Read the full article by Gretchen Morgenson (NBC News)
“Robin Andrews of Pedricktown, New Jersey, has been fighting an autoimmune disease and thyroid condition for the past three years, suffering severe dental problems, hair loss and other symptoms. All, she believes, are the result of exposure to drinking water tainted by a group of chemicals called PFAS, used widely for decades in products like Teflon pans, stain-resistant carpets, even cosmetics…
Now, however, there’s a risk that Andrews and other people with illnesses linked to the chemicals could end up with no compensation for their health problems. That’s because a major manufacturer, DuPont, recently unloaded its PFAS obligations to smaller companies that do not have the money to pay for them.
For decades, DuPont manufactured PFAS-type chemicals in a plant close to Andrews’ home in this tiny South Jersey town on marshy land near the Delaware River. Her grandfather and father both worked at the sprawling plant, known as the Chambers Works, which covers 1,400 acres of riverbank in the shadow of the bridge to Delaware.
In 2017, after she developed unexplained high liver enzymes, her well water tested positive for PFAS; she now runs it through a large filtration system in her basement and has it monitored every three months…
Jeff Tittel, senior chapter director of the New Jersey Sierra Club, has watched DuPont’s moves with concern. ‘They are setting up other companies to take the fall on liabilities that won’t have enough money, so even if people win lawsuits, they will get nothing or very little,’ he said.
PFAS are not regulated by the Environmental Protection Agency under the Safe Drinking Water Act and their side effects are still being understood by scientists and the public. In February, the EPA put out a proposal to regulate two of the most common PFAS chemicals found in drinking water and is asking for comment on how to monitor them.
On Wednesday, the EPA disclosed it ‘has multiple criminal investigations underway concerning PFAS-related pollution.’ The agency did not identify the entities being investigated and it could not be determined if DuPont is one of them.
Daniel Turner, reputation and media relations manager for DuPont, said the company had not received an information request from the EPA related to a criminal investigation…
A 2019 study by the Social Science Environmental Health Research Institute at Northeastern University and the Environmental Working Group, a nonprofit focused on the environment, identified at least 610 locations in 43 states that are known to be contaminated by PFAS, including drinking water systems serving an estimated 19 million people.
The DuPont spin-offs
In 2015, as problems associated with PFAS were becoming clearer, DuPont began a series of complex transactions that transformed the company’s structure. As a result of the transactions, responsibility for environmental obligations associated with the chemicals shifted onto other entities.
The first shift by DuPont occurred in 2015, when it assigned the great majority of liabilities associated with PFAS to The Chemours Company, a new entity containing DuPont’s chemicals business that was spun off to its shareholders.
In a statement provided to NBC News, DuPont spokesman Turner denied that the Chemours spin-off was an attempt to evade environmental and legal liabilities associated with PFAS. ‘The reason for the spin-off,’ Turner said, was that DuPont ‘was seeking to transform itself into a higher growth, higher value company’ and “saw more growth opportunities in its other businesses.’
A second spin-off was Corteva Inc., in 2019, an agriculture science company that holds other legacy DuPont operations and some PFAS liabilities.
The third transaction occurred last June when so-called new DuPont was created. Formerly known as DowDupont, its businesses include electronics, transportation and construction. Because of the two other spin-offs, new DuPont is two steps removed from PFAS obligations.
Chemours, with primary responsibility for the estimated tens of billions of dollars in PFAS obligations, does not have anywhere near the money or assets to cover them. Chemours’ net worth — its assets minus liabilities — stood at just $695 million as of Dec. 31, 2019.
If Chemours becomes insolvent, Corteva Inc. will be responsible, corporate filings show. Corteva does not have the funds to cover tens of billions in estimated PFAS costs either. Turner declined to say whether PFAS responsibilities would ultimately revert to DuPont if Chemours and Corteva are unable to pay them. A lawyer for Chemours declined to comment.
Corporate spin-offs like DuPont’s that transfer liabilities associated with problematic businesses are becoming more common, analysts say, especially in the energy and chemical fields.
‘You’re seeing it again and again,’ said Clark Williams-Derry, an analyst with the Institute for Energy Economics and Financial Analysis. ‘Spinning off your legacy liabilities into a separate corporation and to some other responsible party appears to be part of the standard playbook in these industries.’
DuPont is not the only PFAS manufacturer under scrutiny. Another is 3M, headquartered in Minneapolis. Both companies stopped making PFAS over a decade ago. 3M is fighting the suits and says it is cooperating with government investigators.
DuPont and 3M both face lawsuits over problems allegedly linked to PFAS. But DuPont’s shift of its PFAS liabilities to Chemours has drawn its own raft of litigation. In a complaint filed last year against DuPont by Chemours, it contended that the 2015 deal was fraudulent. DuPont knew and intentionally hid the scope of the liabilities when it dumped them into Chemours, the company alleged.
In response, DuPont says Chemours executives were well aware of the PFAS problems at the time of the spin-off and could not have been duped. Next up is the judge’s ruling on oral arguments in the case.
$400 million in settlements
Pinpointing liability for ailments that may be linked to toxic products is never easy. Large manufacturers often disavow responsibility for health problems allegedly tied to their products, forcing consumers to bring lawsuits. Big PFAS suits brought in recent years by consumers have been settled before they went to trial. DuPont has paid at least $400 million in settlements related to the chemicals so far…”