A Chemical
Industry Marriage Not Made in Heaven
By
Phil Mattera in Dirt Diggers Digest
A corporation once known as the Merchant of Death because it dominated the gunpowder market wants to unite with a company that became notorious for its production of napalm and Agent Orange during the Vietnam War.
The proposed merger of DuPont and Dow Chemical is not a marriage made in heaven.
The
more recent track records of the two chemical giants are also seriously
tarnished, raising questions as to whether the plan for a merger and then
breakup is really a ploy to evade liability — something each of the companies
has done in the past.
DuPont’s feel-good postwar campaign promoting “better living through chemistry” gave way to a series of environmental controversies. In the 1970s and 1980s the issue was the company’s production of chlorofluorocarbons (CFCs) like Freon, which were destroying the earth’s ozone layer.
After resisting for years, DuPont finally
agreed to phase out production of CFCs but sought to use substitutes that were
also harmful.
In
1989 evidence emerged that
the Savannah River nuclear weapons plant, which DuPont had built and operated
for the federal government since 1951, had serious structural flaws and safety
problems that the company failed to report.
Numerous accidents at the South
Carolina facility, which made plutonium and the tritium gas needed in nuclear
warheads, were also kept secret.
DuPont
was a pioneer in developing perfluorinated compounds (PFCs), one of the most
highly toxic, extraordinarily persistent and likely carcinogenic group of
chemicals that work their way into the bloodstream of humans and wildlife.
DuPont’s highest profile PFC-based product was Teflon, best known for its use
in non-stick cookware. In 2004 the EPA charged that
for two decades DuPont failed to report signs of health and environmental
problems linked to perfluorooctanoic acid (or PFOA), the PFC used in making
Teflon.
Residents living near the plant in West Virginia where DuPont produced
PFOA sued the company, which agreed to
pay about $100 million to settle the case and spend up to $235 million on
medical monitoring of residents, which is ongoing. DuPont also paid $16.5
million to settle the EPA charges and later agreed to gradually phase out PFOA.
In
2014 a leak of methyl mercaptan (used in the production of pesticides) at a
DuPont plant in LaPorte, Texas caused the
death of four workers. In July 2015 OSHA proposed fines of $273,000 in connection
with the accident and put DuPont on its severe violator list.
This
year, DuPont spun off numerous facilities with tainted environmental and safety
records into a new company called Chemours. There was immediate concern
expressed by groups such as Keep Your Promises DuPont that the ownership change would
impair the commitments DuPont had made to deal with toxic waste sites and other
contaminated areas. One of those areas was Parkersburg, West Virginia, where
DuPont had produced Teflon.
DuPont’s
initial SEC filing about Chemours disclosed that the
new company would begin life with some $298 million in environmental
liabilities but acknowledged that the total could rise to 3.5 times that
amount.
Dow Chemical was involved in one of the most
controversial cases of liability evasion: its decision to do nothing for the
victims of the Bhopal disaster after acquiring Union Carbide, the company whose
subsidiary operated the pesticide plant where in 1984 a vast quantity of highly
toxic methyl isocyanate gas was released.
More than 8,000 people died
in the immediate aftermath of the incident, and many thousands more suffered
serious harms from exposure to the gas, including genetic damage that affected
their offspring.
Union
Carbide paid
compensation of $470 million, far below what many advocates
felt was necessary to care for the victims and their families. After the
merger, Bhopal advocates began to pressure Dow to do more, but the
company insisted that it had not assumed Union Carbide’s liabilities and thus
had no responsibility to help.
Dow’s
sins are not all inherited. In the 1980s its Dow Corning subsidiary was hit
with class action lawsuits filed by women claiming that they had developed
autoimmune diseases as a result of silicone leakage from breast implants produced
by the company.
In 1992, following a review of Dow Corning internal company
documents suggesting that the implants had been rushed to market without
complete safety tests, the U.S. Food and Drug Administration called for a
moratorium on new implants.
The New York Times reported that
the documents revealed that Dow Corning executives had delayed conducting
critical safety studies for more than a decade.
In
2011 Dow had to pay $2.5 million to settle EPA allegations that the company’s complex in
Midland, Michigan violated the Clean Air Act and Clean Water Act in a host of
ways at its chemical, pharmaceutical, and pesticide plants.
Given
the histories of these two companies, the proposed merger of DuPont and Dow
deserves the utmost scrutiny so that the needs not only of shareholders but
also their victims are addressed.