Document 0vw6MDJnJ1r0okRbzdGzmgYM

A- CHEMICAL MANUFACTURERS ASSOCIATION EXECUTIVE COMMITTEE MEETING Monday, September 12, 1988 12:00 p.m. Luncheon -- Courtyard 1:30 p.m. Meeting -- Pavilion 4 Room The Ritz Carlton Laguna Niguel, California AGENDA 1:30 p,m. 1:30-1:45 1:45-2:15 2:15-3:15 1. Call to Order and Approval of Minutes of June 8, 1988 Meeting -- Chairman Kennedy 2. Association Activities a. Treasurer's Report -- Gary C. Herman b. Committee Appointments -- Charles W. Van Vlack c. President's Report -- Robert A. Roland o Proposed Distribution Committee Charter - Phillip R. Griffiths, Exxon Chemical Americas, Chairman, Distribution Committee o Other Issues 3. Discussion (if needed) on Board Agenda Items Not Otherwise Scheduled for Executive Committee Action: o Title III o Chemical Warfare o Federal Legislative Issues o State Legislative Issues o Ad Hoc Board Committee Activities o Advocacy Committee -- Earle H. Harbison, Jr. 4. Proposed Policies a. Oil Exploration in the Alaskan National Wildlife Refuge -- R. David Damron, Hoechst Celanese Corporation, Chairman, Energy Committee b. Process Safety Management Policy -- Gary A. Sunshine c. Above Ground Storage Tanks -- Charles T. Seay, Exxon Chemical Americas, Chairman, Environmental Management Committee d. Waste Minimization Awards Program -- Charles T. Seay e. International Trade -- Mark Blass, Air Products and Chemicals Inc., Chairman, Internationa] Trade Committee o Preshipment Notification o Multilateral Trade Negotiations T 1:15-3:40 3:40-4:00 4:00-4:20 4:20 5:00 5:00 5:00 6. Title III Release Reduction Program Concept -* Robert C. Forney 7. Proposed Dues Structure Changes -- Robert: D. Cadieux o Definition of Chemical Sales o Maximum Category/Fee Schedule Structure 15 16 8. Proposed Epidemiology Resource and Information Center (ERIC) -- J. Lawrence Wilson, Chairman, Health Effects Committee 18 9. Proposed Responsible Care Initiative -Paul P. GreffIce, Chairman, Public Perception Committee 17 10, New Business 11. Adjourn CMA 066122 T *r CHEMICAL MANUFACTURERS ASSOCIATION EXECUTIVE COMMITTEE MEETING Monday, September 12, 1966 1:30 p.a. Moating - Th Rltz Carlton Laguna Nigual, California 1. Tha meeting was cal lad to ordar at 1:30 p.a. by Chaiman Kannady. Thera ware present: ,,_ Maabers: Robert D. Kannady, Chaiman Robert 0. Cadieux H. Eugene McBrayer Robert V. Davis Frank P. Popoff Robert C. Forney Davis B. Richardson Bruce C. Gottwald Robert A. Roland Earle H. Harbison, Jr. J, Lawrence Wilson David S. Hollingsworth Secretary: Charles W. Van Vlack Treasurer: Gary C. Herman General Counsel: David F. Zoll By Invitation: David L. Baird, Jr., Exxon Chemical Company Hark Blass, Air Products and Chemicals, Inc. David S.J- Brown, Monsanto Company Will Carpenter, Monsanto Company Geraldine V. Cox, CMA R. David Damron, Roechst Celanese Corporation Clyde K. Greenert, Union Carbide Corporation Philip R. Griffiths, Exxon America Company Jon C. Holtzman, CMA Geoffrey B. Hurwitz, Rohm and Haas Company Don Kirtley, Hercules Incorporated Paul F. Oreffice, The Dow Chemical Company Michael A. Pierle, Monaanto Company Vernon R. Rice, E. I. du Pont de Nemours & Co. Charles T. Seay, Exxon Chemical Americas William M. Stover, CMA Gary A. Sunshine, 1C1 Americas, Inc. Ben Woodhouse, The Dow Chemical Company 2. Minutes of Last Meeting The minutes of the June 8, 1988 meeting were approved as distributed. 3. Treasurer's Report Mr. Herrmsn reported that through the two months ending July 31, the Association had received revenue of $15,696,800 and had incurred expenses of $2,058,900. He further reported that due to the success of the membership drive, he anticipated revenues exceeding tha amended budget projections by $400,000 to $500,000. 4. Committee Appointment Mr. Van Vlack presented the proposed appointment of Mr. Joseph Catto of the American Cyanamid --T. Company to the Distribution Committee for a tan ending Hay 31, 1991, raplacing Hr- Howard E. DaVoid of the a owe company. This was approved. 5. President's Report a. Distribution Cc-- Charter Hr. Griffiths presented a proposal to revise and update the Distribution CoMsittae's charter, reflecting its advocacy role and its other proactive activities. This was approved as set forth in Exhibit A. -- b. President's Co--ants Hr. Roland reported on the following two itews: The proposed development by the Health and Safety Committee of a performance standard for HSDSs; and tha current status of tha Ruckalshaus-Valker Superfund reauthorization research project and a related, EPA sponsored project being managed by the Conservation Foundation. 6. Board Agenda Itews Mr. Seay indicated that with respect to Title 111 activities in the cowing year, the Environmental Management Coenittee nay request additional funds from the Executive Committee for developing the capability to access and analyze EPA's Section 313 release data. 7. Advocacy Conittee: State Report Mr. Harbison presented an overview of the Advocacy Committee's recommendations for state advocacy improvements. Mr. Davis, who chaired the committee's State Task Group which developed the report, provided further details of the recommendations and the need to act in the near future. Following the reports, there was considerable discusaion of the recommendations which had been reviewed and recommended by tbe Advocacy Committae the previous day. The Executive Committee agreed to the following: o Mr. Davis would make a preliminary presentation of the report's recommendations at the Board meeting the following day. o The recommendations would be placed on the agenda for the October Executive Coaittee and Board meetings. o The final recommendations would be mailed to the full Board within several weeks. o The Officers would review the recommendations at their October meeting. 8. Proposed Policies and Programs a. Alaskan National Wildlife Refuge fANWR) Exploration Mr. Damron presented a proposed policy on energy exploration and development in the ANVR. The proposed policy (Exhibit B) was approved for presentation to the Board. CMA 066124 3 b. Process Safety Hntwtnt Hr. Sunshine presented a proposed policy an process safety management. Ths propossd policy (Exhibit C) was approved for presentation to the Board. e. Above ground Storage Tanky Hr. Seay presented a proposed policy on above ground storage tanks. The proposed policy (Exhibit D) was approved for presentation to the Board. d. Waste Minimization Awards Program Action oh the waste minimization awards program was deferred pending the resolution of the Responsible Care and Title III releese reduction program. 9. Title III Release Reduction Program Concepts Dr. Forney led a further discussion of a possible Association progra* for Title III release reduction. Concepts discussed end observations *ade included: o Set goal of overall reduction, but not s percentage per conpany per year. o Focus on health impacts, not raw data. o Good exawple of cooperative reduction efforts by Houston ship channel copsnies. o Potential for inclusion in Responsible Care Management Practice Codes. o Importance of two dates in 1989: availability of computerized data on releases in the spring; and the July 1989 deadline for reporting 1988 data which will be compared with 1987. It was agreed to continue this discussion at the following day's Board meeting. 10. Dues Structure Changes Messrs. Cadieux and Rice presented the following two proposals for consideration. Information on the proposals and their review by the membership are set forth in Exhibit E-l. a. Definition of Chemical Sales The revised Definition of Chemical Sales as set forth in Exhibit E-2 was approved for presentation to the Board. b. Fee Schedule The Executive Committee approved for presentation to the Board the following guidance to the Finance Committee as specifically set forth in Exhibit E-3: o The change in the Definition of Chemical Sales does not by Itself necessitate any adjustments to the fee schedule. O Those companies whose sales are impacted 20% or more by the definition change should be entitled to a phase in period of two (20-301 impact) or three years (more than CMA 066125 30% impact). o Thar* should b an upward adjustment of the maximum fee for 1989/90 such that tha maximum rapresanta 3.1% of tha 1988/89 faas and subaaquant annual lncraasas should be aade to reflect tha proportional increases experienced by those sabers not at the Maxima. 11. Noe inating Committee Or. Forney comanted on the Nominating Committee's intentions for its 1989/90 Executive Comittee membership selection process. He indicated that it was the Noninsting Comittee's belief that: the Executive Comitt as should main at no norm than 14-15 members; not aors than half of thoss ambers should be aaxinua dues payers; maximum dues payers should continue by custoa to be continuously represented on the Board but not the Executive Conaittee; and those aaxinua dues payers nay expect Executive Comittes membership in years two and three on the Board, but not in the first year the individual Director serves on the Board. 12. Epidemiology Resource and Information Center Mr. Vilaon presented the Health Effects Committee's proposal to establiah on a one year pilot basis an Epidemiology Resource and Information Center (ERIC). During the diacusaion, it was stressed that ERIC had two principal objectives during its pilot phase: (1) the development of a common protocol for epidemiology studies; and (2) to determine whether ERIC will be able to encourage and support the development or expansion of epidemiology programs or studies in companies which are currently not engaged in these activities to any significant degree. The proposed center as set forth in Exhibit F was approved for presentation to the Board with the recommendation that the search for the ERIC project director begin immediately even though the target start up date for the project is June, 1989. 13. Responsible Care Initiative Mr. Oreffice presented the Public Perception Committee's proposal for the Association to adopt the Responsible Care initiative. He reported on the regional executive contact meetings held during the summer, and the outreach efforts to all member companies to seek their comments and suggestions. Mr. Zoll reported that he and outside counsel had reviewed the proposal and the potential areas where liability might be a concern and that they agreed that it was their opinion that the legal issues were manageable and should not inhibit a decision by the Association to proceed with the initiative. Following discussion and some minor changes to the material included in the meeting book, the proposed Responsible Care initiative (including a $250,000 1988/89 budget with three staff as set forth in Exhibit G) was approved for presentation to the Board. 14. International Trade CMA 066126 Nr. Blass presented proposed policies on tbs folloving two issues: Preshipaent Inspection; and Multilateral Trade Negotiations. Both proposals as set forth in Exhibit H and I were approved for presentation to the Board. Re also reported that the Ethyl Corporation has agreed to provide the services of Hr. Hex Tumipseed, foneer ehairaan of CMA's International Trade Cowaittee, to the Association on a full tiaa basis to sarva as a spacial adviaor on GATT natters for the next two years during the Uruguay Round of negotiations. 15. Loansd Executivsa The Executive Conaittee requested written job descriptions for the loaned executives requested for the Responsible Care and UNEP projects. ****** The nreeting adjourned at 4:20 p.w. Cert ifcorrect: Robert D. Kennedy, Chairma, Executive committee 4 Charlta V. Pen Vleck. President-Secretary CMA 066127 Exhibit A CMA DISTRIBUTION COMMITTEE PROPOSED CHARTER Purpose: Under the policies established by the Board of Directors and within th authority specified by the Executive Committee, the Committee oversees Association programs to insure safe and efficient distribution of chemicals and to promote affective emergency response In doing so, the Coeaittee will: o Identify key issues end focus efforts on natters of greatest significance to the cheaieal manufacturing industry; o establish specific objectives on key Issues and mobilize resources to produce tinely results; o develop and recomsend to the Executive Committee policies and positions on legislative, regulatory and technical questions; o advocate affective and reasonable legislation on the distribution of chemicals; o advise the Executive Comnittee on Association staffing and raaources requirad by the Committee to achieve its objectives; o help member companies understand the major trends, developments, key issues, and Association actions in the distribution area; o develop public awareness of chemical maimfactoring industry contributions to the safe distribution of chemicals; o sponsor joint initiatives with other organizations to continue to improve the safe distribution of chemicals; and o proetote member participation in CMA initiatives. # CMA EC 9/12/68 EXHIBIT B EXPLORATION AND DEVELOPMENT OF THE ARCTIC NATIONAL WILDLIFE REFUGE (ANWR) BACKGROUND AND STATUS: In 1987, th Interior Department recommended that the Congress open up 1.5 nillion acre* of the 19 MillIon acre Arctic National Wildlife Refuge (ANWR) for oil and gas exploration and development. ANWR is located approximately 65 alias east of the Frudhoe Bay oil field, which currently accounts for about 20 percent of U.S. domestic oil production. The reserve potential within ANWR is estimated to be equally significant, ranging from 600 million barrels to 9 billion barrels of recoverable reserves. During the past year, Congress has addressed several legislative proposals that would permit leasing for exploration and development in ANWR. Bills to permit conditioned leasing were reported out of Committees in the Senate and House, although no floor action has been taken. Anti-leasing bills were also introduced, but have not been taken up in Committee. The issue of ANWR exploration and development will carry over into the energy security debate anticipated in the next Congress. ISSUE: The U.S. chemical industry is hesvlly dependent on petrolsum`based products for both feedstock and fuel -- seventy-five percent of the industry's energy use is based on derivatives of crude oil and natural gas. Diversified supplies of petroleum products at world competitive cost are therefore of paramount importance to the viability of the chemical industry. For this reason, CMA has strongly opposed oil import fees or quotas which put energy-intensive U.S. industries at a competitive disadvantage in world markets. For this seme reason, economically and environmentally sound policies that encoursge development of domestic energy supplies are of significant interest to the chemical industry. The continuing decline of U.S. crude oil reserves end production is of particular concern to energy-intensive industries. The potential resources from undiseovared fields, such as ANWR, present the only realistic opportunity to retard significantly this decline. Development of ANWR is essential to further diversify energy and feedstock supplies at competitive costs, and is in the best Interests of consumers, energy-intensive.industries, and tha Nation's economy. ie chemical industry is Increasingly vulnerable to policy proposals that purport to Improve U.S. energy security. Several options being discussed would disadvantage all of U.S. manufacturing and would particularly threaten tha economic viability of the U.S. chemical industry including oil Import fees, import quotas, an oil price floor and mandated diversions of oil imports to tha Strategic Petroleum Reserve. While continuing its strong opposition to such measures, the chemical industry must also try to shift public attention toward actions that would enhance U.S. energy security-without having a detrimental CMA 066129 \ inpact on the competitiveness of energy-intensive industries or the U.S. anufsecuring base. MCOHMENDATION: CHA should support legislative sfforts to opn ANWR to petroleum exploration and development in an environmentally sound sannsr. Such fforts raprasant a positiva stap to improve U.S. anarty sacurity and anhanca faadstock supplias for tha domestic chemical industry. CMA's advocacy rola should ba directed to participation in coalition efforts with other Industrial energy users. ACTION REQUESTED: Approval of recommendat ion. CHA EC - 9/12/88 BD - 9/13/88 CMA 066130 EXHIBIT C PROPOSED PROCESS SAFETY MANAGEMENT POLICY It is the policy of CMA to urge its members and all Manufacturers to produce and use only those chemicals that can be manufactured, used and disposed of safely. Effective performance-oriented process safety Management programs are essential to this goal. CMA supports the development of industry guidelines and appropriate regulations which address those program elements shown to contribute to process safety. Any proposed standard should address the following elements: o Hazard identification and assessment o Management of change o Documentation of rules and procedures o Training o Incident investigation and follow-up o Auditing and inspection programs o Pre-startup checks o Quality assurance o Emergency response o Integrity maintenance o Process, technical and equipment design information Where government action is deemed necessary to worker and public safety, CMA recommends that this responsibility rest exclusively with the CI.S. Occupational Safety and Health Administration. 05HA has primary responsibility for addressing workplace safety issues, has developed experience in process safety through its Special Emphasis Program and could assure application of consistent requirements across industry. CMA EC 9/12/88 8D 9/13/88 CMA 066131 EXHIBIT D PnpMtd Policy On Above Grand Storage Tank Control Legislation Tha Ashland Oil Coopany spill in Pennsylvania rekindled Congressional interest in the issue of above ground storage tanks. This issue is also a high priority for environmentalists. Five bills are currently before Congreea, and hearings nay occur later this year. In addition, state legislation is aoving forward in Pennsylvania and is likely to be enacted this year. Tha Government Relations Coamiittee recommends that meetings with key Congressional staff take place as soon as possible to assure the best chance of influencing the legislation that will ultimately emerge in the next Congress. (The Officer's of CMA approved the use of the proposed policy on an interim basis on July 29, 1968, pending review and approval by the Board of Directors.) Despite the absence of any data to indicate widespread failure or release problems with above ground tanks, thsre is a perception that the risks of both leaks and catastrophic releases are extremely high. The pending bills attempt to regulate above ground tanks containing hazardous substancss or patroleum in a fashion similar to the underground storage tank provisions of RCRA. Problem While the Ashland spill has focused attention on catastrophic releases. Congress clearly Intends to establish leak prevention and remediation requirements. Thsss requirements may be of greeter Impact to the chemical industry than catastrophic release provisions. Potential problems with the current Congressional direction are: (I) lack of adequate data to truly define the magnitude of the perceived problem; (2) development of new, ill-conceived design/operating standards instead of relying on existing industry voluntary standards; (3) application of rigid retrofitting requirements to existing tanks; (4) other inappropriate and restrictive requirements such as liability and financial responsibility; and (5) unreasonable time frames for applying new regulatory requirements to existing tank systems. The Environmental Management Committee has coordinated its policy development activities with API. Although CMA has some different substantive interests (i.a., chemical tanks versus petroleum tanks, size of tanks, and cut-off for small chemical tanks), the CMA proposed policy on above ground storage tank control legislation is consistent with API's policy. As a result, the Environmental Management Comittee recommends the following: Basie Policy No additional legislation for above ground storage tanks is needed at this time. However, CMA would support legislation that 2 requires EPA to collect date to determine the need for additional standards or legislation. Backup Poeition If we later conclude that comprehensive legislation is inevitable, CMA could support legislation that properly addresses the potential problems listed above and that distinguishes between catastrophic releases, spills, snd leaks as specified below: Catastrophic Release Protection ' Any catastrophic release protection standards should distinguish between new/reconstructed tanks and existing tanks. For new and reconstructed tanks, CMA would accept adoption of reasonable design standards. For existing tanks. Congress should require EPA to develop a phased inspection and tasting program to provide comparable assurance of catastrophic release protection. Spill Prevention CMA can agree to spill prevention provisions in legislation that requires secondary containment. The legislative language should be general and EPA should be required to promulgate implementation standards. Leak Detection/Protectloo Leak detection requirements should only apply to on-ground storage tanks. For existing tanks, the standards should have a reasonable phase in period. Action Requested Approval of recommendations. If the proposed policy on above ground storage tanks is approved, CMA representatives will meet with Senate staffers to express CMA's concerns with previously proposed legislation. The Government Relations Committee has advised that CMA needs to carry out these discussions as soon as passible in order to impact how this issue is ultimately addressed as part of comprehensive RCRA legislation. Proposed RCRA amendments will be drafted later this year and will be considered in the next Congress. A decision to move to the proposed backup position will be based on the outcome of CMA's discussions with Congressional staffers, and an analysis of the extent/scope of the above ground storage tank problem in the chemical industry. CMA representatives plan to discuss with API CMA's substantive positions, and the strategy/timing on moving to the backup positions. We do not anticipate having to resort to the backup positions with Congressional staffers in the near term. EC - 9/12/88 BO - 9/12/88 CMA 066133 Proposed Ohmhi Industry Model The basis for tbo proposed dues structure la to aaaaaa dues la aoeordaaea with tha typaa of producta and activities that CM* supports. Aa a conceptual atart* lap point, tha chemical iaduatry waa diwidad into a aariaa of atapa progressing from natural raaourcaa, to Category I producta (0.9., petrochemicals raaulting from chamical synthesis or procaaaing atapa involving natural raaourcaa) to Catagory XI producta (producta raaulting froa blanding, fabricating, formulat ing, ate., of Catagory I producta) to Catagory XXX producta (producta which art aold by CMA members in tha aaaa phyaical fora aa sold to tha ultimata canauaar and includa in thair margin a larga component of advartiaing, marketing or ratail diatrlbution expenses). Theaa atapa ara furtbar illuatratad balow. 1. Tha intarfaca batwaan natural raaourcaa and Catagory X la dafinad aa tha point at which fractionated or separated component! of a natural reaource ara flrat subjected to chamical procaaaing/aynthaaia. Tha product ramaina in Catagory X throughout subsequent aynthaaia atapa. For anuria, ethane (a natural resource) could be cracked into ethylene (a Catagory X product), which, in turn, could be polymerized into polyethylene which is sold in the form of flake or chip (also a Catagory X product). 2. Secondly, tha intarfaca batwaan Catagory X and XX la dafinad as tha point at which chemical procaseing/synthesia atopa and formulating/fabrieating/blandlng begins. There are multiple atapa taken before tha produce ia fully converted and sold aa a final consumer product. Continuing with the above example, tha polyethylene flake could be calendared into a fins gauge film (a Catagory XX product). 3. Finally, tha intarfaca batwaan Catagory XX and IXX ia tha point at which Catagory XX product ia converted to a product which is in the asms form as ia sold to tha ultimata consumer and tha sales pries of such product in cludes a larga component of marketing, advertising or retail distribution expanse. For example, tha polyethylene film could be fabricated into gar bage bags and distributed in retail outlets under a brand name (a Catagory ITT product). Hot all products neatly fit into this mold, but the concept is broadly applica ble. Figure X further illustrates this concept. Methodology for Assessing Dues Tha objective In creating three product categories waa to acknowledge tha de creasing level of chamical manufacturing involved as a product progresses from its basic raw material to a finished good. Accordingly, tha level of OKI sup port is different for each of theaa categories. Thus, tha proposed methodology introduces a three-tiered dues structure which attempts to accawxSate these differences. -2- CMA 066135 Category I product* clearly anjoy the support of Cm activities and, therefore, dust r UMiud at * 100% level oa tbalr sal*. Siuilarly, the sals of Catego ry 11 and III products should ganarata duas sine* tha production of tbaso goods is also supported by cm activities. Hovavar, thara is a largo nonchemical coaponant involved in tha aanufactura of Catagory II products and an avan larger such coaponant in Catagory in products. Consequently, it is proposed that they be assessed duas, respectively, at a 50% and 15% level. Because there is no alapis mean* of determining the exact value of the nonchemical component of this group, these figures represent a general proxy for the value of the final goods sold which is not supported by OA. -3CMA 066136 CMA 066137 i riGUMt I M & U f -*> i l M K l t t o r * - -.............. - J > tit% n lw d lo ii4 p l^M iit Chemical Manufacturers Association, Inc. OEFmmoii or "chemical salts"* Aa revised October 12, 19B7, and approved by tha Board of Directora, pursuant to Section 2 of Artlela ZV of CMA Bylaw#, Fbr use by aach --bar fin in determining and reporting calandar yaar "chemical aalaa" dollar volume to tba Treasurer for tba aola pur* poaa of membership faa computation. Tba tan "chemical aalaa* ineludaa both donatio and export aalaa of all chemicals and chemical product# sold to othara, with tha exception of tha product# llatad balow, and provided that tha aalaa value of ch--ical products praparad by nixing, nchanical forming or coating oparationa not Involving chanieal synthaaia shall ba aqual to narleat valuo lass tha cost of purchased materials used in tha production of such products! 1. Interdepartmental (Intracompany) Transfers. (However, transfers out side tha specific partnership, joint venture, corporation, diviaion, or other unit of a corporation as approved for nenbership shall ba consid ered a sale to othara and shall ba valued at coaparable market value). 2. RasaIs Products (chemicals purchased for resale aa such). 3. Products of Mining Operations (except whan told for use in chemical processing). Examples: Phosphate rock, fluorspar, barytas, ilmenite, coal, salt, borax, potash, natural salts, and limestone* 4. Certain Structural Metals and Their Alloys (except whan sold for use in chemical processing). Examples: Aluminum, chromium, eolumbium, copper, hafnium, iron and steal, lead, magnesium, manganese, nickel, tantalum, titanium, vanadium, tine, zirconium, and all fabricated metal products. 5. Pood Products. Examples: natural extracts, vitamins from natural sources, vegetable oils and fats. 6. Animal Products* Examples: Oil, fats, tallow, grease, animal glue, gelatine, soap, glycerine, (Fatty acids, synthetic detergents, and synthetic glycerine are considered to he chemicals and are not in the excluded group). 7. Carbon, Bone, and Lamp Black. Examples: Electrodes, activated car bon, and carbon papers. 8. Rubber Products, (Synthetic rubber sold as such is considered to be a chemical and is not in the excluded group). 9. Paints, Varnish, Lacquers. 10. Inks* Polishes, ilexes* ' "Sales of products manufactured outside the United States, its territories, or possessions should be excluded. * , CMA 066138 2 11. Mixed Fertilisers. (Synthetic components such aa area, uniui And aodiiak nitrates and sulfatss are considered to be Chemicals and ara not in tha sxeluded group). 12. Mixed Paatieidaa. (Manufaeturad or aynthatic components.ara considarad to be chemicals and ara not in tha axeladed group). 12. Coated Fabrics and Floor Covering. 14. Formulated Detergent*. (Manufactured or synthetic components axe considered to be chemicals and ara not in tha excluded group). 15. Molded or Extruded Products. Examples: Bristles, combs, bruahsa, containers, and similarly fafericatad plastic products! mechanical rub ber goods; films formed by extrusion such as saran, polyvinyl chloride, polyethylene and polypropylene. (Cellophane formed by chemical reac tion and aynthatic rasins and plastic materials in unfinished form such as liquids, molding powders, flaks, sheets, rods and tubes, are consid ered to be chemicals and ara not in the excluded group.) 16. Petroleum Products. Examples: Lubricating oils, gases, grasses, waxes. 17. Fuels. Exasples: Coke, diesel oils, gasoline. 18. Tar, Asphalt, Pitch, Creosote. Examples; Hoofing, paving, wood preserving products. . 19. Havel Stores. Examples: Turpentine, rosin, pine oil. 20. Wood Products. Examples: wood pulp for paper and rayon manufacture. 21. Industrial Gases. Examples: Helium, argon, neon, oxygen and nitro gen. (When sold for use in chemical processing, these products are considered to be chemicals and are not in the excluded group). 22. Equipment and Devices. a. Physical Facilities. Exa^lest Coke ovens, gas producers, electrolytic cells, sulfuric acid plants, cutting and welding equipment, tractors, mowers, sprayers, pumps. b. Devices. Examples: Fusees; blasting aceassories; signals; jat perforators; ammunition, powder cartridges; cameras; photographic accessories, including light-ssnsitized film and paper; instru ments; welding rods; bettsries. 23. Textile Fibers and Fabrics. Examples: Rayon, "Dynel", saran, nylon, "Dacron," "Orion," "Acrilan," "Creslan", "Fortrel," "Xodel," "Zafran," cellulose acetate, glass, and asbestos, including staple, yarn, tow, and knitted, woven, and felted fabrics. CMA 066139 -- -T 3 COMPARISON CP CHEMICAL PRODUCTS OHDER CURRgWT DgHUTIOW AMD PROPOSED MEN QgriMITIOH Current Exclusions 1. Interdepartmental (Intra company) Transfers. (Mow mrf transfers outside the pacific partnership, joint venture, corporation, divi sion, or other unit of a corporation ae approved for membership shall be considered a sale to others and shall be valued at comparable market value.] 2. Resale Products (chemicals purchased for resale as such). 3. Products of Minin? Operations (except when sold for use in chemical processing). Examples; Phosphate rock, fluorspar, barytes, ilmenite, coal salt, borax, potash, natural salts, and lime stone. 4. Certain Structural Metali and Their Alloys (except when sold for uss in chemical processing)). Examplesi Aluminum, chronium, Columbian copper, hafnium, iron and steel, lead, magnesium, mananese, nickel, tantalum, titanium, vandium, zinc, zirconium, and all fabricated metal products, 5. Food Products. Examplesi Natural extracts, vitamins from natural sources, vege table oils and fats. 6. Animal Products. Exs^les: Oil, fats, tallow, grease, animal glut, gelatine, soap glycerine. (Fatty acids, synthetic detergents, and synthetic glycerine are considered to be chemicals and are not in the excluded group.) Statue (Under Proposed Definitions Mo change. Mo change. Ho significant changes intended. However, the language is changed to make clear that direct products of mining operations (ores) are excluded. Chemical products, such as titanium dioxide end barium carbonate, resulting from the chemical processing of mining products, are Category I products. No change. Mo change. Ho significant changes. Natural animal and vegetable products are excluded. Synthetic products such as synthetic fatty acida, deter gents, rubber and glycerine are Category I products. CMA 066140 7 . Carbon, Bono, and Laap Black. Sxeapleet electrodes, activated carbon, and carbon papera. 8. Rubber Products. (Synthetic rubber sold as such is considered to be a chemical and is not in the excluded group.) 9* Paints, Varnish, Lacquers. 10. inks, Polishes, Waxes. 11. Mixad Fertilizars. (Syn thetic components such as urea, ammonium and sodium nitrates and sulfates are considered to be chemicals and are not in the excluded group.) 12. Mixed Pesticidee. (Manu factured or synthetic components are considered to be chemicals and are not in the excluded group.) 13. Coated fabrics and Floor Covering. No change *o change. The manufacture of peinte, varnishes and lacquers involves substantial chemical manufacturing oparationa followed by blending/formulation. These arm either Category 11 or Category 111 products*. Inks and polishas are produced through chemical synthesis/proces sing followed by formulation, and, tbarafora, are included as Category II or Category III products*. Syn thetic waxes are considered Category 11 or III products*; natural waxes are excluded. Individual synthetic fertilizers are Category I products while blends of such compounds are Category IX or III products*. All pesticides (crop protection chemicals) are considered Category II or Category 111 products*. Most are sold as formulated products. The production of coated fabrics and floor coverings (vinyl tile, carpet, etc.) involves substantial chemical manufacturing operations followed by mechanical forming. These are included as Category II or Category III products*. See tho Bovised Definition, Paragraph B(2) and (3) for the definition of Category II and Category III Products. CMA 066141 -5- 14. Formulated Dturgmu. tynthetic detergent compounds sold i (Manufactured or synthetic components in considered ss such are Category Z products, Imrir, formulated detergents are to be eh--icals and are considered Category II or Category not la the excluded group.) III products*. 15. Molded or Extruded Products Examples: Bristles, combs, brushes, containers, and similarly fabricated plastic products; mechanical rubber goods; films formed by extrusion such as saran, polyvinyl chloride, poly . ethylene and polypropylene. (Cellophane formed by chemical reaction and synthetic resins and plastic materials in un finished form such as liquids, molding powders, flakes, sheets, rods and tubes, are considered to be chemicals and are not in the excluded group.) 16. Petroleum Products, Examples: Lubricating oils, gases, greases, waxes. 17. Fuels. Examples: Coke, diesel oils, gasoline. 18. Tar, Asphalt, Pitch, Creosote, ' Examples: Roofing, paving, wood preserving products. 19. Naval Stores. Examples: Turpentine, rosin, pine oil. 20. Wood Products. Examples: Hood pulp for paper and rayon manufacture. The production of plastic resins involves substantial chemical manufacturing operations. If the resins are sold as such (e.g., as chip or flake), they are category I products. If the resins are molded or extruded into articles (e.g,, films or fabricated products) by a CMA company, they are considered Category II or XII products*. No significant change. No change. No change except creosote is in cluded as a Category II product due to its associated environmental issues. Ths production of turpentine, rosin and pine oil involves substantial chemical processing. These are, therefore, included as Category ZI or III products*. No change. *See ths Revised Definition, Paragraph B (2) and (3) for the definition of Category II and Category ZIZ products. -6-- 21. Industrial Gases. Examples: Belium, argon, anon, oxygen and nitrogen. (Khan sold for im in chemical processing, thasa products ara considarad to be chemicals and ara not in the excluded group.) Gases produced by separating the coeqxmenta of air are excluded unless sold for use in the chemi cal industry is which ease they are Category I products. Gases produced by chemical processes, e.g., chlorine, are considered Category I products. 22. Equipment and Devices. a. Physical Pacilitias. Examples: Coka ovens, gas producers, eleetrolytic acids, sulfuric acid plants, cutting and walding equipment, trac tors, mowers, sprayers, pumps. b. Devices. Examples: Fuseesf blasting acces sories f signalst jet perforators! ammunition, powder cartridges) cameras! photographic accessories, including light-sensitized film and paper! instruments! welding rods; batteries. 23. Textile Fibers and Fabrics. Examples: Rayon, "Dynel", saran, nylon, "Dacron", "Orion", "Acrilan", "Craslan", "Fortrel", "Kodal", "Zafran", cellulose acetate, glass, and asbestos, including staple, yam, tow, and knitted, woven, and faltad fabrics. No change. The production of textile fibers and fabrics involves substantial chemical manufacturing followed by mechanical forming. These are considered Category II products. CMA 066143 T-- . CHEMICAL KMfOFACTOBEltS ASSOCIATION WORKSHEET FOR CALCULATING CHgtlCAL SALES SUBJECT TO DDES A. Gross Salsa in 1987 of Category I Chemical Products as defined in Paragraph (B) fl) of the attached Definition of Chemical Salest ~ B. Gross Sales in 1987 of Category II Chemical Products as defined in Para graph (B) (2) of the attached Definition of Chemical Sales: Gross Sales * *5 __ C. Gross Sales in 1987 of Category III Chemical Products as defined in Para graph (B) (3) of the attached Definition of Chemical Sales: Gross Sales X . 15 D. Total Sales in 1987 subject to dues (A+B+C): Company _______________ NameDate Upon completion, please return to: Mr. Gary C. Herman Vice President, Treasurer Chemical Manufacturers Association 2501 M Street, MW Washington, DC 20037 -2CMA 066144 - EXHIBIT E-2 CHEMICAL MANUFACTURERS ASSOCIATION PROPOSED DEFINITION OF CHEMICAL SALES BACKGROUND At the June 6, 1988 Greenbrier Mating, survey results of the proposed Definition of Cheat!cel Seles were presented. The survey encompassed feed back from all companies on the Board of Directors. Based on the favorable conclusions, the Board tentatively approved the proposed definition, pend ing a full membership survey. This decision was reported to the entire Association at the annual business meeting, and a final survey was mailed on June 20, 1988. Results from the full-membership survey were generally favorable and consistent with earlier findings. These findings have been combined with the Board of Directors' results and are presented in the attached table. The proposed definition of chemical sales could result in a modest increase in the sales base used for computing Association dues. ACTION REQUESTED: 1. Approval of the proposed Definition of Chemical Sales as described herein to be effective for the year beginning June 1, 1989. Ii^ilementation of the definition and the phase-in schedule are dis cussed in detail in tab number 17. Attachment CMA EC - 09/12/88 BD - 09/13/88 -***'" Y ' '' CMA 066W5 A. rh--ical Manufacturer* Association, Inc. otnnTZOH or 'obdocu salts* As revised ,19XX, sad approved toy tbs Board of Directors, pursuant to Section 2 of Article XV of OIA Bylaws, for use by aaefa member fin in determining and reporting cslandsr ysar "chemical salsa* dollar volume to tbs Treasurer for tbs sols purpose of membership fss compu tation. A. DOES BASIS Dues shall ba based on tbs sales of "Chemical Products", including domestic and export sales of products sanufactured in north America. Sales of products manufac tured outside the United States, its territories or possessions, are excluded. Interdepartmental or intracompany transfers shall not be considered salee except that transfers outside the specific partnership, joint venture, corporation, divi sions, or other unit of a corporation as approved for nsobsrship shall be considered a sale to others and shall be valued at comparable *Narkst Value." B. DEFIMTIOH OF CHEMICALS SALES Dues shall be assessed on salsa using s three-tiered structure, in accordance with three different categories of chemical products, and dues levels. Oues shell be paid on 100A of Sales of Category I Chemical Products as described in paragraph (1) balowt on SOB of Sales of Category II Chemical Products as described in paragraph (2) belowt and 15% of Sales of Category III Qiemicsl Products as described in para graph (3) below. (1) Category I Definition Category I Chemical Products shell include all products of chemical manufactur ing operations, except those described below in Categories II and III. Exam ples are petrochemicals including aliphatic, cycloaliphatic and aromatic hydro carbons and their derivatives such as alcohols, ketones, amines, ethers, alde hydes, esters, nitrites, amides and halidest organic and inorganic industrial chemicals such as acids, anhydrides, salts, caustics, sulfates, nitrates and halogensi organometallic compounds (such as tetraethyl lead) and polymers in unfinished form including plastics and elastomers such as polyolefins, poly vinyl chloride, polyecrylic, polyurethane, polyecetals, cellulosic polymers and styrene/butadiene rubber. (2) Category II Definition Category IX Chemical Products shall include products whose manufacture involves s substantial operation not involving chemical synthesis such as fabricating, blending, formulating or extracting, especially when such operations raise significant environmental or health issues. This group is not intended to include sales of final consumer retail goods, which are defined below as Catego ry III products. Banes, the following examples pertain to industrial sales or salee of products in semifinished form, rather than retail sales. CMA 066146 t "1 a. Paints, Varnishes, Lacguers. b. Inks, Polishes, Synth*tic Maxes. e. Crop Protaction Chemicals, except genetically-engineered products. d. Mixed Synthatic Partilixars. (Individual components such as uraa, umonlum and sodium nitrate and sulfata ara considered Category I products. Blands of thasa individual component* ara coosidarad Category II products.) a. Formulated Detergents. . f. Moldad or Bstrudad Synthatic Products. Examples: Bristlas, combs, brushes, containers, and similarly fabricated plastic products! aachanical rubber goodst films formed by extrusion of materials such as saran, polyvinyl chloride, polyethylene and polypropylene. g. Chemicals extracted without chemical synthesis from natural sources such as coal and wood products. Examples; Creosote, turpentine, rosin, pine oil. h. Textile fibers and Fabrics. Examples: Nylon, polyester, acrylic, cellulose acetate (including staple, yarn and tow) and knitted, wven felted and coated fabrics and floor covering. i. Synthetic Rubber Products. Examples; V-belts and conveyor belts. 3. Category 1X1 Definition Category III Chemicel Products are those which meet the description of Category II Products set forth above, but which, in addition, are sold by CMA aombers in the same fora as sold to ultimate consumers and include in their margins, a large marketing, advertising, or retail distribution component. Examples in clude branded formulated detergents, tires, household peint, and pesticidas sold to the final consumer. C. EXCLUSIONS For the guidance of OH members, sevsral products which are not considered Chemical Products subject to fee are as follows; 1. Resale Products (chemicals purchased for- resale and sold as such). 2. Direct Products of Mining Operations. Examples; Phosphate rock, fluorspar, barytes, ilmenite, coal, salt, borax, potash, natural salts, and limsstone. however, chemical products, such as titanium dioxide and barium carbonate, resulting from the chemical processing of mining products, ara meant to be covered as Category I Products. 3. Structural Metals and Their Alloys. Examples; Aluminum, chromium, columbium, copper, hafnium, iron and steel, lead, magnesium, manganese, nickel, tantalum, titanium, vanadium, zinc, zirconium, and all fabricated metal products. 4. Animal or Vegetable Products. Examples; Oil, fats, tallow, grease, animal glue, gelatine, glycerine, vitamins from natural soureea, natural rubber prod ucts. (Synthetic fetty acids, synthetic detergents, synthatic rubber and syn thetic glycerine, are considered to be Category I Chemical Products, however, and are not in the excluded group.) -2- CMA 066147 5. Carbon, Boo*, and La^ Black. Examples: Electrodas, activated carbon. 6. Batural Fartilixsrs. 7. Bsfinary products from lube oil baa* stocks. Exablest Lubricating oils, greaa- aa, vexes, asphalt. 8. Fuels. Examples: Coka, diasal oils, gasolisa. (However, fuel additives pre- parad by chemical synthaais such as tatraathyl laad and MTBE ara Category I products). 9. Gasas derived froa air, except to the extant sold for use in the chemical indus try. Examples: Balium, argon, neon, oxygen and nitrogen. (All gaaas produced through chemical processes ars considered Category 1 products. Example: chlo rine gas.) 10. Equipment and Devices, including: a. Physical Facilities. Examples: Coke ovens, gas producers, electrolytic cells, sulfuric acid plants, cutting and welding equipment, tractors, mov ers, sprayers, ptssps. b. Devices. Examples: Puses, blasting accessories; signals, jet perforators; nmunition, powder cartridges; cameras; photographic accessories, including light-sensitised film and papar; instruments; welding rods; betteries. 11. Pharmaceuticals (including over-the-counter drugs), cosmetics, personal health cars products and food additives. 12. Wood Products. Examples: Wood pulp for paper and rayon manufacture. 13. Tar, Asphalt and Pitch. 14. Products of genetic engineering. Examples: Recombinant DMA, monoclonal antibod ies, interferon. 15. Ceramics, including powders and formed or molded components. June B, 1988 3 CMA 066148 EXHIBIT E-3 CHEMICAL MANUFACTURERS ASSOCIATION PRELIMINARY CONSIDERATIONS ON THE FEE SCHEDULE FOR THE 1989/90 FISCAL YEAR BACKGROUND: TtM chartar of the Finance Coanittee of the Association includes the responsibility to rsco--nd s "schedule of fMi" to fund ths approved budg et and activities of the Aasociation. At the March 6, 1989 meeting, the Finance Consnittee vill prepare recommendations on the "schedule of fees" for the 1989/90 fiscal year. These recommendations vill be' based on 1988 calendar year sales and will represent the first time the new definition of chemical sales is used as the basis for recommending a fae schedule for the Association. During the review of the Definition of Chemical Salas, the Executive Committee comnissioned the dues study group to evaluate the existing fee structure (attached) including the maximum dues level, and implementation issues. Recommendations to be considered by the Finance Committee include: 1. Fee Schedule The proposed definition of chemical sales introduces only a modest expected increase (approximately 3%) in the overall sales base. There fore, no structural changes to the existing fee schedule sales classifi cations or proportional rates (for all nonmaximum payers) are required at this time. 2. Maximum Dues Level Questions arose at the last Executive Coamittee meeting regarding the appropriateness of the maximum dues level. Subsequent analysis by the study group indicates that the proportion of dues paid by an indi vidual firm at the maximum had increased somewhat less than the in crease in total dues for the entire membership. Thus, the study group recommends a new maximum level for fiscal year 1909/90 in the amount of 3.It of total Association dues. This figure is based on the average percent of total CMA dues paid by an individual maximum dues paying company over the past decade. For the future, the study group recom mends that the maxi mum category be adjusted each year in proportion to the change in the total CMA dues base. 3. Implementation Survey results indicate that the level of dues may change signifi cantly for some Association members as a result of implementing the new definition of chemical sales. Thus, the study group recommends a phasein schedule for increases attributable to the new definition. Firms with a change in dues of more than 30% will ba phased in over a threeyear period while those with changes between 20% to 30% will be phased in over a two-year period. No phase-in procedure is recommended for changes of less than 20%. ACTION REQUIRED: Approval of above recomendations as general guidance for Finance Com mittee deliberations. CMA EC - 09/12/88 BD - 09/13/88 CMA 066149