DuPont, Chemours, Cortiva reach accord to split $4 billion in expenses to face potential liabilities over PFAS chemicals
DuPont, Chemours and Cortiva, once all part of one company that for several decades made chemicals that have since originated a myriad of lawsuits over health impacts and other losses, announced Friday Jan. 22 an accord to split over $4 billion in expenses related to such liabilities.
Under the accord, the companies will set up a cost-sharing plan and an escrow account “to be used to support and manage potential future legacy PFAS liabilities arising out of pre-July 1 2015 conduct,” according to a joint press release.
E.I. Dupont de Nemours once included all the companies. Chemours separated in 2015 as a spinoff and afterwards claimed DuPont had not been truthful about potential liability estimates.
PFAS are short for polyfluoroalkyl substances (PFAS), once widely used for non-stick cookware, coatings, carpets, foams, food containers, and water repellent outerwear, among other products. One example of PFAS is perfluorooctanoic acid (PFOA), also known as C8, which lawsuits have linked to diverse forms of cancer.
Companies to split expenses, create escrow account
Under the cost-sharing agreement, DuPont and Corteva on one hand, and Chemours on the other, agree “to a 50-50 split of certain qualified expenses incurred over a term not to exceed twenty years or $4 billion.”
DuPont will assume 71% of the half of the expenses it will share with Corteva.
“The companies also agree to establish a $1 billion maximum escrow account to address potential future PFAS liabilities” with annual contributions over an eight-year period, the statement said.
Chemours “will waive specified claims, including claims regarding the construct of its 2015 spin-off” from E.I. DuPont. The companies will also dismiss pending arbitration that arose from a Chemours complaint against DuPont.
Chemours complaint against DuPont
In June 2019 DuPont said, after the filing of a legal complaint by Chemours, that Chemours wanted to limit its “responsibility for their litigation and environmental liabilities under the separation agreement” that had been reaffirmed in 2017.
“While DuPont and Corteva will continue to meet our own regulatory and legal commitments, we are fully aligned and will vigorously defend against the claims in the complaint and our rights under the Separation Agreement,” DuPont said in a June 2019 statement.
DuPont and Corteva had asked the court at the time to dismiss a lawsuit by Chemours in favor of arbitration.
A Delaware judge granted the DuPont request to dismiss a lawsuit on grounds that the separation agreement between the companies clearly stated that all disputes arising from the spinoff were subject to binding arbitration, according to an April 2020 report in Insurance Journal.
Chemours had argued that in the separation agreement DuPont downplayed environmental liabilities, as they far exceeded the amounts cited by DuPont. It also claimed that the separation agreement was forced upon it. But the judge claimed a Chemours executive had signed it, according to the Insurance Journal.
Ed Breen, Jim Collins and Mark Vergnano, chief executives of DuPont, Corteva and Chemours, respectively, agreed the accord brings a “measure of security and certainty.”
DuPont is focused on industries including electronics, transportation, and construction while Corteva focuses on agriculture. Chemours, which owns brands including Teflon and Freon, describes itself as a leader in titanium technologies and fluoroproducts.
Lawsuits over PFAS
Besides DuPont and its spinoffs, 3M has also faced lawsuits related to PFAS. According to a 2019 Barron’s report, 3M set aside $235 million for lawsuits related to PFAS just in the first quarter of 2019.
According to a story published by Barron’s in August 2019, John Inch, analyst for Gordon Haskett research advisors, estimated that “the industry could face costs ranging from $25 billion to as much as $40 billion” related to PFAS.
Costs associated with PFAS include cleaning up costs of former production sites, or efforts to collect compensation for medical and other damages, including loss of home value near contaminated areas.
Initial PFAS litigation took the form of individual complaints and class actions against DuPont de Nemours and 3M, according to a January 2020 document by the Washington Legal Foundation, which describes itself as an organization that promotes justice.
In 2017 “DuPont and the Chemours (…) without conceding liability, agreed to pay $670.7 million, and to make specified additional amounts available to fund potential future payments,” the Washington Legal Foundation said. In 2018 3M settled a case “without admission or finding of liability” for $850 million, it added.
The Washington Legal Foundation said that in more recent years the trend has been to file lawsuits against companies that were involved in production of cookware, footwear and other products that used the chemicals made by those companies.
Legacy of PFAS production to last
According to the Environmental Working Group (EWG), which states it seeks to empower people to live healthier lives through research, PFAs may remain a problem for future generations as these chemicals can linger in the environment for very long time. At the same time controls are inadequate, it said.
“There are no federally enforceable limits on any PFAS in drinking water, groundwater or soils, or any requirements to clean up PFAS under the federal Superfund law. Only five states have placed drinking water limits on a handful of PFAS and the EPA (Environmental Protection Agency) has the ability to test for only 29 PFAS in drinking water,” according to an EWG report on Jan.22.
The Superfund legislation distinguishes between chemicals designated as ‘hazardous substances’ and things that are merely considered ‘pollutants or contaminants.’ Under current law, PFAS
are considered ‘pollutants or contaminants’ but not ‘hazardous substances’,” the EWG said in 2019.
The EWG asked in July 2019 for PFAS to be designated “a hazardous substance” and identified 610 sites contaminated by PFAS, including 117 military bases. It said some 500 industrial sites were “potentially discharging PFAS into the air and water.”
The 2019 film Dark Waters tells the story of Robert Bilott’s decades-long legal fight against DuPont over PFAS, the EWG said.
By Renzo Pipoli