Regulation PFAS: The Upcoming Challenges for the Electronics Industry

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With the PFAS regulation, the electronics industry is facing a profound upheaval. It is no longer just about substances, but also about liability, supply chains and business risks - and about the scope for action that companies still have.

Per- and polyfluorinated alkyl substances (PFAS) are at the center of one of the biggest regulatory developments in European chemicals legislation: The planned restriction under the EU REACH Regulation is intended to largely restrict the manufacture, use and placing on the market of these substances. At the same time, new limit values, more sensitive test methods and more extensive substance restrictions mean that PFAS exposures that were considered permissible for decades are now becoming legally and economically relevant.

For the electronics industry, PFAS have long been more than just a materials issue: they affect strategy, supply chain and liability. Increasing requirements for product safety and growing liability risks meet complex supply chains and long product cycles. For companies, it is therefore not just a question of evaluating individual substances, but of transparency, traceability and controllability along the entire value chain.

Background: Current Developments with Significant Effects

The electrical and electronics industry is a particular focus of this far-reaching restriction. Fluoropolymers, special coatings or certain process chemicals are still considered difficult to replace in parts of the industry, for example in printed circuit board or semiconductor production.

With stricter limits, some of which only apply for a limited period of time, the regulatory benchmark will continue to shift - in the long term towards an extensive ban on PFAS. This will also increase the requirements for product safety, substance transparency and documentation along the supply chain - factors that can be of decisive importance both preventively and in the event of liability.

The restriction procedure is nearing completion: the European Chemicals Agency (ECHA) committees responsible for risk assessment (RAC) and socio-economic analysis (SEAC) have finalized their opinions. A final consultation on the SEAC opinion will follow in spring, in which affected companies can comment on the effects of the planned restriction and influence for which applications longer transitional periods or specific exemptions should be provided.

Implications: Liability Issues Along Complex Supply Chains

As a result of the new regulation, additional liability issues arise, particularly in environmental law, which is often linked to operator or polluter roles. In complex industrial structures, several sources of PFAS can interact: In the electronics industry, PFAS can originate from both materials and manufacturing processes, for example from upstream manufacturing stages, production processes or process chemicals used. These different causes can in turn be attributed to different actors - such as suppliers, operators or individual process steps. This can result in several (co-)responsible parties under liability law.

This creates structural uncertainty for companies: the connection between historical use, possible emissions and a specific burden can often not be clearly proven. At the same time, liability risks can arise even without clear evidence of fault, for example if companies are considered potentially responsible due to their activities or create particular risks through their business activities.

The harbingers of the restriction are already visible: customers are demanding less or no PFAS, while conflicts and possible recourse claims along the supply chain are intensifying - and the corresponding risks are becoming increasingly difficult to insure.

Strategy: Systemic Approach

This makes a sober and structured approach to PFAS all the more important. In addition to the question of which applications technically require PFAS, transparency about material flows in our own production and in the supply chain is crucial.

If affected market participants document materials, specifications and supply chains, they create the basis for recognizing regulatory requirements at an early stage, addressing them along the value and supply chains together with customers and suppliers and contractually mapping corresponding expectations. If companies can demonstrate this in a comprehensible manner, their ability to act in the event of a conflict also increases.

Against this backdrop, the current consultation phase on the planned PFAS restriction is also becoming increasingly important. It offers companies the last opportunity to contribute their specific applications, technical dependencies and transitional requirements to the process. (sb)

*Niklas Gatermann is a senior associate at the commercial law firm reuschlaw, which specializes in product liability.