November 27, 2019

PFAS class actions developments: a road map of potential liability risks

The largest class action in Australia has been announced, with 40,000 people suing the Australian Government for Per- and poly-fluroalkyl substances (PFAS) contamination.

Shine Lawyers, representing the clients, has enlisted the support of American activist, Erin Brockovich. Eight locations in particular are the subject of the class action. Namely: Darwin, NT; Wagga Wagga, NSW; Richmond, NSW; two sites in Townsville, QLD; Bullsbrook, WA; Edinburgh, SA; and Wodonga, VIC[1]. These relate to the sites of several Defence sites with historical use of firefighting foams.

What is PFAS? What are the risks?

PFAS is a group of polymers which are used in products which resist heat, oil, stains and water[2], commonly used in non-stick pans and firefighting foam, as well as other everyday products[3]. These chemicals do not break down, and can accumulate in the human body and other animals. 

Several countries around the world, specifically the US and those in Europe, have responded to the potential health risks of PFAS exposure, following some studies which have linked elevated exposure to PFAS to infertility, heightened cancer risks, and developmental delays[4].

However, the Australian Government has been equivocal in acknowledging that the exposure to PFAS can cause health issues, such as an increase in cancer risk[5]. For example, the Department of Health's Factsheet on PFAS states that the links between PFAS and cancer are weak or non-existent[6].   

However, other state environmental regulators have been responding to PFAS as an emerging contaminant. The Environmental Protection Authority (EPA) in NSW has set up a state-wide investigation program (the taskforce) to identify the use and impacts of legacy PFAS contamination[7]. The taskforce has been testing sites where large quantities of PFAS have historically been used, and working with occupiers, owners, responsible parties and others to clean up the sites[8].  

PFAS class actions in Australia

In addition to the announced Shine class action, there are also several other class actions already underway in the Federal Court. These class actions relate to the PFAS contamination in Williamtown, NSW, Oakley, QLD and Katherine, NT[9].  

  • The Katherine class action is an "open class", meaning that every resident in Katherine has been included unless they have chosen to opt-out.
  • The class action regarding Oakey and Williamtown have been filed and are in the procedural stages of preparing evidence for an initial hearing.
  • An individual claim pursued by a landowner in Oakley has resulted in a settlement with the Department of Defence, for compensation for groundwater contaminated by PFAS[10]. This settlement should not affect the Oakley class action. 

What are the potential litigation and liability risks of PFAS?

DuPont and 3M class actions

The potential health risks posed by PFAS have led to several lawsuits in the US, specifically against DuPont and 3M, for their endangerment of public welfare through their products, manufacturing of products, and production of PFAS[11]. The multiple lawsuits rest in DuPont and 3M's knowledge of the hazards posed by PFAS, and their refusal to inform the public of such risks[12]. The suits also focus on the manufacturers' liability in producing these products[13]. An order issued by a federal judge in the US has allowed for a class action case to proceed against 3M, DuPont and seven other companies. Effectively, the scope of the class action extended to every US resident with detectable levels of PFAS in their blood and who suffered injury as a result[14]. 

Risks for landowners

Many of the group members to the Australian class actions allege that the contamination has led to a variety of losses, including diminution of the value of their property[15]. This highlights that owners, or prospective purchasers, of land which has historical PFAS use, or nearby PFAS use, should be aware of the potential contamination risks posed by PFAS, the uncertainty around the health impacts of PFAS, and the costs of remediation, carries potential to devalue the land. 

Before purchasing land, potential buyers may wish to consider seeking legal advice on contamination risks including undertaking expert sampling for purposes of obtaining legal advice, and conducting due diligence checks on any potential contamination of sites. Where land has PFAS contamination, they should seek legal advice regarding their potential liabilities and/or ability to claim against third parties which have caused that contamination. 

For occupiers and owners of contaminated property, there are several issues which should be considered. 

  1. Re-development of the land may potentially be affected, as contamination may bar the consent to development (State Environmental Planning Policy No 55, cl 7). For example, it is possible that Council may require expensive remediation programs as a condition of development consent. 
  2. The NSW EPA has specific powers regarding the management of contaminated land, and may serve a written order to manage the land in a specified way[16]. Such orders can be subject to ongoing maintenance orders[17]. A landowner may be issued with such orders, despite not having caused the contamination. 
  3. The NSW EPA also has the power to issue clean-up and prevention notices[18].  

Where a landowner's property is the source of PFAS contamination which has spread offsite to third party land or groundwater, it is possible they may face liability for addressing this, including potential claims in negligence or nuisance. Such landowners should seek legal and technical advice on managing these contamination and liability risks.

WHS Risks and Worker's Compensation 

Given that PFAS has commonly been applied in a variety of industrial uses, ranging from fire-fighting, manufacturing, and defence, there is potential for employers to face claims by employees who have been exposed to PFAS in the course of their employment, alleging the exposure has caused illness. Where an employer is aware that the premises carries potential for exposure of PFAS to employees, either through ongoing use of PFAS or by inadvertent exposure to historical PFAS contamination, they should ensure that there are proper precautions taken to limit the potential for employee exposure, and whether there are alternatives to PFAS.

Likewise, worker's compensation insurers should be aware of the potential for PFAS to contribute to workplace illness claims.

Risks for Government Authorities 

Given PFAS litigation in the US, Government agencies should be prepared for claims regarding injury suffered from PFAS exposure, for example lawsuits regarding failure to warn. Governments should take measures to ensure that exposure risks to communities impacted by PFAS contamination are appropriately managed, so as to limit potential for human exposure. Given that a number of government authorities have used PFAS in firefighting exercises and training activities, it is inevitable that employee and third party claims may be made against Government authorities.

Product liability claims 

Manufacturers, producers and distributers of products containing PFAS may be subject to product liability claims for the hazards potentially posed by PFAS. For example:

  • Similar to the DuPont and 3M class actions, producers may be liable for any illness caused to consumers which can be demonstrated as having been caused by exposure to PFAS.
  • Where manufacturers have caused offsite migration, for example spread of PFAS from a manufacturing facility into groundwater or adjacent land or waters, they may be exposed to third party claims.

Companies should review whether they currently use PFAS in their manufacturing processes, or otherwise use PFAS containing goods in their business, and whether there are alternatives available to phase out use or otherwise limit potential for exposure.

Exposure of agriculture and aquaculture industries to risk

Given the capacity for PFAS to migrate into adjoining land and waters through stormwater or groundwater, there is potential for farming or fishing operations near contaminated land to potentially be exposed to PFAS contamination. This carries broader potential for claims, as:

  • There are broader exposure pathways for consumers to ingest PFAS, leading to claims by consumers for any health consequences; and
  • Claims made by farmers or fishers for any economic loss or devaluation of their business caused by PFAS contamination.

This accordingly has implications for insurers of those industries, who for example, may be exposed to claims for business interruption caused by being unable to continue fishing operations while decontamination works are carried out or exclusion areas are applied.

Other risks for insurers

Insurers may find themselves exposed to claims, where environmental insurance policies cover remediation claims by the insured for their own land, claims by third parties relating to offsite migration from the Insured's land, or remediation orders made by regulators concerning the Insured's land. 

Insurers should generally consider their exposure to PFAS claims in considering premiums, and whether or not to exclude PFAS related claims from relevant policies. Insurers may wish to apply greater due diligence before extending policies to land with potential for historical PFAS contamination. 

Conclusion

PFAS continues to emerge as a contaminant of concern. Despite the equivocal evidence that PFAS exposure contributes to risks of illness and cancer, businesses and landowners should continue to apply a conservative management approach to preventing third parties and employees being exposed to PFAS through their operations, and be aware of the potential for liability risks as well as possible regulatory changes which may arise concerning PFAS.

Please contact us if you would like to discuss further the liability and contamination risks associated with PFAS.

Footnotes
1. Anita Barraud and Anna Kelsey-Sugg, 'Landmark class action over PFAS contamination in Australia announced by Erin Brockovich', ABC News (online), 30 October 2019 https://www.abc.net.au/news/2019-10-29/erin-brockovich-australia-class-action-pfas-contamination/11645312
2. Department of Defence, Government of Australia, What are PFAS? PFAS Investigation & Management Program https://www.defence.gov.au/Environment/PFAS/Glossary.asp 
3. Lauren Zanolli, 'Why you need to know about PFAS, the chemicals in pizza boxes and rainwear', The Guardian (online), 23 May 2019 https://www.theguardian.com/us-news/2019/may/23/pfas-everyday-products-toxics-guide
4. Zoë Schlanger, 'Dupont and 3M knowingly contaminated drinking water across the US, lawsuits allege', Quartz (online), 30 May 2019 https://qz.com/1630348/dupont-and-3m-face-a-growing-list-of-water-contamination-lawsuits/
5. Barraud and Kelsey, above n 1.
6. Department of Health, Government of Australia, Per- and Poly-Fluroalkyl Substances (PFAS) Health Effects and Exposure Pathways https://www1.health.gov.au/internet/main/publishing.nsf/Content/44CB8059934695D6CA25802800245F06/$File/health-effects-exposure-factsheet.pdf
7. The NSW Environment Protection Authority, The NSW Government PFAS Investigation Program (2019) NSW EPA https://www.epa.nsw.gov.au/your-environment/contaminated-land/pfas-investigation-program    
8. Barraud and Kelsey, above n 1.
9. Emma Tonkin and Liz Farquhar, 'Delayed PFAS class actions a 'kick in the guts' for angry residents', ABC News (online), 9 May 2019 https://www.abc.net.au/news/2019-05-09/pfas-class-action-delay-angers-residents/11095426
10. Belinda Sanders et al, PFAS compensation settled for Okey landowner in Australian first, ABC News (online), 27 March 2019 https://www.abc.net.au/news/2019-03-27/australias-first-pfas-compensation-settled/10944048
11. Schlanger, above n 4; Sharon Lerner, 'Nationwide Class Action Lawsuit Targets Dupont, Chemours, 3M, and Other Makers of PFAS Chemicals', The Intercept (online), 6 October 2018 https://theintercept.com/2018/10/06/dupont-pfas-chemicals-lawsuit/
12. Emily Holden, 'Companies deny responsibility for toxic 'forever chemicals' contamination', The Guardian (online), 11 September 2019 https://www.theguardian.com/us-news/2019/sep/11/pfas-toxic-forever-chemicals-hearing-3m-dupont-chemours
13. Ibid.
14. Alex Formuzis, Federal Judge's Ruling Allows Class Action Suit Against PFAS Makers to Proceed (2019) https://www.ewg.org/release/federal-court-class-action-suit-against-pfas-chemical-makers-can-proceed
15. Barraud and Kelsey, above n 1.
16. Contaminated Land Management Act 1997 (NSW) s 14.
17. Contaminated Land Management Act 1997 (NSW) s 28.
18. Contaminated Land Management Act 1997 (NSW) s 46.