Key Regulatory Issues, Updates, and Current Hot Topics

1. Key Regulatory Issues, Updates, and Current Hot Topics Charles M. Bartish Director, Product Safety Air Products and Chemicals, Inc. November 15, 2005 Fort Lauderdale, FL

2. Regulatory Affairs Agenda • Hot regulatory and compliance issues • HPV testing of epoxy chemicals • REACH implementation: an update • Country regulatory updates • Canada, China, Korea • Controlled chemicals (ROHS and WEEE) • Animal activists and terrorism • Global Harmonization System (GHS) • VOC implementation in the Northeast • Plea for your continued input!

3. The HPV Test Rule • Affects 2800 chemicals manufactured / imported into USA • Chemicals > 1MM lb in 1990; extended HPV (EHPV) to add new chemicals • Parallel programs subsequently proposed globally impacting ~1000 chemicals • Thermoset industry chemicals are affected • Exempts polymers, salts, SIDS chemicals • Polymers, not rigorously defined, but considered safe • SIDS (Screening Information Data Set) • part of a globally recognized protocol to conduct a risk assessment on chemicals • Encourages grouping related chemicals for testing

4. Test CategoriesAverage Cost ($M) Human Health 230 Environmental 30 Ecotoxicity 25 Physical / Chemical 15 300 Costs and Timing • Thermoset industry chemicals affected • Companies working together to conduct testing Testing costs are for a chemical needing a complete test package. Doesn’t include personnel, travel, sweat equity, administrative costs. All testing to be completed in mid-2000’s.

5. Chemical Epoxy resin Diluents BGE C12-C14 AGE Various Hardeners MOCA Status SIDS dossier, no testing Consortium through SPI conducting testing Variety of amines and polyamides being tested Consortium sponsored Thermoset Industry chemicals impacted by HPV AGE: alkyl glycidyl ether BGE: butyl glycidyl ether

6. Approach for Alkyl Glycidyl Ethers • Only C12-C14-AGE and BGE are subject to testing; estimate $200M of testing costs • Consortium of suppliers working together under auspices of SPI define, fund, and carry out tests • Air Products • CVC • Huntsman • Kemira • Resolution Performance Products / Hexion • At least for C12-C14-alkyl glycidyl ether, we are able to build upon mid-90’s Product Stewardship memorandum of understanding (MOU) with EPA

7. HPV Status and Summary • HPV is a significant US initiative and impacts the Thermosets Industry • An ERSTG team is following the issue closely • Companies are working together and cooperating to minimize costs and duplication of effort • Testing results to date have not resulted in significant changes to labels or PPE • EHPV evaluated, but probably minimal impact. Cresyl glycidyl ether on the list • HPV work will help with future regulatory obligations, such as REACH

8. What is the proposed REACH regulation? The proposed system is known as REACH • Registration • Evaluation and • Authorization of • Chemicals The scope is for (all) chemicals marketed in Europe, either manufactured or imported.

9. Registration For all 20,000 substances handled in quantities greater than 1 mt/yr, a tiered approach will be taken. Polymers exempt for now. CMR > 1 mt/yr 2008 Registration > 1000 mt/yr 2008 (earliest est.) Registration > 100 mt/yr 2011 (earliest est.) Registration > 1 mt/yr 2016 (earliest est.) CMR: Carcinogen, mutagen, reproductive toxin

10. Test Categories Average Cost ($M) Human Health 230 Environmental 30 Ecotoxicity 25 Physical / Chemical 15300 Costs and Timing • Test requirements similar to HPV program, likely staggered by volume and risk • Expect to use HPV data, wherever possible • Industry expected to work together

11. Chemical Safety Report required • From manufacturers and importers containing: • Human health and environmental assessment • Exposure assessment and risk characterization for ALL uses • Options for downstream users: • Provide information about uses and exposure to supplier / manufacturer • Create own chemical safety report for single use

12. Evaluation and Authorization • There are two types of evaluation: • Dossier Evaluation • To be conducted by the competent authority on all substances in volumes exceeding 100 mt/yr for all substances of very high concern. • Member State Evaluation of Substances. • Rolling plan covers three year period • Authorization is required for substances of very high concern, for example, carcinogens, PBT, etc.

13. Vulnerable Situations • Sole customer • Non-EU supplier • Data is scarce/high hazard raw material • Unusual / High exposure end-use • Supplier unaware of end-use • Lack of alternative supplier • Lack of alternative raw material

14. Impact on the Thermoset Industry • Cost impact may be relatively low; many chemicals already extensively tested • SIDS, HPV, ICCA • Polymers are exempt • EU Parliament agreed to scale back (9 Nov 2005) • Parties agree to reduce scope • < 10 ton chemicals tested only if “risky” • Reduced testing for 10-100 ton chemicals • Minimal data in first 18 months of registration process (i.e., MSDS information) • EU Parliament vote on 17 November 2005 • ERSTG companies watching events closely

15. Changing Country RegulationsCanada Changes effective 31 Oct 2005 • Trigger volumes • Only need to follow the yearly trigger volumes • New chemical substance not on NDSL notification volumes have been increased from 20 to 100 kg/yr. • Notification packets for both polymers and chemicals are required before reaching 1000, 10,000 and 50,000 kg/yr. • TSCA / NDSL • Substances on the public TSCA inventory will be placed on the NDSL inventory 1 year later (compared to 5 years). • For substances on the NDSL there is an additional High Volume Data requirement on reaching 50,000 kg/yr if there is significant consumer exposure or potential for aquatic release

16. China • New Chemical Declaration and Registration • Difficulties getting chemicals registered under New Chemical Substances law of 2003 • New methods for testing acute fish toxicity and biodegradation (effective 1 January 2006) • Looking Ahead • Industry efforts to get China to allow low volume exemptions • Chinese regulators very willing to discuss issues with industry

17. South Korea • Changes Made • Increased enforcement of inventory requirements • New chemical notification requires ecotoxicity testing (1 January 2006)

18. Controlled Chemicals -- Why? • Regulatory agencies continually publish lists of chemicals requiring administrative controls • Directives on Waste from Electrical and Electronic Equipment (WEEE) and on the Restriction of the Use of certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) • EU policy on Integrated Product Policy (IPP) and Future Framework Directive on Eco-design and End Use Equipment (EUE) • Using such chemicals might require additional environmental or industrial hygiene controls • Non-compliance with regulations can result in fines • Several industries want to be viewed as “green” and take sustainable development seriously • Electronics, Automotive, Detergent

19. Characteristics of controlled chemicals • Not permitted in products or packages • May be application specific, as certain applications may have higher risk potentials • Not chemicals, but unacceptable properties • Toxicological properties, such as reproductive toxins, carcinogens and endocrine disrupters. • In addition there may be lists of chemicals that are not controlled, but of which there is concern. • Chemicals that are global warmers would be a possibility for such a list.

20. Controlled Chemicals Specifics

21. What should suppliers / formulators do? • Determine if specific chemicals are present • In products intentionally or not intentionally • In packaging materials • Determine if specific chemicals were used in processing • Respond to customers’ inquiries • Letters • Certifications • Guarantees • Consider your own philosophy regarding formulating with “high visibility chemicals”

22. Activist groups taking strong message to stop animal testing Targeted Huntingdon Life Sciences and Covance Invaded labs, protest sites Physically abusing company employees and relatives Making public client names Legislation underway to stiffen crime as terrorism Animal activists becoming violent

23. Why Global Harmonization (GHS)? • Establish a global system for workplace hazard communication that would address • Classification of chemicals • Labeling • (Material) Safety data sheets • Goal was not to create a new system, but to harmonize existing systems that would be accepted globally. • Used by national and regional governments • Useful to target audiences • Emergency responders, consumers, industrial and transport workers

24. What are we harmonizing? • MSDS • 16-section format (reverse sections 2 and 3) • New ANSI revision will follow GHS • Labels • Signal words, pictograms, hazard statements • Classification • Hazardous chemicals according to their health, environmental and physical hazards • Target for global implementation is 2008 • Working over 15 yr • Why so long?

25. Is there harmony in harmonization? One example: Classification – Toxicity • Five categories now exist! • Based on LD50/LC50 values • Oral, dermal, or inhalation route

26. acute oral toxicity Class 1 Class 2 CH Class 3 Class 3 Class 4 Class 5 Category 1 Category 2 GHS Category 3 Category 4 Category 5 EU T+ T Xn // 5 25 50 100 200 300 400 500 2000 5000 LD50 mg/ kg EU is tougher! But GHS will include unclassified EU in Cat 5

27. Classification - Acute Toxicity

28. GHS Business Impact Estimated Costs (for 1 medium-sized German paint company) : - to change the calculation program 8,000 - to recalculate 14,000 recipes 24,000 - to change the pre-printed labels 340,000 - to print the new label versions up to 1,000,000 - to dispose the old labels up to 1,000,000 - to change the computer print program 2,000 - to relabel the containers in central stock ????? - to prepare all new SDSs (IT) 257,000 - to distribute the new SDSs (paper+postal rates) 241,000 - TOTAL more than Є 1,872,000 reference: J.G.Abbott; SGCI Chemie Pharma Schweiz; June 2004; ACC CEFIC meeting

29. Why is there concern about VOCs? • Any volatile compound of carbon is a VOC for regulatory purposes, unless specifically exempted • VOC + NOx + Sunlight = O3 • Precursors: motor vehicle exhaust, industrial emissions, gasoline vapors, chemical solvents • Sunlight, hot weather lead to harmful concentrations • Winds carry O3 and its precursors miles from sources • Harmful to health and the environment • Triggers health problems even at very low levels • Long-term exposure may cause permanent lung damage • Damages plants and ecosystems

30. VOC’s are regulated • Federal Clean Air Revisions Act of 1996 • resulted in stricter national VOC regulations. • AIM (Architectural and Industrial Maintenance) regulations became effective in 1999. • Some state regulations even tougher • Southern CA, Jefferson County, KY, and NJ have more stringent regulations than federal requirements. • Ozone Transport Commission (OTC) regulations • Areas from Northern Virginia to New England adopted lower VOC limits January 2005. • EPA continued actions • 2004 designated "non-attainment" areas exceeding 8-hr standards • 2005 identified boundaries, designations, and classifications for areas under the 1-hr ozone standard

32. Ground-level Ozone – Strategy Shift • Previous control strategies • Focused locally in areas of high ground-level O3 concentrations • EPA, States recognized need to address regional transport issues • New regional strategies • Reducing NOx emissions from power plants, industrial sources • Improving motor vehicle emissions, fuels and inspection programs • Addressing consumer products

33. Ozone Transport Commission (OTC) • Created by Congress in 1990 under the CAA and advises EPA on transport issues • Develops and implements regional measures to address ground-level ozone in the Northeast, Mid-Atlantic regions, includes CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI, VT and VA • Established rules for VOC content applicable to “any person who supplies, sells, offers for sale or manufactures any architectural coating for use within the jurisdiction of the state or local air pollution control agency…” • Does not apply to: • Coatings sold or manufactured for use outside of the (jurisdiction of the state or local air pollution control agency) or for shipment to other manufacturers for reformulation or repackaging • Any aerosol coating product • Coatings sold in containers w/volumes of 1 liter or less

34. OTC Model Rule for Consumer Products • Applies “to any person who sells, supplies, offers for sale, or manufactures consumer products on or after January 1, 2005 for use in the state of OTC STATE.” • Includes: • Applicability and Definitions • Standards and Exemptions • Innovative Products • Administrative and Reporting Requirements • Variances • Test Methods • Severability • Alternative Control Plan

35. Impact of OTC rules

36. Resources • EPA: www.epa.gov - see 63 FR 176:48848 • Ozone Transport Commission (OTC): • dep.state.ct.us/air2/siprac/2001/consu.pdf • Google: ozone transport commission regulations • South Coast Air Quality Management District (SCAQMD): www.aqmd.gov • California Air Resources Board (CARB): www.arb.ca.gov/coatings/arch/arch.htm • Midwest Regional Planning Organization/Lake Michigan Air Directors Consortium (MRPO/LADCO): www.ladco.org

37. What do we expect from you? • Remember, we’re all in this together! • Much of Product Stewardship is based on practical experience • This entire meeting should be interactive • Contribute your ideas • Ask questions • Tell us how you did “it” at your company • Volunteer to present!

38. Thanks to • Lynne Harris, SPI • Marie Martinko, SPI • Jeri Church, TRFA

39. Glycidyl ether Test Plan Estimated costs, $M $50 $150