Chemical Companies Paying $1B PFAS Settlement


Chemical solutions company Chemours, alongside manufacturer DuPont de Nemours and agricultural chemical company Corteva, Inc., recently reached an agreement to resolve all per- and polyfluoroalkyl substances-related drinking water claims.

According to the release, the companies will collectively establish and contribute a total of $1.185 billion to a settlement fund for United States water systems. The three chemical manufacturers are reportedly facing thousands of lawsuits across the country alleging that PFAS were utilized in their manufacturing processes.

PFAS Case Background

In January 2018, the North Carolina Department of Environmental Quality announced that it had been investigating GenX, a chemical used by Chemours in the manufacture of fluoropolymers including PTFE—sold by Chemours and DuPont as Teflon—after finding possible contamination around Chemours’ Fayetteville Works. GenX, an unregulated chemical, has been shown to be carcinogenic in some animals.

The investigation was launched after the Department received reports that GenX releases were contaminating the groundwater—used as a drinking-water source by some nearby residents—and the Cape Fear River. Chemours released a statement at that time asserting that it did not believe GenX was affecting the area’s drinking water, but that it would implement new practices regarding the capture and disposal of wastewater containing GenX.

Previously, in November, the DEQ cited Chemours for violating the terms of its wastewater permit after the company did not report a spill of dimer acid fluoride, used in the process of making GenX. The company admitted the spill, which occurred Oct. 6, after being questioned by the agency.

By March, the United States Environmental Protection Agency announced that it would convene a national leadership summit to address the topic of per- and polyfluoroalkyl substances, or PFAS, used in products including paints.

PFAS are a group of man-made chemicals that includes PFOA, PFOS, GenX and many other chemicals that have been manufactured since the 1940s.

They are used in consumer products and industrial processes and are resistant to heat, oils, stains, grease and water—properties which contribute to their persistence in the environment and in the human body.

PFAS in many cases provide nonstick and chemical-resistant properties to the materials they coat. The most notable PFA substance in production in the U.S. at the time was GenX, which previously raised controversy after the reported releases at the Chemours’ plant in North Carolina.

In July 2019, Chemical & Engineering News reported that Chemours was suing DuPont over environmental liabilities. According to the lawsuit, DuPont grossly underestimated the environmental liabilities it saddled Chemours with when it spun off the company back in 2015.

At the center of the suit, Chemours points out “High End (Maximum) Realistic Exposure” figures—estimates of the liabilities DuPont transferred to Chemours, which took over DuPont businesses such as titanium dioxide and fluorochemicals.

As examples, Chemours referenced the GenX spills in Fayetteville, North Carolina. At the time, DuPont allegedly estimated the liabilities at $2 million, however, Chemours signed an agreement with the state requiring it to spend upwards of $200 million to fix the problem.

Additional examples included 3,500 lawsuits filed against DuPont in Ohio over exposure to perfluorooctanoic acid (PFOA). At spin-off, DuPont determined the maximum liability was $128 million, but later ended up splitting a $671 million settlement with Chemours. The company also agreed to provide up to $125 million for future liabilities.

Both companies also faced lawsuits from the state of New Jersey for discharges from various plants. These liabilities were originally estimated to cost $337 million but were later revised to $620 million.

The lawsuit also requested limits on DuPont’s liabilities to be removed, or for DuPont to return a nearly $4 billion dividend that Chemours paid DuPont at the time of the spin-off.

At the time, DuPont and codefendant Corteva called Chemours’ claims “without merit” and argued that the company has been doing well since the spin off and already returned $1 billion to shareholders in dividends and share buybacks.

In March 2020, while the cases wound their way through the courts, the U.S. EPA proposed regulations on imported products that contain certain persistent long-chain PFAS chemicals that are used as surface coatings as part of its Per-and Polyfluoroalkyl Substances (PFAS) Action Plan.

While the EPA believes the use of these chemicals as surface coatings in imported goods has been phased out, the proposal would ensure that any new uses are reviewed by EPA before any products containing these chemicals could be imported into the U.S. again.

Then, in August, Morningstar financial analyst Seth Goldstein estimated that the total PFAS legal liability for DuPont, Corteva, and Chemours combined, was about $6.5 billion. Of that, $5.2 billion is litigation and $1.3 billion is cleanup costs.

At the time the settlement was announced, DuPont and Corteva stocks were up relative to the overall market, while Chemours shares were roughly flat.

By January 2021, the companies announced that they had entered into a binding memorandum of understanding which contained a settlement to resolve the legal disputes. According to the terms of the cost sharing arrangement, with DuPont and Corteva on one side and Chemours on the other, the three have agreed to a 50-50 split of certain qualified expenses incurred over a term not to exceed 20 years or $4 billion of qualified spend and escrow contributions in the aggregate.

DuPont and Corteva's 50% will be limited to $2 billion including qualified expenses and escrow contributions, and under the existing Letter Agreement from June 1, 2019, each company will bear 50% of the first $300 million (up to $150 million each) and thereafter, DuPont will bear 71% and Corteva will bear the remaining 29%.

DuPont's share of the potential $2 billion would be approximately $1.36 billion and Corteva's would be approximately $640 million. 

As reported in the resolution, the companies have also agreed to establish a $1 billion maximum escrow account to address potential future PFAS liabilities. Over a period of eight years, Chemours, on one hand, and DuPont and Corteva on the other, will make contributions to the escrow. Over this period, Chemours is slated to 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.

Latest Settlement

At the end of last week, Chemours, DuPont and Corteva announced the agreement to resolve PFAS-related drinking water claims. The class reportedly includes water systems with a current detection of PFAS at any level and those that are currently required to monitor for the presence of PFAS under EPA monitoring rules or other applicable laws, including but not limited to systems in the South Carolina aqueous film-forming foam multi-district litigation.

According to the release, the following systems are excluded from the settlement class:

  • Water systems owned and operated by a State or the United States government;
  • Small systems that have not detected the presence of PFAS and are not currently required to monitor for it under federal or state requirements; and
  • Water systems in the lower Cape Fear River Basin of North Carolina (which are included only if they so request).

While the companies will collectively establish and contribute a total of $1.185 billion to a settlement fund, contribution rates will be consistent with the binding Memorandum of Understanding between the companies reached in January 2021.

This remains at Chemours contributing 50% (about $592 million), DuPont (about $400 million) and Corteva (about $193 million) for the remaining 50%. The settlement amounts are then expected to be funded by the companies in full and deposited into the water district settlement fund within ten business days following preliminary approval of the settlement by the court.

The finalization of the definitive agreement is expected in the second quarter of 2023, subject to approval by the United States District Court for the District of South Carolina. As part of the approval process, the court will also establish a timetable for class members.

The companies report that if a settlement cannot be finalized and approved, such as if the plaintiffs elect to pursue their claims in court, the companies plan to continue legal defenses in pending litigation. Additionally, they deny the allegations in the underlying litigation and “reserve all legal and factual defenses against such claims if they were litigated to conclusion.”


Tagged categories: Chemours; Construction chemicals; DuPont; Environmental Control; Environmental Controls; Government; Health & Safety; Health and safety; Lawsuits; NA; North America; potable water; Program/Project Management; Water/Wastewater

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