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Strict PFAS regs could cause hole in New Hampshire budget; Lawsuits seen as solution

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By John O'Brien | Jul 30, 2019


MacDonald

CONCORD, N.H. (Legal Newsline) – New Hampshire lawmakers are betting big on private lawyers and the state attorney general to provide budget relief – even after officials found the AG unsuited to serve on the state Supreme Court.

An estimated $200 million project is on the horizon for the state after its General Court passed strict regulations targeting chemicals known as PFAS in drinking water. To fund this project, legislators are counting on lawsuits filed by AG Gordon MacDonald, who hired private lawyers on contingency fees.

But shortly before the regulations were passed, the state’s Executive Council voted down Gov. Chris Sununu’s nomination of MacDonald to chief justice. All three Democrats on the council voted against MacDonald, a Republican.

Sununu blamed the vote on partisan politics and said one Democrat councilor should apologize. Ultimately, the council found MacDonald’s experience as a judge (none) lacking.

Instead, the legislature and lawyers at Kelley Drye and other firms who will make 20% of any recovery are hoping for the kind of success the State had with lawsuits against companies that used MTBE – a gasoline additive that seeped into groundwater.

“I think this is going to make the MTBE settlements look like child’s play,” said Democrat state Sen. David Watters, who added that he doesn’t see any way municipalities will be able to pay for PFAS remediation without these lawsuits.

The timeline could be tricky. Recovery in those cases took years, and municipalities will start testing their water in October. A quick resolution would benefit politicians in a state whose residents have increasingly focused on the topic.

Three lawmakers in Merrimack have even dubbed themselves the “Water Warriors.”

“It’s like the opioid crisis. Presidential candidates come to the state and (PFAS) is all people talk about,” Watters said.

Litigation is part of a playbook the state has already used when it banned MTBE, then sued the companies that used it. Among other recoveries was a $236 million judgment against Exxon that largely went into a water treatment fund.

But the MTBE recovery took years to complete, begging the question of where the PFAS money will come in the meantime. As noted in a Manchester Union Leader editorial, the N.H. Municipal Association is concerned the costs will be passed on through increased property taxes.

New Hampshire has no sales or income taxes. Watters said financial solutions will need to be reached and mentioned a fund set up from a previous settlement with Saint-Gobain.

“There’s potential that some of that might be available,” he said.

“What we’ve done now is now that the rules are going to come into effect, municipalities will have those rules and have to do testing, and then the process will begin to see how to meet those standards.”

Some weren’t happy with how quickly Watters and his colleagues approved the proposed standards, which claim any more than 11-18 parts per trillion of PFAS (depending on the chemical) are too high.

Those thresholds were lower than what was initially proposed (and far lower than a federal advisory), and lawmakers did not hear comments during the hearing in which they approved them.

Republican Jeb Bradley’s amendment that called for more time to study the health impact of PFAS, as well as a cost-benefit analysis, was rejected by Democrats.

Calls to delay the Joint Legislative Committee on Administrative Rules vote on PFAS were rejected.

“The final proposed (maximum contaminant levels), released less than three weeks ago, left little time or opportunity for the interested parties to properly examine and comment on the effects,” New Hampshire Business and Industry Association President Jim Roche said after the vote.

“The final proposed MCLs are between 50% and 80% lower than those initially discussed.

“We were also disappointed JLCAR voted to approve the rules without hearing any testimony from the many stakeholders who were ready and waiting to speak on the final proposed MCLs, including BIA. By refusing to hear testimony, JLCAR short-circuited stakeholders’ input from consideration on the final proposal.”

As the litigation proceeds, of note is that the contract that the law firms signed with New Hampshire does not incentivize Kelley Drye from having the lawsuits resolved, as its contract with New Jersey possibly does.

The New Hampshire contract calls for a 20% contingency fee, but Kelley Drye’s agreement with New Jersey sets up a tiered system in which lawyers will pocket a larger percentage if the case concludes after a trial begins.

For example, should New Jersey earn more than $300 million, Kelley Drye keeps 10% pre-trial and $12.5% post-trial. Though the firm would spend more taking the cases to trial, that 2.5% difference would represent at least $7.5 million more.

(Minnesota’s PFCs lawsuit against 3M, one of the defendants in New Hampshire’s and New Jersey’s lawsuit, was worth $850 million.)

New Hampshire’s standards will cost around $190 million-$200 million to meet, estimates say. If private lawyers take 20%, that means New Hampshire will need to recover $250 million to make $200 million.

Kelley Drye is working with Florida firm Levin Papantonio; Kennedy & Madonna of New York; Douglas & London of New York; Taft Stettinius of Ohio; and SL Environmental Law Group of San Francisco.

During the preparation of the lawsuits, MacDonald had ceded his AG decision-making authority to a deputy for weeks while his Supreme Court nomination was pending.

The State ultimately chose to hire the six law firms even though its own attorneys apparently drafted the complaints – their signatures were the only ones on them, and the legislature first had to approve the private firms’ contract before they could begin representing the State.

Michigan is also planning to hire private firms for PFAS litigation on a contingency fee. Examples of states that are using their own attorneys are New Mexico and New York.

The federal Environmental Protection Agency has not set a toxicity level on PFAS – it has just issued an advisory for communities with 70 parts per trillion to contact their state regulators.

At the federal level, and in several states, critics claim not enough research has been conducted to show what a proper toxicity level for PFAS is.

Research conducted through a medical monitoring program funded by DuPont as a result of West Virginia lawsuits showed a likely link to six diseases, including kidney and testicular cancer. But the science is far from settled, many are arguing as Congress mulls a toxicity limit.

Lawsuits allege damages for cleanup costs, and one class action seeks to represent everyone in the country with a PFAS level in their body (a high percentage of Americans) with claims of assault.

“My general feeling is this whole PFAS scare is way overblown,” Steve Milloy, a biostatistician who served on President Trump’s transition team for the Environmental Protection Agency and has made a career of resisting what he feels is “junk science," previously told Legal Newsline.

“It’s all basically running on the notion that detection is toxicity and if you can find it someplace and find people who were exposed to it, that’s bad.”

From Legal Newsline: Reach editor John O’Brien at john.obrien@therecordinc.com.

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Organizations in this Story

3M Business and Industry Association of New Hampshire DuPont Kelley Drye Levin Papantonio New Hampshire Office of the Attorney General

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