Cleanup of PCBs won’t be stalled

By Jessica Centers
Star Staff Writer
12-29-2004

It’s been more than a year since Solutia filed for bankruptcy protection to shed the legacy liabilities the company assumed when it was spun off from Monsanto. Today, it remains to be seen what entity in the tangled web of Solutia, Monsanto, Pharmacia and Pfizer will pay for the environmental mistakes of Monsanto’s past that still burden the people, properties and economy in places like Anniston. Although it’s still unknown which company will ultimately pay for the court-approved PCBs cleanup in Anniston — now being paid for by Monsanto — the court and companies have assured the public that the cleanup won’t be stalled and that it will be funded. For the thousands who worked at the Monsanto plant in Anniston during its seven decades of operation and Monsanto plants elsewhere around the country, the bigger question is whether the healthcare benefits they were promised will be kept, reduced or cancelled. From the 1930s until 1997, when Solutia was created, Monsanto operated a plant in West Anniston. For five of those decades, the company manufactured the polychlorinated biphenyls that now contaminate local properties, waterways and people. When Solutia was spun off from Monsanto, it took over the chemical operations, along with the associated environmental liabilities and health-care obligations for Monsanto retirees. In 1999, Monsanto was acquired by Pharmacia & Upjohn to create Pharmacia Corp. In 2002, Pharmacia spun off its biotechnology and agricultural businesses and named the company Monsanto, which company officials often refer to as the new Monsanto or Monsanto II. Pharmacia was acquired by Pfizer Inc. in April 2003. Both Monsanto and Solutia argue that the other is responsible for health costs and liabilities, but Monsanto indicated last week to shareholders that it expects the court will require it to cover some of those obligations. Last Monday, Monsanto announced plans to book a reserve of roughly $285 million pretax in anticipation of legal and environmental liabilities reverting from Solutia to Pharmacia — and by extension, to Monsanto. The reserve in the company’s first quarter results for 2005 is based on estimates, and Monsanto indicates the actual costs may be different given the status of Solutia’s bankruptcy proceedings. Monsanto Chairman Hugh Grant called the reserve fund "a small step on a path to reaching a final business resolution." "I was and I’ve remained adamant that we wouldn’t take on any costs that weren't our responsibility nor in our shareholders’ best interests as Solutia reorganized," he said in a conference call. Still, he said, "we’ve not been naive enough to believe that we wouldn’t be asked to take on some obligations." While the companies duke out who holds the liability, a committee representing the retirees of Solutia and Monsanto is working to protect the more than $1 billion in benefits Solutia provides. Last month, the Birmingham firm of Haskell Slaughter Young and Rediker, which is co-counsel for the Retirees’ Committee of Solutia, announced that they had successfully stopped Solutia from reducing the benefits of almost 6,000 retirees under 65. According to attorney R. Scott Williams, a plan proposed by Solutia would have increased the co-payments of pre-Medicare eligible retirees, affected their coverage limits and substituted the current health-care plan with a cafeteria-style benefits plan. Solutia had argued that the proposed change would save the company $5 million annually. Williams said Solutia was trying to modify retiree benefits without going through the appropriate process, which was why the committee fought to stop them. A document filed by Williams and co-counsel said that the committee learned of Solutia’s proposed changes third-hand and received no notice. Williams said it used to be that companies in need of cutting costs could cancel the benefits they had promised retirees and the retirees had no recourse and little power to fight the action. Today, the law recognizes that such cuts are sometimes necessary for a company’s survival, but it also recognizes that these were important promises made to people. Thus, there is a process a company must follow before making any such modifications. Pensions don’t need the same protection because they are already overseen and protected by the government, Williams said. The Retirees’ Committee, which represents about 25,000 former Monsanto and Solutia employees, spouses and their dependents, also filed a lawsuit in May aimed at getting Monsanto and Pharmacia to cover about $1.3 billion in benefits if Solutia can’t. The complaint said if Solutia cuts or ends retiree benefits prior to determining Monsanto’s obligations, retirees "would be irreparably harmed" while those liabilities are negotiated. Williams said that case is on hold. The committee has said it will not actively pursue the case while talks are ongoing, but has the right to pursue it after giving the other parties 30 days notice. Williams said the significance, if any, of Monsanto’s reserve would be difficult to assess at this point. "There have been a lot of informal discussions, but there have not been formal negotiations at all in the case related to retiree benefits and what, if any, modifications will be made," Williams said. The Associated Press contributed to this report.

About Jessica Centers

Jessica Centers, a University of Missouri graduate, covers health and the environment for The Anniston Star.