PFAS Settlements of $11 Billion Only a Start for Water Utilities

Utilities facing financial hurdles from coming federal water limits for PFAS stand to receive a boost from an historic $11 billion in potential legal settlements, but that money isn’t likely to fully meet utilities’ needs, according to attorneys.

A tentative settlement by the 3M Co. of at least $10 billion prompted US District Judge Richard M. Gergel on June 5 to order a 21-day delay in the first bellwether trial in a multidistrict litigation PFAS case. The first of a group of lawsuits the judge has teed up consists of city, town, and local water agencies seeking money to remove per- and polyfluoroalkyl substances (PFAS) or recoup costs they’ve spent.

Information about 3M’s tentative offer followed a June 2 announcement by DuPont de Nemours Inc., Chemours Co., and DuPont spinoff Corteva Inc. of a proposed $1.19 billion settlement to resolve hundreds of contamination treatment cost claims.

The two settlements would constitute the largest PFAS pacts in the US and one of the biggest mass tort deals ever.

And they’d offer “the best path forward for getting some of these water utilities money relatively quickly that they need,” said John Gardella, a shareholder, CMBG3 Law, LLC, who chairs the firm’s PFAS, Environmental, Risk Management & Consulting, and ESG practice group.

The next couple of weeks are critical to determining how much money will be available in the settlement pool, said Emily M. Lamond, a member of Cole Schotz PC’s environmental department.

Gergle’s order started a ticking clock for the parties to reach an agreement. “If a binding agreement regarding the water district cases is not accomplished within this 21-day period, the Court will promptly reschedule this case for trial with no further continuances to be granted,” the order said.

That’s not a lot of time to complete a $10 billion possible settlement, Lamond said.

‘Drop in the Bucket’

It’s impossible to know whether the possible $11 billion in settlements will offer a good deal for drinking water utilities, until more information about the specifics of the deals becomes available, attorneys said.

The devil is in details, including whether the settlement requires water utilities to release the companies from all future liability claims, Lamond said.

But an $11 billion pool of money would go a long way, particularly for utilities using carbon filtration, which has been an effective treatment, said Allyson Cunningham, a partner who focuses on environmental, toxic tort, and other crisis-related litigation at Lathrop GPM LLP.

Utilities that require reverse osmosis, a treatment process that removes contaminants by forcing water molecules through a semipermeable membrane, face higher costs, meaning the dollars awarded wouldn’t go as far, she said.

Final drinking water limits the Environmental Protection Agency is developing for up to six PFAS and the agency’s proposed designation of two of those chemicals—perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)—as hazardous substances under the Superfund law are key drivers prompting utilities’ need for money, Gardella said.

The EPA’s proposed Safe Drinking Water Act (SDWA) rule for the six PFAS would be “one of the most costly rules under SDWA ever proposed,” the American Water Works Association said in recent comments to the agency.

Annual treatment costs to remove the chemicals would range from more than $2.5 billion to $3.2 billion annually, it said, offering details on the capital and operating costs some utilities already paid to address local concerns or comply with state drinking water limits.

The EPA says that fewer than 10% of the roughly 66,000 water systems—3,400 to 6,300—subject to the proposed rule would have PFAS levels high enough to require treatment. The EPA’s rule proposes a 4 parts per trillion limit for PFOA and PFOS. The agency would require utilities keep the amounts of four other PFAS below a mathematical calculation they’d use to estimate potential health hazards.

“$10 billion is a drop in the bucket; $1.18 billion is an even smaller drop in the bucket in terms of the nationwide costs to meet the EPA’s proposed 4 parts per trillion limit,” Lamond said.

The EPA’s proposed hazardous substances rule adds to water utilities concerns, said Stephanie Schlea, senior water policy adviser with the Association of State Drinking Water Administrators. Treatment costs may increase if carbon filters, membranes, or other PFAS-contaminated material have to be disposed of at hazardous waste sites, she said.

Spur for More Offers

These initial settlements would provide an impetus for the remaining defendants in the case, In Re Aqueous Film-Forming Foams Products Liability Litigation, Gardella said.

It could spur the defendants to discuss additional settlements to resolve their alleged liability and expand the funds available to water utilities, he said.

Other defendants include BASF Corp., Honeywell International, Inc. Phillips 66 Pipeline LLC, Raytheon Technologies Corp., and other companies alleged to have made PFAS or to have produced or used aqueous film-forming foam (AFFF), a type of fire suppressant made with the chemicals.

Some of these chemicals, such as PFOA and PFOS, are known for remaining for years in the environment and people’s bodies, where they’re associated with an array of health problems including weakened immune systems and certain cancers.

Yet PFAS’ properties, including their ability to make products resist heat, oil, water, and corrosion, have made them widely used by many different industrial sectors including clothing and carpet manufacturers, paper mills, fuel cell and semiconductor producers, and the aerospace industry, which has previously used some of the chemicals to make sure airplane brakes worked.

The case is In Re Aqueous Film-Forming Foams Products Liability Litigation, D.S.C., No. 18-mn-02873, 6/5/23.