DuPont 2010 Annual Report Download - page 46

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
submission of additional data needed to determine the risk a chemical may pose. Also in 2009, EPA announced its
‘‘Essential Principle for Reform of Chemicals Management Legislation.’’ The company is monitoring these
developments under TSCA.
In December 2006, the European Union adopted a new regulatory framework concerning the Registration, Evaluation
and Authorization of Chemicals. This regulatory framework known as REACH entered into force on June 1, 2007. One
of its main objectives is the protection of human health and the environment. REACH requires manufacturers and
importers to gather information on the properties of their substances that meet certain volume or toxicological criteria
and register the information in a central database to be maintained by the European Chemicals Agency. The Regulation
also contains a mechanism for the progressive substitution of the most dangerous chemicals when suitable
alternatives have been identified. Complete registrations containing extensive data on the characteristics of the
chemical will be required in three phases, depending on production usage or tonnage imported per year, and the
toxicological criteria of the chemical. The first registrations for substances that were preregistered in 2008 were
required in 2010; subsequent registrations are due in 2013 and 2018. New substances that will be manufactured or
imported need to be registered prior to being placed on the market (also known as non-phase-in substances). The
company successfully completed the 2010 registrations and is working on the non-phase-in registrations. By June 1,
2011, companies must notify the European Chemicals Agency of products containing above 0.1 percent of substances
of very high concern on the candidate list for authorization. There are now 46 such substances and the notice process
may create pressure for substitution away from these substances. By June 1, 2013, the Commission will review whether
substances with endocrine disruptive properties should be authorized if safer alternatives exist. Management does not
expect that the costs to comply with REACH will be material to its operations and consolidated financial position.
Facility Security
DuPont recognizes that the security and safety of its operations are critical to its employees, neighbors and, indeed, to
the future of the company. As such, the company has merged chemical site security into its safety core value where it
serves as an integral part of its long standing safety culture. Physical security measures have been combined with
process safety measures (including the use of inherently safer technology), administrative procedures and emergency
response preparedness into an integrated security plan. The company has conducted vulnerability assessments at
operating facilities in the U.S. and high priority sites worldwide and identified and implemented appropriate measures
to protect these facilities from physical and cyber attacks. DuPont is partnering with carriers, including railroad,
shipping and trucking companies, to secure chemicals in transit.
In April 2007, the Department of Homeland Security (DHS) issued an interim final rule (Rule) that establishes risk-based
performance standards for the security of U.S. chemical facilities. Covered chemical facilities are required to prepare
Security Vulnerability Assessments that identify facility security vulnerabilities and to develop and implement Site
Security Plans that include measures satisfying the identified risk-based performance standards. The Rule contains
associated provisions addressing inspections and audits, recordkeeping, and the protection of information that
constitutes Chemical-terrorism Vulnerability Information. DHS can seek compliance through the issuance of Orders,
including Orders Assessing Civil Penalty and Orders for the Cessation of Operations.
In June 2008, DHS notified those facilities that were preliminarily determined to be covered by the Rule’s security
requirements. DuPont facilities that were preliminarily determined to be covered conducted and submitted security
vulnerability assessments to DHS. Based on its review of these assessments, DHS made final determinations as to
which facilities were covered and the risk-base tier into which each falls. These facilities are submitting site security
plans to DHS. Once DHS has reviewed and provided preliminary approval of the plans, it will meet with facilities before
providing final approval. DuPont has already devoted substantial effort and resources in assessing security
vulnerabilities and taking steps to reinforce security at its chemical manufacturing facilities. Until each facility develops
and receives DHS approval for its site security plan, specific requirements cannot be determined and considerable
uncertainty exists regarding estimates for future capital expenditures. However, based on guidance issued by DHS
regarding its risk-based performance standards, it is expected that new security measures will need to be implemented
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