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. September 12, 2006 Montreal, Canada

2. Regulatory Affairs Agenda • Hot regulatory and compliance issues • HPV testing of epoxy chemicals • REACH implementation: an update • Controlled chemicals (ROHS and WEEE) • Global Harmonization System (GHS) • VOC implementation in the Northeast\ • Request 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 • 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 to minimize costs and duplication of effort • Testing results to date have not resulted in significant changes to labels or PPE • Final test reports sent to EPA on 28 August 2006 • 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 – but NLP are not • 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 voted approval • ERSTG companies watching events closely

15. 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

16. 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.

17. Controlled Chemicals Specifics

18. 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”

19. 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

20. 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?

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

22. 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

23. Classification - Acute Toxicity

24. Status in North America • United States • Expected implementation by 2008 • OSHA is driver; Jennifer Silk announced retirement; • OSHA GHS Workshop set for Oct 20 in Washington • Impact on MSDS, labels • Employee training • Costs to the business • Timing and OSHA communication plan • Canada • In process of implementation, final date expected 2008 • Developed summary document (2/06) for affected sectors • Final document to be released 10/06 • Current ongoing processes: • Phase-in options • Consultation with trading partners • Economic analysis • Development of final recommendations

25. Status in Europe • EU Target 2008 • In conjunction with REACH • Conducted study 2004 to assess the differences between current EU system of classification and GHS. • Analysis of impact conducted 2005/2006 by independent contractors. • Launched a public internet consultation on a draft Regulation implementing GHS into Community legislation. • Ongoing (3rd Quarter 2006) • CEFIC Recommendations • Add GHS classification to Section 16 of current MSDS • EU should only adopt Health Categories equal to what is currently regulated. (i.e. Harmful) • Unofficial sources indicate EU will adopt Health Categories 1-4 • Companies should do cost assessments and provide feedback to regulators.

26. Status in Asia • Japan • 2006 implementation • Labels (Industry requesting transition period) • MSDS have 4 year transition (2010) • Translated Classification Manual Available • http://www.meti.go.jp/policy/chemical_management/kokusai/GHS/GHS_Classification_Manual.htm • Plans to “Pre-classify” 1500 chemicals • ~700 completed • May be discrepancies as indicated by local sources • China - 2008 • Work ongoing with no formal documents presented

27. Asia (continued) • Korea • No official implementation date (2008?) • Different regulating bodies discussing • One government official noted that “GHS will not cover all Korean regulations, therefore it will be supplemented”. • Taiwan • Originally targeted 2007 • Translated version of GHS available

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. Report from the TRFA VOC Task Force Charles M. Bartish Air Products Charles Zarnitz CVC Tom Geriak Garland Floors Derek Kincaid Huntsman September 11, 2006 Montreal, Canada

30. TRFA and VOC’s: Background • New US regulations are sharply reducing levels of VOC’s acceptable in coatings formulations • Significant discussion in Regulatory Affairs session in Ft. Lauderdale re new VOC legislation • Coatings, Civil Engineering, Flooring Committee requested effort to address issue for TRFA • Team formed to address issue, focused on needs of TRFA companies • Purpose of this presentation is to update the membership on accomplishments to date

31. Impact: Regulations are driving down allowable VOC content in coatings

32. TRFA formed the VOC Task Force • Industry team members with interest, commitment to address issue • Charlie Bartish Air Products and Chemicals • Charlie Zarnitz CVC Specialty Chemicals • Tom Geriak Garland Floors • Derek Kincaid Huntsman • Significant participation from TRFA administration • Jeri Church • Kathy Fatz • Benzyl alcohol suppliers asked, but declined to participate

33. Task Force approaches outlined • Focus on VOC issues related to benzyl alcohol • Common ingredient in many formulated products • Limited volatilization; formulation dependent • Consider alternate performance-equivalent solvents; supplier feedback pessimistic based on work to date • Define why benzyl alcohol should not be classified VOC • Existing analytical methods (EPA 24, ASTM 2369) overstate VOC impact of benzyl alcohol • Develop and get new method approved • Components can be excluded, i.e. reactive diluents • EPA process, although tedious, exists to delist chemicals from VOC list • Work closely with other organizations with common interests • NPCA, ASTM, CARB, SCAQMD, EPA

34. ASTM task group D01.21.24B proposed changes to ASTM 2369 • ASTM task group leading efforts to change methods • Addressing high (>90%) solids coatings • Fred Gelfant (Stonhard) chairs task group • Proposed changes include: • Sample size not limited to 0.3 g • Apply at thickness for product intended use • No solvent dilution required in test • Up to 24-hr cure time • These changes could benefit the benzyl alcohol case. • Stonhard data supports conclusion • TRFA will work more closely with ASTM • EPA letter will allow use of changes in certain areas

35. Conclusions • New VOC regulations require a response from TRFA formulators to meet new requirements • Formulations containing benzyl alcohol need attention to meet new VOC limits • TRFA VOC Task Force is formed and has reviewed several options for solutions • Benzyl alcohol delisting or replacement low probability to meet time needs • Modification of analytical methods EPA 24 / ASTM 2369 offers good potential for success and may be usable in near future • TRFA VOC Task Force will work closely with ASTM to influence industry forward program

36. 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!