Chemicals, Wastewater

DuPont Water Contamination Case Dismissed

On January 4, 2022, U.S. District Judge Lewis Liman of the Southern District of New York dismissed claims against Du Pont de Nemours and Co and its codefendants seeking payment for upgrades to five water treatment plants managed by Suez Water New York Inc.

The suit, Suez Water New York v. Dupont, Corteva, Inc, and The Chemours Company, claimed the companies were responsible for the required upgrades to filter toxic substances because they allegedly contributed to the state’s water pollution with perfluoroalkyl and polyfluoroalkyl substances (PFAS).

The suit “sought to hold the companies liable for the costs of installing and running the pricey filtering systems at the New York plants it operates,” Reuters says. “The filters are needed to cut PFAS levels in water the plants treat to levels New York set last year, the lawsuit said. The plants service about 500,000 customers across Orange, Putnam, Rockland, Tioga, and Westchester counties, according to Suez.”

Although the suit was dismissed and the defendants dodged a huge financial bullet, estimated to “cost millions of dollars per location,” the reprieve is only temporary.

“The complaint claimed E.I. du Pont de Nemours and Chemours manufactured and sold the chemicals in New York, where they leached from landfills into state watersheds,” Reuters adds. “Corteva, now the parent company of E.I. du Pont de Nemours, is a spin-off of DowDuPont, which is now dissolved. DowDuPont is now known as DuPont.

“Liman disagreed with Suez that he could exercise his jurisdiction over Corteva and DuPont as successors of the manufacturers of PFAS. He also dismissed the claims against E.I. du Pont de Nemours and Chemours for lack of specificity and other reasons.”

The judge said an amended complaint filing is allowed in the case within 30 days, and Reuters notes that Suez spokesperson Richard Henning said the company will refile.

Background

“DuPont was for decades a leading U.S. manufacturer of PFAS chemicals, which it used to make Teflon and other nonstick products,” says the Environmental Working Group. “Chemours was created in 2015 when DuPont spun off its chemical division, in part to limit liability relating to PFAS chemicals. Corteva, formerly the agricultural division of DowDuPont, was spun off in 2019.”

“Defendants are all Delaware corporations with principal places of business in Wilmington, Delaware, and all do business in the Southern District of New York,” states the background section of Liman’s opinion and order. “They are alleged to be manufacturers, sellers, licensors, and distributors of PFAS and PFAS-containing products. SUEZ alleges that Defendants have knowingly and willfully placed PFAS and products that contain PFAS into the stream of commerce.”

The New York State Department of Health (NYSDOH) July 2020 test results revealed that “around 21% of public water systems had levels of PFOA and/or PFOS in excess of 10 ppt, when the Maximum Containment Level (MCL) for these chemicals in drinking water is set by the state to … 10 ppt,” according to court documents.

Infighting settlement to resolve legacy PFAS claims

“Last January, DuPont, Corteva and Chemours reached a $4 billion cost-sharing settlement amongst themselves to be utilized to settle PFAS lawsuits filed against the companies,” states a DuPont press release

Legal disputes began among the three companies after Chemours spun off from E.I. du Pont in 2015.

“In the spin-off, Chemours assumed legal responsibility for damages and cleanup related to PFAS pollution by DuPont, as well as other pollution-related liabilities,”  Chemical & Engineering News (C&EN) says. “In 2017, however, the firms agreed to split a $671 million PFAS settlement in West Virginia 50-50. … Corteva is involved because it spun off from DowDuPont in 2019 as part of the creation and subsequent break up of DowDuPont.”

“According to the terms of the cost sharing arrangement, DuPont and Corteva together, on one hand, and Chemours, on the other hand, agree to a 50-50 split of certain qualified expenses incurred over a term not to exceed twenty years or $4 billion of qualified spend and escrow contributions in the aggregate,” states the DuPont press release. “DuPont and Corteva’s 50 percent will be limited to $2 billion including qualified expenses and escrow contributions. Under the existing Letter Agreement from June 1, 2019, DuPont and Corteva will each bear 50 percent of the first $300 million (up to $150 million each) and thereafter, DuPont bears 71 percent and Corteva bears the remaining 29 percent. DuPont’s share of the potential $2 billion would be approximately $1.36 billion and Corteva’s approximately $640 million.

“In connection with the cost sharing arrangement described above, the companies also agree to establish a $1 billion maximum escrow account to address potential future PFAS liabilities. Subject to the terms of the arrangement, contributions to the escrow will be made by Chemours, on one hand, and DuPont and Corteva, on the other hand, annually over an eight-year period. Over such period, Chemours will deposit a total of $500 million into the account and DuPont and Corteva will deposit an additional $500 million pursuant to the terms of their existing Letter Agreement. The escrow provides for a one-time replenishment mechanism if the escrow account balance has less than $700 million on December 31, 2028.”

The cost-sharing agreement included the resolution of “about 95 pending cases, as well as other unfiled matters, in multidistrict PFOA litigation in Ohio. The $83 million settlement will be split roughly equally among the three companies. It does not include a case that resulted in a $50 million jury verdict in March that DuPont is appealing,” reports ABC News.

“The Ohio verdict stemmed from a class action lawsuit involving about 80,000 residents of Ohio and West Virginia who drank water that was contaminated by chemical releases from DuPont’s Washington Works facility near Parkersburg, West Virginia,” ABC News adds. “More than 3,500 individual class members who suffered from any of six diseases linked to PFOA filed individual personal injury cases against DuPont. Those cases have been centralized in Ohio federal court.

“After three trials in which juries returned verdicts in favor of the plaintiffs, DuPont agreed in 2017 to settle the remaining 3,500-plus cases. Since that time, more than 100 post-settlement cases have been filed.”

The amount of pending and potential lawsuits is expected to far exceed the $4 billion cost settlement agreement.

“Morningstar financial analyst Seth Goldstein estimated last summer that the total PFAS legal liability for DuPont, Corteva, and Chemours is about $6.5 billion,” C&EN says. “Of that, $5.2 billion is litigation and $1.3 billion is cleanup costs. Goldstein based his estimate on the West Virginia settlement. Referring to DuPont and Corteva, he wrote at the time, ‘We see the resolution of the arbitration as a catalyst for the stock, as it would remove a source of uncertainty.’”

As the EPA continues to tighten PFAS regulations, additional litigation related to cleanup costs is certain, analysts predict.