Thu 8 July, 2004 21:04
By Chris Baltimore and David Brinkerhoff
WASHINGTON/NEW YORK (Reuters) - DuPont Co., the No. 2 U.S.
chemicals maker, failed for more than 20 years to report potential
health risks caused by a key ingredient in the manufacture of
Teflon, the Environmental Protection Agency said on Thursday.
The Wilmington, Delaware, company violated the Toxic Substances
Control Act from June 1981 to March 2001 by not reporting dangers
associated with perfluorooctanoic acid or C-8, EPA said.
The chemical is crucial in the process of making the well-known
coating used in a wide range of consumer products, including
nonstick cookware and stain-resistant carpets.
Tests by 3M, the original manufacturer of C-8, have shown that
high levels of exposure may cause liver damage and reproductive
problems in rats.
Traces of C-8 were found as early as the 1980s by DuPont in
water supplies near DuPont's West Virginia plant and in a pregnant
employee, the EPA said.
In an administrative complaint, EPA accused DuPont of "multiple
failures to report information to EPA about substantial risk of
injury to human health or the environment" from C-8.
Shares of DuPont fell 32 cents, or 0.74 percent, to $42.77 on
Thursday afternoon amid a fall in the broader stock market.
DuPont dismissed the EPA's allegations as baseless and said it
would file a formal denial with the agency within 30 days.
"The evidence from over 50 years of experience and extensive
scientific studies supports our conclusion that (C-8) does not
harm human health or the environment," DuPont said in a statement.
C-8 can remain in humans for up to 4 years, according to the
EPA. Small amounts of the chemical are found in a large proportion
of the general U.S. public.
The EPA is trying to determine how C-8 finds its way into the
general population, DuPont said, adding that it supports the EPA's
Tom Skinner, head of EPA's enforcement office, said the agency
would seek penalties "in the millions of dollars." DuPont could
face penalties of $25,000 per day for violations before Jan. 30,
1997, rising to $27,500 per day after that, the EPA said.
A straight calculation could mean fines in the range of $300
million, but "that is not what we would be seeking," Skinner said,
although he would not disclose the exact amount.
As early as 1981, blood samples from at least one pregnant
worker at DuPont's West Virginia plant showed that C-8 had been
transferred to her fetus, the EPA said.
DuPont also detected traces of the chemical in water supplies
in West Virginia and Ohio communities near the plant that exceeded
its own exposure guidelines in 1991, the EPA said.
Some investors had anticipated the EPA's action on Thursday and
said the chemical maker could absorb any legal costs.
"I wouldn't overreact," said Earl Gaskins, managing director at
Brandywine Asset Management Inc. in Wilmington, Delaware, which
owns DuPont shares.
"There still is no clear-cut evidence, or even overwhelming or
substantial evidence, that C-8 is injurious to humans," he said,
adding "there's a fair amount of insurance that would protect
Since C-8 is used to manufacture Teflon and not in the coating
itself, it may have only contaminated people near its production,
Nonetheless, the chemical's link with Teflon could affect
DuPont's reputation with consumers, sources said.
"At bare minimum, it's a public relations issue for the
company, and at worse, the full extent of the law could be
implemented," said Heather Langsner, a senior analyst with
Innovest Strategic Value Advisors. Innovest, based in New York,
analyzes companies based on risk factors like environmental
concerns and social impact.
DuPont is facing Teflon problems on other fronts.
A suit, filed by residents near DuPont's West Virginia plant
and due to go to trial in September, seeks medical testing, clean
water supplies and property and personal injury damages, an
attorney familiar with the case said.
In 2000, 3M pulled its stain repellent Scotchgard from the
market after the EPA expressed concern that a sister chemical to
C-8 posed serious health risks. 3M has since stopped making all
DuPont said it had no plans to stop using C-8.