3M 2011 Annual Report Download - page 112

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feasibility studies or the Company’s commitment to a plan of action. Liabilities for estimated costs of environmental
remediation, depending on the site, are based primarily upon internal or third-party environmental studies, and
estimates as to the number, participation level and financial viability of any other potentially responsible parties, the
extent of the contamination and the nature of required remedial actions. The Company adjusts recorded liabilities as
further information develops or circumstances change. The Company expects that it will pay the amounts recorded
over the periods of remediation for the applicable sites, currently ranging up to 20 years.
As of December 31, 2011, the Company had recorded liabilities of $75 million for “other environmental liabilities”
based upon an evaluation of currently available facts to implement the Settlement Agreement and Consent Order
with the MPCA, the remedial action agreement with ADEM, and to address trace amounts of perfluorinated
compounds in drinking water sources in the City of Oakdale, Minnesota, as well as presence in the soil and
groundwater at the Company’s manufacturing facilities in Decatur, Alabama, and Cottage Grove, Minnesota, and at
two former disposal sites in Washington County, Minnesota (Oakdale and Woodbury). The Company expects that
most of the spending will occur over the next five years.
It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the
interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental
contamination and the existence of alternative cleanup methods. Developments may occur that could affect the
Company’s current assessment, including, but not limited to: (i) changes in the information available regarding the
environmental impact of the Company’s operations and products; (ii) changes in environmental regulations, changes
in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and
policies, including efforts to recover natural resource damages; (iii) new and evolving analytical and remediation
techniques; (iv) success in allocating liability to other potentially responsible parties; and (v) the financial viability of
other potentially responsible parties and third-party indemnitors. For sites included in both “environmental
remediation liabilities” and “other environmental liabilities,” at which remediation activity is largely complete and
remaining activity relates primarily to operation and maintenance of the remedy, including required post-remediation
monitoring, the Company believes the exposure to loss in excess of the amount accrued would not be material to the
Company’s consolidated results of operations or financial condition. However, for locations at which remediation
activity is largely ongoing, the Company cannot estimate a possible loss or range of loss in excess of the associated
established reserves for the reasons described above.
Employment Litigation
In January 2011, 3M reached an agreement in principle with plaintiffs’ counsel to resolve the Whitaker and Garcia
lawsuits. The Whitaker settlement agreement was signed by all parties in March 2011. The court granted preliminary
approval of the settlement on April 6, 2011, and provisionally certified a class for settlement purposes only. The final
approval hearing occurred on December 21, 2011 and the court issued its Order and Judgment on January 5, 2012
approving the settlement. The Garcia settlement agreement has been signed by the parties. All plaintiffs subject to
the Garcia settlement have signed and not timely revoked individual releases of claims against 3M, and the parties
anticipate filing a stipulation of dismissal, with prejudice, in that matter following administration of the settlement,
which will occur concurrently with administration of the Whitaker settlement. If finalized and approved by the court,
administration of the settlement agreements will take several months to complete. In September 2011, 3M reached
an agreement in the form of a proposed Consent Decree with the U.S. Equal Employment Opportunity Commission
(EEOC) to resolve related charges as described below. The Consent Decree was filed concurrently with a complaint
in the U.S. District Court for the District of Minnesota and has been approved by the court. The Consent Decree
addressed the outstanding charges of age discrimination in addition to claims on behalf of a class of certain former
employees as defined in the charges and subsequently in the complaint. 3M agreed, as part of the Consent Decree,
to ensure that its policies and practices further the objectives of equal employment as set forth in the federal Age
Discrimination in Employment Act and to make certain enhancements in its employee communications and
development programs. The EEOC agreed, as part of the Consent Decree, not to take any further action against 3M
in connection with the charges and as otherwise set forth in the decree. Administration of the EEOC settlement is in
process and will take several months to complete. The amount of each of the proposed settlements is not material to
the Company’s consolidated results of operations or financial condition. The background of this litigation is set forth
below.
Whitaker Lawsuit
As previously reported, in December, 2004, one current and one former employee of the Company filed a purported
class action in the District Court of Ramsey County, Minnesota, seeking to represent a class of all current and certain
former salaried employees employed by the Company in Minnesota below a certain salary grade who were age 46 or
older at any time during the applicable period to be determined by the Court (the “Whitaker” lawsuit). The complaint