Summer Blockbuster: The PFAS Settlement

As the movie studios begin to roll out their megahits for the summer, the big news last week in environmental law was the blockbuster $12 billion settlement in the multi-district litigation pending in the U.S. District Court in South Carolina on the impacts from PFAS in aqueous film-forming foams (the “AFFF MDL”). While the news certainly caused a huge splash, the critics are reserved about just how much this development resolves a problem like PFAS.

In the wake of the seminal 2004 settlement agreement, which brought $70 million to six water districts impacted by the releases of PFAS from DuPont’s Washington Works Plant and funded a massive public health study, the C8 Science Panel, of the residents of the Parkersburg, West Virginia area, DuPont and its successor, Chemours, continued to argue that the “forever chemicals” did not cause or contribute to deleterious human health impacts.

Even in the cases brought by the individuals who participated in the C8 Science Panel, DuPont did not concede an inch. The chemical manufacturer lost the legal arguments and eventually settled those cases but maintained the posture that the groundbreaking C8 Science Panel only demonstrated a “probable link” rather than an objective finding of “causation” between PFAS and various health outcomes, such as ulcerative colitis, thyroid disease, testicular cancer, and kidney cancer.

With that legal parsing, the chemical companies continued to dig in and publicly oppose any conclusion that PFAS impacted human health. For example, while many legal observers anticipated industry litigation challenging the EPA’s proposed rulemaking to list PFOA and PFOS as hazardous substances under CERCLA, Chemours pre-emptively sued the EPA over its June 2022 PFAS Health Advisory. In that petition, Chemours argues, among other things, that EPA was arbitrary and capricious when it relied on toxicological data that was not relevant to humans to set the PFAS Health Advisory. Chemours defeated the EPA’s Motion to Dismiss before a three-judge panel of the Third Circuit Court of Appeals in December 2022, and the matter is being briefed for a further hearing with the EPA just recently filing its papers in the Court of Appeals on Tuesday, June 27, 2023.

Against this backdrop of contested toxicological interpretation, observers were looking at the test cases in the AFFF MDL as the proving ground for both sides to bring their best science and objective arguments to settle the issue of whether PFAS causes or contributes to deleterious health impacts.

Now, as the news breaks of settlements totaling over $12 billion in the AFFF MDL, one might think that skepticism of the health implications of PFAS will abate, and the government can proceed unopposed to promulgate extensive regulations over PFAS. However, according to the proposed 3M settlement that has been released – but not yet adopted by the District Court – the chemical companies have not accepted liability and are not conceding any grounds on causation.

Though it certainly does not represent the total cost to rehabilitate all public water supplies in the US (not to mention globally), the settlement amount of $12 billion speaks for itself, and going forward, it may be hard for 3M and Chemours to claim with straight faces that there is no causation of human health impacts.

Whether 3M and Chemours admit liability for deleterious health impacts, the liability landscape will be altered forever once the EPA lists PFAS as a hazardous substance under CERCLA.

As the proceeds of the settlement are distributed among all eligible public water suppliers in the United States, the payments to individual systems will not cover all remedial costs or ongoing O&M costs for PFAS removal. Given this reality, water suppliers are going to continue to need relief from the long-term costs of these “forever chemicals” in drinking water. With the releases and covenants not to sue for all types of PFAS baked into the settlement agreements from the AFFF MDL, the public water suppliers will not receive any further relief from the major PFAS manufacturers, which may spark actions against local actors.

In addition, once the EPA completes the rulemaking process, owners and operators of properties where there has been a release of PFAS will face liability under CERLCA. Even if those parties can name the chemical manufacturers as third parties who bear responsibility for placing PFAS products into the stream of commerce, there will be a limit to the contributions and involvement the chemical companies can bear before being forced into bankruptcy.

The many consumer goods companies that added PFAS to their products to achieve stain-resistant or hydrophobic functionality will appropriately bear some responsibility for any releases from their facilities during the manufacturing process. There may also be greater scrutiny on when and why these companies continued to use PFAS in the face of increased awareness of the potentially serious health consequences. Thus, for real estate and corporate due diligence – particularly in states that already have their own reportable concentrations and cleanup standards – the massive settlement in the AFFF MDL does not eliminate the potential for liability for a PFAS release. Prospective purchasers will still need to weigh the risk of getting involved with a property contaminated with an increasingly notorious noxious substance.

The settlement is a blockbuster, but there will be sequels coming to a court near you.