Solutia Settles Alabama PCB Case

Published October 1, 2003

Solutia, Inc. and its parent/predecessor Monsanto have reached a $700 million settlement with citizens of Anniston, Alabama who claimed PCB releases caused an assortment of health problems.

Facing as much as $3 billion in legal and compensatory expenses regarding the Alabama suit and a similar case scheduled for federal court, Solutia warned in its 2003 second-quarter earnings report that it might be forced to file Chapter 11 bankruptcy. Monsanto also faced potential bankruptcy from the suits.

In response to Solutia’s bankruptcy warning, trial lawyers representing the federal and state plaintiffs agreed to the $700 million settlement, which will allow both companies to remain in operation.

The settlement removes “an area of great uncertainty for our shareholders and employees related to our contingent liabilities,” said Monsanto Chief Executive Officer Hugh Grant.

From 1935 through the early 1970s, Monsanto manufactured PCBs at the 70-acre Anniston site to insulate electrical equipment. PCBs were considered safe at the time of their manufacture, and are still believed to be safe at low levels of exposure. Nevertheless, the federal government banned PCBs in 1979 after studies indicated that high levels of exposure to PCBs cause cancer in laboratory animals.

Owners of property near the site have had their land tested for PCBs, and many joined a class-action lawsuit filed against Solutia, a specialty chemical company that was spun off by Monsanto in 1997 but inherited the parent company’s liability for PCB claims.

As of August 11, a jury had awarded $101 million to the first 509 of 907 plaintiffs who claimed property damage as part of the suit. The awards were given even though much of the property registered only trace amounts of PCBs and was upstream of Monsanto’s plant, calling into question whether Monsanto was responsible for the PCB contamination. Moreover, Solutia had already spent more than $50 million cleaning up PCBs and has entered into a consent decree with EPA to clean up any other sites on EPA’s request.

In addition to the remaining 398 property damages claims, the jury had yet to consider any of the personal injury claims. The settlement addresses those remaining claims.

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].