Australia’s Emerging PFAS Regime

What the 2025 reforms means for government, industry and insurers

Australia’s PFAS regulatory landscape is shifting rapidly. With a national ban on manufacturing and importing PFOS, PFOA and PFHxS now in effect, PFAS has moved from a historic contamination issue to a critical compliance, litigation and commercial risk.

New frameworks including NEMP 3.0, stricter drinking water guideline values and expanded IChEMS controls are driving tougher expectations for environmental management, supply chain oversight and product stewardship. Organisations now face growing pressure to identify PFAS in their operations and transition to safer alternatives.

At the same time, major PFAS class actions have created strong precedents for significant financial exposure, highlighting the need for proactive governance, early risk assessment and a reassessment of insurance coverage.

Across regulators, manufacturers, water utilities and property sectors, PFAS has become a mainstream business risk with clear ESG, legal and financial implications.

The 2025 PFAS Regime Report summarises these fast moving reforms and explains what they mean for organisations facing new compliance pressures, legal exposure and operational risk. It offers clear guidance on how to prepare for the changes, manage liability and respond to increasing scrutiny, making it an essential resource for anyone needing to stay ahead of Australia’s evolving PFAS landscape.

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Why PFAS is back on the regulatory front burner

Per- and poly-fluoroalkyl substances (PFAS) have shifted over the last decade from being obscure industrial chemicals to a headline environmental risk. The PFAS development has been driven as much by public exposure as it has by laws.

On 9 October 2017, the Australian Broadcasting Channel (ABC) aired a Four Corners episode titled ‘Contamination’¹ which shone a spotlight on PFAS firefighting foam used at RAAF Base Williamtown in New South Wales and the Oakey Army Aviation Centre in Queensland, highlighting alleged delays in public disclosure.

Since then, communities around RAAF bases and other facilities have brought large class actions against the Commonwealth over PFAS contamination of land and water.

Regulators and water providers are now pushing for aggressive source control, pointing out that removing PFAS once it is in drinking water and biosolids is exponentially more expensive than preventing its use.

Against that backdrop, 2024 and 2025 has seen a genuine step-change in the Australian regulatory framework. The key reforms either already in force or that have recently “come into effect” this past year include:

• In July 2025, a national ban came into effect concerning the manufacture and import of the three PFAS of “highest current concern” (PFOS, PFOA and PFHxS) including products that contained them
• Further restrictions on PFAS imports and uses under Australia’s national framework for managing the environmental risks associated with industrial chemicals, the Industrial Chemicals Environmental Management Standard (IChEMS)², which are or have been implemented progressively by the Commonwealth and Australia’s States and Territories.
• In June 2025, we saw new, significantly tighter PFAS drinking water guideline values which were incorporated into the Australian Drinking Water Guidelines.³
• On 10 December 2024, the Environment Ministers of Australia agreed to publish the third version of the PFAS National Environmental Management Plan (NEMP) 3.0, which is now the national reference point for soil, groundwater and biosolids criteria.⁴

For clients, this means PFAS is no longer just a historical contamination issue. It is an active compliance, procurement, product-stewardship and litigation risk.

The new federal architecture – AICIS, IChEMS and NEMP 3.0

AICIS and import/manufacture controls

PFAS in Australia are regulated primarily as industrial chemicals under the Industrial Chemicals Act 2019 (Cth) (IC Act)⁵ and the Australian Industrial Chemicals Introduction Scheme (AICIS).⁶

PFAS are not manufactured domestically at scale but have historically been imported in both bulk and finished products.

On 21 October 2025, the AICIS Executive Director initiated an evaluation on the introduction and use of 522 PFAS under section 74 of the IC Act.⁷

The evaluation includes 522 PFAS listed on the Australian Inventory of Industrial Chemicals (the listed PFAS) and aims to confirm whether the listed PFAS are being introduced or are in use in Australia, and if so:

• what they are used for
• in what volume they are being introduced, to consider which PFAS should be the subject of a further evaluation

The headline change, however, is that in July 2025, the Australian Government banned the manufacture and import of PFOS, PFOA and PFHxS, and products containing them, in line with their listing as persistent organic pollutants under the Stockholm Convention.

For businesses, this shifts PFAS from “emerging” to explicitly high-risk chemicals with a defined phase-out horizon.

IChEMS – national environmental standards

IChEMS is now the central federal instrument for environmental management of industrial chemicals across their lifecycle (import, export, use and disposal).⁸

Key features: 

• IChEMS is populated via an online register that assigns chemicals to categories (in the form of ‘Schedules’) reflecting environmental hazard and sets minimum management standards.
• All Australian governments have agreed to adopt IChEMS into their own regulatory regimes, aiming for nationally consistent controls.

PFAS NEMP 3.0 – the new benchmark

In March 2025, environment ministers published the PFAS NEMP 3.0 which has been endorsed by them a few months earlier, in December 2024.⁹

NEMP 3.0:

• Replaces NEMP 2.0 (2020).
• Provides new guideline values for investigation and risk assessment, including soil and groundwater criteria and ecological guidelines.
• Adds guidance on remediation of contaminated land, risk-based re-use of biosolids, and using resource recovery products that may contain PFAS.

While not itself a legislative instrument, NEMP 3.0 is routinely hard-wired into State Environment Protection Authority (EPA) policies, licences and planning approvals, so it functions as the de facto standard for:

• due diligence in property and M&A transactions.
• contaminated land investigations.
• regulator expectations on remediation and re-use of PFAS-affected materials.

For PFAS:

• PFOS, PFOA and PFHxS and their related compounds have been, or are proposed to be, placed into Schedule 7 (being the schedule of highest concern), with standards that prohibit most uses and allow only tightly controlled essential uses. The Schedule 7 provisions began to take effect from 1 July 2025, with States and Territories progressively aligning their laws.

In practice, entities using PFAS for specialty industrial or firefighting purposes should assume use is presumptively prohibited unless clearly carved out as essential and managed to strict conditions.

Drinking water – new guideline values and senate pressure

PFAS has always been politically sensitive in the context of drinking water. In 2025 we saw three strands converging:

1. Updated Australian Drinking Water Guidelines (ADWG)

The National Health and Medical Research Council (NHMRC) released draft PFAS guideline values in October 2024 and finalised new health-based values on 25 June 2025, substantially lowering the acceptable concentrations of PFOS, PFHxS and PFOA in drinking water.

For example, the guideline value for PFOS was reduced from 70 ng/L (combined with PFHxS) to 8 ng/L, and PFOA from 560 ng/L to 200 ng/L.

2. Water industry calls for a broad PFAS ban.

At a Senate inquiry hearing in January 2025, water authorities and experts:

• warned of “hundreds of millions of dollars” in capital and operating costs to treat PFAS in water and biosolids.
• urged a ban on PFAS in non-essential consumer products, arguing that source control is far more cost-effective than downstream treatment.¹¹

3. Evidence of widespread contamination

The NSW EPA told the inquiry it had identified 51 sites with significant PFAS contamination requiring ongoing monitoring and remediation, while WaterNSW detailed the shutdown of Medlow and Greaves Creek dams due to elevated PFAS.

Taken together, the new ADWG values and parliamentary scrutiny foreshadow:

• tighter licence conditions for water and wastewater utilities.
• increased scrutiny of nearby PFAS sources (e.g. firefighting training facilities, landfills, industrial estates).
• potential claims where authorities are alleged to have failed to act promptly once guideline exceedances are identified.

State and territory responses – foam bans and IChEMS alignment

States and Territories retain primary carriage of land and water pollution control, so the practical impact of the reforms is playing out at that level.

Examples include:

• Firefighting foam restrictions – Many jurisdictions introduced early bans on PFAS-containing Class B firefighting foams (especially those containing PFOS and PFOA) outside limited “essential use” contexts.
• NSW’s 2025 regulatory changes – NSW has amended its Protection of the Environment Operations (General) Regulation to expressly regulate PFAS under an IChEMS-aligned framework, with PFAS-specific provisions commencing 4 July 2025.
• EPA policy updates – State EPAs have been updating contaminated land and waste classification frameworks to integrate NEMP 3.0 values, creating more conservative thresholds for when PFAS-impacted material must be managed as controlled waste.

Additionally, a federal Senate inquiry into PFAS has delivered 47 recommendations, including calls for a national ban on PFAS in non-essential uses and strengthened coordination on monitoring and remediation, signalling likely further legislative activity.

Litigation as a catalyst – PFAS class actions and regulatory risk

Smith v Commonwealth of Australia (No 2) [2020] FCA 837

In Smith v Commonwealth of Australia (No 2) (Smith)¹² Lee J approved settlements of three Pt IVA class actions concerning PFAS contamination at Williamtown (NSW), Oakey (Qld) and Katherine (NT).

Group members were primarily land and business owners claiming loss from PFAS contamination sourced to Defence use of PFAS-based firefighting foam at nearby RAAF bases.

The Court ultimately approved a global settlement exceeding $200 million (inclusive of costs and funding fees), focused on diminution in property value, nuisance and inconvenience, not personal injury.

Lee J emphasised that the Court’s protective jurisdiction under section 33V of the Federal Court of Australia Act 1976 (Cth) (FCA Act)¹³ required close scrutiny of whether compensation fairly reflected the risks on liability and quantum.

Practically, Smith:

• set a liability and quantum benchmark for PFAS land contamination claims.
• demonstrated that governments can face substantial exposure even where health effects are uncertain, provided causation of environmental and property loss is made out their evaluation.

Smith is now cited in several subsequent Federal Court decisions as a leading authority on the standard for court approval of settlements in representative (class action) proceedings under section 33V of the FCA Act.

Haswell v Commonwealth of Australia (No 3) [2023] FCA 1093

In Haswell v Commonwealth (No 3),¹⁴ the Federal Court again per Lee J approved a $132.7 million settlement of further PFAS contamination class actions against the Commonwealth relating to additional Defence sites.

Key points from the judgment and subsequent commentary:

• The Court made a 25% common fund order (CFO) for the litigation funder, in line with earlier PFAS actions.
• The settlement again did not compromise personal injury claims, preserving scope for future healthbased litigation as the epidemiological evidence evolves.
• Lee J stressed that the distribution scheme produced compensation that “roughly reflects the merits of the claims”, reinforcing the Smith analytical framework.

For regulators and duty-holders, these decisions underline that:

• Regulatory non-compliance and poor risk communication can translate directly into large-scale class action exposure, even where statutory standards were less developed at the time of the contamination; and
• Insurers (particularly CGL, environmental impairment and D&O) should treat PFAS as analogous to asbestos and silica in its potential to generate long-tail liabilities.

The role of media

ABC’s Four Corners ‘Contamination’ episode played a significant role in elevating PFAS into national consciousness. The program:

• investigated communities around Defence bases, highlighting historical internal reports and alleged delays in notifying residents about PFAS migration into groundwater and private bores.
• broadcast personal stories of residents concerned about property devaluation and health impacts.
• provided a narrative framework that later class action pleadings and parliamentary debates explicitly referenced.

Subsequent media, including detailed reporting by The Guardian, ABC News and others has also played a significant role in:

• tracking Senate inquiries into PFAS.
• reporting on the increasing number of contaminated sites identified by state EPAs (e.g. the NSW EPA’s 51 PFASaffected sites); and
• covering international developments (such as the US EPA’s stringent drinking water standards and 3M’s decision to cease PFAS production by early 2026).

Practical implications for clients

Who is most exposed?

Key risk cohorts include:

• Importers, manufacturers and distributors of industrial and consumer products that may contain PFAS (textiles, coatings, food packaging, cosmetics, surfactants).
• Operators of high-risk sites, such as airports, ports, fuel terminals, refineries, chemical plants, firetraining facilities and major hazard facilities.
• Water and wastewater utilities and biosolids re-users.
• Property owners, developers and investors dealing with land near known PFAS sources or with historical industrial use.
• Government agencies (Defence, airports, emergency services) with historical PFAS usage and potential legacy sites. Although at present, firefighting foams containing PFAS can still be purchased.

Priority actions

Without giving site-specific advice, typical steps a prudent entity should consider, in light of the new regime include:

1. PFAS inventory and supply-chain mapping

• Identify all current uses of PFAScontaining products, focusing on foams, surfactants, coatings and specialised industrial applications.
• Keep and maintain an up-to-date register of all PFAS-containing products and their uses including the relevant Material Safety Data Sheets provided with those products.
• Review supplier declarations against the impending ban on PFOS, PFOA and PFHxS imports and products by July 2025.

2. Transition to PFAS-free alternatives and essential-use assessment:

• Test whether any remaining PFAS uses are genuinely “essential” within the meaning adopted in IChEMS and international guidance.
• Where alternatives exist, phase-out dates should be brought forward to anticipate, rather than simply comply with, regulation.

3. Contaminated land and due diligence:

• Align internal contaminated land procedures with NEMP 3.0 guideline values, including screening thresholds and investigation levels for soil, groundwater and surface water.
• Undertake baseline assessments for any leased or purchased property to determine any pre-existing levels of PFAS on or around the property.
• Elevate PFAS to a standard item in property and M&A due diligence, particularly near airports, Defence facilities, landfills and industrial precincts.

4.  Licences, permits and planning approvals:

• Expect EPAs to update licence conditions for high-risk facilities to reflect NEMP 3.0 and new ADWG values; proactively engage with regulators on manageable transition timelines.

5. Disclosure, ESG and directors’ duties:

• Listed entities and governmentowned corporations should consider whether PFAS exposures are material for continuous disclosure and sustainability reporting.
• Boards should be briefed on the litigation landscape (Smith, Haswell) and potential implications for directors’ duties of care and diligence where PFAS risk is foreseeable but unmanaged.

6. Insurance and indemnities:

• Review pollution and contamination exclusions and retroactive dates in CGL, EIL and D&O policies in light of emerging PFAS claims.
• In contracts (e.g. construction, waste, operations), revisit indemnity, warranty and “known contamination” clauses to ensure PFAS is not inadvertently carved out.

Looking ahead

Internationally, regulators are moving towards class-wide regulation and, in some cases, near-total bans of PFAS in non-essential uses. Australian water authorities and academics have urged a similar “ban as a class” approach rather than chemical-by-chemical regulation.

Domestically, the trajectory is clear:

• import and manufacture of legacy PFAS are being shut down;
• environmental standards (NEMP 3.0, ADWG PFAS values) are tightening;
• IChEMS is being populated and embedded into State law; and
• class actions have demonstrated that governments and corporates can face significant liabilities even before the regulatory picture is fully settled.

Clyde & Co regularly advises government, corporates and insurers, and where PFAS should now be treated as a mainstream regulatory and litigation risk rather than a niche technical issue, early, proactive engagement with the new standards rather than the “wait and see” approach will be critical in reducing both environmental impact and future legal exposure.

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¹‘Contamination’, Four Corners (Australian Broadcasting Corporation, 2017) 0:00:00-0:46:00 <http://www.abc.net.au/4corners/contamination/9032140>

²Department of Climate Change, Energy, the Environment and Water, Industrial Chemicals Environmental Management Standard – IChEMS (Updated, November 2025) (IChEMS).

³National Health and Medical Research Council, Australian Drinking Water Guidelines (the Guidelines) (Updated, June 2025).

⁴Department of Climate Change, Energy, the Environment and Water, PFAS National Environment Management Plan (NEMP) 3.0 (Updated 4 March 2025).

⁵Industrial Chemicals Act 2019 (Cth) (IC Act).

⁶Department of Health, Disability and Ageing, Australian Industrial Chemicals Introduction Scheme (AICIS) (Updated, 24 October 2025).

⁷IC Act s 74.

⁸IChEMS (n 2).

⁹NEMP 3.0 (n 4).

¹⁰the Guidelines (n 3).

¹¹Senate Select Committee on PFAS (per and polyfluoroalkyl substances), Parliament of Australia, Inquiry into the extent, regulation and management of PFAS (Final report, November 2025).

¹²Smith v Commonwealth of Australia (No 2) [2020] FCA 837.

¹³Federal Court of Australia Act 1976 (Cth) s 33V.

¹⁴Haswell v Commonwealth of Australia (No 3) [2023] FCA 1093.