Water and groundwater contamination.

Monsanto and Solutia sign $700 million settlement

PCBs: Monsanto Co. and Solutia, Inc. sign an agreement that could cost more than $700 million to settle two lawsuits accusing the companies of polluting the town of Anniston, Alabama, with polychlorinated biphenyls over a period of decades. (Tolbert v Monsanto, N.C. Ala., No. CV-01-C-1407-W, 8/20/3003: Abernathy v Monsanto, Ala., Cir. Ct., No. CV-2001-832, 8/20/2003).

The global settlement sets up a $600 million fund to reimburse about 21,000 plaintiffs for damages stemming from the PCB contamination with Monsanto paying $390 million, Solutia paying $50 million, and the companies’ commercial insurance paying the remaining $160 million. It also requires Monsanto and Solutia to perform court-supervised remediation of the PCB-contaminated areas of the community, a lawyer for the plaintiffs, Jere Beasley, told BNA. That remediation likely will cost a minimum of $51.3 million, he said.

Moreover, Solutia and Pharmacia, a subsidiary of Pfizer, Inc., will also be required to participate in a series of community health initiatives, including setting up a medical clinic for low-income residents, health screenings, and a drug prescription benefit. These programs are valued at more than $75 million over the next 20 years, according to a Solutia statement. By the time the companies meet all of the different requirements, the settlement will total more than $700 million, Beasley said. “I felt very good today,” Beasley said, “I looked out and saw those folks, and they came up with tears in their eyes, and I felt real good. I’ve seen good results, bad results, corporations that don’t care, and I feel real good about this one.”

In signing the agreement, the companies involved admitted no wrongdoing. Two Cases Closed. This settlement brings to a close two major personal damage cases – one in federal court and one in state court – brought against the companies for their roles in polluting the ground and water of Anniston with PCBs. Monsanto operated a PCB manufacturing plant at Anniston from 1935 until its closure in 1971. PCBs were manufactured and used extensively until the 1970s as coolants, lubricants, and electrical insulators.

Because of growing health concerns, the federal government banned the manufacture of the PCBs in 1977; the Environmental Protection Agency has classified the substance as probable human carcinogens. Internal documents, some of which were decades old, demonstrated that Monsanto executives knew about the health hazards of PCBs and the extensive contamination in the community, but did not disclose it, Beasley said. “They knew it back then – they knew it in the 50s and 60s,” he said. “Monsanto knew as far back as 1937 that problems were caused by PCBs.”

Although Monsanto owned the PCB-producing Anniston plant, a number of companies are participation in the settlement because of a series of corporate mergers and spin-offs over the years. Chemical Business Spun Off. St. Louis-based Monsanto spun off its chemical business in 1997, which became Solutia. Monsanto, itself a subsidiary of Pharmacia, was subsequently spun off as a separate company in 2000. Pharmacia merged with Pfizer in 2003 and is now a subsidiary of that company.

“This global settlement is in the best interest of Monsanto and our shareowners, as it allows us to concentrate our efforts on our agricultural business, while removing an area of great uncertainty for our shareowners and employees related to our contingent liabilities,” Monsanto President and Chief Executive Officer Hugh Grant said in a statement. Monsanto had agreed to indemnify Pharmacia for some of this obligations connected to the Solutia spin-off, if Solutia were unable to meet those obligations, the statement noted. “We are glad to have this litigation behind us as it removed a burden for the company, its employees and stakeholders, and the community of Anniston, Alabama,” Solutia President and Chief Executive Officer John Hunter said in a statement. “This settlement puts the company in a better position in the coming months to refinance its bank facility and to address upcoming bond maturities, pension funding obligations, and other legacy liabilities.”

The settlement was reached in an Aug. 20 court appearance before both judges in both cases, according to the Solutia statement. The settlement is expected to be finalized and approved by the court by Aug. 26 with funds being transferred by Aug. 29.

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