In The Courtroom: As PFAS Regulation Ramp Up, Experts Urge Manufacturers To Look At Their Supply Chain

 

As PFAS Regulation Ramp Up, Experts Urge Manufacturers To Look At Their Supply Chain

Environmental regulators are beginning to pay attention to PFAS, also known as “forever chemical” compounds, and experts say the recent action in California may just be the start. The state of California recently passed a range of legislation mandating that the chemical can no longer be “intentionally-added” to food and beverage packaging and banning any packaging containing PFAS from being labeled as recyclable. Just this week, California announced it will expand the class of chemicals defined as PFAS under Prop 65.

Food and beverage packaging made from paper, cardboard, or other plant-based fibers are the main focus of this new legislation as they are commonly treated with a waterproof lining that is composed of PFAS. Outside of plant-based packaging, a process used to increase the strength of plastic known as fluorination has also been linked to the inadvertent creation of the chemicals.

In addition to California’s legislation, the EPA made a preliminary move last week to begin researching and establishing federal regulations on the use of the compounds with the release of its PFAS Strategic Roadmap. However, due to the many unknowns about the chemicals’ use, production and presence in the environment, these regulations may take time to develop and will likely continue to evolve over time.

“The challenge with PFAS is we don’t really understand yet the full extent of how and where these compounds have been used in the industry,” said Tom Lee, a partner at Bryan Cave Leighton Paisner who specializes in PFAS litigation. “We are identifying new product categories and industries that interact with this chemistry all of the time.”

What are PFAS?

PFAS are a man-made class of chemical compounds used in a wide range of consumer products — ranging from the non-stick coating on cookware to shampoo. The chemicals are highly water soluble and extremely resistant to heat, do not significantly break down over time and pose a significant risk of seeping into soil and wastewater, thus contaminating the surrounding environment and any humans, animals, or crops that come into contact with them.

The most common PFAS compounds are PFOS and PFOA which, in food and beverage packaging, are created when polyethylene is used as a moisture barrier, either in high (HDPE) or low density form (LDPE). PFAS were first found to be a hazardous substance in a study conducted by the U.S. Navy in 1980 and have been almost entirely phased out in U.S. commerce since 2015 by the EPA under the Toxic Substances Control Act (TSCA). However, they are still found as a byproduct in wastewater from manufacturing and used in varying quantities since there is no federal ban on their use.

Earlier this year, a study from John Hopkins identified PFAS compounds in the liquid of 39 of the 100 bottled water brands it tested. Although there are no current federal limits on the concentration of PFAS in drinking water, the EPA did issue a health advisory in 2016 setting a safety level of 70 parts-per-trillion of PFOA and PFOS concentrations combined in drinking water.

What can brands and manufacturers do now to get ahead?

Because of the broad use of PFAS in manufacturing, coupled with the added component of their inadvertent production, beverage brands and manufacturers should assess their entire supply chain for the use and quantities of the chemical as regulations begin to take form. Manufacturers should also be on the lookout for legislation at the state-level as regulations range on essentially a “perceived impact” basis as some states, such as North Carolina and Minnesota, have been home to PFAS manufacturers and have recorded significant concentrations of the compounds in the environment, Lee said.

“It’s not over and there are more regulations coming, so to the extent that you think this chemistry is a part of your supply chain, now is a very good time to evaluate how you use it, what quantities you use, how it relates to your wastewater discharges and air emissions and whether now is the time to consider looking at alternatives,” Lee stated.

Beverage packaging manufacturers should pay particular attention to the most recent revisions to TCSA, Lee said, as it establishes new reporting methods for use of PFAS. The EPA is currently conducting a “10-year lookback” at how the chemical has been used across a variety of industries. According to Lee, manufacturers should take an active role in those conversations during the public comment period.

For bottled water companies sourcing from municipal water, the EPA’s roadmap creates a bit of grey area in relation to risk and obligation for testing the water they bottle and distribute.

“If EPA passes MCLs [mandatory content limits] for certain PFAS, then municipal drinking water systems will have to comply with those limits, which could actually benefit beverage manufacturers that use municipal drinking water as an ingredient,” Lee said. “How those drinking water limits and related regulations will impact the finished beverage products themselves, however, is still an open question.

“The general consensus is that more regulation is coming and there will be broader categories of PFAS regulated,” Lee continued. “There will be more regulations in different areas of environmental law and there is an opportunity now to both get involved in that regulatory process, but also to consider whether there are any changes to be made in anticipation of that risk.”

India Globalization Capital Reaches Settlement In Investors Lawsuit

India Globalization Capital reached a settlement agreement of $1 million to end a 2019 lawsuit alleging the company misled investors about its plans to produce CBD Energy Drink “Nitro G” in Malaysia despite the fact it is illegal to manufacture cannabis products in the country.

The case was filed in Maryland federal court after the company generated $30 million in capital in the two days following the announcement, driving its stock price up from less than $2 to $14.58 per share. The motion to dismiss the case states that a settlement agreement was reached due to the fact that continuing to pursue trial would have essentially bankrupted the company, in turn, causing investors to lose any chance of receiving any financial compensation.

“At the time of settlement, IGC’s most recent quarterly report filed with the U.S. Securities and Exchange Commission showed the company had cash holdings of less than $1 million,” the motion states. “Additionally, the company’s stock was trading at less than $2 per share. In fact, the company’s entire market capitalization was less than plaintiffs’ estimate of maximum available damages.”

IGC continues to deny the allegations and will distribute the settlement fund among the authorized class members which is inclusive of those who purchased or acquired IGC common stock between Sept. 26, 2018, and Oct. 26, 2018.

Judge Dismisses Class Action Against Arrowhead Mountain Water

A class action lawsuit against Nestlé’s water brand Arrowhead Mountain was tossed out this week after a panel of judges agreed that no reasonable consumer would be misled about the origin of the brand’s water on the basis of the label imagery and brand name as alleged by the plaintiff in a complaint originally filed in 2019 in California Central District Court. The case was first dismissed in lower court and then again upon appeal in the ninth circuit after a judiciary panel affirmed the California federal court’s decision.

“The mountain and lake images, when combined with the source information and explicit notation that Arrowhead is a brand name, would not mislead a reasonable consumer into believing that Arrowhead water is sourced exclusively from one ‘Arrowhead Mountain,’” the lower court order said.

In the complaint, the plaintiff alleges she believed that the image of the mountain on the label was of Arrowhead and indicated that was the source of the water. The complaint also states that the plaintiff would have not purchased the water if it had been clear that it wasn’t actually sourced from Arrowhead Mountain. However, the judge ruled the label on the bottle is clear as it clearly notes that the liquid is collected from multiple sources followed by a list of the various mountain springs.