3M is paying $850 million to end a years-long lawsuit claiming it contaminated water in its home state of Minnesota.

Minnesota Attorney General Lori Swanson, who filed the case against 3M (MMM) in 2010, announced the settlement on Tuesday.

Her office said in a statement that the money would "be used to finance projects which involve drinking water and the water sustainability."

The case centered on 3M's production of perfluorochemicals, or PFCs, which were made at plants in Minnesota starting in the 1950s. 3M voluntarily began phasing out their use in 2000 after consulting with the Environmental Protection Agency.

The chemicals, once used to make stain protector Scotchgard, among other products, polluted ground and surface water in the Twin Cities metropolitan area, according to the state. The company "knew or should have known" they posed risks to residents' health and to the environment, said officials, who accused 3M of conducting a coverup.

3M, which is headquartered near Maplewood, Minnesota, said it will work with the state even though it does "not believe there is a PFC-related public health issue."

"This settlement reflects our commitment to acting with integrity and conducting business in a sustainable way that is in the best interest of all who live and work in Minnesota," John Banovetz, 3M's chief technology officer, said in a statement.

As the case approached trial in recent months, debate heated up about the harm of PFCs.

In November, Swanson said that a state-commissioned expert had found higher rates of cancer and premature births outside Minneapolis due to the chemicals, and demanded that 3M pay punitive damages.

But a conflicting report from the Minnesota Department of Health released earlier this month complicated those claims.

The agency said that while PFCs pose environmental and health risks, they had not caused higher rates of cancer and premature births.

3M has repeatedly said it does not think PFCs have caused health issues in Minnesota.

"We do not believe there is a PFC-related public health issue in Minnesota and look forward to discussing the [Minnesota Department of Health] report with the State during trial," the company said in a statement to the Star Tribune.

3M is a manufacturing conglomerate that makes products like Scotch tape, Post-it notes and ACE bandages.