PFAS: cost of ‘forever chemicals’ remediation highlighted by US utility

The information emerged during a call hosted by executives of Essential Utilities with investors following publication of the company’s financial results for the second quarter of 2023.

‘Forever chemicals’ is the colloquial name given to the class of approximately 10,000 chemicals that are more formally known as poly- and perfluoroalkyl substances (PFAS). The colloquialism derives from the fact that PFAS degrade very slowly.

Essential Utilities operates across eight US states. Christopher Franklin, the company chairman, president and chief executive, said he expects the company’s PFAS remediation work mostly to be “fairly straightforward” to undertake but “expensive”. He said he expects the remediation work to be “concentrated in states like New Jersey, some in Pennsylvania, heavily in North Carolina” and that therefore the cost of that work would be borne more heavily by customers in those states.

Franklin said, however, that neither Essential Utilities nor its customers “should bear the cost of this cleanup”.

“We have initiated litigation against the polluters and have applied for federal and state grants and loans where available,” Franklin said.

On the investor call, Franklin alluded to forthcoming changes to US federal regulations on PFAS which are in the “regulatory process” currently. He said “final determinations on some of these things” are expected in the first quarter of 2024, but that Essential Utilities has estimated that most of the remediation work it will need to undertake to comply with the new regulations will need to be completed “between now and 2027”.

Franklin said that the company believes PFAS regulation will be “a catalyst to drive further consolidation” in the long term.

Experts at Pinsent Masons have previously commented on the need for businesses across sectors and throughout supply chains to consider the risk they are exposed to from the growing scrutiny of ‘forever chemicals’ amidst increasing commentary about the potential harmful effects and the ongoing drive to restrict their use.

Katie Hancock of Pinsent Masons said: “PFAS-related litigation is on the rise in the US. PFAS are reported to have been found in the soil and water supply across the US. Essential Utilities’ announcement is the latest step in the company's efforts 'to remediate PFAS in aqua systems in the United States'. US businesses involved with the use of PFAS are likely to face more developments of this nature in the coming months and years.”

“Regulators across the world are tightening restrictions on the use of PFAS. For example, the EU is currently grappling with how to restrict the use of PFAS without decimating the many supply chains from which they cannot easily be removed,” she said.

“As concerns about PFAS become more widely publicised, businesses manufacturing and using these chemicals should be aware of the risks of litigation in the UK, which is likely to be fuelled by the increasing use of the group claims framework, supported by a rapidly growing litigation funding industry. Steps should be taken now to mitigate these risks,” Hancock said.

Jacqueline Harris, litigation expert at Pinsent Masons, urged regulators to adopt a proportionate and risk-based approach to any new regulation.

Harris said: “Whilst some may prefer to use the carrot rather than the stick to encourage change – relying on consumer pressure – for others, regulation presents the only route to a level playing field. Any new laws in this area, however, will have to be fully thought through to avoid unforeseen consequences, particularly as knowledge of PFAS chemicals progresses, as well as undue burdens on those least able to shoulder them. All stakeholders must keep up to date with developments in this area and ensure their views are heard.”

Editor's note 28/06/24: This article was amended after publication to clarify Katie Hancock's comments.