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Chemours sues DuPont over environmental liabilities

Company says former owner soft-pedaled costs at time of spin off

by Alexander H. Tullo
July 2, 2019 | A version of this story appeared in Volume 97, Issue 27


A photo of the sign in front of DuPont's Fayetteville plant.
Credit: Cheryl Hogue/C&EN
DuPont's Fayetteville, North Carolina, plant.

DuPont grossly underestimated the environmental liabilities it saddled Chemours with when it spun off the new company in 2015, according to a lawsuit filed by Chemours.

The complaint, filed in the Delaware Court of Chancery in May but unsealed on June 28, asks for 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 center of the lawsuit are “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.

For example, DuPont had been facing 3,500 lawsuits in Ohio over exposure to perfluorooctanoic acid (PFOA). At spin-off, DuPont determined the maximum liability was $128 million. DuPont later ended up splitting a $671 million settlement with Chemours. It also agreed to provide up to $125 million for future liabilities.

Similarly, DuPont’s Fayetteville, North Carolina, plant, now part of Chemours, had been discharging per- and polyfluoroalkyl substances (PFAS) into the Cape Fear River for more than 30 years. DuPont allegedly estimated the liabilities at $2 million. Chemours has signed an agreement with the state of North Carolina that will require it to spend upwards of $200 million to fix the problem.

Chemours and DuPont also face lawsuits from the state of New Jersey for discharges from various plants. DuPont estimated the liabilities at $337 million. It later revised them to $620 million, and Chemours says the real liability could be much greater.

Chemours says DuPont estimated benzene-related liabilities at $17 million but later increased the figure to more than $111 million. Chemours says it also faces additional PFAS liabilities that DuPont didn’t fully account for.

Chemours wants DuPont to be responsible for the liabilities above the maximums.

“If, as DuPont now maintains, the maximums it certified for its board have zero meaning, and Chemours has uncapped liability without regard to them, then DuPont is admitting that the entire spin-off process was a sham,” the suit says.

DuPont and Corteva, which was named as a codefendant, call Chemours’ claims “without merit” and say the allocation of liabilities to Chemours was “standard spin-off practice.” They are seeking to dismiss the complaint and head to arbitration with Chemours.

They argue that Chemours has been doing well since the spin off and has returned $1 billion to shareholders in dividends and share buybacks. “We have no reason to believe Chemours is insolvent or otherwise unable to manage the liabilities allocated to it,” the companies say in a statement.



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