New PFAS ban underscores need to deal with PFAS contamination across wide range of Australian businesses

Chris Erfurt, Will Golinelli
21 Feb 2024
4 minutes
It's not just industries which use PFAS which will need to deal with PFAS contamination – agribusiness, construction, and any dealings in land must prioritise it.

If you were looking for a remote spot, Antarctica's McMurdo Sound would fit the bill. It's perhaps surprising to discover that even there, flowing in the blood of some of the local Weddell seals, are traces of our industrial world: PFAS, a group of approximately 15,000 "forever" chemicals. Some types have been found to be toxic to human health and the environment.

In its most definitive regulatory action taken to date, the Commonwealth has effectively banned the import, use and manufacture of some of the more prominent types of PFAS (PFOS, PFOA and PFHxS) from 1 July 2025. This aligns Australia with the international community and it will assist in minimising future exposure of humans and the environment to these types of "industrial chemicals that are likely to cause serious or irreversible harm to the environment".

Clearly, Australian businesses need to identify the potential implications of this ban on their supply chains, operations and activities well before the ban takes effect. But as the Weddell seals show, PFAS can travel far and wide. More and more, parties should understand and be considering steps to minimise their contractual, financial, commercial and regulatory risks arising out of PFAS contamination more broadly.

What is PFAS, why is it a problem, and what's happening in the courts?

PFAS (per-and polyfluoroalkyl substances) are a group of persistent, bio-accumulative and toxic (PBT) manufactured chemicals. Being a PBT chemical, PFAS do not readily biodegrade, are highly mobile, bioaccumulate in food chains, and can be toxic to human health and the environment.

PFAS has an interesting background. Aqueous Film-Forming Foams (AFFFs) which contain PFAS were developed by the US Naval Research Laboratory in the 1960s. A (sensationalised) background of the corporate deception and cover-ups associated with the manufacturing of PFAS was played out by Mark Ruffalo and Anne Hathaway in the 2019 film, Dark Waters.

PFAS are highly resistant to heat and repel water, which made AFFFs useful for fire-fighting. Beyond that, PFAS could be found in non-stick cookware, stain-resistant fabrics and many other consumer products.

Those properties made PFAS a commonly used chemical which spread easily – and also make it a particularly difficult and costly contaminant to treat, contain and remediate. It is frequently detected in areas which are not located close to obvious, localised sources.

Both overseas and here, PFAS litigation has begun. In the US, it's a commonly litigated contaminant, with claims ranging from class actions against manufacturers for having measurable concentrations of PFAS in mouthwash to large-scale litigation against manufacturers of PFAS. In June 2023, one of the main manufacturers of PFAS, 3M, reached a US$10.3 billion settlement with several US public water system operators to test and treat PFAS contamination.

In Australia, class actions commenced by landholders claiming diminution in value against the Department of Defence based on its use of AFFF settled for $215.5m in 2020 (for residents in Katherine, Williamtown and Oakey), and $132.7m in 2023 (for 30,000 residents located near a number of Australian military bases).

How the PFAS ban works in practice

The Industrial Chemicals Environmental Management Standard (IChEMS) is a national set of regulations managing chemical use, storage, handling and disposal.

On 12 December 2023, PFOS, PFOA and PFHxS (and any substance capable of degrading to those chemicals) were listed in schedule 7 of IChEMS. That schedule includes the chemicals of greatest concern on the register, described as "relevant industrial chemicals that are likely to cause serious or irreversible harm to the environment with no essential uses". The purpose of listing chemicals in schedule 7 is to phase chemicals out. While PFOS, PFOA and PFHxS have been classified and listed on the register now, the entry comes into effect on 1 July 2025 to allow industry additional time to phase out any remaining uses.

Australia's phasing out of PFOS, PFOA and PFHxS from 1 July 2025 follows:

  • a major manufacturer (3M) abandoning PFOS over two decades ago (and phasing out the manufacturing of the balance of PFAS by the end of 2025);
  • 171 other countries banning PFOS (through ratification of the 2009 amendment listing PFOS under the Stockholm Convention on Persistent Organic Pollutants);
  • in 2016, Queensland becoming the first State to introduce a ban on AFFF (given the most dispersive form of PFAS contamination is through AFFF).

The impact of PFAS is not just on industries which use PFAS

The phasing out of key types of PFAS has the potential to impact a broad range of industries. Some examples of industries that use and import PFAS include manufacturing, chemical, electronics, textiles and clothing, photography, firefighting and aviation.

However, the impacts from the use of PFAS extend far outside of the industries that use PFAS and frequently arise in the context of:

  • construction projects and activities (e.g. dumping of PFAS-contaminated soil delayed tunnelling works for the West Gate Tunnel Project by over a year);
  • livestock, fishing and crops (e.g. fishing closures and the quality and safety of food for consumers);
  • sites where AFFF has been used (e.g. mining operations, fuel refineries and storage facilities, airports, fire training grounds and transport infrastructure), as well as in and around landfills, wastewater treatment plants, and other waste disposal and recovery facilities. Nearby landowners and businesses can be impacted by the value of their properties reducing, or potentially even being required to take steps to respond to PFAS contamination that was not caused by them to comply with regulatory obligations. For this reason, PFAS may be a material issue for mergers and acquisitions, development projects and property transactions, and undertaking appropriate due diligence on potentially impacted sites is a critical risk mitigation measure.

There is a complex set of Commonwealth and State-based regulations that can apply to PFAS, ranging from reporting and investigative requirements, all the way through to enforceable orders compelling a party to take steps to remediate PFAS contamination. As knowledge of the environmental and human health risks of PFAS is evolving, regulators are becoming increasingly interventionist and acceptable thresholds and criteria are becoming increasingly strict and difficult to achieve both in Australia and overseas.

PFAS contamination has been found. Now what?

Where PFAS contamination is identified, or if there is a risk of being impacted by PFAS contamination, parties should seek to avoid exposure and minimise risk by:

  • understanding and identifying circumstances giving rise to potential PFAS-related risks (eg. considering whether PFAS is relevant to your operations or supply chain, M&A and property transactions, or construction activities, and whether any "greenwashing" and product liability risks could apply);
  • obtaining sufficient and appropriate insurance cover, if available (ie. coverage which clearly extends to PFAS contamination and ensuring that the coverage limit is sufficient);
  • considering other liability risk allocation measures (e.g. contractual indemnities);
  • understanding the specific PFAS regulatory framework that applies to your operations (eg. any reporting requirements, and regulatory thresholds and criteria);
  • considering potential contractual, tortious and statutory remedies that may be available if loss arising out of PFAS contamination is suffered.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.