Hey, guess what? It turns out that if you're producing a toxic chemical and you find out it's poisoning the environment and people in the neighborhood, you have to report it to the Environmental Protection Agency. Or else you're in trouble. Big time.

The Environmental Protection Agency is seeking fines totaling millions of dollars from DuPont on the grounds that the chemical giant failed for two decades to report possible health and environmental problems linked to a key ingredient used in making Teflon, agency officials said yesterday.

The penalty would dwarf any the agency has assessed for toxic contamination and could become the largest environmental levy in U.S. history. Tom Skinner, head of EPA's Office of Enforcement, said the penalty is "intended to send a message to DuPont and everyone else this type of information must be provided" so officials "can make valid assessments of the risks posed by various substances."

The chemical, perfluorooctanoic acid, is a soaplike material used in making stain- and stick-resistant surfaces and materials for a wide array of products, including Gore-Tex and pizza boxes. The substance, also known as C-8 or PFOA, has been linked in industry studies to cancer and birth defects in animals.

Turns out that two women exposed to C-8 had children with birth defects and DuPont transferred them away from the workplace without telling EPA. Industry studies in 1981 suggested that C-8 causes birth defects in animals. But the company later determined that C-8 didn't cause birth defects and transferred the women back again.

Company tests also found that traces of C-8 were found in public drinking water in communities near DuPont facilities, but the company did not tell EPA that it had done the tests.

The Toxic Substances Control Act (TSCA) requires a company to report adverse health effects if a chemical they use or produce "is strongly implicated" to have caused the effects. The costs to DuPont, in fines and lawsuits, could be substantial:

The EPA's top enforcement attorney, Thomas Skinner, would not specify how large a penalty the agency wanted to impose on DuPont. He would only say that the EPA was seeking "in the millions" in an administrative enforcement action and would try to negotiate a settlement with the company.

The EPA has the authority to seek a penalty of as much as $25,000 per day for each violation before 1997 and up to $27,500 per day after that — which would amount to about $300 million.

Several residents of the Ohio River Valley, who filed a class-action suit against DuPont after discovering that their drinking water had been contaminated with PFOA, are urging the federal government to fine the corporation $200 million. That is the amount DuPont earns annually in Teflon sales. The residents are joined by the Environmental Working Group, which initially petitioned the EPA to act on the chemical.

"DuPont made 17 years' worth of profit from Teflon while illegally suppressing studies on the health effects of a chemical used in its manufacture," residents Debra Cochran, Callie Lyons and Jim and Della Tennant said in a letter sent Tuesday to EPA Administrator Michael Leavitt. "Faced with overwhelming evidence that it broke the law, shouldn't DuPont lose at least one year's worth of Teflon profits?"

DuPont says the chemical is safe, it's done nothing wrong. This is all about a paperwork reporting requirement.

The EPA action resulted from a petion filed by the Environmental Working Group which had

unearthed company documents showing DuPont's deliberate withholding of the health and toxicity studies as well as evidence of widespread drinking water contamination. The group filed a petition in April, 2003 that prompted the Agency's investigation and action.

Despite the potential size of the fine, EWG fears that EPA will cave in and negotiate the fine down to a significantly lower level.

"This is shaping up as another in a long series of industry-friendly environmental 'enforcement' actions by the Bush EPA," said EWG President Ken Cook. "This time DuPont was caught in three serious violations of federal pollution laws. In the Bush administration, that automatically triggers the 'three strikes and we'll talk' policy."

"There's no message being sent here except the weakness of the Bush Administration and how it succumbed to DuPont's lobbying. It's pathetic," Cook said. "Everyone thought DuPont was in hot water with the Bush EPA, but instead it looks like they're sitting in the Jacuzzi."