3M on Thursday announced a $10 billion-plus national settlement of "forever chemical" lawsuits involving drinking water, a significant step in reducing a litigation overload that has punished the company's stock.
The agreement, which requires court approval, is by far the largest settlement 3M has made over its PFAS chemicals — and one of the largest mass tort settlements in recent U.S. history.
Previously, the largest 3M settlement was an $850 million agreement in 2018 to settle PFAS water pollution claims in Minnesota.
Under the settlement announced Thursday, 3M will pay $10.5 billion to $12.5 billion from 2024 through 2036, according to a company filing with U.S. securities regulators. The company expects to record a $10.3 billion charge to its profits during the second quarter to recognize the settlement.
While the settlement covers a range of cases, the Maplewood-based company still has myriad claims pending.
The new settlement pivots on a big federal court case in Charleston, S.C., where scores of cities and water agencies have sued 3M over firefighting foam made with PFAS, which have tainted groundwater nationwide.
The agreement resolves all drinking water claims by public water suppliers in the South Carolina case, 3M said.
And it also covers current and future drinking water claims by public water suppliers who allege PFAS contamination from all sorts of products made with 3M's chemicals. It also provides water suppliers with money for testing and treatment technologies.
"This agreement will benefit U.S.-based [public water systems] nationwide that provide drinking water to a vast majority of Americans," 3M said in a statement. As is common in settlements, 3M did not admit liability.
"This is an important step forward for 3M, which builds on our actions that include our announced exit of PFOA and PFOS manufacturing more than 20 years ago ... and our announcement that we will exit all PFAS manufacturing by the end of 2025," 3M Chief Executive Mike Roman said in the statement.
Water providers' lawsuits that targeted firefighting foam were expected to go to trial in Charleston June 5. On that day, 3M and plaintiffs' attorneys asked U.S. District Court Judge Richard Gergel to delay the trial, saying they were in serious settlement talks.
DuPont de Nemours Inc., Chemours Co. and DuPont spinoff Corteva Inc. settled their aspect of those cases earlier this month for $1.2 billion.
Around the same time, Bloomberg News reported that 3M had made a tentative $10 billion settlement offer, though the company did not confirm it.
Analysts at UBS wrote at the time that a $10 billion settlement would be "more of a starting point rather than an end game." Still, it "could allow the overhang to be lifted quicker than previously thought," they wrote.
RBC Capital Markets also weighed in this month following the tentative settlement report.
"Overall, we see this as a step in the right direction for 3M in terms of dealing with its PFAS liability, but we believe this is still just the beginning of what is likely to be a multi-year legal battle for the company," RBC analyst Deane Dray wrote June 4.
"We caution that there are likely more multi-billion-dollar settlements ahead," including up to $10 billion for the Combat Arms military earplug cases. "Our market-based estimate for the total litigation overhang on the stock (both PFAS and earplugs) is approximately $30 billion," Dray wrote.
3M is fighting over 200,000 suits claiming that its Combat Arms earplugs — once standard issue for the U.S. military — were defective, causing hearing damage.
The suits lodged by veterans and active-duty soldiers constitute the largest multi-district litigation — or MDL — case in U.S. history. 3M denies the allegations, saying the earplugs were safe.
3M's previously largest PFAS settlement covered pollution damage from its Cottage Grove plant, where the chemicals were produced for decades. The company has also committed to paying nearly $600 million to remediate water pollution from a PFAS plant in Belgium.
The company has also settled some other PFAS cases for smaller dollar amounts.
3M's settlement announcement Thursday was made after the stock market closed. In after-market trading, 3M's stock was up at least 4%. 3M shares have been trading at 10-year lows in recent months, due to litigation uncertainty and other woes.
3M pioneered the use of PFAS chemicals decades ago, selling them for use in everything from fabric stain protectors to metal plating to firefighting foam. However, PFAS — an acronym for per- and polyfluoroalkyl substances — does not biodegrade, tainting the environment.
The chemicals have been linked to cancer, liver damage, decreased fertility and other maladies.
The common thread in the flood of PFAS litigation: 3M knew of the chemicals' risks for years, yet did not fully disclose them to government regulators. 3M stands by its handling of PFAS, arguing that the chemicals are safe to humans in the levels that exist in the environment.
No single PFAS case is more significant in terms of size, combined with possible damages, than the firefighting foam litigation in South Carolina. It has more than 4,700 plaintiffs, including firefighters with personal injury claims. However, the settlement announced Thursday covers only public water providers.
About 300 public water providers sued 3M and other PFAS makers in recent years — and many of those claims involved firefighting foam.
In the 1960s, 3M and the U.S. Navy developed a firefighting foam that was particularly good at quenching oil-related fires. The Air Force adopted the foam after the Navy, as did fire departments nationwide.
3M's fluorocarbon-based film blanketed oil fires, smothering flames, keeping vapors from igniting and fireproofing unburned fuel. But it contaminated water supplies nationwide, primarily from training exercises.
3M stopped making the foam around 2000 because of potential environmental risks.
Includes reporting by Brooks Johnson.