July 10, 2024
Denka Company Limited

Decision of the U.S. Court of Appeals against an injunction filed by a U.S. subsidiary of Denka
As announced in the “Announcement of New Regulations set by the U.S. Environmental Protection Agency that apply to
Chloroprene Rubber Manufacturing Facilities in the U.S.” on April 17, 2024, on April 9 of the same year (local time), the U.S.
Environmental Protection Agency (“EPA”) announced new chemical air emission regulations (“new regulations”) applicable tochloroprene rubber manufacturing facilities, including Denka Performance Elastomer LLC (“DPE,” Denka has a 70% stake inthe company.), a U.S. subsidiary of Denka Company Limited (Denka). The new regulations were published in the official gazetteon May 16, 2024 (local time) and will take effect on July 15 of the same year (local time), 60 days after that day of publication.
Furthermore, the grace period for implementing measures in line with the new regulations has been set at 90 days from the dateof enforcement.
In response, DPE filed a motion for injunction on May 28, 2024 (local time) with the U.S. Court of Appeals for the District ofColumbia (“DC Court of Appeals”) seeking a stay of the EPA’s 90-day grace period for the new regulations. The DC Court ofAppeals ruled on June 26 of the same year (local time) to reject the petition, as described below.
1. Background of Petition and Decision, etc.
The EPA’s new regulations require chloroprene rubber manufacturing facilities in the U.S. to take various emission control
measures to substantially reduce emissions of chloroprene monomers (*1), which are used as an intermediate raw material. The
new regulations will take effect 60 days after the date of publication in the official gazette, and the grace period for taking suchmeasures was set at 90 days after the date of publication.
These new regulations respond to the results of the EPA’s Risk and Technology Review (RTR), which is based on the EPA’s
2010 Integrated Risk Information System (IRIS) carcinogenicity assessment of chloroprene monomers. DPE has longdemanded that the EPA review the carcinogenicity assessment of chloroprene monomers based on the latest science, claimingthat the carcinogenicity of chloroprene monomers is overestimated by IRIS (see 4 below). DPE has consistently operated thisbusiness of manufacturing chloroprene rubber in compliance with the emission standards of the state of Louisiana since it took
over the business from DuPont on November, 2015. In addition, it has further invested a total of more than 35 million dollars in
the environment based on consultations with the Louisiana Department of Environmental Quality (LDEQ) and the EPA, andhas reduced the amount of chloroprene monomers emitted at the facility by 85 percent as of 2019 compared with that in 2014.
Since this new regulations do not appear to review the validity of the carcinogenicity assessment based on the latest science, butwill have a significant impact on the continued operation of DPE, in response to the publication of the new regulations in theofficial gazette on May 16, 2024 (local time), DPE filed a petition for a review of the new regulations themselves with the DC
Court of Appeals on the same day, and on May 28 of the same year (local time), filed a motion for injunction seeking a stay of
the grace period until the implementation of emission reduction measures with the DC Court of Appeals. In parallel, DPE filed
an application with the LDEQ for a two-year extension of the grace period for the new regulations.
2. Content of the Decision, etc. on the Petition
In a written decision dated June 26, 2024 (local time), the DC Court of Appeals rejected the motion for a grace period injunction
filed by DPE.
However, regarding DPE’s parallel application to LDEQ for a two-year extension of the grace period for the new regulations,
DPE received a notice from LDEQ on June 27 of the same year (local time) granting DPE’s application for a two-year extension

of the grace period for the new regulations. DPE has contacted the EPA regarding the EPA’s position on the validity of this notice,
but as of today, the EPA’s position has not been made clear.
As of today, there has been no decision on the petition filed by DPE with the DC Court of Appeals for the review of the newregulations themselves.
3. Future Outlook
Regarding future actions, DPE will closely examine the content of the DC Court of Appeals’ decision, etc. and discuss andreview it with the counsel for the litigants, and will continue to take action to seek a stay or extension of the 90-day grace period.
DPE will continue to closely examine the impact on the operation of DPE’s chloroprene rubber manufacturing facilities andDenka’s consolidated financial results due to the new regulations and this DC Court of Appeals’ decision, etc. Further disclosures
will be released promptly if any matters that require disclosure should arise due to further detailed examination, etc. in the future.
4. Supplemental Information (Carcinogenicity Assessment of Chloroprene Monomers)
Since the EPA’s assessment, in 2010, of the carcinogenicity of chloroprene monomers, which was based on the Integrated Risk
Information System (IRIS), overestimated their toxicity, DPE has been requesting the EPA to perform a review that incorporates
the latest scientific technologies, and has consulted with the EPA on the application of a model of physiologically based
pharmacokinetics (PBPK). As a result, the EPA has also accepted it, and DPE has been developing a new PBRK model jointlywith the EPA since 2018. Subsequently, in July 2021, DPE submitted a request to the EPA for a review of the carcinogenicity
assessment of chloroprene monomers based on the new, jointly developed PBPK model.
However, in October 2022, the EPA rejected DPE’s Request for Review. The reason for the denial was that they were notobligated to bring newer science into the assessment because the carcinogenicity assessment of chloroprene monomers
conducted based on the Integrated Risk Information System (IRIS) in 2010 was systematized through peer review by a strict
third party at that time using the best science at the time which complied with the EPA Information Quality Guidelines.
Despite the above, the results of the toxicity assessment using the new PBPK model were published in the leading sciencemagazine, “Inhalation Toxicology.” In the said publication, the “Recommendation Value” which is a 70-year average exposure
concentration of 0.2 μg/m3 or below based on EPA’s 2010 IRIS carcinogenicity assessment was concluded to be overstated. Inaddition to the new PBPK model, a causal relationship between chloroprene monomers and carcinogenicity, as claimed by theEPA, has not been confirmed from the data, such as a recent epidemiological study updated by researchers at the University ofPittsburgh that followed approximately 7,000 employees who worked at the facilities handling chloroprene monomers for nearly
70 years in the U.S., and carcinogenic statistics around DPE plants by the Louisiana Tumor Registry.
5. Outline of the Subsidiary of Denka(1) Company Name

Denka Performance Elastomer LLC（DPE）(2) Location

State of Louisiana, USA(3) Title and name of representative

Kazuya Tokumoto, President & CEO(4) Content of business

Manufacture and sale of synthetic rubber (Neoprene)(5) Capital

121 million USD(6) Major shareholders and share ownership

Denka USA LLC (100% invested by Denka Company Limited):

ratio

70%
DIANA ELASTOMERS, INC. (100% invested by Mitsui & Co., Ltd.):30%(7) Date of establishment

December 8, 2014(*1) Chloroprene monomer: Chemical substance that is a raw material of chloroprene rubber

[Regarding DPE’s environmental initiatives, please refer to the following information posted on Denka’s official website.
https://www.denka.co.jp/eng/]
・“Announcement of New Regulations set by the U.S. Environmental Protection Agency that apply toChloroprene Rubber Manufacturing Facilities in the U.S.” April 17, 2024

https://www.denka.co.jp/eng/storage/news/pdf/490/20240417_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (9th Report)” April 21, 2023
https://www.denka.co.jp/eng/storage/news/pdf/445/20230421_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (8th Report)” March 6, 2023
https://www.denka.co.jp/eng/storage/news/pdf/442/20230306_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (7th Report)” January 13, 2023
https://www.denka.co.jp/eng/storage/news/pdf/439/20230113_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (6th Report)” October 28, 2022
https://www.denka.co.jp/eng/storage/news/pdf/429/20221028_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (5th Report)” June 17, 2022
https://www.denka.co.jp/eng/storage/news/pdf/407/20220617_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (4th Report)” April 28, 2022
https://www.denka.co.jp/eng/storage/news/pdf/406/20220428_denka_dpe_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (3rd Report)” July 20, 2021
https://www.denka.co.jp/storage/news/pdf/901/20210720_denka_dpe.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers (Updated) “March 2, 2021
https://www.denka.co.jp/eng/storage/news/pdf/332/20210302_denka_dpe_en.pdf• “Latest epidemiological study of chloroprene monomer workers in the US” December 17, 2020
https://www.denka.co.jp/eng/storage/news/pdf/317/20201217_denka_dpe_en.pdf• “Transition to Review Process in Toxicity Assessments Reconsideration of Chloroprene Monomer by theUnited States Environmental Protection Agency” August 7, 2020
https://www.denka.co.jp/eng/storage/news/pdf/311/20200807_denka_dpe_en.pdf• “LDEQ confirms 85% emissions reduction achieved, DPE’s completion of voluntary program” June 8,2020
https://www.denka.co.jp/eng/storage/news/pdf/314/20200608_denka_dpe_en.pdf• “Notice Regarding Litigation Against US Subsidiary” February 14, 2020
https://www.denka.co.jp/eng/storage/news/pdf/265/20200214_denka_dpe_litigation_en.pdf• “U.S. EPA’s Review of the Toxicity Assessment of Chloroprene Monomers” February 14, 2020
https://www.denka.co.jp/eng/storage/news/pdf/266/20200214_denka_statement_en.pdf• “Notice Regarding Initiatives to Reduce Environmental Burden Being Undertaken by Denka’s
Subsidiary in the United States” June 19, 2019https://www.denka.co.jp/eng/storage/news/pdf/238/20190619_statement_en.pdf
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