Allied Chemical

THIRTEEN YEARS AFTER the discovery that Allied Chemical, one of Virginia's major employers, had knowingly discharged the pesticide kepone into the James River, the waterway was fully reopened to fishing.

From 1966 to 1973, Allied Chemical produced kepone at a small plant converted from a gas station in Hopewell, Virginia. After 1973, the plant was operated by two former Allied employees under the name Life Science Products Company. Its sole customer was Allied; its sole product was kepone. In 1975, Virginia closed the plant after workers developed the “kepone shakes,” a characteristic tremor caused by overexposure to the chemical. Overexposure can also cause liver damage and temporary sterility. Kepone, a grayish white powder used in ant traps and to kill potato and banana plants, was banned in the United States that year.

The state also discovered that the factory had illegally disposed of large quantities of waste containing kepone. Life Science Products discharged kepone to the local sewage system, which was not equipped to handle it; Allied Chemical discharged kepone directly to the James River. Because kepone accumulates in organic tissues, Governor Mills E. Godwin banned all fishing on a 100-mile stretch of the river.

As the Virginia fishing industry staggered under bad publicity, Godwin and chemical industry lobbyists asked the U.S. Environmental Protection Agency (EPA) to raise the permissible level of kepone in fish, arguing that studies showing links to cancer were flawed. In late January 1977, U.S. District Judge Robert R. Merhige levied a record $13.2 million fine against Allied Chemical, which pleaded no contest to 940 counts of illegal dumping. By [Page 25]February 1, he had agreed to reduce the fine to $5 million if Allied Chemical created an $8 million environmental fund for Virginia. Merhige declared that the company's managers were “good boys in my book.” The fund would be administered by a board of local philanthropists.

Although Merhige commented, “I cannot believe that the board of Allied sat somewhere in New Jersey and said, ‘Let's go pollute,'” the Securities and Exchange Commission (SEC) disagreed. In March 1977, the SEC charged Allied Chemical with neglecting to inform its investors that it was knowingly polluting the environment, thereby distorting the firm's financial risks. The company and the SEC immediately signed a consent agreement in which Allied promised not to do it again. That October, the state of Virginia levied its own $5.25 million fine for environmental clean-up. By April 1978, the company had settled personal injury suits with 30 male workers, 8 wives, and 12 infants who were exposed to kepone.

Allied reappeared in the news in 1982, when it shattered the mutual stock-buying death grip of Bendix and Martin Marietta by buying both, then selling Martin Marietta back to itself. After multiple acquisitions and divestments, the company merged with Honeywell.