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How a St. Paul suburb is missing out on millions over 3M pollution

LAKE ELMO, Minn. — Lake Elmo has been a player in a billion-dollar game of pollution poker.

And it’s losing.

The other players at the table — Lake Elmo’s neighbors — have received tens of millions of dollars from 3M, which manufactured the pollutant found in the cities’ drinking water. Those cities are expected to get hundreds of millions more from a lawsuit settled in February.

But it looks as though Lake Elmo will be getting approximately nothing.

“We were left by the wayside,” said city administrator Kristina Handt. “We obviously do not think we have been treated fairly.”

The city’s water problems are at least as severe as anyone else’s.

Two of the city’s four wells have been shut down, and officials say they can’t dig a new well because of red tape. Pollution has made the fish in the namesake Lake Elmo the most toxic in the state, according to the Minnesota Department of Health.

Yet the city of Lake Elmo has ended up almost empty-handed, despite spending more than any other city. The story of how that happened is based on bad timing, bad luck and a legal strategy that — so far — has backfired.

PFCs found in 2004

The polluting chemicals — perfluorochemicals or PFCs — were invented by 3M in the 1940s. The company sold them for use in nonstick cookware, fire extinguishers and stain repellent.

3M disposed of leftover chemicals in dumps until 1975. Twenty-nine years later, traces of PFCs were discovered in underground plumes originating at the dumpsites. They spread in the water beneath Lake Elmo, Oakdale, Woodbury, St. Paul Park and Cottage Grove.

3M spent $10 million on a new citywide filtration system for Oakdale. It filtered rivers of groundwater in Oakdale and Woodbury, the equivalent of 2,200 Olympic-sized swimming pools per year.

It installed filters in hundreds of homes with private wells. It hooked up many homes to municipal water systems.

The price tag? The company won’t say, but an annual report in 2012 listed the cleanup costs at $100 million.

Why no help for Lake Elmo?

The money was apparently spent anywhere but Lake Elmo. Although some individual homeowners in Lake Elmo were helped by 3M, the city never was.

That’s because Lake Elmo — and only Lake Elmo — paid to address its water-pollution problem, completed the work, then sued 3M for the cost.

Other cities waited to start their water-cleaning projects. Now their ongoing projects are being financed with 3M money, from court settlements and voluntary payments. Those cities never sued 3M.

But Lake Elmo had no choice, said Mayor Mike Pearson.

The city was under tremendous pressure to grow. At the time, the Metropolitan Council had ordered the city to add 17,000 sewer-connected residents by 2030 — more than tripling the population.

To serve those new houses, the city opened a new well in 2006.

But the city was stunned when traces of the PFCs showed up in the water. Before the first drops trickled out, the new well was closed down.

To compensate for the missing water, the city spent $10 million on a 2.5-mile connection to clean wells in the north part of town.

The cost was — and still is — the most money spent by any city on the pollution problem.

The city tried to get 3M to pay for the project, Handt said, but negotiations failed.

City sued 3M

The city sued 3M in 2013 and again in 2016 for unspecified damages. The case is expected to come to trial in 2019.

So far, the strategy of building first, then filing a lawsuit, has backfired.

It has made Lake Elmo ineligible for $40 million that 3M agreed in 2007 to pay cities for short-term fixes.

That money is going to ongoing projects, not to reimburse cities for past projects.

The $40 million is administered by the MPCA and the state Department of Natural Resources. MPCA assistant commissioner Kirk Koudelka said Lake Elmo is planning to be repaid by suing 3M, and the $40 million is going to cities that don’t have that option.

How will Lake Elmo be reimbursed? “Lake Elmo is working that out,” Koudelka said.

Lake Elmo is also missing out on 3M’s voluntary payments.

For years, 3M has been pumping groundwater from former dumpsites in Woodbury and Oakdale. No cost estimates have ever been provided, but the company has filtered billions of gallons of water in those communities.

But not in Lake Elmo.

That’s true even though the company dumped PFCs in Lake Elmo. In 2009, the state spent $13 million to dredge a PFC-tainted Lake Elmo landfill and install a plastic liner. 3M voluntarily contributed $8 million but did not follow up with a water-pumping program.

Looking ahead, it seems as though Lake Elmo might be shut out of the biggest pot of money yet.

What about the $850M settlement?

In February, 3M settled the $5 billion lawsuit for $850 million. After expenses, $720 million remains.

The money is supposed to be spent on water-quality projects in the east metro.

Two advisory groups are now hammering out the details, weighing proposals. Those recommendations aren’t expected until later in 2019, with the projects to be completed months or years after that.

The PCA’s Koudelka explained that the money is for new projects. Lake Elmo’s 8-year-old replumbing project is not new.

Handt said that as state officials see it, the $10 million project solved the city’s water problems. But that’s not true, she said.

With half of the city’s wells shuttered, she is worried about serving the needs of the rapidly growing city. “We are vulnerable,” she said.

On Nov. 21, 3M issued a statement via email. It did not address payments from the $40 million fund or Lake Elmo’s lawsuit. It said state agencies administer the $720 million fund for projects that are “reasonable and necessary” to improve water quality in communities including Lake Elmo.

Which brings us to the controversial well.

Handt asked the state in April about digging a badly needed well in Tana Ridge Park. It would have compensated for the loss of the second city well to be shut down, in the Old Village area last spring.

New wells typically cost about $2 million.

“This is so much cheaper than putting in a $50 million treatment center in Cottage Grove,” Handt said.

The cost of a new well, she said, would be money wisely spent. She said it took the state until August to respond — asking for a study weighing other options to get more water.

Koudelka said if Lake Elmo wants to pay for the well, it can start work immediately. But if the city wants to get some 3M money, it must show that the new well is cost-effective. All cities applying for the 3M money must complete feasibility studies comparing various options.

But Handt said the city doesn’t have much time. With two wells down and the new well in limbo, the city might have to impose a watering ban this summer.

Putting the situation into poker lingo, Lake Elmo is betting the house on winning the lawsuit next year.

It could win and get paid for the $10 million project. Of course, it could lose. Or 3M could try to delay the trial or appeal a verdict — taking more time from a city that doesn’t have much left.