Just a few days ago, an $11.9 million settlement was announced in a Michigan lawsuit in which a class of approximately 3,000 plaintiffs alleged that a PFAS manufacturer and a PFAS-using paper mill contaminated drinking water supplies, thereby polluting the environment and placing nearby citizens at increased risk of adverse health effects. The PFAS paper mill settlement is noteworthy not because it is yet another settlement by 3M, one of two prominent chemical companies that manufactured PFAS, but because a business that used PFAS in its manufacturing process found itself yet again needing to settle a costly lawsuit for actions that took place over the course of several decades. Companies of all types (not just paper companies) must understand that this is but one representative example of the type of lawsuits that we have predicted will have significant impacts on company financials as awareness of PFAS issues continues to grow. These impacts will be felt well beyond industries that use PFAS directly in their manufacturing processes, and companies of any type must take a closer look at current or legacy PFAS issues that may plague them in the near future.

What Are PFAS and Why Are They a Concern?

Per- and poly-fluoroalkyl substances (“PFAS”) are a class of over 7,000 manmade compounds. Chemists at 3M and Dupont developed the initial PFAS chemicals by accident in the 1930s when researching carbon-based chemical reactions. During one such experiment, an unusual coating remained in the testing chamber, which upon further testing was completely resistant to any methods designed to break apart the atoms within the chemical. The material also had the incredible ability to repel oil and water. Dupont later called this substance PFOA (perfluorooctanoic acid), the first PFAS ever invented. After World War II, Dupont commercialized PFOA into the revolutionary product that the company branded “Teflon.”

Only a short while later, 3M invented its own PFAS chemical – perfluorooctane sulfonate (PFOS), which they also commercialized and branded “Scotchgard.”  Within a short period of time, various PFAS chemicals were used in hundreds of products – today, it numbers in the thousands.

The same physical characteristics that make PFAS useful in a plethora of commercial applications, though, also make them highly persistent and mobile in the environment and the human body – hence the nickname, “forever chemicals.” While the science is still developing regarding the extent of possible effects on human health, initial research has shown that PFOA and PFOS are capable of causing certain types of cancer, liver and kidney issues, immunological problems, and reproductive and developmental harm.

The PFAS Paper Mill Settlement

In the town of Parchment, Michigan, the Crown Vantage paper mill produced paper products for decades. For several decades, a PFAS-containing grease and oil repellant was used to coat certain types of paper manufactured at the mill. While the ownership of the mill changed hands several times since it opened in 1909, in 2000, Georgia Pacific purchased assets and liabilities of the last corporate entity to own the mill. During the 1980s and 1990s, a landfill site was owned and operate by the owner of the paper mill, in which PFAS-containing waste and sludge were dumped. While done pursuant to applicable local permits, over time the waste and sludge nevertheless began to leach into public drinking water supplies. In 2000, upon completion of its purchase, Georgia Pacific assisted with closing the landfill site.

In 2018, the local environmental regulatory agency for the state of Michigan tested the local water sources and found 740 parts per trillion (ppt) of PFOA, 670 ppt of PFOS, and a total PFAs concentration of 1,587 ppt. At the time, Michigan had adopted a 70 ppt acceptable level for PFAS in drinking water. Subsequent investigations by the state of Michigan identified the Crown Vantage landfill as a likely source of the PFAS contamination. Well testing was conducted in the immediate area around the landfill, and PFAS concentrations of up to 11,500 ppt were discovered. A lawsuit was filed on behalf of the citizens of Parchment and others who utilized the drinking water source in December 2018. The lawsuit sought damages for necessary medical monitoring for the class participants, nuisance, trespass, negligence, gross negligence, battery, and products liability claims.

Why This Lawsuit Should Concern Many Businesses

The PFAS paper mill settlement and lawsuit is but one example of the type of lawsuit that we predict will overwhelm businesses in the near future, especially when (as we predict) the EPA for the first time sets an enforceable PFAS limit with respect to drinking water. The EPA regulatory action will trigger a requirement that all states follow suit, although each state is still permitted to enact more aggressive standards than the EPA, if they wish.

As states accelerate testing requirements for drinking water sources of all types to determine compliance with the EPA or state-level PFAS limits, enormous amount of data will be collected regarding the scope of PFAS proliferation in the nation’s water. This data will allow not only regulatory agencies, but also citizens (such as the ones in Michigan and a pending paper mill lawsuit in Fairfield, Maine) to determine likely sources of PFAS contamination due to businesses in proximity to those water sources. Those companies may become targets of not only regulatory agency action for remediation costs, but also lawsuits from citizens seeking damages for additional remediation costs, property devaluation, and personal injury. Depending on the scope of the PFAS contamination and a company’s ultimate contribution to PFAS problems, this could cost some companies millions of dollars.

As the PFAS paper mill settlement shows, the lawsuits will not be confined only to chemical manufacturers producing PFAS. Rather, they will extend to companies that utilize the PFAS for their manufacturing process, that purchase raw materials that may be contaminated with PFAS, that utilize water that may be contaminated with PFAS (which would then be discharged by the company), and waste discarded that may contain PFAS. Even companies that merely purchase land that may have legacy PFAS contamination issues may find themselves the target of lawsuits or regulatory action if the PFAS have slowly leached from the soil into water sources over time.

Conclusion

Our prediction remains that in 2021, PFAS drinking water rules will be finalized at the federal level. This will require states to act, as well (and some states may still enact stronger regulations than the EPA). Both the federal and the state level regulations will impact businesses and industries of many kinds, even if their contribution to drinking water contamination issues may seem on the surface to be de minimus. In states that already have PFAS drinking water standards enacted, businesses and property owners have already seen local environmental agencies scrutinize possible sources of PFAS pollution much more closely than ever before, which has resulted in unexpected costs. All companies of all types would be well advised to conduct a complete compliance audit to best understand areas of concern for PFAS liability issues, and ways to mitigate PFAS concerns.