressive number” given the ongoing pandemic. He added that that number was “substantially higher” than 2017 and 2018 as well, but noted that general aviation traffic includes private aircraft coming and going from the airport.
He attributed the increased numbers to good weather conditions, and an increase in people living here year-round and commuting to their workplaces off-Island on a regular basis.
On the commercial and passenger side of airport operations, Freeman said, traffic in October was down 59 percent, compared with last year.