AGENDA ITEM 4: STOCKHOLDER PROPOSAL FOR REPORT ON ENVIRONMENTAL REMEDIATION IN MIDLAND AREA |
|
|||||
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Corporate Secretary. Dow is not responsible for the contents of the proposal. If properly presented at the Annual Meeting, your Board unanimously recommends a vote AGAINST the following proposal.
Stockholder Resolution
Whereas:
In the Saginaw River downstream of Dow Chemical’s Midland plant, dioxin levels have been measured above 1.6 million parts per trillion, the highest levels in the Great Lakes. The residential cleanup standard is 90 ppt. The Environmental Protection Agency (EPA) has charged Dow with delaying cleanup of downstream waterways and found significant deficiencies in the company’s work plans; in 2007 EPA issued consent orders requiring immediate action to remove hazardous sediments from certain areas with some of the highest concentrations.
Dow’s contamination stretches more than 50 miles through two river systems to the Saginaw Bay, which empties to Lake Huron, making it one of the largest contamination sites in the country. In August 2007, EPA also required Dow to take certain actions regarding the downstream migration of contaminants to Lake Huron.
A Dow-funded study confirmed increased levels of dioxin in the blood of residents living in the contaminated floodplain near Dow, with median levels of dioxin in their blood 28 percent higher than a comparison group.
The Michigan Department of Environmental Quality (MDEQ) has warned Tittabawassee-area residents that regularly eating fish and game from the river can dramatically increase dioxin exposure; eating seven monthly meals of sport fish from the Tittabawassee River would increase exposure to dioxin by 3,900 percent.
Dow Chemical is being sued by individuals representing 2,000 residents living along the Tittabawassee River and flood plain, alleging that dioxin from the Midland plant threatened their health and lowered property values. The class‑action lawsuit seeks damages possibly totaling $100 million dollars.
A National Academy of Science review reaffirmed dioxin’s toxicity as a known human carcinogen. According to the report, “There does not appear be a safe ‘threshold’ for dioxin’s carcinogenic effects. Evidence has accumulated...that dioxin also causes many other health problems even at low levels, such as developmental problems in children, immunologic problems in children and adults, reproductive problems in adults, and diabetes.” Dioxin has been called the ‘new lead’ because its effects on children can include impairments in basic functions, and because exposure is widespread.
Proponents believe that continued delays in thorough characterization and remediation of dioxin exposures near Dow’s Midland facilities may lead to increased long term liabilities and reputational damage for Dow.
Resolved: Shareholders request that the Board of Directors issue a report to shareholders by April 2009, at reasonable cost and excluding confidential information, summarizing the pace and effectiveness of the environmental remediation process being undertaken by Dow in the vicinity of and downstream from its Midland headquarters.
Supporting Statement
Proponents believe that such report should include overall public exposure and environmental goals; estimates of the overall volume of dioxin contaminated soil and sediment alleged to be caused or affected by Dow Chemical and the portion that will have been removed or remediated on a year by year basis, for each of the next twelve years; methods of remediation; and effectiveness of those methods at removing dioxin from waterways, floodplains and the food chain.
Company’s Statement and Recommendation [top]
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
This proposal asks stockholders to vote in support of the publication of a new report summarizing the pace and effectiveness of the environmental remediation process being undertaken by Dow in the vicinity of and downstream from its Midland headquarters.
In their proposal above, the proponents base their request for a new report on numerous arguments that are inaccurate, misleading, out of context or ill-informed.
Proponents state that the University of Michigan’s study confirmed increased levels of dioxin in the blood of residents living in the contaminated floodplain. This conclusion lacks important context and is misleading. University of Michigan researchers combined the results of dioxin, furans and PCBs together and concluded that the most significant factors contributing to combined dioxin, furan and PCB blood levels were that people living in this area tend to be older and heavier than people in the control group. Both age and body weight are well-known contributors to higher levels of dioxins in the general U.S. population, due to historically higher levels of dioxin, furans and PCBs in food and the way the body eliminates dioxin, furans and PCBs. When the University of Michigan results take into account age and weight, blood levels of dioxin and furans are not elevated above the levels found in people living elsewhere in the absence of any known source of dioxin contamination. In addition, a recent “Pilot Exposure Study” conducted by the Michigan Department of Community Health (“MDCH”) also found, “The levels of DLCs (dioxin-like compounds) measured in participants’ blood serum samples fell within the range of preliminary estimated background levels for people with no known exposure to dioxins and furans beyond background.”
The proponents’ statement about Michigan Department of Environmental Quality (“MDEQ”) warnings to Tittabawassee-area residents regarding consumption of fish and game from the river is similarly ill-informed, and it, too, requires further scrutiny. Overwhelmingly, the preferred species for consumption from the Tittabawasee River is walleye. The current MDCH fish consumption advisory lists walleye as a “safe fish for families” and allows “unlimited consumption of walleye under 22 inches” for adults. The MDEQ warning is largely based on models using extreme assumptions about consumption that do not reflect typical real world conditions. In addition, the University of Michigan dioxin exposure study determined that “eating fish, no matter whether it is sport‑caught, store‑bought or from a restaurant, is related to higher levels of dioxins in people’s blood. This applies to fish both from the contaminated area in Midland/Saginaw and from outside the contaminated area.” Even so, the MDCH and the University of Michigan report that the levels of dioxin-like compounds measured in local people’s blood serum samples fall within the range of preliminary estimated background levels for people with no known exposure to dioxins and furans beyond background. Consequently, MDEQ and proponents grossly exaggerate exposure estimates due to consuming locally caught fish.
Statements about the findings of the National Academy of Sciences (“NAS”) report on the U.S. Environmental Protection Agency’s (“EPA”) Draft Dioxin Risk Reassessment are misleading and in some cases entirely inaccurate. Commenting on the relative human health risk of dioxin exposure, the NAS said, “The potential adverse effects of TCDD, other dioxins, and dioxin-like compounds from long-term, low-level exposures to the general public are not directly observable and remain controversial.” And, contrary to proponents’ statements that, “According to the report there does not appear to be a safe threshold for dioxin’s carcinogenic effects,” the NAS actually noted that EPA’s sole reliance on non-threshold models for determining risk “lacked adequate scientific support.”
Proponents’ concerns about possible delays in achieving thorough remediation, and the potential for long‑term adverse impact on the Company, are also ill-founded. As part of the required regulatory process governing the approach to be taken to resolve the local situation, a detailed Remedial Investigation Work Plan (“Work Plan”) outlining required projects, implementation protocol, specific activities and a schedule for completion of each component of the Work Plan, has been submitted and significant portions of the detailed work have been implemented. Our current proposed Work Plans target a 2010 completion date for resolving the mid-Michigan furan and dioxin situation. The Work Plan is publically available on the Internet.
Even if the misstatements in proponents’ proposal were corrected, Dow’s Board of Directors believes the proponents’ request to issue a new report summarizing the pace and effectiveness of the environmental remediation process is both duplicative of the regulatory process requirements for communication and stakeholder engagement, and is in any event, premature.
In addition, quarterly public communication meetings are scheduled jointly by Dow and MDEQ for the explicit purpose of keeping the community aware of plans and progress toward completing the investigation and remediation processes in the most transparent manner possible.
These communications are adequate to apprise the public and interested stockholders of Dow’s progress in the process. There is no way to develop, with any degree of confidence, an assessment of the effectiveness of the environmental remediation process before the Remedial Investigation has been completed, before feasibility studies for each potential remedy have been conducted, and before final remedies have been implemented and the effectiveness of these remedies has been validated. Nor will it be possible to estimate volumes of soil and sediment that might be involved in the remediation until and after the abovementioned work has been completed and MDEQ approves a plan for remediation.
For these reasons Dow believes this proposal is unnecessary, that it would divert Company resources and deliver no benefit to stockholders. Accordingly, your Board unanimously recommends a vote AGAINST this proposal.
Vote Required
Approval of the resolution requires a majority of votes actually cast on the matter. For purposes of determining the number of votes cast on the matter, only those cast “for” and “against” are included, while abstentions and broker non-votes are not included.