Pall Corp. allocates funds for water cleanup in Michigan

High-tech filter maker Pall Corp. makes products aimed at keeping medical, industrial and aerospace systems clean, but the company has its own mess to clean up.

In a Sept. 2 Securities and Exchange filing, Pall said it set aside $20.8 million to help pay for an environmental cleanup in

Pall used Gelman, a maker of filters for laboratories and the biopharmaceutical industries, to form the core of its life sciences operations. The firm also acquired an environmental cleanup problem related to water pollution from Gelman's disposition of 1.4 Dioxane, a solvent used in manufacturing that was later found to be a carcinogen.

Pall is proposing one method to clean up deposits of 1.4 Dioxane in the groundwater, while the Michigan Department of Environmental Quality is pushing for a more aggressive plan.

In the filing, Pall said the DEQ, on Sept. 1, gave the firm one year to demonstrate that its proposed clean-up method is approvable as a final remedy.

If Pall isn't able to demonstrate its plan will work, the DEQ would seek to compel Pall to implement a more stringent plan.

The costs to implement an alternative clean-up methodology could be significant, Pall said in the filing.

The state's plan involves drilling wells and pumping polluted water through underground pipes to a treatment center and into the Huron River.

Pall's plan allows some pollutants to seep into the Huron River, where they would be diluted so they no longer pose a danger.

Pall, which already spent at least $30 million to clean up more than 2 billion gallons of water, said the extra money is a reserve for cleanup costs that it hasn't yet incurred.

What I can say is that these cleanups last for many, many years, said Pall Chief Executive Officer Eric Krasnoff in a conference call.

Pall is enmeshed in litigation with Ann Arbor and the Michigan Department of Environmental Quality regarding the cleanup.

In 2001, the city shut down a well which provided as much as a quarter of the area's water supply. On May 16, it sued Pall in Washtenaw County Circuit Court, seeking unspecified damages and asking the firm to pay for a new water source to replace the well allegedly contaminated by an 18 million-square-foot plume of Dioxane.

We are searching for alternatives to the well, said Ann Arbor Water Utilities Director Sue McCormick. Those alternatives are going to cost money. Pall should shoulder those costs, not Ann Arbor's citizens.

The Ann Arbor suit follows a separate suit filed by the Michigan DEQ in 1988 seeking to compel Gelman and then Pall to proceed rapidly with a cleanup. The latest hearing in the DEQ suit was held Sept. 9 as the DEQ and Pall seek to settle on a plan.

I think it would easily take close to 20 years with an active remediation system, said Sybil Kolon, an environmental quality analyst at the DEQ, of proper cleanup.

Pall acquired Gelman when the Ann Arbor firm was in talks to merge with Australia-based MemTec. Some observers said the pressure to close a deal quickly may have meant skimping on environmental review.

Because they swooped in like this, I'm not sure how much due diligence Pall did when they took over, said Roger Rayle, president of Scio Residents for Safe Water, an Ann Arbor group that's monitoring the cleanup. They didn't know what they were getting into. They didn't want to know.

Pat Ianucci, a Pall spokeswoman, said the firm was aware pollution existed at the time of the acquisition, but nobody knew the scope.

We knew when we bought the company that this situation existed, Ianucci said. But we didn't have a crystal ball. We've behaved responsibly from the very beginning and will continue to do so.