DuPont reserves $45 million for C8 case
Ken Ward Jr.
kward@wvgazette.com
DuPont Co. has set aside $ 45 million to cover potential costs of a lawsuit that
alleges the company poisoned Parkersburg-area water supplies with a chemical it
uses to make Teflon products.
DuPont revealed the move in a footnote to its quarterly report to stockholders,
released Tuesday morning.
The note said that the chemical giant's financial results through the end of
June included "a charge of $ 45 million to establish a reserve in connection"
with a class-action suit over the chemical C8.
During the quarter, DuPont reported net income of $ 503 million, down slightly
from $ 675 million during the second quarter of 2003.
C8 is another name for perfluorooctanoate, and is also known as
perfluorooctanoic acid, or PFOA.
At its Washington Works plant, DuPont has used C8 for more than 50 years in the
production of Teflon.
For years, C8 - and DuPont's emissions of it - have been basically unregulated.
But in the past few years, C8 pollution from the plant has come under increasing
scrutiny.
DuPont has settled at least one lawsuit over C8 contamination for an undisclosed
amount of money.
Currently, DuPont is defending itself in a class-action lawsuit. Tens of
thousands of plant neighbors allege the company poisoned their air and drinking
water with harmful levels of C8. Trial in Wood Circuit Court is scheduled for
late September.
DuPont's new financial report, to be filed with the U.S. Securities and Exchange
Commission, is the first time the company has put a potential price tag on the
C8 litigation.
Previously, DuPont told stockholders and the SEC that "while management
recognizes that it is reasonably possible that losses related to" the C8
litigation "may be incurred, a range of such losses cannot be reasonably
estimated at this time."
As recently as March, company officials reported that, "Since DuPont does not
believe that its use of PFOA has caused or will cause any deleterious health
effects, the company has not established a reserve related to the final outcome
of the lawsuit."
Clifton Webb, a DuPont spokesman, said that he could not provide a detailed
explanation for why the company decided to list a specific dollar figure now.
"As the process has proceeded, we are at a point in the process where we feel we
can make an estimate," Webb said.
It is common for companies to establish reserve accounts to cover likely
liabilities, including the costs of environmental cleanups or litigation.
Generally accepted accounting principles require companies to report
liabilities, including environmental liabilities, in their financial statements
if those liabilities' occurrence are "probable" and their amounts are
"reasonably estimable," according to a recent Government Accountability Office
report.
In September 2002, the EPA launched a "priority review" of C8 in response to
studies that linked the chemical to developmental and reproductive problems,
liver toxicity and cancer.
EPA has repeatedly delayed the release of results of that review. The release is
currently scheduled for mid-November.
Earlier this month, EPA cited DuPont for not telling regulators for more than 20
years about evidence that C8 could be a danger to workers and the public.
EPA also said that DuPont had covered up "widespread contamination" of drinking
water supplies that created a "substantial risk of injury to health or the
environment."
DuPont could face fines of hundreds of millions of dollars for these
toxics-reporting and hazardous-waste-handling violations.
To contact staff writer Ken Ward Jr., use e-mail or call 348-1702.