Coweta Files Suit Over Faulty Water Pipes

Coweta County and the Coweta County Water and Sewerage Authority joined in filing suit today in Fulton County State Court against Shell Oil Company and others for negligence, breach of contract, product liability, fraud, and violations of the Georgia Racketeer Influenced and Corrupt Organizations Act over the misrepresentation, marketing and sale of Blu-Max pipe, which uses a polybutylene resin manufactured by Shell. Coweta County and the Coweta County Water and Sewerage Authority are seeking at least $25 million in compensatory damages, in addition to treble damages provided by the RICO Act, attorneys’ fees, costs, and punitive damages.

“The Commissioners and the Authority Board are doing all we can to protect the customers of our water system. The performance of this pipe has been an utter failure for Coweta County and we have spent enough of our rate payers’ money to try and solve it,” said Coweta County Water and Sewerage Authority board chair Neal Shepard.

These pipes were touted as easy to install, resistant to corrosion and deterioration, tougher than metal, flexible without cracks or kinks and having a useful life of 50 years or more. Shell has been sued dozens of times across the country over misrepresentations related to the properties of pipe containing polybutylene resins, and has since ceased manufacturing the resins.

The pipes were installed in Coweta County in the 1980s and 1990s, and were used for service lines that run from the water main to the customer’s meter. The pipes were installed during a period of great growth for the water department. From 1987-1997 water customers grew from about 1,000 to about 14,000.

“The county authorized the use of these pipes based on the information we received from Shell, the extruders who manufactured the pipe, the suppliers who sold the pipe, and industry leaders such as the American Water Works Association (AWWA),” said Theron Gay, Coweta County Administrator. “We were never told of any performance issues with this product – never told that our resource, our product, might be soaking into the ground.”

The Coweta County Water and Sewer Authority operated as a county department until April 2007 when it transitioned to a full authority.

Between 2005 and 2006, Coweta County experienced a dramatic change in water loss.
In 2005 the Coweta County Water and Sewerage Authority documented a 10.84 % water

“loss” – meaning that was the difference between the water that was piped out and the water that was accounted for in customers’ meters. This was a reasonable amount because the industry standard is 15-18%.

In 2006, the water loss increased dramatically to 37.87% and in 2007, it increased again to 48.13%. Given the extreme level of loss and the drought that Coweta and Georgia were experiencing, the Coweta County Water and Sewerage Authority began an aggressive effort to identify and repair leaks to lessen water loss.

“The more we repair, the more failures we find,” said Ellis Cadenhead, general manager, Coweta County Water and Sewerage Authority. “Of our 24,500 customers, we expect as many as 15,000 of those to have been affected by this defective product.”

“We have spent countless man hours and millions of dollars repairing and replacing these pipes. With the challenges we face in water conservation today and our responsibility to our rate payers, this suit was the right thing to do,” said Shepard.

The Water and Sewerage Authority issued a $27 million bond in 2007, backed by the county. So far about $6 million of this bond has been used to replace the Blu-Max pipe. This amount does not include the costs incurred in years past when the pipe failed and was replaced as a matter of course. It also does not include the value of the product that was lost as a result of this defective product.

The County and the Water and Sewerage Authority are asking that the trial be held with a jury in Fulton County State Court.
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