U.S.-Based 3M Faces More Costs After $581M Chemical Cleanup Pact in Belgium
3M Co. still faces the prospect of additional costs to resolve contamination liabilities in Belgium after reaching an agreement to clean up and remediate PFAS, the so-called forever chemicals used in many consumer goods, a government official said.
The St. Paul, Minnesota-based company’s agreement with the Flemish government to pay €571 million ($581 million) doesn’t release it from responsibility to address human health damage that arises from contamination, according to Zuhal Demir, the Flemish environment minister.
The pact is “open-ended” for 3M’s obligations for health and soil remediation, she said in a statement Wednesday. “This agreement ensures we can take concrete actions on the ground.”
3M’s manufacturing activities over several decades caused widespread contamination in the area surrounding its Antwerp factory, Bloomberg Businessweek detailed in a report last month. The Flemish government ordered 3M to stop production of PFAS in Antwerp last year after activists exposed the extent of the contamination around the factory, and tests on almost 800 local residents showed the vast majority had unsafe levels in their bloodstream. 3M resumed some PFAS production at the site last month.
While the new agreement gives 3M a path to move forward, officials in Belgium are focusing on the limits of the deal. The pact doesn’t prevent local residents from bringing civil claims against 3M, doesn’t stop an ongoing environmental-crime probe of the company, and doesn’t cap future liabilities for health harms to local residents, a representative for Demir said.
“It was important for us that the agreement was open-ended,” spokesperson Andy Pieters said in an interview. “If there is health damage to civilians because of 3M, we can come back to charge them with that.”
In a regulatory filing Wednesday, 3M said it plans to take a $360 million pretax charge for the second quarter of 2022 for PFAS. The agreement will “build the foundation for future certainty in 3M’s Belgium operations and address future potential liabilities,” John Banovetz, its executive vice president and chief technology officer, said in a statement.
The U.S. company committed an additional €300 million beyond what it already announced for remediation of the area surrounding the Antwerp plant and installing PFAS treatment technology on its site. The agreement said there’s no limit to 3M’s obligation to remediate the soil under a government decree.
Among the new funds announced, 3M will pay €100 million to help finance costs related to a state-backed €4.5 billion highway and tunnel project to complete the ring road around Antwerp, which has involved digging up soil that 3M contaminated with PFAS. It will also pay €100 million directly to the Flemish government for PFAS-related costs, including the running of blood tests on local residents.
Pieters said reaction to last month’s Bloomberg Businessweek story prompted 3M’s “last, best and final offer” in the negotiations.
3M shares rose less than 1% in New York trading Wednesday and have declined 27% so far this year, more than the 19% drop in the S&P 500 index.
Civil Claims
The agreement won’t stop civil claims against 3M from going ahead, said Geert Lenssens, a partner at SQ Law in Brussels who is representing a local family with high PFAS levels in their blood. He says the case could usher in hundreds of additional lawsuits for compensation.
“We are worried that civilians were not involved in the negotiations,” Lenssens said. “There are all kinds of personal, material and health damages now and in the future that are clearly not included.”
Flemish politicians voiced concerns about the agreement. Hannes Anaf, who chaired the PFOS Commission in the Flemish parliament that investigated 3M’s contamination, said he’s worried the agreement may allow the company to escape future liabilities despite government assurances.
“This is one of the most polluted areas with PFOS in all of Europe,” Anaf said. “It’s good that 3M makes a first funding commitment of €571 million and it may seem like a big number but it isn’t in reality.”
Minnesota Contamination
In the U.S., 3M’s costs to resolve PFAS contamination have been much higher. In 2018, the company reached an $850 million settlement with the state of Minnesota to address PFAS contamination in a deal that was set up to address contaminated drinking water in Cottage Grove and surrounding towns.
In Belgium, 3M’s pollution hasn’t impacted drinking-water supplies.
The pact could lead to 3M accepting polluted soil from the highway-tunnel project on to its factory site to allow construction to continue. 3M committed to support services such as “operation of an interim storage depot, landfill or mobile cleaning installation site on the site of 3M,” Pieters said, adding that it could involve additional environmental permits.
The Flemish government concluded its agreement with 3M after just 10 months of negotiations, compared to eight years it took to settle the Minnesota case.
“The government might have proceeded too fast. There are uncertainties and the complete picture of the damages isn’t clear,” Lenssens said. “This is not the end of it. It’s a start.”