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Recent PFAS Settlements Emphasize the Scale of Liability Exposure for Primary Manufacturers

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Three notable settlements from June 2023 highlight the immense scale of liability for primary manufacturers of per- and polyfluoroalkyl substances (PFAS).

  • June 2, 2023: DuPont de Nemours Inc. (Dupont) and Dupont spinoff companies, Chemours Company and Corteva Inc., announced that they reached an agreement in principle, totaling $1.185 billion, to settle PFAS related drinking water claims in the aqueous film-forming foam (AFFF) multidistrict litigation in the U.S. District Court for the District of South Carolina. The class includes public water systems at which PFAS have been detected at any level, as well as systems that are required to monitor for the presence of PFAS under Safe Drinking Water Act rules or other applicable laws.
  • June 22, 2023: 3M entered into a substantially larger settlement, estimated to cost between $10.3 billion and $12.5 billion (depending on how many public water systems detect PFAS impacts) to resolve its own liabilities in the MDL. This is the single largest PFAS-related settlement to date.
  • June 28, 2023: Separate from the AFFF MDL, Solvay Specialty Polymers USA LLC, the U.S. subsidiary of Solvay S.A., a Belgium-based company, agreed to a nearly $393 million settlement with the New Jersey Department of Environmental Protection (NJDEP) to address PFAS contamination near the company’s West Deptford, N.J., manufacturing plant. Notably, this settlement includes a sizable payment of $75 million to the NJDEP for natural resource damages.

In large part, these sizable settlements reflect the practical difficulties of remediating PFAS to the limits required by or recommended by federal and state regulators once they are released into the environment. This and the current regulatory and litigation climate have made PFAS an existential threat for primary manufacturers. For example, earlier this year CreditSights, a New York-based financial research firm, estimated 3M’s total PFAS-related liabilities at approximately $140 billion.

What is certain is that the current wave of PFAS litigation and enforcement actions is still in its nascent stages and is expected to continue, if not pick up, in the foreseeable future. Plaintiffs’ firms involved in the AFFF MDL settlements on a contingency basis will now have additional resources to pursue PFAS claims in other contexts and under other theories of law. Furthermore, the trend of bringing suits and initiating enforcement against secondary manufacturers and distributors of PFAS is expected to pick up, increasing the liability exposure of such entities.

In this climate, businesses with potential PFAS concerns may wish to consider the value of ascertaining their nexus to these chemicals, as well strategies for offsetting or mitigating their liability exposure. Insurance recovery will likely be an important component of any such strategy. With respect to new policies, policyholders may find it possible and worthwhile to pay higher premiums or to develop creative strategies to obtain coverage for prospective PFAS liabilities, particularly for direct exposure claims. At the same time, pre-1987 occurrence-based policies may be a useful tool to offset historical PFAS liabilities, particularly environmental liabilities, provided that the “occurrence,” “property damage” or “bodily injury” is alleged to have commenced decades ago.