Litigation risk for companies which historically used fluorinated chemicals in manufacturing

April 2017  |  SPECIAL REPORT: MANAGING RISK

Financier Worldwide Magazine

April 2017 Issue

For several decades, manufacturing companies have used perfluorooctanoic acid (PFOA) and other long-chained perfluorinated compounds – compounds with extended perfluorinated alkyl chains greater than or equal to eight carbons in length – to manufacture textiles and leather products, metal plating, the photographic industry, photolithography, semi-conductors, paper and packaging, coating additives, cleaning products, pesticides and fire fighting foam, among other products. More recently, federal and state environmental regulators have sought to limit or outright ban the use of PFOA and other long-chained perfluorinated compounds because of environmental and health concerns (particularly their widespread discovery in blood, their persistence in the environment and adverse effects in animal studies). In the early 2000s, the United States Environmental Protection Agency (EPA) negotiated a voluntary cessation on the manufacture of PFOA and perfluorooctanesulfonate (PFOS).

In January 2016, the Food and Drug Administration amended the food additive regulations “to no longer provide for use” of three specific perfluoroalkyl ethyl – three long-chained fluorinated compounds – containing food-contact substances (FCSs) in or on paper and paperboard for use in contact with aqueous and fatty foods because new data is available concerning the toxicity of substances structurally similar to these compounds that demonstrate there is no longer a reasonable certainty of no harm from the food-contact use of these FCSs. This was not based on a positive finding of significant risk, but on a policy determination that due to the absence of data, the FDA “was unable to calculate consumer exposure to the FCSs in a manner which would allow a quantitative assessment of the safety of that exposure”. CNN has stirred controversy and misinformation by claiming that “it turns out that the packaging your food comes in could also have a negative impact on your health”, because one-third of the fast food packaging researchers tested contained fluorinated chemicals even though the study only measured fluorine. This claim is the equivalent of trying to equate the toxicity of chlorine gas, salt and dioxin because they all contain chlorine atoms.

The EPA has detected PFOA in drinking water at concentrations above a minimum reporting limit of 20 nanograms per litre (parts per trillion (ppt)) in 345 out of 35,000 samples throughout the US. The Environmental Working Group (an environmental advocacy group which frequently publishes documents obtained by plaintiffs in personal injury litigation) claims that 5.2 million people are drinking water that exceeds 20 ppt and argues that the advisory level should be 1 ppt because biological changes may occur at that level even though EPA draft drinking water advisory is 70 ppt. EPA regions and states have increased their investigations of areas around these drinking wells and locations where companies are suspected to have used PFOA in the past.

Plaintiff attorneys have filed personal injury lawsuits, initially against the manufacturers of PFOA and PFOS and now against companies which used PFOA in manufacturing other products. DuPont and Chemours agreed to pay $671m to resolve multidistrict personal injury litigation in Ohio federal court alleging DuPont improperly dumped cancer-causing chemicals. This is in addition to the estimated $350m paid by DuPont for water filtration systems in the affected communities, health data collection for the class and health studies. Companies that historically used PFOA in the manufacture of products recently have become subject to both remediation actions and personal injury lawsuits.

                         Companies in the supply chain are even questioning the presence of short-chained perfluorinated compounds in raw materials or products, despite the fact that short-chain chemicals cannot degrade to form PFOA or other more toxic long-chained fluorinated compounds.

Prudent potential actions

In the face of these developments, companies which may have used chemicals containing PFOA or may even still be using similar long-chain perfluorinated chemicals in their production processes may want to take precautions.

First, manufacturing companies that used perfluorinated chemicals may want to assess their compliance with existing regulatory requirements.

Second, companies, or their trade associations, may want to track regulatory developments (either internally or through a trade association). If appropriate, companies may comment on these regulatory developments. As appropriate, companies may want to document (internally within the company or again through their trade association), the unique toxicological issues associated with PFOA in particular or short-chain fluorinated compounds more generally.

Notwithstanding the active regulatory and personal injury actions, there is an unusual degree of scientific uncertainty associated with the recent advisories issued concerning PFOA. In fact, the EPA’s current internet site states that the “information that EPA has available does not indicate that the routine use of consumer products containing PFASs poses a concern”. According to the former head of the EPA Toxic Substances Control Act (TSCA) programme, the voluntary approach cited above was utilised because it was unlikely there was a reasonable basis to conclude that manufacturing, processing, distributing, using or disposing of PFOA “presents, or will present an unreasonable risk of injury to health or the environment”, the statutory threshold for a ban, which is less demanding than the typical personal injury burden.

Third, on a case-by-case basis, companies may want to assess their potential legacy liabilities from historic use of at least the long-chained fluorinated chemicals.

Finally, if the EPA or a state initiate an investigation (or if local citizens threaten a lawsuit), companies should have a flexible roadmap concerning how to proceed. It is axiomatic that without a roadmap, you ‘cannot get there from here’. In short, be prepared.

 

William J. Walsh is senior counsel at Clark Hill PLC. He can be contacted on +1 (202) 772 0924 or by email: wwalsh@clarkhill.com.

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BY

William J. Walsh

Clark Hill PLC

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