DuPont Subpoenaed in Teflon-Ingredient Health Probe (Update2)

May 19 (Bloomberg) -- DuPont Co., the second-biggest U.S. chemical maker, said it received a subpoena in a grand jury probe related to an ingredient used to make Teflon non-stick coatings that has been found to cause cancer in animals.

 The subpoena, from the U.S. District Court for the District of Columbia and delivered by the Justice Department, calls for the production of documents previously handed over to the Environmental Protection Agency related to the ingredient, perfluorooctanoic acid, or PFOA, Wilmington, Delaware-based DuPont said today in a statement.

 DuPont earlier this month said it had agreed to settle allegations by U.S. regulators that the company failed for 20 years to disclose health data about PFOA. DuPont didn't specify the settlement amount although it set aside $15 million in the first quarter as a result of the April 21 preliminary agreement. The EPA said in July the penalty could be as much as $300 million.

 ``The worry from investors is that this is going to lead to more liabilities and set-asides,'' said Gene Pisasale, who helps manage $36 billion in investments, including 22.9 million DuPont shares, at Wilmington Trust Corp. ``A fine of couple hundred million dollars, though, would be extremely unlikely,'' Pisasale said in an interview. He rates DuPont shares a ``buy.''

 Shares of DuPont fell 79 cents, or 1.6 percent, to $47.25 at 2:43 p.m. in New York Stock Exchange composite trading. They have gained 13 percent in the past year.

 Accusations

 DuPont was accused by the EPA in July of failing to disclose that it knew as early as June 1981 that PFOA could pass from a mother to her unborn child. DuPont also didn't tell EPA that it knew in the mid-1980s that PFOA was in municipal water supplies around its plant in Parkersburg, West Virginia, the agency said.

 An EPA advisory panel is also deliberating whether to characterize PFOA as having undetermined ``carcinogenic potential'' or as a ``likely carcinogen,'' a higher-risk assessment. PFOA is not yet known to make people sick, the EPA said in January.

 DuPont, 3M Co. and other PFOA users said in March they are taking steps to reduce their emissions of PFOA. DuPont plans to remove PFOA from Teflon coatings and other dispersion polymers by the end of next year. 3M stopped making PFOA, which can cause cancer in animals, in 2000, after scientists said the chemical was in the blood of almost all people at very low levels.

 PFOA does not cause human cancers, Robert W. Rickard, DuPont's chief toxicologist, said last month. The company asked the EPA panel on March 9 to wait until more studies are presented before making a ruling.

 Dupont General Counsel Stacey J. Mobley said in today's statement that the company would be ``fully responsive'' to the subpoena. 

To contact the reporter on this story:
Daniel Goldstein in Washington at dgoldstein1@bloomberg.net

Last Updated: May 19, 2005 14:45 EDT