Minnesota Attorney General Lori Swanson on Tuesday announced an $850 million settlement in the state's lawsuit against 3M over water contamination by perfluorochemicals, or PFCs, in several east Twin Cities suburbs.

A trial in the state's largest environmental lawsuit had been set to begin Tuesday with jury selection. The state sought $5 billion in punitive damages from 3M.

The state will use settlement funds for drinking water and water sustainability projects in areas affected by the contamination.

This undated photo shows 3M in St. Paul, Minn. Marlin Levison | Star Tribune via AP

Swanson said the money will come shortly in a single payment from 3M. The deal has been in the works for weeks, she said, with negotiations lasting through early Tuesday morning.

The money from 3M will go toward remedying the problems caused by PFCs in the east metro, Swanson said, which could include constructing new wells, connecting people on private wells to municipal water sources, or cleaning up existing water supplies. There will be a process created for deciding how to distribute and spend the money, Swanson said.

The trial was delayed a week following a Minnesota Department of Health report earlier this month that found no unusually high rates of cancer or adverse birth outcomes in the east metro, raising questions about the strength of the state's case.

Swanson said she found the health department's actions "very, very troubling," adding that they did not help her case.

While the $850 million settlement is under a fifth of what the state sought in damages, it is more money than what 3M told the Securities and Exchange Commission it had in environmental liabilities as of the end of last year.

Minnesota Attorney General Lori Swanson announces a $850 million settlement between the state and 3M at the Hennepin County Government Center on Feb. 20, 2018. Matt Sepic | MPR News

Swanson called the settlement a win, referencing a different settlement over groundwater contamination in West Virginia. In that case, Dupont settled a series of suits over PFC leaks for $671 million.

"We're pleased the settlement," Swanson said. "We think the settlement will help solve a problem for Minnesota. It's a problem that's been a long time in the making for many decades. These chemicals as I mentioned were put into the ground and we are very hopeful that this settlement can help fix that."

In a statement announcing the settlement, 3M said it does not believe there are public health issues relating to PFCs, but it will work with the state on environmental projects anyway.

"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," 3M chief technology officer and senior vice president John Banovetz said in a statement. He added, "while we have never believed there is a PFC-related health issue, this agreement allows us to move past litigation and work together with the state on activities and projects to benefit the environment and our communities."

Commissioners for the state Department of Natural Resources and Pollution Control Agency praised the settlement in a statement Tuesday. The agencies will be trustees of the $850 million fund.

MPCA head John Linc Stine said his agency will continue to work with east metro residents to ensure clean drinking water.

Part of the settlement could also go to improving water sustainability and wetlands in the area affected.

"We are pleased with the natural resources restoration and protection portion of the settlement and look forward to working with the impacted communities as we determine how best to invest these funds to restore and improve the area's water resources, fishing and wildlife habitat," DNR commissioner Tom Landwehr said in the news release.

Settlement ends years-long legal battle

The lawsuit, first filed in 2010, has been delayed many times. 3M had asked for yet another delay earlier this month after the health department report was released, saying it was a "game-changer." Lawyers representing the state refuted that characterization saying it was old news. The judge delayed the case by just a week.

Swanson brought the suit saying 3M knowingly contaminated groundwater with PFCs, putting east metro residents at risk of cancer and infertility.

3M discontinued production of PFOA and PFOS, but still makes other types of PFCs, according to the MPCA. The company used them in many products like Scotchgard stain repellent, nonstick cookware and firefighting foam.

Up until the 1970s, 3M legally dumped the chemicals in landfills in the Twin Cities suburbs of Oakdale, Woodbury and Lake Elmo. Then, the chemicals leached into the groundwater.

Swanson argued in the suit that 3M willfully disregarded the potential harm of PFCs on the environment and citizens before it discontinued production of PFOA and PFOS. The suit also said 3M held back critical information on PFCs from federal authorities.

3M had said Minnesota's suit was a "misguided attempt" to pay for damages that don't really exist. The company has already spent more than $100 million to clean up pollution in the Oakdale area.

"In some ways, it's not surprising to settle such a big case. There's really a lot at stake for both parties. Certainly, the original claim for billions of dollars is a lot of money for 3M, but also a lot of risk to the state if it doesn't go well," said Alexandra Klass, a professor at the University of Minnesota law school.

3M faces at least 24 similar suits alleging it polluted groundwater and Klass says the Minnesota settlement could have an impact nationally, either in cases of PFC contamination or other chemicals.

"Once you've brought one case like this, you have the experts, you've dealt with some of the legal issues. So maybe it provides a bit more of a playbook and a framework for other states to use," she said. "So I don't think that a case like this is unique, particularly as we learn more about different types of chemicals that in decades past we didn't necessarily think were harmful and now we're more concerned about them." The details of what will happen with the settlement money is expected to be spelled out in more detail in upcoming days. Swanson said the funds won't be available to state lawmakers for spending on pet projects.

Correction (Feb. 21, 2018): A previous version of this story incorrectly stated that 3M ceased production of PFCs, instead of certain PFCs specifically.

This story is part of The Water Main from MPR News, helping Minnesotans understand the value of water in our lives. Check out @thewatermain on Twitter.