ST. PAUL — 3M’s pollution problems in Minnesota appear to be receding.
But nationwide, they are rising like the floodwaters of the Mississippi River. An estimated 35 federal bills take aim at 3M Co.’s chemical pollution, and 41 states have complained that it’s in their groundwater. Wall Street analysts have downgraded 3M’s stock, citing potential legal liabilities of up to $6 billion.
3M, they fear, is about to be injured by its own creation.
“From a legal standpoint, this is like an octopus — lots of arms, lots of outcomes, lots of issues to decide,” said Nick Heymann, an analyst with the advisory firm William Blair & Co.
The chemicals, found in groundwater around the world and millions of consumer products, seem to be in many places. And so does the potential legal liability.
“(The chemicals) remain an acute risk with product liability still unquantifiable,” said a July report of RBC Capital Markets, by analyst Deane Dray.
Citing the risk of lawsuits and cleanup costs, RBC in July downgraded the 3M stock — as have other advisory firms.
Final act in Minnesota?
In Minnesota, the legal issues seem to be entering their final act.
It began 15 years ago with the chemicals found in drinking water in Woodbury, Lake Elmo, Oakdale and Cottage Grove. They worried officials because in huge doses, the chemicals cause problems in laboratory mice including cancer, thyroid problems and birth defects.
The perfluorochemicals — many of them called PFCs or PFAS — were found in tiny amounts, including in Mississippi River fish and in the blood of Washington County residents.
But fears were eased by the state Health Department. In three separate studies, the department concluded there were no health effects on the roughly 60,000 affected people — even though the chemicals had been in their water for more than 60 years.
The amounts in local water — measured in parts per trillion — are so tiny that they couldn’t hurt anyone, 3M has said.
So the state attorney general’s office took a different approach. Instead of trying to show the pollution was harmful, a lawsuit charged 3M with damaging the environment.
3M made the chemicals and legally put them into dumpsites in the 1970s, where they leaked into groundwater, rivers and lakes. The chemicals are slow to degrade, and can linger in the bodies of humans and fish for years.
3M stopped making the two most persistent types of PFCs in 2002.
The state asked for $5 billion in damages. In 2018, 3M settled for $850 million. Two advisory groups are now mulling over ways to spend the money for water-quality projects.
The amount of PFCs in local rivers, and in bodies of people who have been drinking the water, has fallen by more than half. In the same way, fears seem to be fading. Today, there are no known pending lawsuits against 3M for any kind of pollution-related claim in Minnesota.
But not nationally.
“3M has been named in over 300 individual and class-action lawsuits over the decades” related to PFCs, said RBC.
About 610 locations in 43 states are contaminated with the chemicals, according to the Environmental Working Group, a Washington, D.C., nonprofit. The chemicals have been found in the drinking water of about 19 million people.
Roughly 35 pending bills in Congress address PFCs, according to the William Blair firm. One of those bills, the “PFAS Action Act of 2019,” was co-sponsored by Sen. Amy Klobuchar, D-Minn.
The act is one of many that would change the legal status of the chemicals to “hazardous,” increasing 3M’s cleanup costs.
But as in Minnesota, said analyst Heymann, other states might have a hard time showing that traces of the chemicals actually harmed anyone.
“3M has been adamant about this. Before you come out and say this is bad, you have got to figure out the scientific evidence,” he said. “Is PFAS empirically proven to be hazardous to humans? In what concentrations?”
3M officials chose not to comment for this article. For the past 15 years, 3M has claimed that the chemicals have never been proven to harm humans at any dose — a claim that has not been refuted.
A larger danger to the company could lurk in the claim that the chemicals harmed the environment — the successful tactic in Minnesota.
3M has set aside money to fight the environmental lawsuits. “3M looks to have ring-fenced its PFAS environmental liability with $1.1 billion in reserves and settlement,” said the RBC report.
It said that the money is in reserve for any future environmental lawsuits around 3M’s manufacturing facilities in Minnesota, Alabama, Illinois, Belgium and Germany.
But what about product liability? That is defined as a claim that a company manufactured a product that was defective or dangerous. They are in a countless number of products — non-stick cookware, stain repellent, fire extinguishers, packaging and wrappers for food.
Analyst Joshua Aguilar, cited on the website morningstar.com, estimated product liability between $1.8 billion and $7.8 billion.
Other analysts say that the chemicals are so widely used in so many products and locations, that it’s impossible to predict liability.
Analyst Heymann said a small shoe-maker in Michigan is being sued for using the chemicals. The PFCs are present in food-packaging materials nationwide. Hundreds of fires have been extinguished using 3M’s firefighting foam, leaving the chemicals to seep into groundwater.
The analysts don’t know how big 3M’s legal bills will be. But they will be big.
The highest suggested estimate for liability came from RBC. A report said that 3M’s stock price was “dislocated” below where it should be.
“If we were to assign all of this dislocation to (PFCs),” said the report, “it would imply an $8 billion valuation headwind.”