States sue 3M, DuPont over ‘forever chemicals’ in drinking water

Just outside of Bangor, Maine — the hometown of renowned horror author Stephen King — more than 500 students, faculty and staff arrive at Hermon High School each day. 

But since November, they can no longer drink the water. All the fountains are taped off with plastic bags. Bottles of water are stacked nearby. A water filtration system is set to be installed over the summer. 

“We’re very concerned,” Hermon School District Superintendent Micah Grant told CNBC. 

The reason? The school’s water recently tested above the state’s safety limit for PFAS, or per- and polyfluoroalkyl substances, often referred to as “forever chemicals.” 

According to the Environmental Protection Agency, even tiny exposure to PFAS in drinking water could pose a serious health risk. 

“We’re not fully understanding why it’s in our water and it’s at the level we’re at,” Grant said.

Hermon High School is just one example of PFAS contamination currently affecting the community, according to Maine’s attorney general, Aaron Frey. The chemicals have also been identified in groundwater in towns and municipalities throughout the state including several military facilities and farms, according to Frey.

“There are farmers who had to euthanize their livestock because of the chemical contamination,” Frey told CNBC. 

Maine recently joined a growing list of states — which now includes Maryland, Rhode Island and Massachusetts — in filing litigation against several chemical manufacturers claiming they have caused significant harm to the state’s residents and natural resources.

“We’re alleging that 3M and DuPont [and other manufacturers] created these chemicals … had the science that showed just how dangerous they were, how toxic they were, how they were going to last forever,” Frey said. “It is my responsibility to do whatever I can to hold accountable those companies that profited off of this chemical.”

More than a dozen other states — including Alaska, California, Colorado, Delaware, Florida, Illinois, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Ohio, Vermont and Wisconsin — have filed litigation against PFAS manufacturers over the years.

Some have already reached settlements. Minnesota, for example, settled with 3M for $850 million, and Delaware settled with DuPont and its spinoffs for $50 million, resolving the companies’ responsibility for damage in those states.

Wall Street is now awaiting a bellwether trial in federal court, set to begin Monday, in which the city of Stuart, Florida, alleges that firefighting foam chemicals manufactured by 3M contaminated its water supply.

According to the Centers for Disease Control and Prevention, PFAS are a group of chemicals used to make coatings and products that resist heat, oil, stains, grease and water.

The human-made substances date back to the 1940s, and over the decades, they’ve been used in a wide range of applications, including nonstick cookware, waterproof fabrics, carpeting, food packaging and cosmetics in addition to firefighting foam like that at the center of the lawsuit in Stuart.

But over time, concerns began to rise. CDC officials say the synthetic chemicals do not break down in the environment and are tied to serious health risks.

“We’ve seen correlations with thyroid disease, certain kinds of cancer, kidney disease, liver dysfunction, it becomes concentrated in the liver … they’re called ‘forever chemicals’ because they stay in your body,” former FDA Commissioner Dr. Scott Gottlieb told CNBC. “I think what the government needs to do is step up testing, make sure that we have a better picture of where these chemicals are getting into food sources [and] in the water supply.”

While testing of PFAS is expected to become more prevalent in the years to come, Gottlieb said there are steps consumers can take now to assess their exposure. Residents who live close to a military base or an industrial plant that is known for making these chemicals should ask their local water utility if it has tested PFAS levels, he said.

“There was a big analysis done a number of years ago of different water municipalities that found that about 1% of all municipal water sources did contain some level of PFAS,” Gottlieb said.

More than 64 million people are affected by drinking water contaminated with PFAS — represented by a reading of 4 parts per trillion or above — according to an EPA report released in March.

Several manufacturers have announced plans to reduce or discontinue the production of PFAS in the coming years. 

“As the science and technology of PFAS, societal and regulatory expectations, and our expectations of ourselves have evolved, so has how we manage PFAS,” a 3M spokesperson said in a statement to CNBC, adding the company plans to end production of the chemicals by 2025.

The company also expressed a commitment to remediate PFAS contamination, invest in water treatment and collaborate with communities. 

DuPont, on the other hand, said it has “never manufactured” the harmful chemicals and believes the legal complaints are “without merit.”

The company, formerly E.I. du Pont de Nemours, separated its chemical businesses in 2015, forming Chemours Company. It then merged with Dow in 2017 to create DowDuPont, and then subsequently split into three separate entities in 2019: Corteva Agriscience, Dow and the new DuPont.

All these companies, along with others, are named as defendants in Maine’s lawsuit. DuPont and Chemours have been severed from the bellwether trial where the city of Stuart, Florida is the main plaintiff.

On Friday, DuPont, Chemours and Corteva announced a $1.19 billion fund that will be used to resolve “PFAS-related drinking water claims.” However an addendum to a joint statement announcing the fund adds that it “does not include claims of personal injury due to alleged exposure to PFAS or claims by State Attorneys General that alleged PFAS contamination has damaged the State’s natural resources.”

Chemours pledged in 2018 to reduce PFAS emissions at its manufacturing sites by at least 99% by 2030. A spokesperson said in a statement it has made significant progress in implementing advanced technologies to minimize emissions of fluorinated organic compounds.

Dow denied manufacturing PFAS and said it is not accused of causing any environmental contamination.

A Corteva spokesperson told CNBC it “does not comment on ongoing legal matters.”

RBC Capital Markets Managing Director Deane Dray sees the lawsuits as a particular financial risk to 3M.

“At this stage, given valuation and what we know about the PFAS litigation, we do consider 3M to be uninvestable at this point,” Dray told CNBC.

Shares of 3M have been under pressure this year, down 20% over the last six months, trading at their lowest level in over 10 years.

“I expect PFAS to be a front-page news item for the next couple of years,” Dray said, adding that the substances are used right now in many semiconductor applications and military weapons systems.

According to RBC Capital, 3M’s PFAS liability risk amounts to an estimated $20 billion to $25 billion. 

3M is showing signs it may be feeling the pressure: In its latest earnings report it revealed a restructuring plan that included layoffs affecting 6,000 employees around the world that the company says will save up to $900 million a year. It’s also planning to spin off its health-care business in early 2024, which analysts say will generate billions of dollars in capital.

The industrial giant is already facing separate lawsuits over its military Combat Arms earplugs. Those suits are being brought by more than 200,000 military service members and veterans who claim 3M’s earplugs were defective and failed to protect them from hearing loss during combat and training.

3M attorney Eric Rucker told CNBC in March that the earplugs worked when used according to their instructions and that any liabilities estimate was “purely speculative.”

Last year, the Biden administration announced that $10 billion from the Bipartisan Infrastructure Law would be used toward addressing PFAS contamination.

That same month, the EPA introduced for the first time new standards on drinking water that address the amount of PFAS allowable for consumption.

The industry is awaiting word on whether the EPA will move forward with designating PFAS compounds as hazardous chemicals, which experts say could open the door to further litigation and push water utilities to make necessary upgrades to their filtration systems.

While the agency has publicly acknowledged its intent to do so, experts including Capstone energy analyst Gianna Kinsman says a formal designation could come by the end of this year. 

Kinsman added that the 2024 presidential election could also influence the timeline: “I think it is likely that if a Republican takes office we could see a slowdown in PFAS regulation, whereas if Biden wins a second term I believe his PFAS regulatory agenda will be even more ambitious, potentially tackling PFAS by larger categories rather than individually.”

RBC’s Dray added that there is national security interest in extending the use of PFAS due to a lack of alternative options on the market.

“[It will take] a decade to develop another molecule and then have all the testing done,” he said.

In the meantime, scientists and industrial experts are in an arms race to develop a safer substitute to PFAS. Others are researching technologies that use electrification and heat to break down synthetic chemicals as well as treatment options for exposed areas.

Nearly 30 miles away from Hermon High School, in the rural farming town of Unity, Maine, sits the remnants of the once-thriving Songbird Farm. 

Nine years ago, Adam Nordell — who’s now an advocate for nonprofit Defend Our Health — and his wife, Johanna Davis, came to this property to grow healthy and fresh produce to sell to their community. 

At the time, Songbird was thriving and lush, and over the years the couple grew a mix of grains and vegetables, including tomatoes, peppers, garlic, onions, sweet potatoes and cantaloupe. 

But that all changed two years ago when Nordell and Davis had their soil tested after a customer called about a local news report she saw detailing a farm contaminated with PFAS. 

When the test results came back, their worst fears were realized.

“We learned our land was severely contaminated with forever chemicals,” Nordell said. “As soon as we learned, we shut down.”

The family has since learned the land was spread with municipal wastewater treatment sludge in the early 1990s. Nordell said at the time it was marketed to farmers as a free or cheap source of fertilization.

“The farmers were told they were fertilizing their crops. Unfortunately, that wastewater is laden with all sorts of industrial chemicals that are leaching out of consumer products,” he said.

The mission of the nonprofit he now works for is to reduce people’s exposure to toxic chemicals, to raise awareness among farmers across the country and to hold chemical manufacturers accountable.

“They need to step up to the plate and pay for the impact that they’ve had on the world,” Nordell said.