This article was co-authored by Ryan Iglesias, Associate, New York and Rebecca Stark, Associate, New York.
An overview of legal and regulatory developments
Perfluoroalkyl and Polyfluoroalkyl substances (PFAS), often referred to as 'forever chemicals' are a complex and expanding group of man-made chemicals found in a variety of products used by consumers and industry. The chemicals have recently been under the scrutiny of various stakeholders across the globe, culminating in a series of international noteworthy legal and regulatory developments, because of their alleged impact on health.
- October 2021: the Governor of California, USA approved Assembly Bill 652 that prohibits PFAS in childcare products.
- July 2021: several EU Member States announced their intention to submit a REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Regulation Restriction Dossier in July 2022 on PFAS, covering restrictions on their manufacturing, use and placement on the EU market under the mainstay EU chemicals product safety regime.
- December 2021: the UK Government opened a call for evidence on PFAS to support a regulatory management options analysis that is being conducted under the UK REACH regime.
These developments follow a trend that indicates growing concern, accompanied by increasingly stringent regulations as well as litigation opportunities for claimants in relation to PFAS around the globe.
The potential for harm
The global product safety regulation landscape for chemicals is continually evolving as products are developed using new raw materials and manufacturing processes, requiring businesses to implement stricter regulations to monitor the storage, use and market placement of non-hazardous and hazardous substances.
Whilst chemicals are widely used in a range of products in modern society, many have properties which are considered to be harmful to the environment and human health. These chemicals, including PFAS, are typically ingested following oral exposure, either by way of contaminated food, water or air, but studies have also shown that small amounts can enter the body through skin.
Regulatory development and legislative action
The United States Environmental Protection Agency (EPA) has produced numerous reports over recent years that address the ability of PFAS to move and persist in the environment, people and animals as they break down very slowly and the potential to build up over time. Scientific studies relied on by the EPA have shown that exposure to certain levels of PFAS may have negative effects on reproduction, child development, natural levels of hormones and/or cholesterol and may lead to increased risk of some cancers.
In response to these concerns, Assembly Bill 652 will prohibit a person from selling or distributing any new children’s products that contain regulated PFAS on or after 1 July 2023. The relevant children’s products, known as “juvenile products”, include products designed for use for infants and children under 12 years of age, including but not limited to, booster seats, baby or toddler foam pillows, child restraint systems for use in vehicles and aircraft, co-sleepers, infant carriers, nursing pads, portable cribs, mattresses and prams.
The EU has a well-regarded and comprehensive product safety framework. With the use of chemicals in consumer products expected to increase and the global production of chemicals expected to double by 2030, the EU has proposed more stringent regulation of these chemicals as outlined in its Chemicals Strategy for Sustainability Towards a Toxic-Free Environment strategy document (CSS) and within the proposed revision of the REACH Regulation, expected to be formally announced following consultation in late 2022.
- Proposes a set of actions to address the use of, and contamination from PFAS including legislation on water and food, sustainable products, waste and industrial emissions.
- Seeks to address protection of society and the environment alongside boosting innovation for safe and sustainable chemicals.
- Provides for the introduction of a new restriction under the EU’s mainstay chemicals legislation, the REACH Regulation, on all uses of PFAS except for where they are essential for society, for example, in medical devices. The restriction will prevent emissions from the production, use and final disposal of PFAS, seeking to address pollution at the source and respond to concern over the consequential contamination of soil and water. This aligns with the EC’s Zero Pollution Action Plan noting that “environmental damage should, as a priority, be rectified at source”.
Alongside the aforementioned product safety regimes which address the placing of products on the global market, there is a rise in litigation in respect of products that were introduced at a time when no such regimes existed, but which continue to circulate.
PFAS have been in use in a number of products since the 1940s. They are also known as 'forever chemicals' as they do not break down easily and it is therefore not surprising that identifying liability and analysing insurance coverage in relation to PFAS contamination is very complex, with claims resulting from PFAS contamination likely attaching to several years of cover across a variety of policies including environmental, product liability and commercial general liability.
The mounting apprehension about PFAS has already resulted in class actions in the USA, including the DuPont contamination litigation which became the subject of the 2019 film, Dark Waters, resulting in multimillion-dollar verdicts and settlements.
In April 2021, following a civil claim made by the residents of Kallinge in South Sweden, a municipal water company was ordered to pay damages to residents who drank municipal water from a source contaminated by fire-fighting foam used in a nearby area for fire drills. The claimants suffered from elevated levels of PFAS in their blood which they alleged caused increased risks to their health.
Whilst there is currently no active PFAS litigation in the UK, there has been public discussion amongst environmental activists, MPs and English claimant law firms which suggest that these may come to the fore in the future.
With the introduction of the EU Representative Actions Directive in 2020, and a growing appetite for large scale group actions in the UK, environmental actions of this nature are most likely to proceed by way of group litigation, given their potential to impact millions of individuals.
Practical considerations for businesses and their insurers
Global businesses, manufacturers, and their insurers must be aware of their changing regulatory obligations, policy developments, the increased risk of being subject to enforcement action from regulators and liability exposure in respect of civil claims. If they have not done so already, businesses should consider implementing internal policies to reflect the requirement for safe and sustainable chemicals.
As PFAS have been identified as one of the top emerging litigation risks, there have been rising concerns amongst businesses and the insurance market that PFAS contamination claims could expose companies and their insurers to unprecedented numbers of claims, similar to the asbestos-related claims pursued at the turn of the millennium.
With mounting apprehension over use of PFAS across the globe, insurers would be wise to consider:
- Their risk exposure to PFAS claims when evaluating insurance premiums.
- Adding relevant clauses in insurance contacts, including any exclusion clauses, in relation to products suspected of using, or being exposed to PFAS.
- Coverage which may need to be appropriately adjusted depending on risk exposure.
A further report on the global impact of PFAS will be published in due course.