Legal development

The end of 'forever chemicals'?

19 July 2023

In this briefing we look at the growing concerns about per-and poly fluoroalkyl substances (PFAS), some of the associated global regulatory and litigation developments, and the impact of PFAS contamination on the Built Environment.

Background

PFASs are a group of thousands of mainly man-made substances.¹Their durability and useful properties such as water repellence and grease resistance means that they have been widely used since the 1950s in the manufacture of many domestic and industrial products, including:

Textile and fabric treatments;
Food contact materials and packaging, including consumer cookware;
Skin creams and cosmetics;
Firefighting foams;²
Pesticides and pharmaceuticals.³

In the last two decades, PFASs have come under increased regulatory scrutiny. So-called 'forever chemicals', PFASs do not readily decompose in the environment and can migrate long distances through soil and water.⁴This means that they can bioaccumulate, and as such can be found in higher concentrations at the top of the food chain in animals and humans, as well as at sewage treatment plants (being the "end of the line").

While the extent of their potential effect on human health and the environment remains uncertain, exposure to some PFAS chemicals, such as perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), has been linked with adverse health conditions (including development and reproductive issues, cancer and liver damage).⁵Their high persistence in the environment is considered to be the main concern in Europe.

In addition, a number of pollution events have been reported as being linked to the production of, or exposure to, PFAS. For example, the European Environment Agency has reported that "Areas around industrial production, manufacturing and application sites have been found to be particularly contaminated by PFAS. This has led to contaminated drinking water around factories in Belgium, Italy and the Netherlands, and around airports and military bases in Germany, Sweden and the United Kingdom".⁶In Australia, presumptive rights legislation in some jurisdictions provides a rebuttable presumption to claim compensation under workplace laws for career and volunteer firefighters who have been diagnosed with certain types of cancers.⁷

In parallel, an increasing number of companies and investors are calling for chemical manufacturers to phase out PFAS production. In November 2022, a group of 47 asset managers, coordinated by Aviva Investors and Storebrand Asset Management, with $8 trillion under management wrote a letter to the CEOs of some of the largest chemical companies, encouraging them to substitute these chemicals.⁸In December 2022 a large chemical manufacturer announced that it will stop PFAS production by 2025⁹, having previously entered into an agreement with the Belgian government to remediate PFAS-related concerns related to production.¹⁰

Regulatory Developments

Certain PFASs are already subject to regulatory control. PFOA, PFOS and related chemicals are restricted by the Stockholm Convention on Persistent Organic Pollutants.¹¹In the EU, both PFOA and PFOS are restricted under the Persistent Organic Pollutants (POPs) Regulation and the EU REACH Regulation 2006.¹²

As both momentum for reform and concerns around the potentially harmful effects of PFAS on human health and the environment continue to grow, further legislation is being proposed to restrict or ban the use of PFAS across a multitude of jurisdictions. We set out below some examples.

EU Regulatory Developments

One of the key objectives of the EU's Chemicals Strategy For Sustainability¹³is a commitment to phase-out all PFASs, allowing their use only where they are proven to be irreplaceable and essential to society.

Since January 2023, maximum concentration levels apply to PFAS contaminants in food¹⁴as human exposure to PFAS is mainly through food and drinking water.¹⁵As of 12 January 2021, a limit of 0.5 µg/l for all PFAS in drinking water applies under the recast Drinking Water Directive, unless other measurement limits apply. In the European Commission's October 2022 proposal for a Directive amending the Water Framework Directive, the Groundwater Directive and the Environmental Quality Standards Directive, certain PFASs are included in the revised lists of pollutants, meaning their presence are proposed to be more strictly controlled in surface waters and groundwater.¹⁶A recent POPs amendment also means that from 10 June 2023 stringent limits in waste apply for PFOA, its salts and PFOA-related compounds.¹⁷

On 7 February 2023, the European Chemicals Agency (ECHA) published a proposal from five Member States to restrict a wide range of PFAS uses under REACH.¹⁸The proposed restriction groups around 10,000 PFAS on the basis that they share a common hazard and risk because PFAS molecules have "very persistent" properties.

The EU's aim is to introduce an EU-wide ban on the manufacture, sale, import and use of PFAS (and mixtures and articles containing PFAS above a certain concentration), with "use-specific" derogations of up to five or 12 years after the 18 month transition period ends. For example, alternatives to PFAS may not be readily available so that a general restriction on PFAS would have a potential impact on the availability and security of supply of PFAS-containing medicines and their alternatives.¹⁹Other time-unlimited derogations would cover the use of PFAS in refrigerants in HVACR-equipment in buildings where national safety standards and building codes prohibit the use of alternatives.

There would also be some time-unlimited derogations for exceptional cases. For instance, the use of PFAS in plant protection products, biocides, and medicines would not be affected by the proposed REACH restriction. These products are governed by sector-specific regulation requiring a prior risk assessment and authorisation before they are placed on the market.

The proposed restriction will be assessed by the ECHA's scientific committees for Risk Assessment (RAC) and for Socio-Economic Analysis (SEAC) and a six-month consultation which opened on 22 March 2023 and closes on 25 September 2023.²⁰The consultation gives the opportunity to submit information relevant to risks, socio-economic aspects, and alternative substances.

The RAC will form an opinion on whether the proposed restriction is appropriate in reducing the risks to human health and the environment, while SEAC's opinion will focus on the socio-economic impacts associated with the proposal. Both committees will take into account any comments and feedback received from stakeholders which may, for instance, call for a longer transitional period or additional derogations for specific uses.

The final EU REACH restriction is not expected to be adopted before 2024 with entry into force at the earliest in 2025. Any further EU restriction on PFAS is likely to have a spill-over effect into other jurisdictions (e.g. US). This is hinted at in the proposed restriction: "a restriction within the EU/EEA may be the first step for global action, which is needed as PFASs and PFAS-containing products are manufactured and distributed in a global market".²¹

UK Regulatory Developments

In England and Wales, there are currently no statutory standards for PFAS in drinking water. However, water companies are under a duty to ensure water is "wholesome"²², and the Drinking Water Inspectorate has issued guidance requiring water companies to monitor for PFAS compounds and follow a tiered compliance system wherein if the "concentration of any PFAS in final water" is greater than or equal to 0.1 µg/l, the wholesomeness concentration has been exceeded and prescribed steps must be taken.²³

Similar to the position in the EU, the UK is also looking to strengthen its regulation of PFAS. On 4 April 2023, the Health and Safety Executive (HSE), as the regulator for UK REACH and in partnership with the Environment Agency, published a regulatory management options analysis (RMOA) for PFAS.²⁴The RMOA collates and analyses PFAS research to set out in detail the extent of PFAS use in the UK. In addition to acting as a foundation upon which UK regulators can consider implementing change, the report makes a number of recommendations, which include:

the preparation of background dossiers to support potentially one or more UK REACH restrictions of PFAS;
further evaluation and investigation of substances that have been highlighted to be of concern; and
continued collaborative work across government and with external stakeholders to bring together work on PFAS strategically.

While the RMOA has been criticised for not going far enough in addressing the true impact of PFAS,²⁵it has already resulted in some action. DEFRA has announced that it will start to develop a restriction proposal on PFAS in firefighting foams this year, and will investigate future restrictions of PFAS in consumer products.²⁶HSE has also announced that it will work with the Environment Agency and UK government to consider the recommendations as part of the forthcoming UK REACH Work Programme for 2023-24.²⁷However, the extent to which any UK proposals will converge with what has been proposed in the EU currently remains uncertain.

pfa诉讼的崛起

The number of PFAS-related cases has been steadily rising globally, and there are no signs of this trend slowing.

The US, which has arguably been dealing with PFAS longer than anywhere else, provides an illustration of the type of PFAS litigation that may arise. Claims (beginning in the late 1990s) initially took the form of individual lawsuits filed against PFAS manufacturers for the direct contamination of the adjoining land and water supplies. This soon expanded to include large class actions involving thousands of claimants and resulting in millions of dollars in compensation. Recently cases have yet again pushed into "new frontiers" with claims relating to the alleged use of PFAS in consumer products, such as cosmetics and fast food packaging.²⁸

The Australian government is reported to have reached a A$132.7m class action settlement (without admitting liability) with 30,000 Australian landowners whose properties were contaminated by PFAS as a result of the use of PFAS-containing firefighting foams on air force bases. The class action alleged that the Department of Defence was negligent in not adequately preventing PFAS from contaminating the soil and groundwater. The compensation claimed was for diminution in property values as a result of PFAS contamination, as well as for inconvenience, distress and vexation suffered by the claimants (excluding personal injury claims). At the time of writing, the settlement agreement, which was reached on 15 May 2023, is yet to be approved by the Federal Court of Australia.

In the UK, PFAS concerns have arisen from contaminated drinking water, drawing attention of regulators and the public.²⁹更广泛地说,环境污染情况下有限公司ntinue to be litigated in the UK. The recent landmark case ofJalla v Shell³⁰is one recent example of this and is likely to shape future civil cases concerning the migration of contamination from land A to land B. InJalla, the Supreme Court has reiterated the legal distinction between 'one-off' and 'continuing' nuisances. The relevance of this distinction is that:

where there is a 'one-off' nuisance (such as a 'one-off' leak from a tank), the six-year limitation period in tort runs from the date on which the leak occurs and the land is impacted by contamination;
however where there is a 'continuing nuisance' (such as an ongoing leak from a pipeline), a new cause of action arises each day that the nuisance continues.

The effect ofJallais that claimants will be time-barred in the UK in civil cases concerning the migration of contamination, unless claims are brought within six years (or unless they can prove that the contamination is ongoing). Given that PFAS contamination is often associated with historical industrial activities, thismaytime-bar some PFAS claims.

Legacy Liability

There are potentially significant implications for the Built Environment sector from dealing with PFAS. For example, in Australia, a current intersectoral issue is the application of biosolids (which may contain low levels of PFAS) by water authorities to farm land owned by third parties. Repeat application could lead to an increase in PFAS concentration levels as well as challenges to meet increasing and changing regulatory controls. There is also a balance to be struck in terms of the extent of the risk posed by biosolids application to land, compared to stockpiling or otherwise not using biosolids for a beneficial reuse.

长尾遗产pfa结合他们的widespread use may also give rise to contaminated land risk. Land can be impacted through emissions from: (i) the manufacture of PFASs or PFAS-containing products; (ii) PFAS-containing substances used to tackle fires (which have either been released onsite or have migrated from another site). A recent mapping project found that PFAS contamination has been reported to have been discovered at around 17,000 sites across the UK and Europe.³¹

PFASs have historically not been routinely monitored or assessed in soil and water bodies, however as discussed above, this position may change. If significant concentrations of PFASs are detected, potential consequences may include:

a) Insurance, financing and valuation issues;

b) Clean up costs (even where the land is not technically considered "contaminated land" );³²

c) Regulatory action, e.g. statutory clean-up costs and penalties, if PFAS is released into surface or ground water;

d) Compensation claims for exposure to PFAS;

e) Litigation arising from neighbouring land owners (e.g. diminution in value and third party clean-up costs);

f) Issues with planning obligations and conservation covenants for sites which have biodiversity commitments.

What Action Can You Take?

The immediate action is to assess whether and to what extent PFAS is material to your business or supply chain. In Europe, certain directly affected industries are already actively engaging in the REACH restriction process to collect and submit data to regulators to demonstrate the essential use of PFAS in their sectors, for example, pharma and medical devices. It would be prudent to document any use cases and risk assessments if you are involved in the manufacture or supply of PFAS-containing substances.

公司可能会间接的影响proposed regulatory changes should actively engage with their supply chain to find solutions to minimise disruption e.g. establishing essential use cases, control measures and transition plans for alternative substances.

PFAS may become a material issue on M&A and property transactions. In response, landowners and investors can:

Identify whether there is a risk of legacy PFAS contamination, noting that, in some jurisdictions, PFASs will not be routinely monitored as part of Phase 2 site investigations.
If PFAS contamination is identified and the land has already been acquired, take steps to mitigate its effects e.g. clean up or containment, and consider potential recovery options e.g. contractual indemnities, insurance, compensation claims and statutory remedies.
If PFAS contamination is identified and the land has not yet been acquired, consider risk allocation mechanisms e.g. retention/price adjustment, insurance and contractual protection.

We would like to thank Eli Garrett, Tessa Birch and Becky Clissmann for their contributions to this article.

Footnotes

_{1. See ECHA, Annex XV Restriction Report: Proposal for a Restriction, available athttps://echa.europa.eu/documents/10162/1c480180-ece9-1bdd-1eb8-0f3f8e7c0c49}

_{2.https://www.dwi.gov.uk/pfas-and-forever-chemicals/}

_{3. See Analysis of the most appropriate regulatory management options (RMOA), p. 13, available athttps://www.hse.gov.uk/reach/assets/docs/pfas-rmoa.pdf}

_{4.//www.hschangyihong.com/en/news-and-insights/insights/pfas-and-property-valuation-litigation-remediation/}

_{5.https://www.cdc.gov/biomonitoring/PFAS_FactSheet.html}

_{6.https://www.eea.europa.eu/publications/emerging-chemical-risks-in-europe}

_{7. and who have been employed or served for the respective qualifying period.}

_{8.https://www.reuters.com/business/environment/call-phase-out-forever-chemicals-gains-investor-momentum-2022-12-01/}

_{9.https://news.3m.com/2022-12-20-3M-to-Exit-PFAS-Manufacturing-by-the-End-of-2025}

_{10.https://news.3m.com/2022-07-06-Agreement-Reached-Between-the-Flemish-Government-and-3M-Belgium-to-Support-the-People-of-Flanders}

_{11.https://chm.pops.int/Implementation/IndustrialPOPs/PFAS/Overview/tabid/5221/Default.aspx}

_{12. EU 2019/1021 and EC 1907/2006}

_{13.https://echa.europa.eu/hot-topics/chemicals-strategy-for-sustainability}

_{14. See the Annex of Regulation (EC) 2022/2388 for the maximum concentration levels}

_{15.See also the information note from the Danish delegation at the Agriculture and Fisheries Council of 25 April 2023 (available athttps://data.consilium.europa.eu/doc/document/ST-8404-2023-INIT/en/pdf) calling on the European Commission to "be as ambitious as possible in lowering the existing and setting new maximum levels for PFAS in foodstuffs based on occurrence data in food"}

_{16. See Proposal for a Directive amending the Water Framework Directive, the Groundwater Directive and the Environmental Quality Standards Directive (COM(2022) 540) and the accompanying press release, available athttps://ec.europa.eu/commission/presscorner/detail/en/ip_22_6278}

_{17. See Regulation (EU) 2022/2400, available athttps://eur-lex.europa.eu/eli/reg/2022/2400/oj}

_{18. "Annex XV" restriction proposal:https://echa.europa.eu/restrictions-under-consideration/-/substance-rev/72301/term}

_{19. See ECHA, Annex XV Restriction Report: Proposal for a Restriction , p. 73}

_{20.https://echa.europa.eu/-/echa-seeks-input-on-proposed-pfas-restriction}

_{21. See ECHA, Annex XV Restriction Report: Proposal for a Restriction, p. 51}

_22._{https://www.dwi.gov.uk/pfas-and-forever-chemicals}

_{23.https://dwi-content.s3.eu-west-2.amazonaws.com/wp-content/uploads/2023/01/13123351/IL_03-2022_PFAS_Guidance-4-1.pdf}

_{24.https://www.hse.gov.uk/reach/assets/docs/pfas-rmoa.pdf}

_{25.https://www.wcl.org.uk/gaps-may-be-left-in-toxic-forever-chemical-regulation-reforms-warn-nature-experts.asp}

_{26.https://www.gov.uk/government/publications/plan-for-water-our-integrated-plan-for-delivering-clean-and-plentiful-water/plan-for-water-our-integrated-plan-for-delivering-clean-and-plentiful-water}

_{27.https://press.hse.gov.uk/2023/04/04/regulators-report-on-forever-chemicals-published/}

_{28.https://www.reuters.com/legal/legalindustry/litigation-over-forever-chemicals-is-growing-is-your-company-next-defendant-2022-12-07/}