DuPont 2007 Annual Report Download - page 46

Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, continued
company of remediation at those sites and at all CERCLA sites in the aggregate, is not expected to have a material
impact on the financial position, liquidity or results of operations of the company.
Total expenditures for previously accrued remediation activities under CERCLA, RCRA and similar state laws were
$68 million, $64 million and $79 million in 2007, 2006 and 2005, respectively.
Remediation Accruals
At December 31, 2007, the Consolidated Balance Sheets included an accrued liability of $357 million compared to
$349 million at December 31, 2006. Considerable uncertainty exists with respect to environmental remediation costs
and, under adverse changes in circumstances, potential liability may range up to two to three times the amount
accrued as of December 31, 2007. Of the $357 million accrued liability, approximately 10 percent was reserved for
non-U.S. facilities. Approximately 65 percent of the reserve balance was attributable to RCRA and similar
remediation liabilities, while about 25 percent was attributable to CERCLA liabilities. Remediation accruals of
$76 million, $71 million and $64 million were added to the reserve in 2007, 2006 and 2005, respectively.
PFOA
DuPont manufactures fluoropolymer resins and dispersions as well as fluorotelomers, marketing many of them
under the Teflon»and Zonyl»brands. The fluoropolymer resins and dispersions businesses are part of the
Electronic & Communication Technologies segment; the fluorotelomers business is part of the Safety &
Protection segment.
Fluoropolymer resins and dispersions are high-performance materials with many end uses including architectural
fabrics, telecommunications and electronic wiring insulation, automotive fuel systems, computer chip processing
equipment, weather-resistant/breathable apparel and non-stick cookware. Fluorotelomers are used to make soil,
stain and grease repellants for paper, apparel, upholstery and carpets as well as firefighting foams and coatings.
A form of PFOA (collectively, perfluorooctanoic acid and its salts, including the ammonium salt) is used as a
processing agent to manufacture fluoropolymer resins and dispersions. For over 50 years, DuPont purchased its
PFOA needs from a third party, but beginning in the fall of 2002, it began producing PFOA to support the
manufacture of fluoropolymer resins and dispersions. PFOA is not used in the manufacture of fluorotelomers;
however, it is an unintended by-product present at trace levels in some fluorotelomer-based products.
DuPont Performance Elastomers, LLC (DPE) uses PFOA in the manufacture of raw materials to manufacture
Kalrez»perfluoroelastomer parts. PFOA is also used in the manufacture of some fluoroelastomers marketed by
DPE under the Viton»trademark. The wholly owned subsidiary is a part of the Performance Materials segment.
PFOA is bio-persistent and has been detected at very low levels in the blood of the general population. As a result,
the EPA initiated a process to enhance its understanding of the sources of PFOA in the environment and the
pathways through which human exposure to PFOA is occurring. In 2003, the EPA issued a preliminary risk
assessment on PFOA that focuses on the exposure of the U.S. general population to PFOA and possible health
effects, including developmental toxicity concerns. On January 12, 2005, the EPA issued a draft risk assessment on
PFOA. The draft stated that cancer data for PFOA may be best described as “suggestive evidence of
carcinogenicity, but not sufficient to assess human carcinogenic potential” under the EPA’s Guidelines for
Carcinogen Risk Assessment. Under the Guidelines, the descriptor “suggestive” is typically applied to agents if
animal testing finds any evidence that exposure causes tumors in one species of animal.
The EPA requested that the Science Advisory Board (SAB) review and comment on the scientific soundness of this
assessment. On May 31, 2006, the SAB released its report setting forth the view, based on laboratory studies in rats,
that the human carcinogenic potential of PFOA is more consistent with the EPA’s descriptor of “likely to be
carcinogenic” as defined in the Guidelines for Carcinogen Risk Assessment. However, in its report the SAB indicated
that additional data should be considered before the EPA finalizes its risk assessment of PFOA. Under the
Guidelines the “likely” descriptor is typically applied to agents that have tested positive in more than one species, sex,
strain, site or exposure route with or without evidence of carcinogenicity in humans. The EPA has acknowledged that
it will consider additional data, including new research and testing, and has indicated that another SAB review will be
sought after the EPA makes its risk assessment. DuPont disputes the cancer classification recommended in the
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Part II