3M’s Revised PFAS Settlement Includes Atypical Liability Terms

An unusual provision states and the 3M Co. negotiated in a revised multibillion-dollar PFAS settlement limits some future liability that water utilities and the company could face, a notable change with more litigation over the chemicals likely, attorneys say.

Judge Richard Mark Gergel of the US District Court for the District of South Carolina, which oversees multidistrict litigation involving specialized firefighting foam made with per- and polyfluoroalkyl substances (PFAS), preliminarily approved a revised, negotiated $12.5 billion settlement between 3M and water utilities on Aug. 29.

“It’s a historic and important settlement that takes one step forward in making 3M responsible” for releasing toxic chemicals that are found across the country, said Matt Pawa, a partner with Seeger Weiss LLP who represents Maine and Vermont in state litigation against 3M and other companies.

In the settlement, 23 Republican and Democratic attorneys general negotiated with 3M a new “Protection Against Claims-Over” provision that revises the previous “Contribution and Indemnity” section.

The changes prevent 3M from giving water utilities money through the settlement and then in the future demanding the utilities give the money back if the company is successfully sued by other parties for drinking water-related harm, Pawa said.

“The uncapped indemnity in favor of 3M, which could have left water systems liable for damages well beyond their expected recovery from the settlement, is removed in its entirety, significantly increasing the value of the settlement to participating water systems,” said an Aug. 29 statement from New York Attorney General Letitia James (D).

Judge Gergel will decide whether to finalize the settlement after water utilities opt in or out and after a final hearing scheduled on Feb. 2, 2024. 3M’s payouts would be spread out through 2036.

No Money Back

Cancer clusters involving individuals who’ve drank PFAS-contaminated water may emerge over time through medical monitoring or other means, said Suzanne Galvin, a partner with Thompson Coburn LLP.

The revised section protects 3M by saying a water utility, which opts into the settlement, can’t demand more money from the company, said Galvin, a litigator who defends companies in personal injury and product liability cases involving medical products, pharmaceuticals, and environmental torts.

It also protects water utilities, said John P. Gardella, a shareholder with CMBG3 Law LLC.

If 3M is successfully sued—for example by cancer victims who drank water with PFAS—the company can’t go back to a water utility with which it settled and demand the utility help pay for the new liability, he said.

Instead, utilities will look to companies beyond PFAS producers that have used and released the chemicals into local drinking water supplies, said Gardella, who chairs the firm’s PFAS, Environmental, Risk Management & Consulting and ESG practice groups.

The novel approach used may, however, face future legal scrutiny, Galvin said.

3M, other PFAS manufacturers, and other companies also face ongoing liability risks from other torts involving the production, use of, and exposure to the chemicals.

States, firefighters, and other parties have already filed hundreds of lawsuits seeking money for alleged harms unaddressed by 3M’s settlement offer and the similar $1.18 billion settlement offered by DuPont de Nemours Inc., the Chemours Co., and DuPont spinoff Corteva Inc.

And new lawsuits in which farmers and other parties may seek funds for alleged property damage and other injuries from PFAS are likely, said Pawa.

Tobacco-Like Settlement?

Attorneys general from Arizona, California, Pennsylvania, Wisconsin, and the District of Columbia in an Aug. 29 letter said 3M’s proffered billions fall “far short of what is needed to address the harms 3M’s products have caused public water systems.”

“The inadequate settlement amount places the burden of PFAS contamination on ratepayers and taxpayers.”

They buttressed their point by citing costs the American Water Works Association has estimated US water systems will pay to comply with the Environmental Protection Agency’s proposed drinking water limits for just two PFAS. Utilities would face additional costs to comply with state regulations that may cover more of the thousands of PFAS, they said.

Earplug and PFAS litigation could bankrupt 3M by the end of the 12-year payout period it’s negotiated to settle with water utilities, they wrote.

Galvin said 3M has found solutions its shareholders support, and she anticipates it will continue to.

Pawa and Gardella said something akin to the 1998 Master Settlement Agreement between tobacco companies, states, and territories may be discussed for PFAS.

That agreement began with four large tobacco companies but eventually included 45. It resolved dozens of state lawsuits brought to recover billions of dollars in health-care costs associated with treating smoking-related illnesses.

Unlike smoking, however, the science about whether and what diseases result from varied PFAS is still uncertain, Galvin said.

The case is In Re Aqueous Film-Forming Foams Products Liability Litigation, D.S.C., No. 18-mn-02873, Settlement preliminarily approved 8/29/23.