13 August 2024
Forever chemicals – Why Construction and Real Estate companies need to be aware
It is now widely established that PFAS (perfluoroalkyl and polyfluoroalkyl substances), used for a variety of industrial applications, pose a significant health risk.
PFAS are released into the environment through multiple sources and accumulate in soil and groundwater, leading to costly and often challenging clean-up and remediation efforts. In Europe, PFAS contamination hotspots have been identified in numerous locations, primarily due to industrial activities, firefighting foams, and other point sources.
The impact of PFAS contamination is profound, affecting drinking water, food safety, and human health. Construction and real estate firms face significant exposure to PFAS contamination, with the detection of PFAS at sites disrupting projects, increasing costs, and making it difficult for property owners to divest of their investments.
Forever chemicals do not break down easily in nature, making it very difficult to remediate contaminated sites.
Due to their broad use over more than half a century, PFAS chemicals are now found in soil, drinking water, lakes, oceans, the air, rainwater, food, fish, animals, and humans. It is believed that 98% of humans have PFAS in their blood. The health risks associated with PFAS exposure have raised concern among scientists, regulators, and communities. Studies have linked PFAS exposure to adverse health effects.
of humans have PFAS in their blood
Challenges in removing PFAS from the environment
Addressing the challenges of removing PFAS requires a coordinated effort among scientists, policymakers, industry leaders, and communities to develop and implement effective strategies for managing and mitigating PFAS contamination. Removal of forever chemicals from contaminated sites is extremely challenging.
Chemical persistence: PFAS are known for their exceptional chemical stability due to the solid carbon-fluorine bonds that make them resistant to natural degradation. This persistence means that once PFAS enter the environment, they remain for an extended period.
Ubiquity in the environment: PFAS contamination is widespread and is found in various environmental compartments, including surface water, groundwater, soil, and even the atmosphere. This widespread distribution complicates remediation efforts, as multiple pathways and sources of contamination must be addressed simultaneously.
Complex remediation techniques: Traditional remediation technologies are often ineffective against PFAS. Advanced methods, such as high-temperature incineration and advanced oxidation processes, can be technically challenging and expensive. Soil washing and activated carbon filters can remove PFAS from soils and water, but these methods generate secondary waste that needs further treatment.
High costs: The cost of PFAS remediation is exceptionally high. Comprehensive clean-up operations require substantial investment in technology, labour, and time.
Public awareness: Effective remediation requires public awareness. Communities must be informed about the presence and risks of PFAS to support and participate in remediation efforts. Building trust and ensuring transparent communication between stakeholders, regulators, and the public is crucial for PFAS remediation.
Key issues for construction and real estate firms
Health and safety: The construction industry frequently uses PFAS in various materials such as roofing coatings, certain paints, some types of flooring, sealants, adhesives, and even glass fixtures. These products can expose construction workers to elevated levels of PFAS, according to a report from the Green Science Policy Institute.
Sites may already have legacy pollution issues. PFAS chemicals from former manufacturing industries may have accumulated in the soil, posing additional risks. This is a particular issue when considering the health and safety of construction workers engaged in tunnelling or digging projects, according to a 2022 study by Swinburne University of Technology in Australia.
Liability risk: A growing number of class actions worldwide highlight that PFAS contamination can result in civil liability claims from current and future landowners, as well as downstream users in the case of contaminated groundwater. Even if they are not the original polluters, real estate and construction firms may face liability if their activities exacerbate or spread existing contamination, or if they fail to take reasonable steps to prevent harm to people or the environment.
The Corby toxic waste case involved a major environmental and public health issue in Corby, Northamptonshire, England. During the 1980s and 1990s, toxic waste from the demolition of a former British Steel plant was improperly handled and disposed of, leading to widespread contamination. A group of families claimed that exposure to hazardous materials caused congenital disabilities in their children. In 2009, the High Court ruled in favour of the families, finding that the Corby Borough Council had been negligent in managing the waste, which led to the contamination. This landmark case highlighted the serious consequences of improper waste management and set a precedent for environmental liability and public health protection.
Regulatory risk: Discovering PFAS contamination can trigger notification obligations, leading to further investigation and remediation requirements. Financial liability may arise from regulatory fines, legal claims, and the need to compensate affected parties, exacerbating the financial burden on responsible entities.
Financial risk: The financial risk of PFAS contamination lies in the substantial costs associated with its detection, remediation, and long-term management. If PFAS contamination is not identified early in a project, it can lead to unexpected expenses due to the complex and challenging nature of cleaning up these persistent chemicals. Remediation efforts often involve extensive soil and water treatment processes, installation of additional infrastructure to prevent further spread and ongoing monitoring. These unforeseen costs can significantly impact project budgets and timelines.
Could PFAS be the next asbestos?
In the US, the floodgates are opening where PFAS litigation is concerned as awareness of the health and environmental risks associated with these chemicals grows. Numerous lawsuits have been filed against manufacturers and users of PFAS for contamination and related health issues, drawing comparisons to the asbestos crisis due to the widespread impact and legal ramifications.
The litigation surge in the US is a strong indicator of what the UK and Europe might expect, especially as many US litigation funders have opened offices in the UK, Holland and other European countries. The trend suggests we are likely to see an increase in PFAS-related legal action, driven by similar concerns over public health, environmental damage, and regulatory responses.
Real estate companies may have acquired landfill sites that are former industrial estates, airfields and/or chemical works to develop shopping centres or homes. A big part of the UK’s housing programme is using brownfield sites to develop new homes.
In the past, many of the environmental surveys did not include testing for PFAS, focusing solely on hydrocarbons and heavy metals. Therefore, some existing sites may now be contaminated with PFAS.
A big issue with PFAS chemicals is they are phobic to everything, including water and oil, so they just sit there in the ground. These chemicals were designed not to degrade in the environment, resulting in the source of contamination being there for a long time. You have to use aggressive technologies, including reverse osmosis, to tackle it in drinking water and for land clean-up, but there are limited options available.
The litigation surge in the US is a strong indicator of what the UK and Europe might expect...The trend suggests we are likely to see an increase in PFAS-related legal action
Remediation options
Remediation of PFAS-contaminated sites is challenging and expensive. Due to the unique properties of forever chemicals, traditional approaches used for other pollutants are often ineffective.
However, ongoing projects in several European countries are exploring soil and groundwater remediation methods, particularly for small-scale contamination at airports and former firefighting sites. Activated carbon filters can remove some PFAS from groundwater, and specialist suppliers can regenerate PFAS-loaded activated carbon[i].
Complete removal of PFAS from soil requires high-temperature combustion treatment, which is a regulated activity. Soil washing is a promising technology, but it depends on soil composition and only transfers PFAS into the washing water, which then needs further treatment. Standard wastewater treatment methods are unable to remove PFAS from water fully.
While immobilisation or stabilisation methods show promise in preventing the spread of PFAS in soils and groundwater, providers cannot presently guarantee their long-term effectiveness. In other words, it remains uncertain whether these methods can permanently bind PFAS in the soil and prevent future transfer to groundwater.
Insurance cover for PFAS/PFOS
Insurance companies have begun to utilise PFAS-specific exclusions across many insurance classes, however, the coverage implications for PFAS-related liabilities can vary depending on the specific facts and language of the policies.
PFAS exclusions in general liability policies are becoming more common. These exclusions specify that the insurance does not, for example, cover any bodily injury and property damage related to PFAS exposure, or the design, manufacturing, sale, or disposal of PFAS-related products.
Specific Environmental impairment liability (EIL) policies that can cover Brownfield sites, contractors and business operations vary on their approach. In the UK, some EIL insurers started to exclude PFAS cover over a year ago, whilst other insurers would look at it on a site/project specific basis. The position now is all EIL insurers are very much aware of PFAS, some have blanket exclusions others will look at it on a site/project specific basis and provide cover subject to the quality of underwriting information provided.
Conclusion
Real estate and construction companies need to proactively address the risks and potential claims associated with PFAS exposure and contamination. This includes developing a comprehensive risk management and communication plan and reducing exposure to PFAS in building materials throughout the supply chain.
It is crucial to conduct up-to-date risk assessments, site investigations, and testing specifically for PFAS/PFOS. Additionally, clients should seek guidance on effective site clean-up methods.
While exclusions have been introduced in property and casualty policies, there may still be coverage available under bespoke environmental impairment liability policies. It is incumbent upon clients to carefully review and analyse policy wordings and assess their response strategies, with the support of their insurance broker.
By taking these proactive measures, real estate and construction firms can better prepare for PFAS-related challenges and protect their interests in the face of possible exposures and potential claims.
Given the growing attention on forever chemicals, by litigators, regulators and other stakeholders, the urgency of acting on PFAS contamination cannot be overstated. Delaying action could lead to significant future costs, legal liabilities and reputational damage. Early identification and remediation of PFAS contamination can prevent long-term environmental and health impacts, ensuring regulatory compliance and protecting public trust.
The EIL team at Gallagher have looked at cover for Real Estate sites, PFAS remediation projects plus Pi/consultants/contractors annual insurances. It’s important to review the terms of your specific policy to understand the coverage inclusions and exclusions related to PFAS. If you’re considering insurance coverage for potential PFAS liabilities, it would be beneficial to consult with an insurance professional or legal advisor who specialises in this area
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