DuPont de Nemours, Inc. (NYSE: DD), Corteva, Inc. (NYSE: CTVA) and The Chemours Company (NYSE: CC) announced they have entered into a binding memorandum of understanding containing a settlement to resolve legal disputes originating from the 2015 spin-off of Chemours from E. I. du Pont de Nemours and Company (EID), and to establish a cost sharing arrangement and an escrow account to be used to support and manage potential future legacy PFAS liabilities arising out of pre-July 1, 2015conduct. The agreement replaces the February 2017 PFOA Settlement and subsequent amendment to the Chemours Separation Agreement. In addition, DuPont, Corteva and Chemours have agreed to resolve the ongoing matters in the multi-district PFOA litigation in Ohio.
According to the terms of the cost sharing arrangement, DuPont and Corteva together, on one hand, and Chemours, on the other hand, agree to a 50-50 split of certain qualified expenses incurred over a term not to exceed twenty years or $4 billion of qualified spend and escrow contributions in the aggregate. DuPont and Corteva’s 50 percent will be limited to $2 billion including qualified expenses and escrow contributions. Under the existing Letter Agreement from June 1, 2019, DuPont and Corteva will each bear 50 percent of the first $300 million (up to $150 million each) and thereafter, DuPont bears 71 percent and Corteva bears the remaining 29 percent. DuPont’s share of the potential $2 billion would be approximately $1.36 billion and Corteva’s approximately $640 million.
In connection with the cost sharing arrangement described above, the companies also agree to establish a $1 billionmaximum escrow account to address potential future PFAS liabilities. Subject to the terms of the arrangement, contributions to the escrow will be made by Chemours, on one hand, and DuPont and Corteva, on the other hand, annually over an eight-year period. Over such period, Chemours will 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. The escrow provides for a one-time replenishment mechanism if the escrow account balance has less than $700 million at December 31, 2028.
After the term of this arrangement, Chemours’ indemnification obligations under the Chemours Separation Agreement would continue unchanged, subject to certain exceptions set forth in the memorandum of understanding.
Chemours will waive specified claims, including claims regarding the construct of its 2015 spin-off from EID. DuPont, Corteva and Chemours will dismiss the pending arbitration regarding those claims.
In addition, DuPont, Corteva and Chemours have agreed to resolve the matters in the Ohio multi-district PFOA litigation for $83 million. DuPont will contribute $27 million, Corteva will contribute $27 million and Chemours will contribute $29 million to the settlement. The agreement resolves approximately 95 pending cases as well as unfiled matters. The case of Travis and Julie Abbott v. E.I. du Pont de Nemours and Company is not included in the settlement and is presently pending appeal. These amounts are not subject to the new cost sharing arrangement.
Ed Breen, DuPont Chairman and CEO; Jim Collins, Corteva CEO and Mark Vergnano, Chemours President and CEO commented on the agreement:
“We are pleased to have reached a settlement agreement between our companies related to potential legacy PFAS liabilities, as well as resolving the remaining PFOA MDL cases in Ohio. The agreement will provide a measure of security and certainty for each company and our respective shareholders using a transparent process to address and resolve any potential future legacy PFAS matters.”