Moving on from PFAS Settlements: Recouping Costs for Water Systems

It’s hard to overstate the impact of PFAS contamination on United States public drinking water systems. Evidence continues to show that both the prevalence of PFAS in drinking water and its negative health effects are much greater than initially thought, with far-reaching implications for public health and affordability for ratepayers. In response to these health concerns, the EPA published draft MCLs for several PFAS contaminants in March 2023, which are expected to be finalized by December 2023. Systems that have detected PFAS concentrations above the determined levels are acting quickly to implement treatment solutions and seek funding sources to cover the cost of achieving compliance with the impending EPA guidelines. These PFAS treatment costs can often be in the millions of dollars for a single system, and unfortunately, the burden is often borne by municipalities and ratepayers if alternative funding sources cannot be obtained.

PFAS Settlement Agreements Reached

For public drinking water suppliers throughout the United States, some financial relief may be on the horizon in the form of payments from the 3M and DuPont PFAS settlements. These multibillion-dollar agreements are an important step toward protecting the public from dangerous drinking water contaminants while holding the companies, not ratepayers, accountable for the costs of PFAS cleanup. Now that both class action settlements have received preliminary approval from the presiding federal judge, public drinking water systems must assess their PFAS situation and determine their next steps before the opt-out deadlines in early December 2023.

While the 3M and DuPont settlements will provide some much-needed funds to help remove PFAS from public drinking water sources, there are other potential funding sources available. Municipalities that aim to provide drinking water free from PFAS while maintaining affordability for ratepayers will benefit from considering all available options for cost recovery. One option to explore, in addition to the settlements, is pursuing litigation against the other companies that contributed to PFAS water contamination. Legal claims against these companies will not be resolved by the 3M and DuPont settlements, providing an opportunity for water systems to seek further compensation.

Settlement Funds Unlikely to Cover all PFAS Cleanup Costs

Many water systems will find that the estimated 3M and DuPont settlement payments are insufficient to cover the full cost of managing their PFAS contamination, which may include shutting down wells, finding alternative water sources, installing or upgrading treatment facilities, and monitoring and operation costs for years to come. The Estimated Allocation Range Tables available on the official settlement website can help systems estimate the payments they can expect to receive from the settlements, although the exact amounts will not be known until after the opt-out deadlines. A firm with experience in water contamination litigation, like SL Environmental Law Group, can help provide eligible water systems with a good-faith estimate of how much they may expect to receive from the settlement payments.

If a water system determines that the settlement terms do not meet its needs, it can opt out before the settlement opt-out deadlines. Systems that opt out will remain eligible to pursue litigation against 3M, DuPont, and its related companies. The deadline for utilities to opt out of the DuPont settlement is December 4th, 2023, and the 3M opt-out deadline is set for December 11th, 2023. Legal guidance by a law firm experienced in water contamination litigation and familiar with the settlements can help water systems make an informed decision on whether or not to opt out.

It is important to remember that public drinking water systems that do not opt out of the settlements will be ineligible to recover additional PFAS management costs from the companies involved. Meanwhile, due to PFAS’ resistance to biodegradation, treatment and monitoring costs can be expected to continue for many years into the future.

While the proposed EPA PFAS MCLs are important for the protection of public health, the agency recognizes that compliance with the new rules is likely to result in increased costs for U.S. water systems. The EPA estimates that American water utilities will need to spend between $772 million and $1.2 billion per year to comply with the proposed PFAS MCLs, while private entities predict the cost will be even higher.  

Others have also commented on the expense associated with the proposed standards. In comments to the EPA in May 2023, the American Water Works Association (AWWA) said that the proposed Safe Drinking Water Act (SDWA) PFAS rule would be “one of the costliest rules under SDWA ever proposed.” AWWA estimated that the costs of the proposed standards could exceed $2.5 to $3.2 billion annually.

Depending on the specific needs of each water system, the payments from the 3M and DuPont PFAS settlements may not result in full cost recovery. Details including the type of PFAS contaminants detected, the size of the system, and the treatment methods required will all contribute to the unique financial needs of each participant.

Hold All PFAS Manufacturers Accountable

While 3M, DuPont, Chemours, and Corteva were major contributors to PFAS contamination throughout the United States, they are only a few of the multiple defendants named in the ongoing multi-district litigation (MDL), In Re Aqueous Film-Forming Foams Products Liability Litigation MDL 2873. This means that there is still an opportunity to seek to hold additional companies responsible for polluting drinking water. By pursuing litigation against these other companies, water systems may be able to recover more costs than they would through the class action settlements alone.

Systems that do not file their own lawsuits in the MDL will miss out on the chance to seek cost recovery from other companies that the MDL plaintiffs allege have produced PFAS or used aqueous film-forming foam (AFFF), a PFAS-containing substance that was commonly used in firefighting, airport, and military operations and training. The combined liability of these remaining defendants may provide an additional funding source, protecting ratepayers from the high costs of PFAS cleanup.

Water providers interested in litigation should consider acting quickly, as statutes of limitations may restrict the length of time allowed between contaminant detection and lawsuit filing. The statute of limitations is a time limit that applies to every legal claim. Outside of special circumstances, claims brought after the statute of limitations has run out cannot be brought to court, no matter how valid or valuable they are. The time to bring a lawsuit varies from state to state, but can be as short as two years, and what triggers the clock can also vary from state to state. This may result in a small window for systems to seek compensation from those responsible for a water source’s PFAS contamination. In order to avoid issues with statutes of limitations and benefit from as many cost recovery sources as possible, it is in water systems’ best interests to seek legal counsel sooner rather than later.

Experienced environmental litigation attorneys can also help answer questions specific to a water system. For example, if a water source has low or undetectable levels of PFAS currently, but the system is concerned about potential PFAS issues in the future, a knowledgeable lawyer can help the system determine the best course of action. By seeking legal advice before the settlement deadlines, municipalities and water systems can better understand the terms of each agreement and make decisions accordingly.

Don't Leave Money on the Table

If your water system is considering action for PFAS cost recovery, a law firm with experience in water contamination litigation can help you explore all available legal options and avoid potentially costly mistakes. The legal process can be complex, and it is important to have a trustworthy advocate to help find the best solutions for your system’s unique challenges.

SL Environmental Law Group currently represents over 130 clients - including states, municipalities, water suppliers, and airports - in the ongoing PFAS MDL. With 20 years of experience representing clients in water contamination cases for various contaminants, our firm is not afraid to hold large companies accountable for their actions. To learn more about the legal options available to your water system, schedule a free consultation with the SL team.