Source: https://www.lexology.com, April 3, 2019
By: Sarah J. Wightman, Marten Law LLP
On February 20, 2018, the State of Minnesota and 3M Company (“3M”) entered into an agreement settling the State’s claims against 3M for contaminating the State’s natural resources by releasing perfluorinated compounds (“PFASs”), including perfluorooctane sulfate (“PFOS”) and perfluorooctanoic acid (“PFOA”), into the environment.
This settlement, one of the largest natural resource recoveries in the history of the United States and the largest settlement relating to claims for PFAS contamination, will likely have a large impact on future regulation of PFAS chemicals as well as related litigation. The evidence developed during this litigation is staggering and will likely prompt other lawsuits and PFAS regulation. This settlement may also encourage more public natural resource damage claims, which have not yet been a focus of PFAS litigation. Finally, this settlement could inspire more PFAS regulation at the state level, given that Minnesota’s relatively strong PFAS regulations undergird this suit and the size of this settlement.
3M Operations in Minnesota
3M began to develop PFASs in Minnesota in the late 1940s. The company began commercial production of PFASs in Minnesota in the early 1950s and used PFASs to manufacture many products, including stain repellents like Scotchgard, fire retardants, stain removers, paints, hydraulic fluids, semi-conductors, and other products. For decades, 3M manufactured PFOS, PFOA, and other PFASs at facilities in the Twin Cities metropolitan area. 3M was the sole manufacturer of PFOS in the United States and a major manufacturer of PFOA.
In this lawsuit, Minnesota alleged that 3M disposed of wastes containing PFASs at many locations in the Twin Cities metropolitan area, including at dedicated disposal sites, landfills, and unlined dumps. 3M also allegedly discharged wastewater containing PFASs from its manufacturing facility directly into a stream that flows into the Mississippi River and disposed of PFAS-laden waste in close proximity to the Mississippi River, allowing the waste to leach into the river. The State also alleged that 3M contaminated four major drinking water aquifers supplying the sole source of drinking water for 125,000 residents.
Minnesota’s Claims and Subsequent Litigation
The State of Minnesota, through its Attorney General and the Minnesota Commissioners of Pollution Control and Natural Resources, brought claims against 3M in December 2010 under the Minnesota Environmental Response and Liability Act (“MERLA”); the Minnesota Water Pollution Control Act (“MWPCA”); and various tort theories, including trespass, nuisance, and negligence. The State asked the court to award: 1) damages under MERLA for the injury to and destruction of natural resources caused by 3M’s release of PFAS chemicals into the environment; 2) a declaration of responsibility under MERLA for future damages; 3) just compensation under MWPCA for loss to or destruction of fish or other aquatic life caused by the release of PFASs; 4) declaration of responsibility under MWPCA for future costs; 5) tort damages for the injury to the State’s natural resources; and 6) attorney’s fees and other costs under MERLA. The State sought damages totaling more than $5 billion.
The ensuing litigation lasted seven years―involving 27,000,000 pages of documents; approximately 200 witness depositions; more than $10 million in tests, fees and costs; over 100 judicial hearings and conferences; in excess of 1,600 court filings; and a negotiation lasting 22 hours just before trial was scheduled to begin. By the end of the case, more than 75 lawyers were involved (including appeals to the Minnesota Court of Appeals and Minnesota Supreme Court). The parties settled the day that jury selection was scheduled to begin in the trial.
Under the settlement agreement, 3M will pay $850 million to Minnesota through the 3M Grant for Water Quality and Sustainability Fund (“Grant”). The Minnesota Pollution Control Agency and Minnesota Department of Natural Resources will use the Grant to enhance water quality in the East Metropolitan Area, which includes suburbs of St. Paul. Example projects include:
The Minnesota Pollution Control Agency must also assess the role of Project 1007 in conveying PFASs to the environment. Project 1007 is a flood-relief project completed in 1987 that directs outflows from the relevant watershed over 5 miles away into the St. Croix River, and may have helped spread PFAS contamination caused by 3M throughout the environment.
After the priority uses described above, the Grant may be used for other environmental projects, including aquatic habitat restoration, terrestrial conservation projects, recreation improvements, and other sustainability-related projects. 3M also agreed to pay $40 million for temporary projects, including providing individual home water treatment systems, bottled water, and temporary treatment systems. If the $890 million in total settlement funds is exhausted and drinking water problems remain, 3M will continue to pay to fix those problems under a 2007 consent order with the Minnesota Pollution Control Agency.
The agreement includes a release of all future claims related to the litigation, and 3M admits no liability.
This is the third largest natural resource recovery in the history of the United States and the largest environmental settlement in Minnesota history, more than 100 times larger than the next largest case. This is also the largest settlement to date in the United States related to PFAS chemicals. In February 2017, DuPont reached a $671 million settlement with approximately 3,500 plaintiffs in Parkersburg, West Virginia. The plaintiffs in that case claimed injuries such as kidney cancer, testicular cancer, and thyroid disease resulted from drinking water contaminated by PFOA from DuPont’s manufacturing facilities. Due to its size and public profile, the 3M settlement will likely shape future regulation of PFAS chemicals as well as related litigation.
First, this lawsuit and settlement will help fuel future regulation and lawsuits against 3M, other manufacturers, and even those entities that released PFAS into the environment. As described above, this litigation produced millions of pages of documents and hundreds of depositions. The amount of information gathered in the case against 3M is immense. While some is specific to the Minnesota case, some may be of use in other litigation or regulatory processes. For example, this case produced evidence showing that 3M and others have conducted studies since the 1950s indicating that PFAS were toxic and widespread in the population. This could support further PFAS regulation at the state and federal level and damages in suits against 3M and other entities that released PFAS into the environment.
This settlement may encourage states (and other entities that may have standing under relevant laws) impacted by PFASs to bring lawsuits seeking relief for natural resource damages. In particular, it may prompt states with manufacturing facilities that have produced or used these chemicals to bring claims based on the harm to the environment caused by large-scale PFAS releases. Many cases have been brought by individuals emphasizing health impacts; however, natural resource damages have not yet been a focus in PFAS litigation. This litigation and settlement may pave the way for other similarly situated states to pursue similar theories of recovery.
Finally, this settlement may also encourage more state regulation of PFASs. In part, Minnesota was able to secure such a large settlement due to its strong statutory and regulatory structure around PFAS. The State brought claims under two Minnesota cleanup laws, MERLA and MWPCA. MERLA allows the State, as the trustee of the air, water, and wildlife of Minnesota, to sue for damage to those natural resources. Similarly, the MWPCA requires just compensation for damages to wildlife, fish, and other aquatic life. These statutes provided the grounds by which Minnesota could recover for damages to its natural resources. In addition to these statutes providing strong causes of action, Minnesota agencies have laid the regulatory groundwork to demonstrate that PFASs adversely affect human health and the environment. In 2002, the Minnesota Department of Health issued health-based values (interim drinking water quality guidelines) for PFOA and PFOS, followed in 2009 by permanent health risk limits for PFOA and PFOS in drinking water. The Minnesota Pollution Control Agency has also issued soil reference values for PFOA and PFOS. These regulations helped Minnesota quantify the damage caused by 3M’s release of PFASs into the environment and reinforced its argument that these chemicals are harmful to human health and the environment. Because Minnesota was able to secure this large settlement, other states may begin to study and regulate PFASs, which could ultimately lead to future litigation and similar settlements.
As federal regulatory action on PFAS continues to stagnate, this settlement indicates that, for the time being, states and other impacted parties will continue to take the lead on PFAS cleanup.