Environmental Law Section Blog: Lame Duck Impact on Potential PFAS Litigation:

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  • Environmental Law Section Blog
    September
    19
    2019

    Lame Duck Impact on Potential PFAS Litigation

    Robert D. Lee

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    The Wisconsin Legislature recently enacted legislation that could impact the ability of the attorney general to enter into and execute agreements involving contamination from PFAS, a substance that does not easily break down. Rob Lee discusses PFAS contamination and the impact of legislation in Wisconsin.

    State-initiated civil actions to address per- and polyflouroalkyl substances (PFAS) contamination have proliferated throughout the country in recent years.1

    In perhaps the most prominent of these actions, Minnesota sued 3M for PFAS contamination emanating from one of its manufacturing plants into the Twin Cities and surrounding areas.2 That case was settled in early 2018, with 3M agreeing to pay $850 million into a special fund established specifically to address the contamination.

    As the full extent of PFAS contamination in Wisconsin becomes clearer, state action against manufacturers and other potentially responsible parties becomes more likely. However, the Wisconsin Legislature recently enacted legislation that could impact the ability of the attorney general to enter into and execute agreements similar to the Minnesota-3M settlement.3 That in turn could diminish the state’s ability to abate the environmental and public health concerns giving rise to potential PFAS litigation.

    Rob Lee org rlee midwestadvocates Rob Lee, Notre Dame 2018, is an attorney and Thomas L. Shaffer Fellow Midwest Environmental Advocates in Madison, a public interest law firm that works on environmental and public health related issues.

    What Are PFAS?

    PFAS are a class of thousands of manufactured chemicals that have been used since the 1940s in a wide variety of consumer and industrial applications. Once in the environment, PFAS are highly mobile and do not easily break down, leading them to be called “forever chemicals.”

    PFAS have also been linked to adverse health impacts including an increased risk for certain types of cancer, infertility, developmental problems in children, high cholesterol, thyroid problems, and ulcerative colitis. Studies show that nearly every resident of the United States has a detectable level of PFAS in their blood.4

    The Minnesota-3M Settlement

    The Minnesota-3M settlement is the largest to date when it comes natural resource damages stemming from PFAS contamination.

    Minnesota initially sought $5 billion in damages from 3M for the disposal of waste and discharges of wastewater containing PFAS near the Twin Cities for over half a century. The state alleged violations of the Minnesota Environmental Response and Liability Act and the Minnesota Water Pollution Control Act. The state also brought claims for trespass, nuisance, and negligence. Under the terms of the settlement, 3M agreed to pay $850 million into the 3M Water Quality and Sustainability Fund.

    In addition, the settlement agreement prioritizes expenditure of those funds, with the highest priority being placed on ensuring residents have access to clean drinking water. Ingesting contaminated drinking water is the most significant PFAS exposure pathway.

    The second highest priority is placed on rehabilitating and remediating natural resources around the Twin Cities to address broader environmental contamination. After those two issues are addressed, any leftover funds may be allocated toward statewide conservation efforts.

    2017 Wisconsin Act 369

    During the December 2018 Extraordinary Session, the Legislature passed 2017 Wisconsin Act 369, which in part amended statutory provisions relating to settlement funds – namely, Wis. Stat. section 165.

    Previously, all settlement funds were deposited into the Wisconsin Department of Justice’s (DOJ) appropriation account, where the attorney general could ensure that all funds were expended according to the terms of those settlements.5 The attorney general was permitted to expend uncommitted settlement funds only after submitting a proposed plan for such expenditures to the Joint Committee on Finance.6

    As amended, section 165.10 now requires the attorney general to deposit all settlement funds into the general fund, regardless of whether those funds have been committed to a particular purpose.7

    Furthermore, to even enter into a settlement agreement, Act 369 requires the approval of either the Joint Committee on Finance or the full Legislature if it has intervened in the underlying litigation.8

    Implementation Issues

    On Aug. 1, 2019, the Legislature filed a Petition for Original Action and a Supporting Memorandum in the Wisconsin Supreme Court against Attorney General Josh Kaul over his interpretation of section 165.10.

    The Petition and Supporting Memorandum allege that Kaul, in a letter dated June 28, 2019, informed the chairs of the Joint Committee on Finance that section 165.10 only applies to traditional settlements. Under the attorney general’s interpretation, funds derived from a practice colloquially known as “sue and settle” – when a complaint and consent order are simultaneously filed – or from final judgments, can be deposited into the DOJ’s appropriation account rather than the general fund.

    Even if the attorney general’s interpretation is correct, significant questions remain, including whether and to what extent the Legislature can reappropriate settlement funds committed for a particular purpose that are deposited into the general fund.9

    Implementing an agreement such as the Minnesota-3M settlement could take years, if not decades. In the meantime, the Legislature’s funding priorities could change dramatically. While this could lead to funds being diverted to address PFAS-related issues that were unknown at the time of settlement, it could also lead to funds being diverted to issues wholly unrelated to PFAS. If settlement funds are not expended to address the contamination giving rise to the litigation, parties to the settlement will likely be absolved of liability while environmental and public health concerns remain.

    Another significant question concerns confidentiality during settlement negotiations. Kaul and members of the Joint Committee on Finance have been in a high profile standoff because committee members refuse to sign nondisclosure agreements, despite case confidentiality requirements. Without a guarantee of confidentiality, the attorney general may not be able to bring potentially responsible parties to the negotiating table, much less reach settlement.10

    This could increase the costs of PFAS litigation and strain limited judicial resources through the unnecessary prosecution of complex cases to final judgment. Remedial action to address PFAS contamination would consequently be postponed.

    Moving Forward

    Until these issues are resolved, the attorney general and potentially responsible parties will likely have to think strategically in anticipation of potential PFAS litigation. Depending on the outcome of the Legislature’s petition before the Wisconsin Supreme Court, pre-suit negotiations that result in “sue and settle” may be a viable option. If the attorney general’s interpretation is correct, the DOJ would be able to ensure that those funds would remain committed to addressing environmental and public health concerns associated with PFAS.

    Another option is for potentially responsible parties to remediate contaminated sites or, at the very least eliminate exposure pathways, before litigation becomes necessary.

    Although the Wisconsin Department of Natural Resources already referred Johnson Controls, which owns Tyco Fire Products, to the DOJ for civil prosecution due to violations of reporting requirements under the Spills Law,11 the company still set aside $140 million to clean up the PFAS contamination emanating from its testing site in Marinette.

    Such proactive measures could insulate potentially responsible parties from state-initiated civil actions.

    Endnotes

    1 See, e.g., New Hampshire v. 3M Co., No. 216-2019-CV-445 (N.H. Super. Ct. May 28, 2019); New Jersey v. 3M Co., No. L-000953-19 (N.J. Super. Ct. May 14, 2019); New Mexico v. U.S.A.F., No. 6:19-CV-00178 (D.N.M. Mar. 5, 2019); New York v. 3M Co., No. 904029-18 (N.Y. Sup. Ct. June 19, 2018); Ohio v. E.I. Du Pont Nemours and Co., No. 18OT32 (Feb. 8, 2018); North Carolina v. Chemours, No. 17-CVS-580 (N.C. Super. Ct. Sep. 7, 2017).

    2 Minnesota v. 3M Co., No. 27-CV-10-28862 (Minn. Dist. Ct. Dec. 30, 2010).

    3 2017 Wis. Act 369 § 27.

    4 For more information on PFAS, visit Midwest Environmental Advocates’ PFAS website.

    5 See 2017 Wis. Act 59 § 1672g (creating Wis. Stat. section 165.10).

    6 Id.

    7 Wis. Stat. § 165.10.

    8 Wis. Stat. § 165.08(1).

    9 This is a concern particularly given Wisconsin’s biennial budgeting process that typically funds programs rather than line items. See Wisconsin Legislative Reference Bureau, The Legislature and the State Budget (Jan. 2016). Furthermore, despite partial veto power over appropriation bills, the governor, whose office has consulted with the attorney general on cases, cannot insert language into appropriation bills. See Wis. Const. art. V, § 10(b).

    10 The Wisconsin Rules of Evidence provide some protections concerning whether evidence of conduct or statements made during settlement negotiations is admissible, but even then there are exceptions. See Wis. Stat. § 904.08. For further discussion on issues surrounding confidentiality of settlement negotiations, see, e.g., Wayne D. Brazil, Protecting the Confidentiality of Settlement Negotiations, 39 Hastings L.J. 955 (1988).

    11 Wis. Stat. § 292.11.

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