Will companies try to Texas two-step their way out of PFAS liabilities?
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Will companies try to Texas two-step their way out of PFAS liabilities?

More and more scientific reports are showing the incredible scale of the PFAS pollution crisis. Not surprisingly, PFAS-producing companies are now being sued like there’s no tomorrow. Some analysts estimate that they may face legal costs of up to $40 billion dollars. To escape these expensive and tiresome legal processes, the polluters are now turning to complex legal tactics. Have you heard about the Texas two-step?

PFAS pollution has since long spun out of control. “Forever chemicals” are now found everywhere, even in the most remote places on Earth. Studies show that basically every living being on the planet now has PFAS in its bloodstream.

And these chemicals are toxic. They are linked to negative health effects such as infertility, cancer, lowered birth weight and immune system disorders.

So, it comes as no surprise that lawsuits are now piling up against the producers of these chemicals. Last week, for example, the State of California sued several PFAS producers in order to recuperate the costs of cleaning up pollution.

And we’re talking a lot of money. Settlements have ended up in the billion-dollar ballpark, and will continue to do so in the future.

Some analysts estimate that PFAS producers may face legal costs ranging from $25 billion to $40 billion dollars. But that may be an underestimation. The risk modelling firm Praedicat, for example, estimates that the total costs of cleaning up drinking water from PFAS contamination could exceed $400 billion. That’s only in the United States. Plus, it doesn’t include claims for bodily injuries.

“Insurance and liability experts now describe PFAS as ‘the mother of all toxic torts'”

If the responsible companies actually have to pay for the damages they’ve caused — or even a fraction of it — it might lead to sector-wide interruptions and bankruptcies.

For this reason, insurance and liability experts now describe PFAS as “the mother of all toxic torts”, “the next asbestos” and a “looming liability disaster”. This sounds like something companies would want to get as far away from as possible.

But how do you rid yourself of the responsibility for contaminating the drinking water of a whole city, exposing hundreds of thousands of people to toxic chemicals?

You turn to complex legal tactics.

The Texas two-step
Here’s where the Texas two-step comes in. The procedure is simple. You just set up a subsidiary, transfer all looming liabilities to it and then put it into bankruptcy.

The magic of the Texas Two Step lies in the fact that it forces anyone interested in suing you to sue a bankrupt company instead. Meanwhile, you can continue with business as usual.

“There should be no ‘get out of jail free card’ for PFAS producers”

3M — one of the biggest PFAS producers in history — is deploying this legal maneuver in an attempt to shield itself from the largest mass tort litigation in US history. However, this case is not about PFAS. Instead, it’s about a seemingly defective earplug used by the US military, which has led 230,000 servicemembers to sue 3M for hearing loss.

Whether 3M will try to Texas two-step its way out of its massive PFAS liabilities remains to be seen.

It would not be the first time an American company tried to get away from legal accountability. DuPont — another major PFAS producer facing a steady stream of lawsuits — spun off parts of its operations to a separate company called Chemours back in 2015. DuPont then transferred its toxic liabilities to the new company.

Afterwards, DuPont merged with Dow (creating DowDuPont), which then split into three new companies (Dow, DuPont de Nemours and Corteva). To make matters even more complicated, Chemours then sued DuPont. The key takeaway is that now they all claim that they are not the ones responsible for the PFAS contamination.

Obviously, this is not how things should work.

Companies should not be able to two-step their way out of trouble and assume no responsibility for the harm they have caused humans and the environment.

There should be no “get out of jail free card” for PFAS producers. Polluters must face the consequences of their actions and pay for the damage they have caused.