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Litigation

Chemours settles PFAS dispute with DuPont, Corteva

Firms agree to a 50-50 split on up to $4 billion in future liabilities

by Craig Bettenhausen
January 30, 2021 | A version of this story appeared in Volume 99, Issue 4

 

A photo of a stone pavilion overlooking a small city in the autumn.
Credit: Cculber007/Wikimedia Commons
Rome, Georgia, is suing more than 30 firms, including DuPont and Chemours, over PFAS pollution in the Oostanaula River, the city’s main water source.

After a long battle in court and arbitration, Chemours has come to an agreement with DuPont and Corteva Agriscience on how to pay for up to $4 billion in per- and polyfluoroalkyl substances (PFAS) liabilities over the next 20 years. Chemours will be responsible for 50% of the costs of litigation and cleanup, while DuPont and Corteva will share the other half.

PFAS, which are used in nonstick and waterproof coatings, lubricants, and firefighting foams, have been linked to cancer and other health problems in humans.

The agreement ends a dispute stemming from the 2015 spin-off of Chemours from DuPont. 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. But in 2017, the firms agreed to a 50-50 split of a $671 million PFAS settlement in West Virginia.

In a 2019 lawsuit, Chemours argued that DuPont had grossly and intentionally underestimated in the spin-off how expensive PFAS liabilities would be and thus should cover costs above the estimates it made. Chemours also disputed the validity of the separation agreement itself, saying DuPont unfairly dominated the proceedings. The judge in that case ruled that the separation agreement is valid and sent the firms back to the binding arbitration the agreement calls for to settle disputes.

Corteva is involved because it spun off from DowDuPont in 2019 as part of the creation and subsequent breakup of DowDuPont. Corteva and DuPont will each cover half of their combined share for the first $300 million in legal payments. Beyond that, Corteva will pay 29% and DuPont 71%.

Morningstar financial analyst Seth Goldstein estimated last summer that the total PFAS legal liability for DuPont, Corteva, and Chemours is about $6.5 billion. 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.”

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