GLOBAL MATERIALS COMPLIANCEHANDBOOK

GLOBAL MATERIALSCOMPLIANCEHANDBOOK

JOHN PHYPERAtrion International Inc.

PHILIPPE DUCASAtrion International Inc.

PETER J. BAISHIndependent Contractor to Sandler & Travis Trade Advisory Services

A JOHN WILEY & SONS, INC., PUBLICATION

Copyright © 2004 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Phyper, John-David.Global materials compliance handbook / John Phyper, Philippe Ducas,

Peter J. Baish.p. cm.

ISBN 0-471-46739-1 (Cloth)1. Hazardous substances—Transportation. I. Ducas, Philippe.

II. Baish, Peter. III. Title.T55.3.H3P59 2004363.17—dc21

2003014217

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

To my wife, Christine, for her patience, and daughters, Megan and Madison,for constantly reminding me of the important things in life.

J.D.P.To my wife, Catherine, for her understanding and loving. Also to Stéphanie,

Pascale, and Pierre-Olivier, who are the most beautiful gifts of my life.P.D.

To my wife, Mary Alice, and children, Meg, Sarah, Liz, and P.T., I love you!P.J.B.

CONTENTS

PREFACE xiii

ACKNOWLEDGMENT xv

1 Introduction 1

1.1. Overview, 11.2. Types of Legislation, 61.3. Government Enforcement, 81.4. Content, 10

References, 12

PART I REGULATORY REQUIREMENTS 13

2 Chemical Registration, Notification, and Listing 15

2.1. Introduction, 152.2. Requirements for North America, 15

2.2.1. United States, 152.2.2. Canada, 21

2.3. European Requirements, 212.3.1. Current Requirements, 212.3.2. REACH Program, 27

2.4. Pacific Rim Requirements, 282.4.1. China, 28

vii

2.4.2. Australia, 322.4.3. Philippines, 352.4.4. Korea, 36References, 39

3 Material Safety Data Sheets 41

3.1. Introduction, 413.2. Global MSDS Requirements, 423.3. North American Requirement, 53

3.3.1. United States Requirement, 533.3.2. U.S. Approach to GHS, 583.3.3. Canadian Requirements, 603.3.4. Mexican Requirement, 61

3.4. European Safety Data Sheets, 623.4.1. Overview of Labeling (Classification), 623.4.2. Substance Versus Preparation, 943.4.3. Environmental Classification, 963.4.4. SDS Format, 973.4.5. Languages, 99

3.5. Pacific Rim MSDS, 1003.5.1. MSDS for Japan, 1003.5.2. SDS for Korea, 1143.5.3. SDS for China, 1203.5.4. SDS for Australia, 1233.5.5. SDS for Malaysia, 1263.5.6. SDS for Thailand, 129

3.6. Global Harmonization System (GHS), 130References, 143

4 Product Label Requirements 145

4.1. Introduction, 1454.2. North America, 146

4.2.1. United States, 1464.2.2. Canada, 1494.2.3. Mexico, 154

4.3. Europe, 1574.3.1. Information Contained on a European Label, 1584.3.2. Final Choice of Risk and Safety Phrases, 1584.3.3. Chemical Name(s) to Be Displayed on the

Label, 1594.3.4. Choice of Danger Symbols, 1604.3.5. Choice of Risk Phrases, 1604.3.6. Choice of Safety Phrases, 161

viii CONTENTS

4.3.7. The EC Number, 1624.3.8. The Dimensions of the Label for

Preparations, 1624.3.9. Special Cases: Substances, 1634.3.10. Special Cases: Preparations, 163

4.4. Pacific Rim, 1634.4.1. Japan, 1634.4.2. Korea, 1644.4.3. China, 1684.4.4. Australia, 1704.4.5. Malaysia, 171References, 176

5 Transport Requirements 177

5.1. Overview of Transport Legislation, 1775.2. International Requirements, 181

5.2.1. United Nations (UN), 1815.2.2. ICAO and IATA, 1925.2.3. IMO, 193

5.3. North American Requirements, 1975.3.1. U.S. DOT, 1975.3.2. Canadian TDG, 2035.3.3. Mexican, 212

5.4. European Requirements, 2185.4.1. ADR, 2185.4.2. EU Inland Waterways, 2205.4.3. Navigation on the Rhine, 2215.4.4. RID-OTIF, 223

5.5. Other Country Requirements, 2235.5.1. Australia National Dangerous Goods Policy, 2235.5.2. China Transport Packaging of Dangerous

Goods, 229References, 232

6 Import Compliance 233

6.1. Change in Strategy at the Border, 2336.1.1. Overview of Content, 2336.1.2. Historical Perspective, 233

6.2. Import Compliance Issues, 2356.3. Self-Assessments?, 2376.4. Import Requirements of Individual Countries and Economic

Unions, 2386.4.1. United States, 239

CONTENTS ix

6.4.2. Canada, 2466.4.3. Mexico, 2506.4.4. European Union, 2556.4.5. Australia, 2616.4.6. China, 2666.4.7. Japan, 2686.4.8. Korea, 2736.4.9. Taiwan, 276References, 277

7 Export Compliance 279

7.1. Overview, 2797.2. General Export Control Legislation, 2807.3. International Agreements for Export Control, 2827.4. North America, 282

7.4.1. United States, 2827.4.2. Canada, 2917.4.3. Mexico, 294

7.5. European Union, 2957.6. Pacific Rim, 297

7.6.1. Australia, 2977.6.2. China, 3007.6.3. Japan, 3017.6.4. Korea, 3047.6.5. Taiwan, 305

7.7. Corporate Export Compliance Programs, 306References, 308

PART II MATERIAL COMPLIANCE SYSTEMS 309

8 Impact of Terrorism on the Supply Chain 311

8.1. Introduction, 3118.2. Effect on Cargo Movements, 3128.3. Dangerous Times: Next Attack?, 3138.4. Countermeasures, 314

8.4.1. Tightening Legal Requirements, 3148.4.2. Private Sector Partnerships, 3168.4.3. Overseas Targeting of Container Freight, 3178.4.4. U.S./Canadian Border Clearance and Security

Enhancements, 3188.5. New Reality, 318

References, 320

x CONTENTS

9 Material Compliance Systems 321

9.1. Overview of Management System, 3219.1.1. General Management System Principles, 3229.1.2. Key Components of a MCS, 3249.1.3. Reasonable Care, 328

9.2. Material Compliance Policy, 3319.3. Planning, 332

9.3.1. Areas of Potential Risk, 3329.3.2. Legal and Other Requirements, 3349.3.3. Objectives and Targets, 3359.3.4. Management Programs, 336

9.4. Implementation and Operations, 3379.4.1. Structure and Responsibility, 3379.4.2. Training, Awareness, and Competence, 3389.4.3. Communications, 3409.4.4. MCS Documentation, 3419.4.5. Document Control, 3439.4.6. Operational Control, 3459.4.7. Emergency Preparedness and Response, 346

9.5. Checking and Corrective Action, 3479.5.1. Monitoring and Measurement, 3479.5.2. Nonconformance and Corrective and

Preventative Action, 3489.5.3. Records, 3499.5.4. MCS Audits, 350

9.6. Management Review, 352References, 353

10 MCS–Information Systems 355

10.1. Introduction, 35510.1.1. Overall MCS-IS Components, 35510.1.2. Business Drivers, 358

10.2. Identifying Preferred Approach, 35910.2.1. Documenting Business Requirements, 35910.2.2. Documenting Current/Future Costs, 36010.2.3. Maintain Status Quo, Build, or Buy?, 361

10.3. Implementation of Selected Solution, 36610.3.1. Implementation Process, 36610.3.2. Project Team, 37010.3.3. Project Management, 37210.3.4. Uncertainty of Implementation Costs, 37610.3.5. Implementation Schedule, 37610.3.6. Do’s and Don’ts, 378

CONTENTS xi

10.3.7. Training Program, 37910.3.8. Installation and Configuration, 38110.3.9. Conference Room Pilot, 38210.3.10. Custom Modifications (Commercial

Application), 38310.3.11. Legacy Data Migration, 38310.3.12. Interfaces, 38510.3.13. Testing, 386

10.4. Go Live and Post Implementation, 38710.4.1. Going Live, 38710.4.2. Maintenance, 388Reference, 389

APPENDICES 391

1 Glossary 3912 Audit/Inspection Checklists 3973 Material Management Web Sites 4234 Import/Export Web Sites 4375 Occupational Exposure Limits Legislation 441

INDEX 459

xii CONTENTS

PREFACE

This book is primarily directed to assisting those individuals who are respon-sible for material compliance (MC). The term MC refers to activities andprocesses used to ensure an organization is compliant with legislation relatedto hazardous (regulated) goods across all aspects of its business; for example,purchasing, research and development, testing, manufacturing, selling, docu-menting and distribution of regulated materials. Currently, companies spendhundreds of billions of dollars to satisfy these regulatory requirements. Exam-ples of job functions related to MC include the following:

• Personnel who generate and distribute regulatory documents, e.g., safetydata sheets, workplace safety cards, labels.

• Staff or third party contractors who train personnel on hazard communi-cation requirements and import/export legislation.

• Personnel involved in the purchase, importation, manufacture or use ofhazardous (regulated materials).

• Personnel who take new orders, transport goods locally/internationally orexport hazardous (regulated materials).

• Research personnel involved in the development of new/modified for-mulations or products.

The primary purpose of the hazard communication documents is to preventinjury to workers or consumers, identify potential danger to the environmentand be able to quickly and effectively respond to an incident, for example,tanker spill along a roadway or consumption of product by a child.

xiii

The book was designed to assist readers to answer the following questionsrelative to their organization:

• What is MC legislation?• What components of global MC legislation should my business care

about?• How do I keep track of all this legislation?• What are the components of a good material compliance system (MCS)?• What is a MCS-information system (IS) and how can I incorporate one

into our business?

In many cases, a lack of knowledge or poor execution of global MCrequirements has prevented companies from filling international orders. Mostcompanies now realize that the successful management of MC activities pro-vides a competitive advantage for companies doing business globally, espe-cially as North America and Europe “de-industrialize” and companies movetheir businesses abroad to capture lower labor costs. Key components of a suc-cessful MC management program include a well-defined process, personnelknowledgeable in both regulatory matters and supply chain issues and tech-nology for information transfer.

xiv PREFACE

ACKNOWLEDGMENT

This handbook represents the efforts of more than the three authors.To ensurethat the information has been presented properly and is current, the follow-ing experts reviewed draft versions of the chapters. All of the these peoplefreely gave of their time and ideas and authors are indebted to each of themfor their assistance: Leo Appelman, Azko Nobel Coatings; Frank Arcadi,Atrion International Inc.; Sarah K. Baish Milin; Joe Cella,Atrion InternationalInc.; Taco de Jong, Akzo Nobel Coatings; Gil Duhn, General Motors Corpo-ration; Steve Fogel, Applied Materials; Pierre Gravel, Canada Customs andExcise, Retired; Jerry Hagan, Atrion International Inc.; Scott Harter, AtrionInternational Inc.; Lea Johnson, Weyerhaeuser Corporation; Ian Jones, BPInternational Limited;Aad van Keulen,Atrion International Inc.; Sally Meier,IBM; Luc Seguin, Kemika XXI Inc.; Jill Thomas, Applied Materials; and Henkvan Peske, Kodak Polychrome Graphics.

xv

1INTRODUCTION

1.1 OVERVIEW

Whether a company operates facilities across the globe or merely imports or exports goods to a single jurisdiction, company personnel and their advisors must be aware and understand regulatory requirements pertinent totheir activities. The term material compliance (MC) refers to activities andprocesses used to ensure an organization is compliant with legislation related to hazardous (regulated) goods across all aspects of its business, forexample, purchasing, research and development, testing, manufacturing,selling, documenting, and distribution of regulated materials. Currently,companies spend hundreds of billions of dollars to satisfy these regulatoryrequirements.

In many cases, a lack of knowledge or poor execution of the requirementshas prevented companies from filling international orders. More and morecompanies are realizing that the successful management of MC activities pro-vides them a competitive advantage. This is becoming more critical as NorthAmerica and Europe companies move their businesses abroad to capturelower labor costs.

Within a company’s supply chain activity there are multiple areas that need to interact with a proper MC process. These include, as a minimum, thefollowing:

1

Global Materials Compliance Handbook, Edited by John Phyper, Philippe Ducas & Peter J. BaishISBN 0-471-46739-1 Copyright © 2004 by John Wiley & Sons, Inc.

• Review of suppliers’ Material Safety Data Sheets (MSDS) or Safety DataSheets (SDS) to ensure material can be imported and that documenta-tion addresses pertinent regulatory requirements.

• Approval of vendors for specific chemicals, taking into considerationimport/export legislation (e.g., embargos).

• Create Workplace Safety Cards (WSC), primarily in Europe, and labelsusing key information from suppliers’ MSDS/SDS and country-specificregulatory information.

• Train workers on how to use these chemicals and make the MSDS/SDSand WSC readily available.

• Use a new chemical within a research and development activity and identify potential regulated criteria that will be associated with new or mod-ified finished products (product optimization) that use this new chemical.

• Create MSDS/SDS and WSC for the newly design product.• Verify registration and import quantity limitations for targeted countries.• Verify the inventory listing for each substance (pure product) that is used

to create the new product.• Verify export information (banned list, embargo screening, etc.).• Create label (potentially multilingual) information for product selling and

shipment.• Send MSDS/SDS to client prior to shipment (distribution by mail, fax,

e-mail) in appropriate language and jurisdiction.• Create driver instruction cards, in appropriate language, for road ship-

ment (Tremcards).• Print all documentation needed with the shipment, addressing local

languages and legislation for areas through which the shipment may pass.

It is important to note that the primary “purpose” of the hazard communi-cation documents listed above is to prevent injury to workers or consumers,to identify potential danger to the environment, and to be able to quickly andeffectively respond to an incident, for example, a tanker spill along a roadwayor accidental consumption of product by a child.

To effectively manage MC on a global scale, the following are required:

• well-defined process• personnel knowledgeable in both regulator matters and supply chain

issues• technology for information transfer

Most companies who ship or receive goods internationally have developedmaterial compliance systems (MCS) that address these regulatory require-

2 INTRODUCTION

ments. These MCS are typically labor intensive, address mainly the primarybusiness location (e.g., U.S. or German operations only), and are not updatedin a timely manner as legislation changes. More and more proactive compa-nies are automating the screening of orders and generation of regulatory doc-uments while incrementally expanding regulatory content to address globalrequirements.

This book provides guidance to companies importing, exporting, or trans-porting hazardous (dangerous) goods around the world. The terms hazardousand dangerous are used here in general context; both can have very specificmeanings within particular legislation. Key issues addressed by the bookinclude:

• proper classification of hazardous goods according to import/export,health and safety, and transportation legislation,

• review of prohibition rules related to shipments of hazardous goods toand from countries and product registration requirements,

• preparation of proper shipping/transportation documents, labels, WSC,and MSDS/SDS,

• proper screening of shipments to ensure compliance with import/exportlegislation,

• helpful hints on antiterrorism activities to ensure ongoing security of ship-ments, and

• development of global MCS and MCS information systems.

The book also provides information on the important components of suc-cessful MCS and MCS information systems. The proposed components werederived from the International Organization for Standardization quality (ISO9000) and environmental (ISO 14000) series of standards and the U.S. Bureauof Industry and Security (BIS), formerly the Bureau of Export Administra-tion, Export Management System (EMS) guidelines. Components, if not prop-erly addressed, can quickly translate into:

• Development of new products that contain ingredient(s) that may causesignificant risk and, in some cases, are banned from being imported intosome countries.

• Delays and uncertainties in custom clearance that result in parts short-ages and the requirement to provide excess inventory.

• Return or impoundment of goods as prohibited from entering/leaving a country due to prohibition on material, incorrect containers, or documentation.

• Monetary fines, civil and/or criminal prosecution.• Prohibitions on the import/export of goods by the company.

OVERVIEW 3

• Damage to company reputation as a result of incident or prosecution.• Audits of shipments and operations by government agencies.

The presence of a MCS by itself will not relieve an organization of crimi-nal and administrative liability under law if a violation occurs.A well-designedMCS, however, should greatly reduce the risk of noncompliance events andwill serve as a mitigating factor during an investigation should a violationoccur. This role of an effective MCS may be further highlighted as U.S.Customs implements its “informed compliance strategies” for importers; astrategy that shifts focus from a transaction-based operation to an account-based processing.

The evolution of global MC legislation related to business processes can be“generally” described as follows:

Command and control period—In the early 1980s, companies began implementing the precursor to MCS to ensure ongoing regulatory compliance.Their focus shifted from simply executing import/export and transportation,to managing the quality of the processes and resulting output.A shift that mayhave been accelerated by the United States’ introduction of the EnhancedProliferation Control Initiative (EPCI) and a rewrite of Export Administra-tion Regulations (EAR). These regulations placed emphasis on the end useand end-users of the exported products. Companies quickly came to see cor-porate control of compliance processes and output as critical to meeting regulatory requirements, however, it was still considered a labor intensive“operational” issue, with a focus on only key manufacturing sites in the UnitedStates or Europe, depending upon the location of the company’s corporateheadquarters.

Costs/risks aversion period—In the 1990s, most major corporations mas-tered (or believed they had) basic MC issues related to government reportingand refocused on cost reduction and risk aversion—especially when they real-ized how much money it was costing to ensure ongoing compliance.As a result,MCS moved from being an “operational” issue to a “tactical,” issue with a significant amount of MC transactions (document generation, screening, etc.)being automated or semi-automated. However, systems were still primarilyU.S. or European Union (EU) regulatory focused, with other jurisdictionsbeing addressed partially, if at all, using local personnel and storage of datawith no central repository of MC information.

Management period—In the early 2000s, multinational companies began toreevaluate their MCS as they realized that their country-specific, independent,unilingual systems did not reinforce their integrated business process, butrather hindered it and were expensive to operate. In doing so, they also real-ized that the “ship button” present on a company’s internal/external Websystem is linked to a series of time-consuming, manual activities that fre-quently involve complex regulatory matters or the processing of significantamounts of data.

4 INTRODUCTION

They also realized that a well-designed MCS that includes a central datarepository of MC data, integrated with other key business systems, can:

• significantly reduce costs• promote dialogue with suppliers on hazard information and testing

requirements• standardize business processes• ensure trade and regulatory compliance• minimize business risks of current and proposed legislation• in the event of government action, show “reasonable care,” as per

U.S. Customs Informed Compliance Strategy, and potentially mitigatepenalties

Examples of key business information systems include the following:Laboratory Information Management Systems (LIMS), courier trackingsystems, formulation systems, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), or Manufacturing Resource Planning (MRP) software systems, and government reporting/content databases, for example,specific requirements for interfacing with U.S., British, and Canadian Customsystems.

The overall business objective for most companies is to drive costs out ofthe supply chain and improve services levels. Key activities related to MCSthat support this objective include:

• Ensuring compliance with global regulatory requirements.• Reducing the time period for preparation of new documents especially if

multi lingeral, and provide more accurate data.• Minimizing the time goods sit in customs, thereby decreasing the need for

excess inventories (especially customs holding areas).• Developing a single product that can be sold in numerous markets and

complies with legislation in every country rather then regional productsthat must be rolled out separately, avoiding costly product launch delaysand, potentially, prohibitions on entering some markets.

• Potentially allowing chemists to run “what-if” scenarios to find out whatthe consequences of adding/eliminating a particular component are interms of where it is to be sold.

• Integrate business information systems to minimize manual data entry.

These all have significant impact on costs, with some companies reportingdecreases of up to 50% of supply chain costs and significant expansion to newmarkets.

By assessing MC issues at the “strategic” level, companies can account for

OVERVIEW 5

compliance strengths and weaknesses when deciding against which competi-tors, in which markets, using what products (to develop, introduce, or phaseout), or how best to deploy company resources to maximize market opportu-nities. This new direction allows all personnel in the enterprise, from the shipping clerk to the CEO, to have visibility into compliance and hazardousmaterials issues impacting their decisions, from checking whether an MSDS isvalid, to choosing to expand sales into a new country. Each person has accessand the tools necessary to draw the right conclusions for minimizing costs andensuring compliance at all levels.

It is important to note that automation can reduce cost and ensure highquality when processing large amounts of data. Significant cost savings,however, typically only come from the integration of systems, as it eliminatesmanual data entry as well as associated errors.

1.2 TYPES OF LEGISLATION

MC legislation has become significantly more complex over the last few years.Historically, some companies have believed that the generation of documen-tation in English, in conformance to U.S. legislation, is adequate to ship goodsanywhere in the world. However, companies must be aware of and complywith local legislation (approximately 126 countries have local MSDS require-ments) and linguistic requirements. This legislation, when compiled, would fillseveral large bookshelves. In some areas, these requirements are significantlydifferent, and potentially more stringent, than U.S. requirements, for example,the approach to MSDS used in the EU versus the United States.

Several types of instruments are used by government agencies to manageor regulate MC legislation:

• acts, statutes, regulations, directives, and standards• permits, certificates, licenses, and orders• local/municipal ordinances and by-laws• codes of practice, policies, criteria, objectives, and guidelines

Legislative bodies pass acts or statutes (laws passed by legislators). Acts orstatutes are typically general in nature in terms of requirements and have abroader policy perspective. Regulations or directives are made pursuant toauthority set out in an act or statute and provide specific operational detailson the general powers listed in the act or statute. A bill is a proposed law that,following passage by the legislative body, becomes an act or statute. Typically,standards are numerical values stipulated in a statute regarding allowablelevels, for example, emission levels, occupational exposures, etc.

In the United States, the rule-making process involves the publication ofproposed regulations in the Federal Register, allowing the public an opportu-

6 INTRODUCTION

nity to comment on the regulation. The final regulation is also published in the Federal Register and has the effect and force of law when it becomes effective. Annually, the regulations are combined into the Code of FederalRegulations (C.F.R.).

It is important to note that there are three key dates for acts, statutes,regulations, and directives: publication of the proposed/draft legislation; thedate final legislation is published (often referred to as the promulgation date); and the date the legislation or key components become effective (alsoreferred to as the enforcement date). Typically, the more a piece of legislationwill impact the business community, the longer the time period between thedate of promulgation and enforcement date, for example, significant EU leg-islation typically has a transition period of 18 months. It is important to notethat for some regulatory changes, for example, occupational exposure limits(OEL), the transition period, if any, may be very short, depending upon thejurisdiction.

Permits, certificates, or licenses are issued to specific parties by governmentagencies.Some acts, statutes, regulations,or directives require such instruments.Orders are issued to specific parties by government agencies,usually in responseto failure by the party to comply with an act, statute, regulation, or directive, oron the strong suspicion that noncompliance has occurred or could occur.

Codes of practice, policies, criteria, objectives, and guidelines are used bygovernment agencies to address many MC issues.Although not legally bindingon their own, these types of instruments need to be reviewed and assessed aspart of MC compliance. They can illustrate an agency’s position toward a par-ticular situation. If these are incorporated into the terms of a license, permit,or other approval, or referred to in a regulation or directive, these types ofinstruments can be legally binding.

There exist potentially five levels of legislation:

• international (e.g., United Nations)• regional (e.g., EU)• national (federal)• state or provincial• municipal

For the purpose of MC legislation, and thus this book, the primary focus is on the first three levels, that is, items of national concern. Generallyprovinces/states are not precluded from enforcing criteria more stringent thanthose required by federal laws, and are given considerable leeway to followenforcement interpretations that may not be fully consistent with thoseapplied at the federal level. Thus, the laws and interpretations used to applyand enforce federal laws may vary considerably from province/state toprovince/state and these variations may not be readily apparent.

Note that under the U.S. Constitution’s commerce clause (Article I, Section

TYPES OF LEGISLATION 7

8), Congress has the authority to regulate commerce with foreign nations,among several states, and with Indian tribes. If the courts find that the statestatutes or regulations impermissibly burden interstate commerce, then theyare found to be unconstitutional and unenforceable.

1.3 GOVERNMENT ENFORCEMENT

Failure to comply with MC legislation may result in the following governmentagency responses:

• Delays in clearing of goods by customs personnel• Audit of shipments and operations• Orders to perform specific activities• Return or impoundment of goods as prohibited from entering/leaving

a country due to prohibition on material, incorrect containers, or documentation

• Prohibitions on the import/export of goods by the company• Monetary fines (ranging from ticketable offences to several million

dollars depending upon offence and jurisdiction), criminal prosecution ofemployees and executives, and civil prosecution of the company.

One of the largest fines to date was against Sony Corporation by the Dutchauthorities for importing game consoles containing cadmium levels above thelimit allowed under regulations. Sony corporation estimated an impact on salesof approximately EUR 110 million and on operating profit of approximatelyEUR 52 million, including costs of rework, on a consolidated basis for the fiscalyear ending March 31, 2002 (S&EA EN, 2002).

In many cases, the fine associated with incorrect MC document (e.g., MSDSor transportation manifest) is relatively minor, however, the resulting impactfrom personnel using this documentation can be catastrophic (e.g., damagefrom spillage/fires/explosions resulting from the incorrect storage of haz-ardous materials or inappropriate response to an emergency condition result-ing in worker injury/death and damage to equipment/property).

An example of this type of incident is the explosion at the Motiva Refin-ery in Delaware City, Delaware, in July 2002.The incident resulted in the deathof an employee, injury to eight other workers, and the release of a large quantity of acid into the Delaware River, killing fish and other aquatic life. Aspark from the work crew’s welding tools ignited hydrocarbon vapors from a415,300-gallon spent sulfuric acid storage tank. Motiva’s MSDS for spent sul-furic acid did not include important information about the mixture’s flamma-bility. In addition, Motiva had assigned a zero for the National Fire ProtectionAssociation (NFPA) rating on the MSDS (US CSHIB, 2002).

A commonly asked question by companies when discussing a government

8 INTRODUCTION

agency’s response, outside of the United States, is “do they really enforce thelegislation?” The answer is that, unfortunately for workers and the public,the response depends upon the jurisdiction. In almost all developed countries,any event that triggers injury to workers or the public, loss of life, or sig-nificant damage to the environment will result in significant penalties and government intervention. In nondeveloped countries, the response can varysignificantly.

In the United States, enforcement has been relatively steady for MC legis-lation, and, if anything, is increasing related to import/export of hazardousgoods because of the threat of terrorism. Many developing nations are also taking a much more stringent look at what hazardous goods are beingimported/exported.

The EU is starting to increase enforcement activities via the European Clas-sification and Labelling Inspections of Preparations (ECLIPS), including SDS.The objective of the ECLIPS project is first to assure a harmonized Europeanenforcement of the Directive 99/45/EEC (legislation related to SDS) and sec-ondly to show the necessity of appropriate classification and labelling as well as complete and correct SDS of dangerous preparations, also focusing on chemicals classified as carcinogenic, mutagenic, and/or toxic forreproduction.

Main goals of this project include the following:

• exchange of information and experience between the member states toavoid differences in the way the directive is enforced in the differentmember states and as a consequence to avoid different competitivenessof the relevant enterprises

• finding enforcement strategies for each country that are suited for itsnational situations

• reduction of risks to workers, public and environment requires highquality of safety data sheets and an appropriate classification and label-ing of preparations containing dangerous substances

• equal market conditions• correct labeling of dangerous preparations as a tool to attract attention

of the users (workers and public in large) in order to interfere in thebuying decision

Agreement on ECLIPS was reached in the following countries: Austria,Belgium, Denmark, France, Finland, Greece, Germany, Ireland, The Nether-lands, Norway, Spain, and Sweden. The Czech Republic and Slovakia are interested in the project as observer. A working group, consisting of Austria,Germany, Spain, and Sweden, has adapted the ECLIPS project proposal.

The project is currently in the operational phase, whereby the nationalauthorities are selecting companies and inspections of the companies will becarried out. Inspections will include:

GOVERNMENT ENFORCEMENT 9

• checking whether preparations are classified and labeled correctly,• checking safety data sheets, and• support and information for the companies.

To review what happens to companies that do not comply with U.S. regu-latory requirements, please review the U.S. government BIS Web site under“Press Release” or compliance and enforcement section of the U.S. EPA website.

1.4 CONTENT

This text provides easy to understand guidance on MC to shipping/receivingpersonnel, safety inspectors, MSDS/label authors, and transportation andlogistics managers. It also provides senior management insight into the com-plexities of shipping goods globally and a quick guide to the basic componentsof well-run MCS and MCS-IS. The book was designed to assist readers answerthe following questions relative to their organization:

• What is MC legislation?• What components of global MC legislation should my business care

about?• How do I keep track of all this legislation?• What are the components of a good MCS?• What is an MCS-IS and how can I incorporate one into our business?

This book is divided into two parts: Part 1 is an overview of global MC leg-islation and requirements imposed on organization that import, export, and/ortransport hazardous (dangerous) goods and Part 2 covers Material Compli-ance Systems. In this part of the book, MC, MCS—Information Systems, andantiterrorism activities are discussed. The latter is provided to assist compa-nies respond to a new business risk that can have a profound impact on themovement of hazardous goods.

If a chapter deals with regulatory requirements, we have subdivided thesection into the following geographic regions: North America, Europe, andPacific Rim. North America addresses legislation pertinent to the UnitedStates, Canada, and Mexico. In the EU sections, legislation pertinent to thecurrent 15 EU member states is addressed: Austria, Belgium, Denmark,France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, The Nether-lands, Portugal, Spain, Sweden, and the United Kingdom. Where informationwas available, we also tried to address countries that have a high probabilityof being accepted as EU member states in 2003: Cyprus, the Czech Republic,Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. Inthe Pacific Rim sections the five largest trading partners with the United Stateswere selected: Japan, China, Taiwan, Korea, and Australia.

10 INTRODUCTION

The following are brief descriptions of each section of the book and howthey assist readers in addressing key business requirements:

Part I—Regulatory RequirementsChapter 2 covers chemical registration, notification, and listing as derived

from product registration and national inventory legislation. This type oflegislation can prohibit a material from being allowed into a country,limit its use (e.g., research and development), or require a company toprovide a significant amount of documentation as part of a very timelyregistration process.

Chapter 3 addresses the regulatory requirements related to generation anddistribution of MSDS, the second most generated document in manyorganizations. Efforts are underway to harmonize the requirementsaround the world, however, individual countries continue to put forwardtheir unique requirements that in several instances result in a conflictbetween jurisdictions.The concept of a single system is still seen by manyas an elusive dream.

In Chapter 4, legislation pertinent to product label requirements is pre-sented. The chapter deals primarily with precautionary labels for prod-ucts and shipments and presents the key requirements in an easy tounderstand format that promotes comparison jurisdiction.

Chapter 5 presents requirements related to transportation of haz-ardous goods. These include the classification and preparation of ship-ping documents for all modes of transportation: air, water, rail androadway.

Chapter 6 provides an overview of global import compliance. Key compo-nents include classification, prohibitions, custom notification and foreigntrade zone execution.

Chapter 7 presents information on export compliance in a manner similarto Chapter 2. The key components include classification, prohibitions(e.g., restricted parties and embargoes), and customs notification.

Part II—Material Compliance SystemsChapter 8 covers the impact of terrorism on the supply chain. Topics

addressed include effect on cargo movements, planning for the nextattack, and countermeasures.

Chapter 9 presents the basic components of material compliance systemsalong with the proposed links to well-defined business systems, that is,the International Organization for Standardization (ISO) publicationson quality and environment management systems and the U.S. BISExport Management Systems (EMS) guidelines.

Chapter 10 discusses key issues associated with MCS–Information Systems:business drivers for implementing a MCS-IS, overall components ofMCS, needs analysis/financial feasibility studies, preimplementation,implementation activities, and ongoing system maintenance.

CONTENT 11

There are appendixes, that list the following: a glossary of terms: govern-ment audit/inspection checklists; material compliance Web sites; importand export Web sites; and legislation on occupational exposure limits.

REFERENCES

U.S. Chemical Safety & Hazard Investigation Board (US CSHIB), 2002. “InvestigationReport Refinery Incident (1 killed, 8 injured, offsite environmental impact).” ReportNo. 2001-05-I-DE. September.

Social & Environmental Activities Environmental News (S&EA EN), 2002. “SonyEurope Press Statement on Temporary Halt of Shipments of Some Sony Models inEurope.”

12 INTRODUCTION

PART I

REGULATORY REQUIREMENTS

2CHEMICAL REGISTRATION,NOTIFICATION, AND LISTING

2.1 INTRODUCTION

Several countries have put in place legislation to ensure that they have suffi-cient information on chemicals that are imported, manufactured, or exportedfrom their borders. The legislation requires all new chemical substances to gothrough an approval process before being listed on a National Inventory List(NIL). Typically, a country will have a NIL for existing chemicals and one fornew chemicals. Chemicals that are not on a NIL for a given country have togo through a registration process prior to being imported, manufactured, orexported. Depending upon the country, exemptions are available for specifictypes of chemicals, for example, polymers in Europe and the United States, orusage of very small quantities for research and development (R&D) purposes.In addition to the approval process, specific reporting requirements may berequired for NILs, including their inclusion on a (M)SDS. Table 2.1 presentsa summary of key NILs.

2.2 REQUIREMENTS FOR NORTH AMERICA

2.2.1 United States

The U.S. Toxic Substances Control Act (TSCA) was first enacted in 1976 andhas since been significantly amended three times. TSCA was enacted by Con-

15

Global Materials Compliance Handbook, Edited by John Phyper, Philippe Ducas & Peter J. BaishISBN 0-471-46739-1 Copyright © 2004 by John Wiley & Sons, Inc.

gress to give the Environment Protection Agency (EPA) the ability to track75,000 industrial chemicals currently produced or imported into the UnitedStates. TSCA is a federally managed law and is not delegated to states. TheEPA Office of Pollution Prevention and Toxics (OPPT) oversees the law. TheEPA repeatedly screens these chemicals and can require reporting or testingof those that may pose an environmental or human health hazard. The EPAcan ban the manufacture and import of those chemicals that pose an unrea-sonable risk (OPPT, 2003).

The EPA also has put in place a process to track the thousands of newchemicals that industry develops each year with either unknown or dangerouscharacteristics. Depending upon the risk posed by the chemical, the EPA cancontrol these chemicals as necessary for the protection of human health andthe environment.

A major objective of the TSCA is to characterize and evaluate the risksposed by a chemical to humans and the environment before the chemical isintroduced into commerce. TSCA accomplishes this through the requirementthat manufacturers perform various kinds of health and environmental testing,use quality control in their production processes, and notify the EPA of infor-mation they gain on possible adverse health effects from the use of their prod-ucts. Under TSCA, manufacturing is defined to include importing, and thus all requirements applicable to manufacturers also apply to importers (EPA,2003).

The EPA has authority not only to ban the manufacture or distribution ofgiven chemicals but also to limit their use, require labeling, or place otherrestrictions. Among the chemicals EPA regulates under TSCA are asbestos,chlorofluorocarbons (CFCs), and polychlorinated biphenyls (PCBs).

16 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

TABLE 2.1. List of Key National Inventory Lists

Country List Acronym List Name

Australia AICS Australian Inventory of Chemical SubstancesCanada DSL Canadian Domestic Substances ListCanada NDSL Canadian Non-Domestic Substances ListChina IECS Inventory of Existing Chemical Substances

in ChinaEurope EINECS European INventory of Existing commercial

Chemical SubstancesEurope ELINCS European List of New Chemical SubstancesJapan ENCS Existing and New Chemicals SubstanceList

(same as MITI and MHW)Korea ECL Existing Chemicals ListPhilippines PICCS Philippines Inventory of Chemicals and

Chemicals SubstancesUnited States TSCA 8b Toxic Substances Control Inventory Act

Under TSCA, EPA classifies chemical substances as either “existing” chem-icals or “new” chemicals. To determine how a substance is classified, consultthe TSCA Chemical Substance Inventory (commonly referred to as the Inven-tory), which lists existing substances. Searches of the nonconfidential, publicinventory are available at the Cornell University’s TSCA Inventory or commercial content providers (e.g., Atrion International RegDB Online).Searches of the confidential inventory require an EPA bona fide search.

The following are key sections of TSCA. It is important to note that Section5 should be assessed before proceeding with Section 4 requirements (EPA,2003).

• Section 4—Testing requirements• Section 5—Premanufacture Notice (PMN)• Section 6—Protection against unreasonable risk• Section 7—Imminent hazards• Section 8, 12(b) and 13—Record keeping and reporting of chemicals

usage

In the following paragraphs, additional information on each section is provided.

Section 4—Testing Requirements TSCA Section 4 requires manufacturers,importers, and processors of certain chemical substances and mixtures toconduct testing on the health and environmental effects of chemical sub-stances and mixtures, unless they qualify for an exemption. Testing require-ments cover existing chemicals (but not new chemicals, since these areaddressed in the PMN process), and also cover mixtures as well as individualsubstances.The EPA has established a “master testing list” that lays out testingpriorities, based on risk and exposure potential (EPA, 2003).

For example, the EPA is currently working with manufacturers to encour-age testing on chemicals that are produced and used in large volumes (HighProduction Volume Testing).At present, these tests are voluntary, but the EPAhas the authority to develop a testing rule if it determines such a rule to benecessary (EPA, 2003).

Requirements related to TSCA Section 4 can be found in 40 CFR Parts790, 791, 792, 799, and 766. The OPPT Web page also provides extensive infor-mation on testing requirements (EPA, 2003).

Section 5—Premanufacture Notice (PMN) Section 5 of TSCA regulatesanyone who plans to manufacture or import a “new” chemical substance forcommercial purposes. Under Section 5, the EPA requires notice before man-ufacture or importation of nonexempt substances so that the EPA can evalu-ate whether the chemical substance poses a threat to human health or theenvironment. This notice is called a PMN and must be submitted at least 90

REQUIREMENTS FOR NORTH AMERICA 17

days prior to the activity. New chemicals include certain genetically modifiedmicroorganisms and the list is available from the EPA Web site. Manufactur-ers must also submit information on “significant new uses” of existing chemi-cals to the EPA for its review. Again, the TSCA inventory establishes whatexisting uses are (EPA, 2003).

Submittals are to include information on the manufacturing process,disposal method, and health and environmental effects of the substance. TheEPA assesses whether the chemical substance presents an unreasonable riskof injury to health or the environment by weighing the risks versus the socialand economic benefits of introducing the chemical into commerce. After itsreview of the PMN or Significant New Use information the EPA may chooseamong a broad range of options that may limit, restrict, or prohibit the man-ufacture, use, distribution, and/or disposal of the chemical substance (EPA,2003).

There are some exclusions and exemptions to the PMN requirements. Forexample, drugs and pesticides are excluded because they are covered underseparate laws, that is, FDDCA and FIFRA, respectively. In addition, there areabout 15 different exemptions, including exemptions for R&D activities; testmarketing; low-volume and low-release/low-exposure chemicals; certain poly-mers; impurities, by-products, and nonisolated intermediaries; and so forth. Itis therefore important to check with the applicable regulations to insure cov-erage. The PMN applicability flowchart that is provided by the EPA may alsobe helpful (EPA, 2003).

Requirements related to TSCA Section 5 can be found in 40 C.F.R. Parts700, 720, 723, 725, and 747. The OPPT Web page also provides extensive infor-mation on PMN requirements (EPA, 2003).

Section 6—Protection Against Unreasonable Risk TSCA Section 6 regu-lates certain hazardous chemical substances and mixtures and authorizes theEPA to take regulatory action to protect against unreasonable risk of injuryto human health or the environment due to the manufacture, import, pro-cessing, distribution in commerce, use, or disposal of a chemical substance ormixture. For example, the EPA has promulgated regulations under Section 6of TSCA applicable to PCBs and asbestos.Various guidance materials on thesechemicals can be found at the TSCA publication Web site. Specific require-ments can be found in 40 C.F.R. Parts 745, 747, 749, 750, 761, and 763 (EPA,2003).

Section 7—Imminent Hazards TSCA Section 7 authorizes the EPA to com-mence a judicial action for seizure of a chemical substance, mixture, or articlecontaining such a chemical substance or mixture that the EPA has determinedis imminently hazardous, and/or for other relief against any person who man-ufactures, imports, processes, distributes in commerce, uses, or disposes of animminently hazardous chemical substance or mixture (EPA, 2003).

18 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

Sections 8, 12(b), and 13—Data Gathering and Reporting TSCA Sections8, 12(b), and 13 mandate data gathering activities to provide data that the EPAand others can utilize to identify, assess, manage, and reduce actual or poten-tial risks posed by exposure to existing chemical substances and include importand export reporting requirements. The OPPT data gathering Web site pro-vides extensive information on these requirements (OPPT, 2003).

Section 8 of TSCA authorizes the EPA to require persons engaged in themanufacture (including importing), processing, and distribution of TSCA-covered chemical substances and mixtures to perform certain record keepingand reporting activities (OPPT, 2003).

In TSCA Section 8(a), the Inventory Update Rule (IUR) states that com-panies that manufacture or import more than 10,000 lbs. of certain chemicalsthat are included on the TSCA Chemical Substance Inventory (primarilyorganics) are required to report current data on the production volume, plantsite, and site-limited status of these chemicals. Reporting under the IUR takesplace at four-year intervals that began in 1986. Small businesses as defined by40 C.F.R. 710.29 are excluded (OPPT, 2003).

Examples of reporting information that can be required include the fol-lowing (OPPT, 2003):

• chemical or mixture identity• categories of uses• quantity manufactured or processed• by-product description• health and environmental effects information• number of individuals exposed• method(s) of disposal

Section 8(a) regulations can be tailored to meet unique information needs(e.g., via chemical-specific rules) or information can be obtained via use of“model” or standardized reporting rules. An example of a model TSCASection 8(a) reporting rule is the “Preliminary Assessment Information Rule”(or PAIR) (OPPT, 2003).

Under PAIR, producers and importers of a listed chemical are required toreport the following site-specific information on a two-page form (OPPT,2003):

• Quantity of chemical produced and/or imported• Amount of chemical lost to the environment during production or

importation• Quantity of enclosed, controlled, and open releases of the chemical• Per release, the number of workers exposed and the number of hours of

exposure

REQUIREMENTS FOR NORTH AMERICA 19

Exemptions for such reporting are as follows:

• Production or importation for the sole purpose of R&D• Production or importation of less than 500 kilograms during the report-

ing period at single plant site• Companies whose total annual sales from all sites owned by the domes-

tic or foreign parent company are below $30 million for the reportingperiod and who produced or imported less than 45,400 kilograms of thechemical

• Production or importation of the listed chemical solely as an impurity, anonisolated intermediate,and under certain circumstances as a by-product

TSCA Section 8(a) on PAIR states that companies must report site-specificinformation on the manufacture or importing for commercial purposes of any chemicals listed in 40 C.F.R. 712.30. The information includes quantity ofchemical, amount lost to the environment during production or importation,quantity of releases (controlled and noncontrolled) of the chemical, and perrelease worker exposure information (OPPT, 2003).

TSCA Section 8(c) on the Allegations of Significant Adverse ReactionsRule states that companies are required to keep a file of allegations of signif-icant adverse reactions (to human health or the environment) of any chemi-cal they manufacture, import, process, or distribute. Companies must alsoprovide this information to the EPA upon request (OPPT, 2003).

In TSCA Section 8(d) on Unpublished Health and Safety Studies Rule,companies may be required to submit to EPA a list and/or copies of unpub-lished studies that address the health or safety issues of certain listed chemi-cals (OPPT, 2003).

Section 8(e), Substantial Risk Information Requirements, states that com-panies are under a duty to report to EPA within 15 days any new informationthey have that reasonably supports the conclusions that a substance or mixturethey manufacture, import, process, or distribute presents a substantial risk ofinjury to health or the environment (OPPT, 2003).

In Section 12(b), Export Notification Rule, the requirements (see 40 C.F.R.Part 707 Subpart D) apply to chemical substances or mixtures covered byvarious proposed or final actions under TSCA Sections 4, 5, 6, or 7. Notifica-tion of export is generally not required for articles, as provided by 40 C.F.R.section 707.60(b) (OPPT, 2003).

Section 13, Import Notification, requires that any chemical substance,mixture, or article containing a chemical substance or mixture be in compli-ance with TSCA and, in addition, the EPA requires import certification(OPPT, 2003).

It is important to mention that both the American National Standards Insti-tute (ANSI) and OSHA Chemical Hazard Communication System (CHCS)also known as HCS (M)SDS standards in the United States regulate the infor-mation that should be shown on the MSDS. The TSCA information belongs

20 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

to “Section 15 Regulatory Information” of an (M)SDS. The latest version ofANSI standards also proposes a few display examples.

The reporting requirements for the NIL related to (M)SDS include the fol-lowing (OPPT, 2003):

• must report if a single component is or isn’t on a given inventory and• must report if all components of a mixture are exempted from or are on

a given inventory or• must report at least one component of a mixture if it is not listed on a

specific inventory.

2.2.2 Canada

Anyone (person or company) who wants to import, manufacture, or sell anynew substance is required to notify the appropriate Canadian regulatoryauthority so the new substance can be evaluated for potential effects onhuman health and the environment prior to the importation, manufacturing,or sale (as the case may be).

The Canadian Environmental Protection Act (CEPA) is the key authorityfor the government to ensure that all new substances are assessed for theirpotential to harm human health or the environment. Recognizing that otheracts also provide for such an assessment process, CEPA includes a provisionwhereby substances regulated by other acts are exempt from the new sub-stance notification requirements of CEPA. This avoids regulatory duplication,while ensuring that standards for protection of the environment and humanhealth are met, and applied to all substances.

The domestic substances list (DSL) is the sole basis for determining whethera substance is new for the purposes of the Canadian Environmental ProtectionAct, 1999 (CEPA, 1999). Substances on the DSL do not require notificationunless they are proposed for a significant new activity (SNA) as indicated onthe DSL. Substances not appearing on the DSL are considered to be new toCanada and are subject to notification under the New Substances NotificationRegulations (NSNR) of CEPA, 1999 (Environment Canada, 2003).

The nondomestic substances list (NDSL) specifies substances that are noton the DSL but are in commercial use in the United States. As a basis for thislist, Environment Canada used the U.S. TSCA. Substances on the NDSL aresubject to notification under the NSNR of CEPA, 1999 but require lessdetailed notification packages.

2.3 EUROPEAN REQUIREMENTS

2.3.1 Current Requirements

The concern regarding the potential risks of chemicals and in particular exist-ing chemicals was already a policy priority in the late 1980s. The Council of

EUROPEAN REQUIREMENTS 21

the European Communities, in approving the Fourth Community ActionProgram on the Environment (1987–1992), stated that one of the priority areaswas the evaluation of the risks to the environment and human health posedby chemical substances. This action program underlined the need for a leg-islative instrument that would provide a comprehensive structure for the evaluation of the risks posed by “existing” chemicals. In particular, the actionprogram stated that such a legislative instrument “will establish a procedurefor treating priority lists of chemicals for immediate attention, as well as settingout the means for gathering information, requiring testing and evaluating therisks to people and the environment.” Consequently, the European Commis-sion proposed a series of legal instruments, which were aimed at meeting theobjectives outlined in the action program. One of these instruments was theExisting Substances Regulation (CEC 1986).

In the Organization for Economic Co-operation and Development(OECD), the importance of the work carried out on “existing” chemicals hadalready been recognized with the 1987 Decision-Recommendation of theOECD Council on the Systematic Investigation of Existing Chemicals. ThisOECD act stated that “Member Countries should establish or strengthennational programs to systematically investigate existing chemicals.” In 1988,the OECD launched an extensive program on “existing” chemicals, an area inwhich some EU member states were already active. (OECD, 1987)

The existing chemicals work started and aimed its activities to be alignedwith the strategy for implementing an environmentally sound management oftoxic chemicals, outlined in Chapter 19 of the Agenda 21 Rio Declaration,adopted at the United Nations Conference on Environment and Development(UNCED) in 1992. On the international level, this group is responsible for scientific and technical inputs to the OECD existing chemicals program andseveral UN initiatives on chemicals (ECB).

In 1993, the Council adopted Council Regulation (EEC) 793/93 or theExisting Substances Regulation (ESR), thereby introducing a comprehensiveframework for the evaluation and control of “existing” chemical substances.It is important to note that European INventory of Existing commercialChemical Substances (EINECS) was drawn up by the European Commissionin application of Article 13 of Directive 67/548, as amended by Directive79/831, and in accordance with the detailed provisions of Commission Deci-sion 81/437. It lists and defines those chemical substances, which were deemedto be on the European Community market between January 1, 1971, and Sep-tember 18, 1981. In terms of Article 1 of the amended Directive 67/548, theseare substances to which the premarketing notification provisions of the Direc-tive do not apply (ECB).

The Regulation was intended to complement the already existing rules gov-erned by Council Directive 67/548/EEC for “new” chemical substances. Anychemical substance, which has been marketed after September 18, 1981, is calleda new chemical.An existing chemical substance is in the EU defined as any chem-ical substance listed in the EINECS,an inventory containing 100,195 substances.

22 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

New chemicals, introduced subsequently, form a cumulative index theEuropean LIst of New Chemical Substances (ELINCS), which is periodicallyupdated as an official journal. Exemption categories include consumer prod-ucts pertaining to pharmaceuticals, cosmetics, and foodstuffs. The Directive isnot applicable to pesticides, radioactive materials, wastes, and substances usedin scientific research.

The Regulation 793/93 foresees that the evaluation and control of the risksposed by existing chemicals will be carried out in four steps:

Step I. Data collectionStep II. Priority settingStep III. Risk assessmentStep IV. Risk reduction

Step I: Data Collection The regulation initially addressed the so-called HighProduction Volume Chemicals (HPVCs). HPVCs are those substances that are covered by the data collection phases I and II of the regulation, that is,which have been imported or produced in quantities exceeding 1000 tons peryear and produced or imported between March 23, 1990, and March 23, 1994.In phase III of the data collection step, companies that produce or importexisting substances in quantities between 10 and 1000 tons per year, Low Production Volume Substances (LPVCs), were required to submit a reduceddata set by June 4, 1998. All the data had to be submitted in a specific elec-tronic format, Harmonized Electronic DataSET (HEDSET), and is managedby the International Uniform ChemicaL Database (IUCLID). Furthermore,all companies that have submitted a data set in any of the three data collec-tion phases are required to update the information, at least once every threeyears (ECB).

There is also notification that is required for substances imported or produced in quantities from 10kg to 5 tons and should be reported accordingto Annex VII of the Directive by Commission Directive 1993/105/EEC. Theserequirements are described in Annex VII A, B and C. Table 2.2 presents the type of notification according to the annual quantity and the cumulativequantity.

EUROPEAN REQUIREMENTS 23

TABLE 2.2. Type of Notification according to Annual and Cumulative Quantity

Type of Notification Annual Quantity Cumulative Quantity

Level 2 (1000 tons) >1000 tons >5000 tonsLevel 1 (100 tons) >100 tons >500 tonsLevel 1 (10 tons) >10 tons >50 tonsVII A >1 ton > 5 tonsVII B >100kg and 500kgVII C >10kg and

Again, the notification schemes identify the charge levied and the contentof the test package that is required in proportion to the level of supply. Thisreduces both animal testing and the costs to notifiers, who may be in the earlystages of marketing a substance.

Once a supplier has breached either the upper limit of the annual supplytonnage or the cumulative supply tonnage of the band, then the notificationmust be upgraded to the next level and provide the extra data.

HPVC Reporting Without prejudice to Article 6 (1), any manufacturer whohas produced or any importer who has imported an existing substance, as suchor in a preparation, in quantities exceeding 1000 tons per year, at least oncein the three years preceding the adoption of this regulation and/or the yearfollowing its adoption, must submit to the commission, in accordance with theprocedure laid down in Article 6 (2) and (3), the following information, asspecified in Annex III, within 12 months of entry into force of this regulationin the case of a substance appearing in Annex I and within 24 months in thecase of a substance appearing in EINECS but not in Annex I:

(a) the name and the EINECS number of the substance(b) the quantity of the substance produced or imported(c) the classification of the substance according to Annex I to Council

Directive 67/548/EEC of 27 June 1967 on the approximation of thelaws, regulations and administrative provisions of the member statesrelating to the classification, packaging and labeling of dangerous sub-stances or the provisional classification according to the said Directive,including the class of danger, the danger symbol, the risk phrases andthe safety phrases

(d) information on the reasonably foreseeable uses of the substance(e) data on the physico-chemical properties of the substance(f) data on pathways and environmental fate(g) data on the ecotoxicity of the substance(h) data on the acute and subacute toxicity of the substance(i) data on carcinogenicity, mutagenicity, and/or toxicity for reproduction

of the substance(j) any other indication relevant to the risk evaluation of the substance

Manufacturers and importers must make all reasonable efforts to obtainexisting data regarding points (e) to (j). However, in the absence of informa-tion, manufacturers, and importers are not bound to carry out further tests onanimals in order to submit such data.

LPVC Reporting Without prejudice to Article 6 (1), any manufacturer whohas produced, or any importer who has imported, an existing substance, as such

24 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

or in a preparation, in quantities exceeding 10 tons per year but no greaterthan 1000 tons per year, at least once in the three years preceding the adoption of this Regulation and/or the year following its adoption, shall submitto the Commission, in accordance with the procedure laid down in Article 6(2) and (3), the following information, as specified in Annex IV, within a periodof 24 months, to start once the Regulation has been in force for three years:

(a) the name of the substance and the EINECS number(b) the quantity of the substance produced or imported(c) the classification of the substance according to Annex I to Directive

67/548/EEC or the provisional classification according to the saidDirective, including the class of danger, the danger symbol, the riskphrases and the safety phrases

(d) information on the reasonably foreseeable uses of the substance.

Step II: Priority Setting Article 8 of the regulation states that the commis-sion, in consultation with the member states, will regularly draw up lists of pri-ority substances which require immediate attention because of their potentialeffects to man or the environment. The commission and member states utilizethe information collection during step 1 of the regulation as a basis for select-ing priority substances. Since 1994, four such priority lists have been published(ECB).

Step III: Risk Assessment Substances on priority lists must undergo an in-depth risk assessment covering the risks posed by the priority chemical topeople (covering workers, consumers, and people exposed via the environ-ment) and the environment (covering the terrestrial, aquatic, and atmosphericecosystems and accumulation through the food chain). This risk assessmentfollows the framework set out in Commission Regulation (EC) 1488/94 andimplemented in the detailed technical guidance documents (TGD) on riskassessment for new and existing substances. The first draft of the risk assess-ment reports are written by the member states that act as “rapporteurs.” Thecommission mediates the meetings, which attempt to reach consensus on theconclusions of the risk assessments. After adoption of the risk assessment,three publications are produced (ECB):

• The comprehensive risk assessment report as a book, on the ECB home-pages and in the IUCLID

• A summary thereof as an EUR report and on the ECB homepages• A listing of the conclusions in the Official Journal of the European

Communities

Step IV: Risk Reduction As one of the potential conclusions, a risk assess-ment may conclude for a “substance of concern, further risk reduction meas-

EUROPEAN REQUIREMENTS 25

ures, beyond those already in place, are required.” In these cases, a risk reduc-tion strategy must be developed. The elaboration of such a strategy is doneutilizing the TGD on risk reduction. Directive 76/769/EEC on the restrictionsin marketing and use of dangerous substances is one of the legal frameworksthat could be invoked to manage the risks identified by the risk assessment(ECB).

The commission, in consultation with the member states, shall determinethe cases in which it is necessary to request the manufacturers and importersof the substances declared in pursuance of paragraph 1 to submit additionalinformation, in the framework of Annex III, on the physico-chemical proper-ties, toxicity, and ecotoxicity of such substances, exposure, and any other aspectrelevant to the risk evaluation of the substances. However, without prejudiceto Article 12 (2), manufacturers and importers are not bound to carry outfurther tests on animals for that purpose.

The specific information to be submitted and the procedure to be followedfor this submission shall be determined in accordance with the procedure laiddown in Article 15.

Procedure for Data Reporting In the case of a substance produced orimported by several manufacturers or importers, the information referred to in Article 3 and Article 4 (2) may be submitted by one manufacturer orimporter acting, with their agreement, on behalf of other manufacturers orimporters concerned. The latter shall nevertheless submit to the commissionthe information specified in points 1.1 to 1.19 of the data set laid down inAnnex III and, in doing so, shall make reference to the data set submitted bythe manufacturer or importer.

In submitting the information referred to in Article 3 and in Article 4 (1),the manufacturers and importers shall use only the special software packageon diskette made available free of charge by the commission. Member statesmay provide that manufacturers and importers established in their territoryshall be required to submit simultaneously to their competent authorities thesame information as that forwarded to the commission pursuant to Articles 3and 4.

On receipt of the data referred to in Articles 3 and 4, respectively, the com-mission shall forward copies to all the member states. Manufacturers andimporters who have submitted information on a substance in accordance withArticles 3 and 4 shall update the information forwarded to the commission.In particular, they shall submit, where appropriate:

(a) New uses of the substance that substantially change the type, form,magnitude, or duration of exposure of people or the environment tothe substance.

(b) New data obtained on the physico-chemical properties or toxicologicalor ecotoxicological effects where this is likely to be relevant to the eval-uation of the potential risk presented by the substance.

26 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

(c) Any change in the provisional classification under Directive67/548/EEC.

They shall also be required to update the information regarding the production and import volumes referred to in Articles 3 and 4 every threeyears, if there is a change in relation to the volumes specified in Annex III orAnnex IV.

Any manufacturer or importer of an existing substance that acquires knowl-edge that supports the conclusion that the substance in question may presenta serious risk to people or the environment shall immediately report suchinformation to the commission and to the member state in which it is located.Upon receipt of the data referred to in paragraphs 1 and 2, the commissionshall submit copies thereof to all the member states.

Current Status Since adoption of the 7th Amendment of the directive, morethan 800 notifications were submitted with a risk assessment report completedby the competent authority. Most substances, about 56%, were of no immedi-ate concern. Thirty-four percent of the notifications with a risk assessmentreport, the need for further information was seen, either when the nexttonnage trigger is reached (about 20%) or immediately (about 14%). In about10% of the cases, the competent authorities considered the substance ofconcern and risk reduction measures were required. However, the proposedmeasures covered a wide range of quite different actions. Simple risk reduc-tion measures included modifications, for example, to the classification andlabeling of the substance, to the SDS, or to the recommended methods andprecautions. Some substances were withdrawn from the market by a volun-tary agreement of the notifier and for a number of substances restrictions ofmarketing and use (Directive 76/769/EEC) are under discussion. Over 5300notifications in total, representing more than 3200 substances, have been sub-mitted since 1981.

2.3.2 REACH Program

Working with various stakeholders, the EU Commission is currently develop-ing new legislation for the management of chemicals—the Registration, Eval-uation and Authorization of CHemicals (REACH) program. The following isa brief summary of key elements of the current proposal:

The schedule for legislation was a follows:

• EU Commission white paper (achieved in February 2001)• Council conclusion (achieved in June 2001)• Parliament resolution (achieved in October 2001)• EU Commission working group outcome (achieved in February 2002)• Draft legislation (achieved in the spring of 2003)

EUROPEAN REQUIREMENTS 27

Key elements of the proposed program include the following:

• All chemicals substances that are produced or imported in excess of 1 tonper year and risks assessed within 10 years; it is the responsibility of theproducers and commercial users to provide this information. Producersand users of chemicals, at different stages of the supply chain, will be madecollectively responsible for prevention of risks throughout the whole lifecycle.

• For chemicals of very high concern, the chemical will be taken off themarket unless the producer/user can prove that the need for the product(through a socioeconomic analysis) and/or prove negligible risk.

• Animal testing will be avoided where the information requirement canbe met by other means.

• Independent evaluation of the registration dossier will be incorporatedinto the system. If the chemicals are produced or imported in excess of100 tons per year, government agency will carry out the evaluation. Theauthorities will also evaluate chemicals below the 100 tons per yearthreshold if there is a concern.

• Improved communication up and down the supply chain in order to linkhazard information to exposure information and risk evaluation.

• More hazard and risk-related information should be made publicly available.

The key potential dates for activities are as follows (Harvey, 2001):

• Registration• All substances >1000 tons by the end of 2005• All substances >100 tons by the end of 2008• All substances >1 ton by the end of 2012

• Evaluation• Substances >1000 tons by 2008• Substances >100 tons by 2012

2.4 PACIFIC RIM REQUIREMENTS

2.4.1 China

Management Regulation on Registration of Hazardous Chemicals (DecreeNo.19) was issued by the State Economic and Trade Commission (SETC) onSeptember 11, 2000, and came into effect on October 1, 2000, according to theSafety Management Regulation on Hazardous Chemicals.The regulation aimsto strengthen the safety management of hazardous chemicals and to control

28 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

chemical risks. The State Chemical Registration Center is assigned by theSETC to be in charge of technical issues, including registration and consultation.

The hazardous chemicals covered by regulation are listed in the Classifica-tion and Labels for Commonly Used Hazardous Chemicals (GB13690-1992).The registration’s main contents include products labeling, physical charac-teristics, exposure characteristics, fire fighting measures, stability, feasibility,health risk, emergency response measures, operational handling, protectionmeasures, and emergency response to leakage.

Enterprises that apply for registration shall fill out the Registration Appli-cation Form for Hazardous Chemicals, in compliance with the General Rulesto Drafting Safety Data Sheet for Chemicals (GB16483-2000) and GeneralRules to Drafting Safety Labels (GB15258-1999).

A certificate for hazardous chemicals will be issued after registration.Enterprises are not allowed to manufacture and/or use these materials withoutthese certificates. Enterprises cannot sell their products without the registra-tion certificates and safety labels (one label for each certificate). A fine of upto RMB 30,000 (RenMinBi is the official Chinese currency), which is roughly$3600 USD, shall be imposed on enterprises found to be in violation of theregulation. Local governments are authorized to shut down the enterprises inthe event of violation accidents.

“Regulations for Environmental Management on the First Import ofChemicals and the Import and Export of Toxic Chemicals” had already beenimplemented for five years since May 1, 1994. According to Article 11 of theregulations, “The registration for environmental management on chemicals,obtained by a foreign business concern or its agents for their first export ofchemicals to China, shall be valid for five years. If there is need to extend theregistration before its expiration, the original applicant must apply for regis-tration to renew its certificate six months before the date of expiration.”

Under Chapter III, on registration and management, multiple articles areavailable, as seen in other regulations before. The following is an overview ofsome relevant articles.

Article 9—When foreign business concerns or their agents are exporting toChina any chemicals (except for pesticides) that have not been registered inChina, they must

• apply to the NEPA for Registration of Environmental Management onthe First Import of Chemicals

• fill in the application Form for Registration of Environmental Manage-ment on the First Import of Chemicals

• provide samples for experiment (in quantities generally not less than 250grams) free of charge

Registration and management for the first sale of pesticides to China byforeign business must be made in accordance with Registrations for Regis-

PACIFIC RIM REQUIREMENTS 29

tration of Pesticides. The Ministry of Agriculture and the NEPA shall regu-larly exchange registration information.

Article 10—If an application conforms to the provision for registration ofenvironmental management, NEPA will approve the application and issue aregistration certificate permitting the import of chemicals. If a chemical is notdeemed fit for import to China, registration shall not be permitted and a cer-tificate shall not be issued. Applicants shall receive notification of this. If, uponexamination, it is considered that a first import of chemicals must undergofurther tests and a fairly long period of observation before its hazard can bedetermined, a temporary registration may be granted and a temporary regis-tration certificate issued. It is not permitted to import chemicals for which aregistration certificate for environmental management on import of chemicalsor a temporary registration certificate has not been granted.

Article 11—The registration for environmental management of chemicals,obtained by a foreign business concern or its agents for their first export ofchemicals to China, is valid for five years. If there is need to extend the regis-tration before its expiration, the original applicant must apply for registrationto renew its certificate six months before the date of expiration.

Temporary registration is valid for one year. It must be reconfirmedwhether or not formal registration shall be permitted before expiration of thevalidity period. Under special circumstances, extension can be made uponapproval of registration authorities. The period of extension may not exceedone year.

Article 12—If foreign business concerns or their agents export to China, ordomestic businesses import from abroad, industrial chemicals or pesticidesincluded in the list, they must apply in advance to the NEPA for registrationof environmental management on import of toxic chemicals. The RegistrationCertificate for Environmental Management on the Import/Export of Chemi-cals and the clearance notification for environmental management on theimport (export) of toxic chemicals (hereinafter referred to as the “clearancenotification”) shall be issued to them upon approval. The clearance notifica-tion is issued each time for each import/export of chemicals in the list. Eachclearance notification can only be used for customs declaration once within itsvalid date.

Article 13—If an organization wants to export chemicals that are includedin the list, it should apply to the NEPA for the registration of environmentalmanagement on the export of toxic chemicals. The NEPA, after accepting theapplication, shall notify the responsible department of the importing country,and, after receiving notification of import permission from the responsibledepartment of the importing country, shall issue the Registration Certificatefor Environmental Management on the Import/Export of Chemicals, allowingthe applicant to export toxic chemicals. No registration shall be issued and no chemical export shall be allowed without permission from the responsibledepartment of importing country. The applicant shall be duly notified of this.

30 CHEMICAL REGISTRATION, NOTIFICATION, AND LISTING

Article 14—The Registration Certificate for Environmental Managementon the Import/Export of Chemical, which is signed and issued by the NEPA,shall be stamped with the seal of the People’s Republic of China NEPA,thereby denoting approval of the registration request. A green RegistrationCertificate of Environmental Management on the Import/Export of Chemi-cals applies to import or export toxic chemicals included in the list by localbusinesses. A pink certificate applies to foreign business concerns or theiragents for the first export of chemicals to China; a temporary certificate iswhite.

Article 15—The Clearance Notification for Environmental Management onthe Import/Export of Toxic Chemicals is issued to applicant for customs dec-laration. A copy of the clearance notification must be kept by NEPA and acopy sent to the State Administration of Import and Export CommodityInspection of the People’s Republic of China.

Article 16—The examination period of the application for the Registrationof Environmental Management on the Import and/or Export of Chemicals iscalculated from the date after receiving the application, which conforms to therequirement of registration. The period of examination of the application forregistration of the first import of chemicals cannot exceed 180 days.The periodof examination for that of import and export of toxic chemicals included inthe list cannot exceed 30 days.

Article 17—When examining and approving the application for the Regis-tration for Environmental Management on the Import and Export of Chem-icals, the NEPA has a right to address inquiries to applicants and to ask forrelated supplementary materials. The NEPA is supposed to maintain secrecyregarding technical matters connected with the materials and samples sub-mitted with an application.

Article 18—NEPA will supervise the manufacture of standardized applica-tion forms for the Registration of Environmental Management on the FirstImport of Chemicals and on the Import and Export of Toxic Chemicals; theRegistration Certificate and Temporary Registration Certificate for Environ-mental Management on the Import and Export of Chemicals; and the Clear-ance Notification of Environmental Management on the Import and Exportof Toxic Chemicals.

Existing Chemical Substances in China In order to strengthen the envi-ronmental management of chemical substances, implement the regulation ofchemical pollution prevention, perfect the system and measures of environ-mental management of chemical substances, and achieve equivalency with theinternational chemical management principles, the Chemical RegistrationCenter of the State Environmental Protection Administration (SEPA)manages the compilation and supplement of the Inventory of the ExistingChemical Substances in China. This regional center receives its authority fromSEPA. Chemical substances that are included in the inventory are managedby the regulations of the existing chemical substances. Chemicals that are not

PACIFIC RIM REQUIREMENTS 31

included in the inventory are regarded as new chemical substances and mustbe managed by the regulations of the new chemical substances. A supplementof the inventory is produced periodically to cover the chemical substances thathave been manufactured, used or sold in China, or imported into China. Therequirements for details are as follows:

1. Chemical substances that have been manufactured, used, or sold inChina, or imported into China from January 1, 1992, to December 31,2001, are acceptable.

2. Applicants can be the manufacturer, user, seller, or importer or thosewho export chemical substances to China.

3. The supplement for the inventory will be based upon the Inventory ofExisting Chemical Substances in China 2000 (China, 2000). Chemicalsubstances that have not yet been included in this publication must apply,whereas those that are in the inventory need not apply.

4. The Technical Document on Reporting for the Inventory of the Exist-ing Chemical Substances in China (English Version) provides therequirements of the last supplement.

2.4.2 Australia

The Australian Inventory of Chemical Substances (AICS) is the legal docu-ment that distinguishes new from existing chemicals. AICS is a listing of allindustrial chemicals in use in Australia between 1 January 1977 and 28 Feb-ruary 1990. In addition, it includes newly assessed chemicals and correctionsas required.

The AICS is maintained under the National Industrial Chemicals Notifica-tion and Assessment Scheme (NICNAS) and contains over 38,000 chemicalsthat are used in Australia. The AICS is a list of chemical identity data; it doesnot contain information on toxicity, use, manufacturers, or importers. It con-sists of a nonconfidential (public) section and a confidential section.

Any chemical not included in AICS is regarded as a new industrial chem-ical unless it is outside the scope of the Industrial Chemicals (Notification andAssessment) Act 1989 and its amendments or is otherwise exempt from noti-fication. New industrial chemicals must be notified and assessed before beingmanufactured or imported into Australia.

Existing Chemicals Existing chemicals are those industrial chemicals avail-able for use in Australia.