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HomeMy WebLinkAboutItem 10f - Participation in Tyco and BASF Settlements DATE: September 17, 2024 TO: Honorable Mayor and City Council FROM: Michael Maurer, City Attorney SUBJECT: CITY’S PARTICIPATION IN CLASS ACTION SETTLEMENT AGREEMENTS WITH TYCO FIRE PRODUCTS LP AND BASF CORPORATION CEQA: Not a Project Recommendation: Approve SUMMARY On April 12, 2024, Tyco Fire Products LP (“Tyco”) and Class Representatives for the nation’s Public Water Systems reached a $750 million settlement (“Tyco Settlement”) for per- and polyfluoroalkyl substances (“PFAS”) contaminated drinking water claims. On May 20, 2024, BASF Corporation (“BASF”) and Class Representatives for the nation’s Public Water Systems reached a $312.5 million settlement (“BASF Settlement”) for PFAS-contaminated drinking water claims. The putative class includes all Public Water Systems, regardless of size, that have one or more Water Sources impacted by PFAS as of May 15, 2024. Previously, 3M and DuPont reached settlements to pay $12.5 billion and $1.185 billion, respectively, to Public Water Systems with PFAS contamination. The City is a participating class member in both Settlements, and in July and August, the City submitted claims against the Settlements’ Action Fund and Special Needs Fund. It is recommended that the City Council approve the City’s participation in the Tyco and BASF Settlement Agreements and authorize Best Best & Krieger to file the City’s claims on its behalf. BACKGROUND & DISCUSSION A. Class and Funds Similar to the DuPont and 3M Settlements, the Tyco and BASF Settlements are intended to compensate Public Water Systems for PFAS drinking water contamination in exchange for releasing all past and future related claims against Tyco and BASF. Unlike the 3M and DuPont settlements, which included all Public Water Systems subject to UCMR-5, the Participation in Tyco and BASF Settlements September 17, 2024 Page 2 of 3 Tyco and BASF classes consist only of those Public Water Systems that detected PFAS in one or more Water Sources before May 15, 2024 ("Qualifying Class Members"). The City is a putative class member under this definition. Qualifying Class Members, i.e., those putative class members that remain in the Settlements, will have access to three funds: (1) the Action Fund, (2) the Special Needs Fund, and (3) the Supplemental Fund: (1) The Action Fund is the largest and compensates eligible Qualifying Class Members for each of their Impacted Water Sources. The amount of allocation depends on the contamination level and flow rate of the water source. Since the fund has a finite pool, the allocation also depends on the total number and size of claims made by Qualifying Class Members. (2) The Special Needs Fund comes from 5% of Tyco's and BASF's payments into the Action Fund. It reimburses Qualifying Class Members for costs incurred in addressing PFAS before submitting an Action Fund claim. Since the pool is finite, allocation depends on the total number and size of claims made. (3) The Supplemental Fund comes from 7% of Tyco's and BASF's payments into the Action Fund. It compensates class members if the source becomes contaminated or, in certain circumstances more contaminated, after the Action Fund claim deadline. Supplemental Funds are available up until December 31, 2030, or until exhaustion. Since the City has participated in the 3M and DuPont Settlements, it is not required to re- submit forms but may update the Claims Administrator with new information and documentation relevant to the City’s claims. Further, the Settlements do not impose conditions on the use of settlement allocations, nor do they provide a timetable for payments. Deadlines for Action Fund and Special Needs Fund claims have not been set, but will be no sooner than December 31, 2024, and February 14, 2025, respectively. C. Releases Qualifying Class Members release most present and future PFAS related claims against Tyco Fire Products LP, ChemDesign Products, Inc., their affiliated businesses, successors, assigns, any of their representatives, or anyone acting on their behalf. Qualifying Class Members release most present and future PFAS related claims against BASF Company, Ciba Corporation, their affiliated businesses, successors, assigns, any of their representatives, or anyone acting on their behalf. Participation in Tyco and BASF Settlements September 17, 2024 Page 3 of 3 Moreover, the Settlement includes a claims-over provision, which limits or fully eliminates a Qualifying Class Member’s judgment against a third-party defendant in a PFAS-related suit, if the third party successfully cross-claims a Released Party. Claims associated with facilities or real property that are physically separate from the Qualifying Class Member’s Public Water System are preserved. D. Opting In/Out No action is required for the City to opt in; however, staff recommends that the City Council approve participation in the settlement before the opt-out dates lapse. If the City Council wishes to be excluded from the settlements and preserve its claims against Tyco and BASF, it must opt out of the Tyco Settlement by September 23, 2023, and the BASF Settlement by October 15, 2024. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. FISCAL IMPACT Participation in the settlements will result in payments to the City. Given the relative size of the Tyco and BASF settlements, the City Attorney expects the payments to be smaller than the City's estimated allocations under the 3M and DuPont Settlements. RECOMMENDATION It is recommended that the City Council determine that the proposed action is not a project under the California Environmental Quality Act (“CEQA”); and approve participation in the Tyco and BASF Settlements, authorize the City Manager to execute all documents to effectuate the settlements and authorize Best Best and Krieger to submit claims on the City’s behalf.