The Swedish Armed Forces Appeals The Land And Environment Court Of Appeal's PFAS Judgement

It is now clear that the Swedish Armed Forces is appealing the Land and Environment Court of Appeal's judgement regarding environmental damage caused to Uppsala Vatten och Avfall AB of about SEK 37 million. The question concerns the PFAS-contaminated groundwater supply in Uppsala and who bears responsibility for the costs of cleaning the groundwater before it is used as drinking water, with the proceedings having been ongoing for some considerable time. Uppsala Vatten's action was dismissed in the first court, the Land and Environment Court, as the water and drainage company was not considered to have demonstrated that there was a sufficient causal connection between the operation that the Swedish Armed Forces conducted on an airfield and the pollution damage that arose. In this article, Lindahl's environmental law experts review the Land and Environment Court of Appeal's judgement and analyse its consequences. We will naturally continue to monitor legal developments within this highly interesting area and update our analysis if the Swedish Armed Forces is granted leave to appeal.

One issue that has long been highlighted in the context of environmental- and tort law is the occurrence of PFAS contaminants in water supplies. This is not least a consequence of the Supreme Court's rulings in the question of the water and drainage principals' liability in the so-called Kallinge-case, through the rulings "Drinking water" NJA 2018 p. 475 and "the PFAS" case (the Supreme Court's case T 486-23), where the Supreme Court established that, according to the Swedish Product Liability Act, the water and drainage principals have a responsibility to compensate the appellants for personal injuries as a result of increased contents of PFAS in the blood due to the presence of PFAS in the drinking water.

The responsibility for damage that has arisen due to PFAS contaminants can be examined with the support of a number of different legal regulations, depending on who has caused the pollution and what type of damage has arisen. The issue is primarily regulated in the Environmental Code ("MB") in chapters 10 and 32. Chapter 10 of MB regulates primary responsibility for such remedial actions that an operator can be required to take in relation to the public if it has contributed to pollution damage or serious environmental damage to a property. This is in distinction to the tort rules in chapter 32, MB, which solely regulate damages that have come about to a property's surroundings. Pursuant to chapter 32 of MB, compensation as a result of both personal injury, material damage and pure property damage can be examined. However, an examination of the responsibility for the consequences of a PFAS contamination does not need to be limited to the rules in the Environmental Code. A tort examination can also take place pursuant to or based on the Product Liability Act. In distinction from when these regulations are applied, chapter 32 of MB entails a certain alleviation of the evidentiary burden for the injured party. It is namely sufficient that this party demonstrates the overwhelming likelihood of the causal connection between the disturbance and the damage that is alleged.

On 9 April 2024, the Land and Environment Court of Appeal handed down its judgement in the relevant case, thereby adjudicating on several issues of interest in understanding the regulation of damages for environmental damage pursuant to chapter 32, MB. Not least, the question of whether Uppsala Vatten's demands had been subject to the statute of limitations, as well as the calculation of the size of the damages.

BACKGROUND

Uppsala Vatten is principal for the public water supply in Uppsala municipality and is licensed to extract groundwater from the relevant groundwater supply. It was discovered during the autumn of 2012 that the groundwater supply contained PFAS contaminants. An enquiry was conducted by Uppsala Vatten, concluding that the PFAS contaminants had arisen as a result of discharges of PFAS from a nearby airfield belonging to the Swedish Armed Forces. The airfield's operations had included use as a fire training site, and fire-fighting foam containing PFAS had been used during the exercises.

Uppsala Vatten claimed that the Swedish Armed Forces should pay some SEK 37 million plus interest as a result of costs to deal with the PFAS contaminants in the groundwater between autumn 2012 and December 2020. Further, Uppsala Vatten claimed that the Swedish Armed Forces should pay an annual amount of SEK four million (index-linked), or alternatively a one-off amount of some SEK 215 million for future costs attributable to management of the PFAS contaminants in the groundwater. The Swedish Armed Forces contested Uppsala Vatten's claim.

The Land and Environmental Court found that the enquiry lacked sufficient support that the Swedish Armed Forces' PFAS contaminants had caused the damages to the groundwater in the way that Uppsala Vatten alleged. Uppsala Vatten's claim was therefore dismissed in the first court.

THE OUTCOME IN THE LAND AND ENVIRONMENTAL COURT OF APPEAL

Contrary to the lower court, the Land and Environment Court of Appeal considered the Swedish Armed Forces to be liable to compensate Uppsala Vatten's costs for dealing with the PFAS contaminants in the groundwater up to December 2020. However, Uppsala Vatten was not successful with the claim for compensation for future costs, though the court stated that Uppsala Vatten is at liberty to present claims in the future for compensation for future damages.

Of particular interest for the court's adjudication is its assessment of the causal connection between the PFAS-contamination in the ground at the airfield and the contaminants in the groundwater supply, the question of whether Uppsala Vatten's demands should be regarded as subject to the statute of limitations, as well as the assessment of the damage's size, which are all developed individually in more detail below.

EXAMINATION OF THE CAUSAL CONNECTION

Uppsala Vatten had the burden of proving that it was overwhelmingly likely that the costs of dealing with the PFAS contaminants in the groundwater had been caused by the Swedish Armed Forces' previous activities at the airfield.

According to the Land and Environment Court of Appeal, the enquiry requires concrete support concerning the cause of the damage and, in other words, it is not sufficient to provide a hypothesis that is to be regarded as closer than other explanations. On reviewing the enquiry that Uppsala Vatten conducted, the court found that Uppsala Vatten had made it overwhelmingly likely that the PFAS-contamination at the airfield had caused the PFAS-contamination in the groundwater supply. The alternative causes alleged by the Swedish Armed Forces were judged not to be overwhelmingly likely causes of the damage.

LIMITATION

The Swedish Armed Forces considered that Uppsala Vatten's demands were subject to the statute of limitations, as the use of fire-fighting foam at the airfield had ceased more than ten years previously when Uppsala Vatten presented its demands for compensation in March 2018. However, Uppsala Vatten considered that the disturbance (contamination of the groundwater) was still ongoing, with the consequence that the demand could not be considered subject to the statute of limitations.

The Land and Environment Court of Appeal found the legal situation not to be clearly established when it comes to the question of when the limitation period starts in connection with environmental damages where the tort-based action entails disturbances that continue even after the action was taken. The court's conclusion was that the limitation period only commences when the disturbance ceases and not from the point in time when the tort-based action was taken. The relevant disturbance in the case in the form of contamination of the groundwater through PFAS contaminants was regarded as still ongoing, which is why the court considered that Uppsala Vatten's demands were not subject to the statute of limitations.

SIZE OF THE DAMAGES

Regarding the question of the compensation to which Uppsala Vatten was entitled, the Land and Environment Court of Appeal found that all of the costs that Uppsala Vatten incurred up to December 2020 were substantiated and caused by the relevant disturbance and thereby recoverable. However, the court did not consider that Uppsala Vatten should be granted compensation for future costs.

Pursuant to chapter 32, section 9, first paragraph of MB, if so requested by a party, compensation for future damages shall be determined if the amount of the compensation can be reliably estimated in advance. Further, pursuant to chapter 32, section 9, second paragraph of MB, an annual amount is determined if there are reasonable grounds for this. If the circumstances subsequently change, the compensation can be reduced with respect to these conditions.

According to the court, there was uncertainty concerning which purification method would be used by Uppsala Vatten in the future to manage the PFAS-contamination in the groundwater, the cost for these methods, as well as how the PFAS contaminants would change over time. The Court consequently considered that it was not appropriate to make an estimate of future damages. However, the court emphasised that this does not mean that Uppsala Vatten was prevented from presenting claims in the future for compensation for future damages.

Comments

The Swedish Armed Forces has appealed the Land and Environment Court of Appeal's judgement, and it is therefore still uncertain what importance the positions taken by the court will have going forward in other PFAS-related cases. If the Supreme Court grants leave to appeal, the Land and Environment Court of Appeal's judgements may change. Certain conclusions can however already be drawn from the case.

The Land and Environment Court of Appeal's statements to the effect that the assessment of when the limitation period commences must be based on the disturbance's occurrence and whether this is still ongoing, will entail major consequences if the court's decision remains unchanged after a potential appeal in the Supreme Court. Such an application leads to relatively long liability periods for the party that has caused the disturbance and the damage in the event that the disturbance is still ongoing after the tort-based action has ceased. Contamination of groundwater can continue long after the tort-based action has ceased, with the current case being an example. The Land and Environment Court of Appeal's approach begs the question of when limitation can be said to have been implemented in a practical sense concerning PFAS contaminants. PFAS breaks down very slowly in nature and can spread over long distances, at the same time as it is difficult to remove PFAS from the area of land, which is why the date that the disturbance ceased actually seems very remote in relation to PFAS contaminants.

The court's conclusion in the case was that future costs for rectifying PFAS contamination are less suited for estimation, as the costs are associated with major uncertainties. At the same time, the Land and Environment Court of Appeal prescribed that the injured party is at liberty to return with claims for compensation for future costs. As a result of the court's conclusion concerning the limitation period, the period within which the injured party can present compensation demands comprises a longer period, extending a long way into the future. Such a legal solution naturally entails major economic uncertainty for the party that conducted the operation that caused the disturbance and the damage.

Presence of PFAS contaminants in soil and water constitutes an impact on significant values, both environmental and purely economic. In their capacity as water and drainage principals, the municipalities are obliged to provide the public water supply, and essentially finance their water plants through water and drainage charges. PFAS contaminants are costly to deal with as they can require reconstruction of existing purification plants, and in the event that the water and drainage principal cannot substantiate with overwhelming likelihood that a certain operator caused the pollution damage, it is ultimately the water and drainage collective that has to stand for the costs through increased water and drainage rates. There is therefore every reason to assume that the liability issues concerning PFAS contaminants will continue to be highly topical for a long time to come.

Want to know more about legal issues linked to liability for PFAS contaminants or did the article raise any other issues? You are very welcome to contact any of us or your normal contact person at Lindahl.