DuPonts Performance

Chemicals Spinoff:

A Bad Deal for Stakeholders,

Victims, Employees, and the
Environment
A Keep Your Promises DuPont Briefing
June 9, 2015

Disclaimer
The information contained in this document is for discussion purposes only. The Action Network
Fund makes no representations about the accuracy, reliability, completeness, or timeliness of the
information contained in this document, and The Action Network Fund expressly disclaims any
liability relating to such information (or any inaccuracies or omissions therein).
This document includes forward-looking statements, estimates, projections and opinions
prepared with respect to, among other things, certain legal and regulatory issues DuPont faces
and the potential impact of those issues on its future business, financial condition and results of
operations. Such statements, estimates, projections and opinions may prove to be substantially
inaccurate and are inherently subject to significant risks and uncertainties beyond The Action
Network Funds control.
The Action Network Fund does not undertake any obligation to update, modify, revise or
reorganize the information contained in this document, or to notify you or any third party should
any such information be updated, modified, revised or reorganized.
In light of the foregoing, shareholders and others should conduct their own independent
investigation and analysis of the matters discussed in this document before taking or refraining
from taking any action in respect of DuPont or any other company.
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Introduction
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Keep Your Promises is a community organization dedicated to

holding DuPont to the promises made to mid-Ohio Valley
communities resulting from DuPonts contamination of the air and
drinking water with the chemical C-8.
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Speakers:
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Robert Masciola, Advisor, Keep Your Promises

Ken Cook, Founder, Environmental Working Group

Dr. Paul Brooks, Advisor, Keep Your Promises

Bill Wolfe, Founder, NJ Public Employees for Environmental Responsibility

Moderator:
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Douglas Land, Chair, Action Network Fund

Chemours: A Bad Deal

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Chemours, DuPonts proposed spinoff, will be saddled with massive debt and have
exposure to billions of dollars in lawsuits and remediation obligations before they even
open their doors.
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The proposed spinoff has years of declining profitability and cash flow.

3,500 lawsuits have been filed in relation to C-8 contamination, including 32 that allege
wrongful death, as of March 31, 2015. Because it believes losses associated with these
lawsuits, cannot be reasonably estimated, Chemours has made no accrual or reserve for
payment to these victims.

Jury verdicts and settlements for other cases involving similar medical conditions regularly
result in multi-million dollar payouts, yet Chemours ignores this risk on its Balance Sheet.

In addition to this PFOA litigation risk, Chemours is taking on the obligation to remediate more
than 90 of DuPonts hazardous waste sites.

Moodys has assigned speculative ratings to the Chemours Company, and its
recent Bond Offering warns investors of a substantial credit risk.
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Chemours, believesit could incur losses that could be materialwith respect

to thePFOA matters.
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Chemours to Assume DuPont Liabilities

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The preliminary Separation Agreement between DuPont and Chemours clearly

places the burden of significant past, current, and future environmental
liabilities with Chemours.
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Chemours shall use its best efforts to be fully substituted for DuPont with respect
to: (i) any order, decree, judgment, agreement or Action with respect to Chemours
Assumed Environmental Liabilities (Preliminary Separation Agreement).

Liabilities relating to environmental matters will be retained by or transferred to

[Chemours] or one of our subsidiaries (SEC Filings, Form 10).

Liabilities relating to legal proceedings including with respect to PFOA, will be

retained by or transferred to [Chemours] or one of our subsidiaries (SEC Filings, Form 10).

DuPont is playing the classic game of pass the trash except this time lives
are at stake. The spinoff is a great idea for DuPonts management and
board, and a terrible idea for other parties involved.
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Chemours to Assume DuPont Liabilities

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As of March 31, 2015, DuPonts total accrual for environmental remediation

activities was $482 million.
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The company states that potential environmental liabilities could be close to

$1.6 billion (a conservative estimate).

DuPont estimates its potential liabilities could be three times greater than their
accrual for those liabilities, before including any estimate for PFOA litigation
exposure.

A majority of DuPonts remediation liabilities will be passed off to Chemours, a

company that will have only a quarter of its revenue.

Chemours recognizes, We may have inadequate insurance or cash flow to offset

any associated costs. Such outcomes could adversely affect our financial condition
and results of operations.

C-8: A Current and Future Problem

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C-8 was not on the radar of independent scientists

and government regulators until the early 2000s.
Today it is seen as one of the chemicalindustrys
worst actors with regard to the environment and
human health.

A recent Environmental Working Group (EWG) report

called Poisoned Legacy digs into the problems with
C-8 and identifies huge potential liability from the
new C-8 replacement chemical.
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C-8 is an industrial polymer that does not break down

in the environment and now contaminates the
biospherethe living worldeven in remote regions.

The chemical builds up in people and contaminates

nearly every American, beginning in the womb.
Exposure sources include food, tap water, air, dust and
food packaging. C-8 has been linked to a disturbing
range of health effects: impaired growth,
development, reproduction, as well as cancer and liver
function.

C-8 has spread to sites, including water bodies,

far beyond where it has been used in
manufacturing.

C-8: A Current and Future Problem

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Few of these next-generation PFCs have been

tested for safety, and most of the names,
composition and health effects are hidden as
trade secrets.

EPA does not require safety testing before new

chemicals are used in products. If a company
conducts studies, it doesnt have to make them
public.

Studies suggest that short-chain PFCs are more

likely to end up in tap water because it is easier
to remove long-chain chemicals by water
treatment.

No liability for this risk has been reported in the

materials presented by DuPont or Chemours.
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C-8: A Current and Future Problem

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A group of prominent international scientists published a public warning by

way of the Helsingr Statement:
These replacements will be similarly resistant to ultimate
degradation, i.e. persistent, in the environment.

The industry will not offer proof that next-generation PFCs are any safer
than C-8, and the TSCA lacks the teeth to enforce transparency.

It is clear that C-8 and shorter-chain PFCs are dirty business, with a
questionable history and a legacy of significant ongoing liabilities.

C-8 and its children are the epitome of the kind of chemistry we should not
be pursuing.

DuPonts C-8 Promises

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In the 2005 settlement, DuPont agreed to:

1.

2.

3.

4.

Compensate
the people
who have a
Probable
Linked
Disease due
to C-8.

Fund and
effectively
administer the
medical
monitoring of
people in the
community.

Compensate
people who
get sick due
to C-8 in the
future.

Treat the
drinking water
of the affected
water districts.

DuPont committed to accept the findings of an Independent Science Panel,

which identified 6 diseases with probable links to C-8 exposure.
1.

Pregnancy-induced hypertension

2.

Kidney cancer

3.

Testicular cancer

4.

Thyroid disease

5.

Ulcerative colitis

6.

Diagnosed high cholesterol

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DuPonts Broken C-8 Promises

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Ten years later, DuPont has failed to fulfill its promises.

3,500 people who have diseases linked to C-8 have not been compensated.
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The judge has ruled that if, a Leach class membersuffer[s] or suffered from a Linked
Disease, the Probable Link Finding is applicable to themthe individual plaintiffs are not
required to come forward with evidence proving that their individual dosage of C-8 is
sufficient to permit the Probable Link Finding be applied to them.

DuPont continues to use the courts to evade their obligations, despite this Order.
DuPont denies the allegations in these lawsuits and is
defending itself vigorously.
(SEC Filing, Form 10)

DuPont has failed to carry out an effective Medical Monitoring Program.

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Medical Monitoring: A Failed Program

Over 100,000 Residents at Risk
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DuPont was ordered to create a $235

million Medical Monitoring Fund.

DuPont has failed in its outreach to

impacted residents, spending less
than $100,000 in outreach to the
residents they have exposed to C-8.

Only 6,483 registrations have been

received and only $322,000 has been
approved for payment, as of May 18,
2015.
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This is just 0.14% of the $235 million fund.

Without proper monitoring, over 100,000 residents are at substantial increased risk of
medical conditions for which early screening and detection were guaranteed.
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Medical Monitoring: A Failed Program

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We do not believe that the low program participation rates are a

coincidence.

Feinberg Rozen, LLP, the programs court-appointed administrator, has

been paid over ten million dollars while failing to effectively administer
the program.

Low participation rates fail to qualify the administration of the Medical

Monitoring program as effective.

Citizens who have been exposed to C-8 need and deserve the proper
medical care DuPont promised in the Leach Settlement.

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Future Cleanup Liabilities

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Pompton Lakes, NJ
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Potential liabilities for remediation activities: $116 million, which DuPont admits could
have a negative impact on the companys liquidity.

In 2014, DuPont reported it had spent $215 million on remedial measures and
investigative activities with significant risk of future exposure.

Status of Cleanup
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DuPont demolished buildings, cleaned up portions of the site and installed a groundwater
treatment system. According to EPA, DuPont spent $214 million on this partial cleanup.

The groundwater treatment system has not been effective, and groundwater remains
polluted and exceeds State groundwater standards. EPA is about to issue an approval of a
DuPont pilot "bio-remediation" study to cleanup groundwater, and the EPA recently
approved a DuPont cleanup plan.

Due to contamination of fish and wildlife, the US Fish and Wildlife Service is engaged in a
Natural Resource Damage Assessment to require DuPont to compensate the public and
restore damaged natural resources.

All 450 homes have not had vapor intrusion systems; DuPont is responsible for installing
these systems. There is unknown liability for damage to human health from vapor
intrusion into at least 450 homes.
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96 Sites with Future Cleanup Liabilities

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Other sites in New Jersey include:

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Chambers Works: 1,455-acre manufacturing complex, bordered by residential and

recreational areas, and the Delaware River.

Repauno: 1,900-acre manufacturing plant of products including dynamite, acids,

nitrobenzene and other compounds.

Parlin: 220-acre chemical manufacturing plant which produced Teflon,

photographic films, automotive paints, adhesives, and other specialty compounds.

DuPont has over 90 other unresolved hazardous waste sites like these, which
will be transferred to Chemours.

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Next Steps
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The facts we have uncovered show that there has not been nearly enough
regulatory scrutiny related to DuPont and its proposed spinoff.

The Form 10 for the proposed spinoff woefully understates the extent of such
potential liabilities.

Keep Your Promises and the Environmental Working Group urge the SEC, EPA,
and state regulatory agencies to take a closer look at the adequacy of this
disclosure and the potential effect of the transaction on all stakeholders.

We are requesting that DuPont release all studies associated with PFOA
exposure and its complete inventory and analysis of its hazardous waste
locations.

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Contact Information:
Jeffrey Dugas, Keep Your Promises Campaign
Jeffrey@actionnetwork.org
www.actionnetwork.org

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