PFOA Shareholder Proposal

Resolved:

The shareholders of E.I. du Pont de Nemours and Company (“DuPont”) urge the Board of Directors to report by the 2006 annual meeting, at reasonable cost and excluding confidential information, its expenditures by category and specific site (where applicable) for each year from 1981-2004, on attorney’s fees, expert fees, lobbying, and public relations/media expenses, relating in any way to the health and environmental consequences of perfluorooctanoic acid (“PFOA”) exposures, DuPont's remediation of sites where PFOA is present, and PFOA-related litigation.

 Supporting Statement:

DuPont faces significant liabilities due to potential health and environmental consequences related to PFOA, a chemical processing aid used in the production of Teflon and other products.  While DuPont has disclosed some information, we believe more transparency of the costs associated with the company’s use of PFOA would promote sound corporate governance.

PFOA, which does not break down in the environment and is detectable in the blood of more than 90% of Americans, has been shown to cause cancer, liver damage, and other problems in animals.  3M—the original supplier of PFOA—stopped producing PFOA in the U.S. in 2000 due to concerns about its environmental impacts. DuPont, now the exclusive U.S. manufacturer of the chemical, has recently become embroiled in legal actions related to PFOA. (Saint Paul Pioneer Press, 10/2/04 & 10/14/04; New York Times, 8/8/04.) 

In a November 2000 internal email, DuPont lawyer John Bowman warned, “We are going to spend millions to defend these lawsuits and have the additional threat of punitive damages hanging over our head.” (Document available at www.ewg.org/issues/PFCs.)

Indeed, DuPont has already incurred considerable expenses in PFOA litigation.  In September 2004, DuPont settled a class action lawsuit brought by residents involving PFOA water pollution near a West Virginia plant where DuPont manufactures Teflon.  DuPont will pay at least $108 million under the settlement for new water treatment systems for six West Virginia and Ohio communities, health and education programs, and other costs.

DuPont could also be required to spend an additional $235 million for a medical monitoring program for area residents if a DuPont-funded independent panel finds a link between PFOA exposure and disease.  In that event, residents would also retain their rights to pursue personal injury suits against the company. (DuPont Form 10Q, 11/5/04.)

In another case, EPA recently sued the company alleging that for twenty years beginning in 1981, DuPont withheld information from EPA, including the presence of PFOA in blood samples of pregnant DuPont employees and widespread PFOA contamination in local drinking water above the company’s community exposure guidelines. (EPA Notice, 7/8/04.) DuPont faces a potential fine of more than $300 million in the case—an amount almost equal to the company’s 2004 third quarter net income.  (New York Times, 8/8/04.)

 In our opinion, enhanced disclosure of the potential liabilities and other costs related to DuPont’s use of PFOA would bolster the company’s corporate governance image at a time when investors are placing a premium on transparency.  We urge shareholders to vote FOR this proposal.

For further information on DuPont Shareholders for Fair Value contact Sanford Lewis