A long time ago, I recall seeing a poster that listed the "Eight Things That Don't Cause Cancer." While I don't remember what they were anymore, I'm pretty sure that perfluorooctanoic acid (PFOA) wasn't one of them. Too bad for DuPont (NYSE:DD), which just agreed to pay the largest civil administrative penalty ever imposed for failing to report the dangers of the chemical.
The EPA charges that DuPont knew about the dangers caused by PFOA, but covered up the risk for 20 years. The chemical, which is used in the manufacture of Teflon-coated cookware, apparently isn't found in the finished products, such as the Teflon pans and utensils sold to consumers in stores.
Then why is PFOA found in 95% of all Americans? The EPA concedes it doesn't know how the chemical makes it into the human bloodstream. So, for now, it appears that there is no sure way of reducing your exposure.
Also, the agency's not even sure if the chemical is an "unreasonable risk" to the public. That seems to make the $10 million fine levied against DuPont a bit over the top, even if it is a rather singular drop in the bucket for a $39 billion company.
DuPont agreed to pay the fine without admitting any guilt in order to put the matter behind it.
3M (NYSE:MMM) had a run-in with the EPA over the same chemical. It entered into a memorandum of understanding with the agency last year and stopped making products that contained PFOAs.
But in a draft risk assessment, the federal agency says it doesn't believe there's "any reason for consumers to stop using" products made with PFOA.
PFOAs are particularly useful in everyday life, because they resist fire and repel water, oil, and grease. Not only are the fluoropolymers derived from PFOAs used to make your nonstick kitchen skillet, they are also used to make fire-retardant clothes for firefighters, insulated wiring for airplanes, and spacesuits for astronauts. They keep packaged pharmaceuticals fresh, make breathable outdoor clothes breathe, and allow for more fuel-efficient cars. Even the semiconductor industry is heavily reliant on fluoropolymers.
The information used to extract the penalty from DuPont, the third-largest chemical company behind Dow Chemical (NYSE:DOW) and ExxonMobil (NYSE:XOM), came to light as a result of a class action lawsuit filed against the company in 2001. The suit alleged PFOA had contaminated the water supply around the company's West Virginia manufacturing facility, and even though the EPA found that there are "no known health effects" (including no elevated rate of cancer), the company settled that case for $107 million.
These aren't the only lawsuits against DuPont. A federal appeals court reinstated a host of racketeering suits that charged the chemical behemoth with hiding evidence of problems with the fungicide Benlate. Over the past 15 years, DuPont has paid more than $1.9 billion in damages and legal costs associated with the chemical in an effort to head off more serious punitive damages. But the company disclosed in its most recent quarterly report that it still has 73 cases pending that involve Benlate.
As part of its agreement with the EPA, DuPont will spend an additional $6.5 million to fund two research projects related to PFOAs, and will take a $15 million charge in the first quarter for the settlement. Investors may want to consider how the mounting legal bills will affect their investments.
Unfortunately for DuPont, in the latest case it ran afoul of the FDA's labyrinthine reporting requirements, which I believe are nearly as evil as actually endangering the health and welfare of the public. Too bad the health risks associated with outdated, burdensome overregulation won't be publicized anytime soon.
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy .
