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 fines - Fines paid in the calendar year related to environmental compliance issues.
• 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.

Baxter received nine environmental NOVs in 2010, the same as in 2009. Three were related to wastewater, compared to six in 2009. Two were related to unpermitted releases to air and one related to the release of approximately 90 liters of a process chemical to land. The remaining three NOVs pertained to the late payment of a fee, deficiencies in a facility’s spill prevention plan, and the late submittal of a report. Baxter paid a $1,000 fine for the late report submittal. The company paid no other environmental fines in 2010.

Environmental Notices of Violation and Fines
	2005	2006	2007	2008	2009	2010
Wastewater NOVs	12	16	8	7	6	3
Other Environmental NOVs	5	1	2	3	3	6
Total Environmental NOVs	17	17	10	10	9	9
Total Environmental Fines	$11,825	$1,500	$4,591	$0	$800	$1,000

To reduce regulatory risk and enhance the company’s focus on operational control, Baxter set a goal to decrease environmental compliance incidents 50% by 2010, compared to 2005. Unfortunately the company did not achieve this goal, as environmental compliance incidents increased 71% during that period. While Baxter did not meet this target, the company did increase awareness and emphasis on environmental compliance during that period. Baxter remains committed to improving its performance in this area, and has set a new goal to reduce environmental compliance incidents 75% by 2015, compared to 2005.

In 2010, the majority of Baxter’s exceedances occurred at two facilities. The company’s Lessines, Belgium, facility reported 21 wastewater exceedances. These were primarily temperature exceedances, in which the temperature varied within three degrees Celsius above the permit limit. In addition, Baxter’s Sabiñanigo, Spain, facility reported 28 wastewater exceedances, primarily involving increased flow of treated wastewater. Both facilities have worked with local environmental authorities to ensure that actions taken are satisfactory.

Environmental Compliance Incidents*
	2005	2006	2007	2008	2009	2010
Air	2	2	1	1	4	2
Land	0	0	1	1	1	1
Drinking Water	1	0	0	0	0	0
Wastewater	38	30	32	33	39	67
Total	41	32	34	35	44	70

*

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 tables, most of Baxter’s environmental compliance incidents have been related to wastewater. The table below provides a breakdown of wastewater incidents by type in 2010.

Wastewater Environmental Compliance Incidents in 2010
Type	% of Total
Flow	40%
Temperature	30%
Biochemical Oxygen Demand/ Chemical Oxygen Demand	7%
Chloride	4%
Dissolved Sulfides	4%
pH	3%
Phosphate	3%
Total Phosphorous	3%
Acetone	2%
Fecal Coliform	2%
Total Suspended Solids	2%

In 2010, approximately 76% of Baxter’s wastewater-related exceedances were discharged directly to surface waterways, such as rivers, streams or creeks. The remaining 24% occurred at facilities that discharge to regional or municipal wastewater treatment systems.

In both cases of discharges to waterways and to municipal wastewater treatment systems, the regulatory agencies involved generally viewed Baxter’s responses as sufficient and have not pursued enforcement activities. During the year, Baxter did not receive any communication from a municipal wastewater treatment system indicating that the company’s discharges impacted the wastewater treatment plant’s operations. Nevertheless, Baxter has applied internal and external legal and engineering resources to evaluate compliance and technical solutions. Baxter plans to conduct follow-up wastewater compliance-focused reviews of these sites in 2011 to ensure appropriate steps continue to be taken to mitigate risk. See Water and Wastewater for more detail.

The following table summarizes overall environmental compliance incidents in 2010, by facility.

Environmental Compliance Incidents by Facility in 2010
Region/Country/State or Province	City	Description
Europe
Belgium	Lessines	Twenty-one wastewater incidents related to temperature and total phosphorous
Ireland	Castlebar	Eight wastewater incidents related to biochemical oxygen demand, chemical oxygen demand, chloride and pH
Spain	Sabiñánigo	Twenty-eight wastewater incidents related to flow and chemical oxygen demand
North America
United States, California	Los Angeles	One wastewater incident related to pH and one land incident related to a process chemical accidentally released to a municipal drain
United States, California	Thousand Oaks	Two wastewater incidents related to total suspended solids and acetone
United States, Illinois	Round Lake	Two wastewater incidents related to total phosphorous and fecal coliform
United States, New Jersey	Cherry Hill	Three wastewater incidents related to dissolved sulfides
United States, North Carolina	Marion	Two air incidents related to visible emissions
United States, Puerto Rico	Jayuya	Two wastewater incidents related to phosphate

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 EHS 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 eight 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 exposure to Baxter for the eight sites mentioned above was approximately $2.5 million at year-end 2010. Baxter also reached settlement agreements with the U.S. EPA for its potential liability at two Superfund sites.

Separate from the Superfund cases noted above, Baxter paid approximately $100,000 for remediation at the company’s Irvine, California, United States, facility in 2010.