Environmental Compliance

Baxter assesses its performance in environmental compliance using several measures:

• Notices of violation (NOV) - A written notice from a governmental agency that identifies environmental noncompliance.
• Environmental compliance incidents - Releases that exceed permit limits (exceedances) and other spills or releases that must be reported to the government. Some of these exceedances may result in NOVs.
• Environmental fines - Fines related to environmental compliance issues.

Baxter received seven environmental NOVs in 2011, two less than in 2010. Five were related to wastewater, compared to three in 2010. One of the two remaining NOVs was related to the failure of a facility to conduct monthly inspections on two boilers. The final NOV was related to several environmental deficiencies noted during an agency inspection that followed a release of a cleaning agent to the wastewater pretreatment facility. Separately, Baxter paid a $9,455 fine related to exceedances of an air permit that occurred in 2010. It also paid a $530 fine for a wastewater discharge in exceedance of a permit. The company paid no other environmental fines in 2011.

Environmental Notices of Violation and Fines
	2007	2008	2009	2010	2011
Wastewater NOVs	8	7	6	3	5
Other Environmental NOVs	2	3	3	6	2
Total Environmental NOVs	10	10	9	9	7
Total Environmental Fines*	$4,591	$0	$800	$1,000	$9,985

*	Fines paid during calendar year noted.

Baxter has a goal to decrease environmental compliance incidents 75% by 2015, compared to 2005. While Baxter has not made progress against this goal, it has reaffirmed its commitment to focus on reducing compliance incidents through 2015. Additionally, as in 2010, nearly all of the incidents occurred at a few facilities, as noted in the table below. The company’s Lessines, Belgium, facility reported 35 wastewater exceedances. These were primarily temperature exceedances, in which the temperature varied within three degrees Celsius above the permit limit. In addition, Baxter’s Sabiñánigo, Spain, facility reported 25 wastewater exceedances, primarily involving increased flow of treated wastewater. Both facilities continue to work with internal and external resources to address these issues.

Environmental Compliance Incidents*
	2007	2008	2009	2010	2011
Air	1	1	4	2	0
Land	1	1	1	1	1
Drinking Water	0	0	0	0	0
Wastewater	32	33	39	67	73
Total	34	35	44	70	74

*

Subsequent to publishing Baxter’s 2009 Sustainability Report, the company received information from its facilities related to permit exceedances that warranted correction of 2006 - 2009 data. Instead of a 29% reduction in environmental incidents from 2005 to 2009 the corrected data show a 7% increase during that period.

As illustrated in the table above, most of Baxter’s environmental compliance incidents have been related to wastewater. The graph below provides a breakdown of wastewater incidents by type in 2011.

In 2011, approximately 85% of Baxter’s wastewater-related compliance incidents involved discharges to surface waterways, such as rivers, streams or creeks. The remaining 15% occurred at facilities that discharge to regional or municipal wastewater treatment systems.

At Lessines and Sabiñánigo, the regulatory agencies involved generally viewed Baxter’s responses to the exceedances as sufficient and have not pursued enforcement activities. In the case of Castlebar, Ireland, Baxter is in ongoing communication with the agency to address its concerns. Baxter continues to apply internal and external legal and engineering resources to evaluate compliance and technical solutions at high-risk facilities. See Water and Wastewater for more detail.

The following table summarizes environmental compliance incidents in 2011, by facility.

Environmental Compliance Incidents by Facility in 2011
Region/Country/State or Province	City	Description
Asia Pacific
Australia	Toongabbie	Three wastewater incidents related to flow
Europe
Belgium	Lessines	Thirty-five wastewater incidents related to temperature and suspended/sedimenting solids
Spain	Sabiñánigo	Twenty-five wastewater incidents related to flow
Ireland	Castlebar	Four wastewater incidents related to biochemical oxygen demand/chemical oxygen demand, pH, and an unauthorized discharge of a cleaning solution into the sewer
North America
Canada, Ontario	Alliston	One wastewater incident related to biochemical oxygen demand
United States, California	Los Angeles	One wastewater incident related to pH and one land incident related to a failure of the industrial wastewater treatment system resulting in a release of unprocessed wastewater to a municipal drain
United States, North Carolina	Marion	One wastewater incident related to toxicity
United States, California	Hayward	Three wastewater incidents related to suspended/sedimenting solids and biochemical oxygen demand/chemical oxygen demand

Managing Waste Liability

To manage waste disposal appropriately and minimize the risk of future liability, Baxter requires facilities to dispose of all hazardous or other regulated waste at disposal sites that Baxter has inspected or from which the company has otherwise received sufficient assurance of acceptable performance.

Baxter applies the same waste site auditing standards worldwide, and trains internal auditors to evaluate disposal site risk consistently regardless of local customs and culture. In addition, Baxter works with CHWMEG, Inc., a non-profit organization that enables companies to collectively purchase expert waste site audits.

Baxter is involved as a potentially responsible party (PRP) for environmental clean-up costs at seven hazardous waste sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. The estimated potential exposure to Baxter for the seven sites mentioned above was approximately $7.5 million at year-end 2011, compared to $2.5 million at year-end 2010. The increase compared to 2010 is primarily due to one Superfund site where the U.S. Environmental Protection Agency is requiring additional remediation strategies to be employed. Separate from the Superfund cases noted above, Baxter paid approximately $185,000 for remediation at the company’s Irvine, California, United States, facility in 2011.