The deal reached by the company and state’s attorney general was announced hours after a trial over the suit was slated to begin Tuesday.
Minnesota Attorney General Lori Swanson had accused 3M of contaminating the state’s water supply by dumping millions of pounds of waste into the ground and water from the production of fluorochemicals, or PFCs, that the company used in its Scotchgard product for protecting furniture and carpets from stains.
The attorney general’s office claimed the company dumped PFC from 1950 until the early 2000s, in the ground and into the Mississippi River. The affected areas include those near 3M’s headquarters in St. Paul, Minn.
The synthetic substances are considered harmful to humans and wildlife, according to the Centers for Disease Control and Prevention. The agency says studies have shown PFCs may affect “growth and development, reproduction, and injure the liver.”
Under the agreement, 3M will provide an $ 850 million grant aimed at improving “water quality and sustainability,” the manufacturer said. The money would also pay for fishing piers, trails and preserving open space.
It wasn’t immediately clear whether the settlement included an admission of wrongdoing by the company. 3M faces at least 11 class-action lawsuits in state and federal courts related to PFCs, as of Sept. 30, according to a securities filing.
Ms. Swanson said 3M’s settlement wouldn’t be diverted for the state’s other financial needs. “In this case, the money is being used to address some of the problems created by PFCs in our drinking water,” Ms. Swanson said in a statement.
3M said it would record a first-quarter charge of about $ 1.10 to $ 1.15 a share because of the settlement.
“We are proud of our record of environmental stewardship, and while we do not believe there is a PFC-related public health issue, 3M will work with the state on these important projects,” John Banovetz, 3M’s chief technology officer, said in a statement.
Write to Andrew Tangel at Andrew.Tangel@wsj.com