DuPont, EPA Settle Chemical Complaint
Thursday, December 15, 2005
The Environmental Protection Agency reached a $16.5 million settlement with the DuPont Co. yesterday over the company's failure to report possible health risks associated with perfluorooctanoic acid, a chemical compound used to make Teflon. The fine, the largest civil administrative penalty the agency has ever obtained, includes a $10.25 million penalty and a pledge by DuPont to spend an additional $6.25 million on environmental projects.
The agreement, which is subject to approval by the EPA's Environmental Appeals Board, ends the agency's 16-month push to hold DuPont accountable for not turning over evidence to the government from as far back as 1981 about the substance also known as PFOA. That evidence documented that the compound -- which is used to produce nonstick and stain-resistant materials -- could be transferred from a woman to her baby via the placenta. Other studies showed rats dying after inhaling the chemical.
"This settlement sends a strong message that companies are responsible for promptly informing EPA about risk information associated with their chemicals," said Granta Y. Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance. "This is an unprecedented penalty, in the administrative context."
DuPont officials, who did not admit legal liability as part of the agreement, said they did not deliberately withhold information from the government and settled with EPA only to avoid a long and costly court battle. The agency could have fined the company as much as $313 million. The highest penalty previously levied by the agency was $6.4 million in 1994 against Tennessee Gas Pipeline Co.
"The fact of the matter is we could have litigated this, and some of my staff thought we should do that because we did nothing wrong," said Stacey J. Mobley, DuPont's senior vice president and general counsel. "We decided to put this matter behind us and move on. We need guidance from the agency as to what do they want. . . . Right now, after this settlement, I couldn't tell you."
As part of the accord, the company agreed to spend $1.25 million over the next three years on a "green chemistry" project in Wood County, W.Va., to reduce the risks some chemicals pose in schools, and $5 million to gauge whether nine of DuPont's products might degrade into PFOA over time.
DuPont settled a class-action lawsuit this year accusing it of allowing PFOA to contaminate drinking water in Ohio and West Virginia communities near its Parkersburg, W.Va., plant. The Justice Department still may conduct a criminal investigation.
The EPA is considering whether PFOA is a health risk to humans and should be regulated. The chemical has been linked to cancer and possible birth defects in animals, and the agency's scientific advisory board is to announce soon whether it considers it a possible or likely human carcinogen.
Susan Hazen, the EPA's principal deputy assistant administrator for the Office of Prevention, Pesticides, and Toxic Substances, said the additional studies are "essential in terms of contributing to our knowledge about the pathways of exposure" to PFOA. She said that while several animal studies suggest health risks associated with the substance, the agency has no reason right now "to believe there's a significant human health impact."
Environmental Working Group President Kenneth A. Cook, whose advocacy group gave EPA the information that initially spurred it to act against the chemical giant, said the penalty was just a small fraction of what DuPont owed the public. He said the fine amounted to less than half of 1 percent of the company's after-tax profits from Teflon-related products over the past 20 years.
"What's the appropriate fine for a $25 billion company that for decades hid vital health information about a toxic chemical that now contaminates every man, woman and child in the United States?" Cook said. "What's the proper dollar penalty for a pollutant that will never break down, and now finds its way into polar bears in the Arctic and human babies in their mothers' wombs? We're pretty sure it's not $16 million, even if that is a record amount under a federal law that everyone acknowledges is extremely weak."
DuPont stock closed yesterday at $43.18 a share, down 10 cents.