PFAS: 'forever chemicals' a mounting litigation risk for businesses

Businesses should be aware of the growing issue and assess the risks involved for their operation.  Increased regulatory focus and legislative restrictions have already been imposed in some jurisdictions and are on the horizon for many more and business need to act now to help anticipate and manage compliance risks and potential forever chemicals litigation.

What are forever chemicals?

‘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 – earlier this year, the European Chemicals Agency described how they are “very persistent in the environment”. Some forms can take more than 1000 years to degrade.

PFAS is ubiquitous. It is used in the manufacture of a great range of consumer products, from beauty and healthcare products, to clothing, semiconductors, medical equipment in food and drinks packaging, in cleaning chemicals and in firefighting foam among other things. Different chemicals serve different purposes – depending on the chemical and the product, they have a wide range of uses, including making products resistant to oil, water, or heat, for example. However, a growing number of stakeholders are expressing their concern about the impact they are having on people and the natural world.

PFAS regulations in the EU

In the EU, policymakers are moving to tighten the regulation of PFAS.

The EU chemicals strategy foresees the “phasing out [of] all PFASs, allowing their use only where they are proven to be irreplaceable and essential to society”. The concept of essential use is yet to be defined, but this is expected to happen in the course of the proposed revision of the EU regulation on the registration, evaluation, authorisation and restriction of chemicals (REACH).

REACH is the main EU law protecting human health and the environment from the risks that can be posed by chemicals. The European Commission previously consulted on reforms to the legislation and set out a roadmap for new restrictions. The reforms are expected to be delivered with the support of the European Chemicals Agency (ECHA).

There is already a move to restrict the use of PFAS in certain contexts.

In February 2022, for example, the ECHA proposed an EU-wide ban on the placing on the market, use and formulation of all PFAS in firefighting foams. It said at the time that the move would be justified because “the risks posed by PFASs are currently not adequately controlled and releases should be minimised”.

In addition, the European Commission has also proposed adding certain PFAS to its existing lists of water pollutants, which would tighten regulation in this area.

However, some REACH countries are seeking broader action. Earlier this year, five countries – Netherlands, Germany, Denmark, Sweden and Norway – proposed an outright ban on PFAS. Under the proposal, the manufacture, use and placing on the EU market of around 10,000 PFAS would be prohibited. It is likely to be 2026 before any such legislation took effect, with a short 18-month transition period envisaged for some sectors – though others, like businesses that manufacture components for medical equipment, and parts of the semiconductor industry, could be given 12 years to comply.

In the meantime, the five countries are seeking to encourage industry to use alternative substances to PFAS, and have set out their thinking in that regard.

Industry bodies, however, have been pushing back against the prospect of a blanket ban.

The German Association of the Automotive Industry (VDA), for example, believes the use of PFAS “will remain essential” in the automotive industry as it seeks to meet the climate change and sustainability objectives of the European Green Deal. In a July 2021 position paper, it said: “With the responsible use of PFAS in the automotive industry, their release into the environment can be very largely eliminated throughout the entire vehicle lifecycle.”

Similarly, Plastics Europe has said “a restriction on all PFAS would be harmful to the EU’s overarching environmental goals”. It wants an exception from any ban to be made for fluoropolymers, which it said have an important role to play in enabling a transition to the use of hydrogen-based solutions. It said: “Fluoropolymers have been demonstrated to meet the OECD’s criteria for ‘polymers of low concern,’ as they do not present significant toxicity concerns and cannot degrade into other PFAS under normal conditions of use”.

The position in the UK

Since the Brexit transition period ended, Britain has operated its own version of the REACH regime, compliance with which is overseen by the Health and Safety Executive (HSE).

Currently, there are just two UK REACH restrictions of PFAS in force within Britain, but in a report published in April, the HSE, in tandem with the Environment Agency, said further restrictions should be considered.

Specifically, the regulators said (192-page / 3MB PDF) there is a case for limiting the use of PFAS-containing foams used by firefighters, and said further restrictions on the use of PFAS in textiles, furniture, and cleaning products should also be considered.

The report forms part of a regulatory management options analysis (RMOA) that provides an assessment of the likely health and environmental risks associated with the use of a substance or group of substances, alongside the existing regulatory framework and any specific controls relating to them. The analysis considers existing laws and how PFAS substances are being managed around the world, including in Europe, Asia Pacific, and the US.

In its ‘plan for water’, which sets out the intended approach to water management in England, the UK government confirmed that it would develop a UK REACH restriction proposal on PFAS in firefighting foams this year and take forward work to prepare for further restrictions on other uses of PFAS, including consumer products such as textiles, cleaning products, paints, and varnishes.

Moving away from PFAS is not a simple exercise. In their report, the HSE and Environment Agency cautioned that while “there do appear to be potential alternatives to PFAS for many uses”, there needs to be “more performance and socioeconomic information” to be sure that “alternatives are technically and economically feasible and are able to meet performance standards”. They added that “hazard information for alternatives also needs further investigation to avoid regrettable substitution”.

The position in Australia

PFAS is increasingly regulated in Australia. To-date, regulation has focused on the identification and remediation of PFAS-impacted sites with a PFAS national environmental management plan being agreed and implemented across all Australian jurisdictions. This sets a nationally consistent framework for the investigation, risk assessment and remediation and management of PFAS-impacted sites. In addition, almost every state and territory in Australia has imposed limits or bans on the type and amount of PFAS which may be used in firefighting foams, in recognition of the fact that use in firefighting foam is a major cause of PFAS contamination.

A US and Australian led wave of litigation that is spreading

In the US and Australia, the trend for increasing litigation relating to PFAS chemicals shows no sign of abating. 

Initial actions have focused on the damage resulting from PFAS contamination.

In the US, several significant litigations brought by states against manufacturers claiming for clean-up costs and damages.

In Australia, there have been a number of successful class actions brought by landholders impacted by PFAS emanating from defence sites which used PFAS containing firefighting foam.

More recently PFAS litigation has widened beyond contamination to include actions alleging misrepresentation, fraud, greenwashing and personal injury, among other examples.

As the list of alleged grounds of action lengthens, so too does the identity of the defendants. Originally targeting manufacturers or other persons responsible for PFAS contamination, litigation is increasingly extending further down the supply chain and including, for example, retailers of PFAS-containing items, food outlets using PFAS-containing packaging for their food and drink products, and producers of PFAS-containing cosmetics.

There have been some very significant settlements, including the 2017 $617 million settlement between DuPont and plaintiffs from West Virginia and North Carolina, and the 2021 announcement that three former DuPont companies had agreed to set aside $4 billion under a cost sharing plan and an escrow account “to be used to support and manage potential future legacy PFAS liabilities arising out of pre-July 1 2015 conduct”. Recently, it was reported that DuPont, Chemours and Corteva would pay a $1.2bn settlement in respect of water contamination claims in the US, and that 3M was also considering a separate settlement in another case.

Regulatory interest is increasing too.

The US Environmental Protection Agency’s (EPA’s) 2021 strategic roadmap sets out its whole-of-agency approach to addressing PFAS, focused on three central directives: research, restrict and remediate. These involve investing in research, development, and innovation to increase understanding of PFAS exposures, toxicities, human health and ecological effects as well as effective interventions.

In April 2023, the US EPA also issued an ‘advance notice of proposed rulemaking’ asking the public for input regarding potential future hazardous substance designations of PFAS under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). This request for input and information follows EPA’s September 2022 proposed rule to designate two PFAS – perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), and their salts and structural isomers – as hazardous substances under CERCLA. 

In addition, in March 2023, the US EPA proposed the establishment of legally enforceable levels for six PFAS known to materialise in drinking water. Some states across the US already limit the levels of certain PFAS chemicals in drinking water, such as California, as well as prohibiting their use in, for example, food packaging.

Regulatory interest in the potential effects of PFAS on both the environment and human health seems likely to increase and with that the potential for litigation will also increase, including from shareholders and other investors. 

Actions for businesses

Businesses should take stock of the overall litigation environment and assess their potential legal risks as PFAS litigation grows.

Other actions to consider include:

• ensuring all firefighting foams used are PFAS-free;
• mapping the supply chain with regard to PFAS presence, to understand risk exposure;
• integrating PFAS risk assessments into due diligence programmes when involved in commercial transactions, such as mergers and acquisitions;
• reviewing insurance policies with regard to PFAS related risks and liabilities;
• planning how to respond to shareholders – a group of investors wrote to chemical companies in 2022 asking them to phase out and substitute PFAS chemicals and warning of the financial risks associated with litigation;
• keeping abreast of regulatory change to existing rules – for example, environmental permits may soon include PFAS limits;
• anticipating new enforcement and compliance obligations involving the manufacture and use of PFAS and PFAS-containing products;
• pre-emptively establishing contractual cost-sharing arrangements for future anticipated PFAS litigation.