Document 5LoDqaO6vJENjOyqO6ORV2qdJ

CHEMICAL MANUFACTURERS ASSOCIATION BOARD OF DIRECTORS September 12-13, 1988 The Ritz Carlton, Salon 5-6 Room Laguna Niguel, California AGENDA Monday. September 12, 1988 - 9:00 a.m. 9:00 a.m. 1. Call to Order and Approval of Minutes of June 8-9, 1988 Meeting -- Chairman Forney TAB 9:00-9:10 2. Association Activities a. Treasurer's Report -- Gary C. Herrman b. President's Report -- Robert A. Roland 1 ? 9:10-9:20 9. Standing Board Committees a. Membership Committee -- Charles W. Van Vlack b. Program Committee -- Fred W. Montanari, Chairman 3 4 9:20-9:35 9:35-9:45 9:45-9:55 9:55-10:05 4. Ad Hoc Board Committee Status Reports a. Advocacy Committee -- Earle 11. Harbison, Jr., Chairman b. Liability Reform Work Group -- H. Eugene McBrayer, Chairman c. State Toxics Initiative Work Group -- J. Roger Hirl, Chairman d. Transportation Advisory Group -- Bruce C. Gottwald, Chairman e. Trade, Economics, Tax and Competitiveness Advisory Group 5 6 7 8 9 10:05-10:45 5. Title III Implementation and Response o Public Reaction to July 1 Reports -- Jon C. Holtzmsn o 1968/89 Title IIT Implementation Program -Charles T. Seay, Exxon Chemical Americas, Chemical Americas, Chairman, Title Til Coordinating Group o Pilot Information Exchange on Community Exposure Values -- Charles T. Seay and Gary A. Sunshine, ICI Americas, Inc.. Chairman, Health and Safety Committee o Concepts for Title III Release Reduction Goals -- Robert C. Forney 10 11 10:45-11:00 6. Chemical Weapons Treaty Negotiations -- Will Carpenter, Monsanto Company, Chairman, Ad Hoc Chemical Weapons Work Group 12 CMA 038813 11:00-11'30 11:30-11:45 7. Legislative Reporrc a. Federal Issues -- David S.J. Brown, Monsanto Company, Chairman, Government Relations Committee o Product Liability o Drug Trafficking and Chemical Diversion o Clean Air Act o Waste Minimization o Trade b. State Issues -- Geoffrey B. Hurwitz, Rohm and Haas Company, Chairman, State Affairs Committee o Proposition 65 Implementation o Massachusetts Toxics Use Reduction Act 11:45-12:00 8. New Business 12:00 Noon 9. Adjourn 13 14 Tuesday, September 13. 1988 - 9:00 a.m. 9:00 a.m. 1. Call to Order -- Chairman Forney TAB 9:00-9:10 9:10-9:35 2. Standing Board'Committees a. Executive Committee -- Robert D. Kennedy b. Proposed Dues Structure Changes -- Robert D. Cadieux o Definition of Chemical Sales o Maximum Category/Fee Schedule Structure c. Nominating Committee -- Robert C. Forney 15 16 9:35-10:10 10:10-10:30 3. Ad Hoc Board Committees: Status and Recommendations a. Public Perception Committee -- Paul F. Oreffice, Chairman o Status Report o Proposed Responsible Care Initiative b. Health Effects Committee -- J. Lawrence Wilson, Chairman o Status Report o Proposed Epidemiology Resource and Information Center (F.RIC) 17 18 10:30-10:45 4. Title III Release Reduction Goal Concepts Robert C. Forney 10:45-11:00 5. Break 11:00-11:10 11:10-11:25 11:25-11:40 6. Proposed Policies and Programs a. Above Ground Storage Tanks -- Charles T. Seay b. Waste Minimization Awards Program -- Charles T. Seay c. International Trade -- Mark Blass, Air Products and Chemicals Inc., Chairman, International Trade Committee o Preshipment Notification ` o Multilateral Trade Negotiations 19 20 21 CMA 038814 11:40-11:50 11:50-12:05 12:05-12:15 12:15 p.m. d. Oil Exploration in the Alaskan National Wildlife Refuge * R. David Damron, Hoechst Celanese Corporation, Chairman, Energy Committee e. Process Safety Management Policy -- Gary A. Sunshine 7. New Business 8. Adjourn 22 23 CMA 038815 7,420 MINUTES of the three-hundred twentieth meeting of the Board of Directors of the Chemical Manufacturers Association, Inc., held in The Ritz Carlton Motel, Laguna Niguel, California, on Monday and Tuesday, September 12 and 13, 1988 at 9:00 a.m. each morning. There were present: Directors: Robert C. Forney - Chairman of the Board H. Eugene McBrayer - vice Chairman Cyril C. Baldwin, Jr. Emerson Kampen "Raymond F. Bentele Robert D. Kennedy Robert D. Cadieux Donald E. Kolowsky Vincent A. Calarco John S. Ludington Douglas J. Campbell, Jr. George J. McNally w. H. Clark, Jr. Fred w. Montanari Lester E. Coleman Peter J. Neff R. James Comeaux L. John Polite, Jr. Albert J. Costello Frank P. Popoff Robert W. Davis Willis B. Reals Earnest W. Deavenport, Jr. Davis B. Richardson Ernest M. Drew ' Robert A. Roland Frank X. Dwyer Herbert A. Sklenar John T. Files Orin R. Smith Bruce C. Gottwald F. Quinn Stepan "Earle H. Harbison, Jr. O. Edward Wall Peter R. Heinzs "Robert G. Weeks David S. Hollingsworth J. Lawrence Wilson P. W. Ifland Chong Y. Yoon "John W. Johnstone Secretary: Treasurer: General Counsel: Charles W. Van viack Gary C. Hartman David F. Zoll By invitation: David L. Baird, Jr., Exxon Chemical Company Mark Blass, Air Products and Chemical, Inc. David S. J. Brown, Monsanto Company will Carpenter, Monsanto Company Geraldine V. Cox, CMA R. David Damron, Hoechst Celanese Corporation Clyde H. Greenert, Union Carbide Corporation Jon C. Holtzman, CMA Geoffrey B. Hurwitz, Rohm and Haas Company Don Kirtley, Hercules Incorporated James A. Mack, Olin Corporation (SOCMA) Paul F. Oreffice, The Dow Chemical Company Michael A. Pierle, Monsanto Company Vernon R. Rice, E. I. du Pont de Nemours & Company Charles T. Seay, Exxon Chemical Americas * CMA 038816 * Monday only Harold A. Sorgenti, ARCO Chemical Company William M. Stover, CMA Gary A. Sunshine, ICX Americas Inc. Ben Woodhouse, Dow Chemical U.S.A. MONDAY, SEPTEMBER 12, 1988 2421 1. MINUTES OF THE JUNE 3-9, 1988 MEETING The minutes of the June 8 and 9, 1988 meetings were approved as distributed. 2. TREASURER'S REPORT Mr. Herrman reported that through the two months ending July 31, the Association had received revenue of 515,696,800 and had incurred expenses of S2,058,900. He further reported that due to the success of the membership drive, he anticipated revenues exceeding the amended budget projections by a significant amount which would enable funding of a number of the pilot programs under discus sion. He further indicated that the contribution to reserves in 1987/88 was approximately $500,000. 3. PRESIDENT'S REPORT Mr. Roland referenced the written report in the meeting book. He highlighted the following issues: o Upcoming report in October on the UNEP APPEL Project for interna tional emergency response preparedness; and o Successful CMA advocacy on the IRS regulations dealing with the taxation of gasoline blend stocks. 4. MEMBERSHIP COMMITTEE REPORT Mr. Comeaux reported that the Membership Committee had reviewed the qualifications of an applicant and recommended its election to membership. ON MOTION, duly made and seconded, it was VOTED: That the Viskase Corporation be elected a member of the Association. 5. PROGRAM COMMITTEE REPORT Mr. Montanari reported on the upcoming Chemical Industry Conference in New Orleans on October 31-November 1 and urged member companies to participate. CMA 038817 2422 6. AD HOC BOARD COMMITTEES STATUS REPORTS . a. Advocacy Committee Hr. Harbison reported on his committee1s progress in the areas of state advocacy; grassroots and political activity; and international advocacy. He indicated that Hr. Popoff was now leading the inter national effort and would be focusing on building relationships and mechanisms. He reported that the state recommendations would be shared with the Executive Committee that afternoon and that federal advocacy was the next likely target for the committee. b. Liability Reform Work Group Hr. McBrayer reported on progress in developing a federal judicial education project to complement that approved for state judges in June. He also commented on the continuing need to remain vigilant in the liability reform area where there is the danger of the chemical industry being singled out for special treatment. c. State Toxics Initiative Work Group Mr, Stover reported on the group's activities in the following areas: California Proposition 65 implementa tion; Massachusetts toxic use reduction; alternate initiative language; the status of the contingency fund ($300,000 + and 58 companies); continuing assis tance to the California Environmental working Group and the exploration of legal options on preemption; and coalitioning activities in other states such as Washington State. d. Trade/Economics/Tax/Competitiveness Advisory Group Mr. Stover reported on the group's activities in the following areas: development of a "least worst" tax alternative if significant revenues are needed in the next Administration; and concepts for the development of better chemical industry economic data, including the possible development of a computer model. e. Transportation Advisory Group Mr. Gottwald reported on the group's activities in the following areas: enhanced capability to send hard data on chemical products directly to an accident scene using facsimile transmission; accident rate analysis; and the revitalization of the interindustry rail group. 7. ' TITLE III IMPLEMENTATION AND RESPONSE a. Public Reaction Mr. Holtzman reported on the public response to the release of the Section 313 data. Highlights of his report included: the high degree of chemical industry compliance; straightforward and balanced media reporting; Lack of -organization on the part of the environmental activists and their inability to centrally access the data; the opening of the EPA "reading room"; and the Greenpeace efforts with the Beluga on the Mississippi. He urged companies to continue their outreach efforts and to keep their CAER programs active and viable. b. CMA 1988/89 Title III Activities Mr. Seay reviewed the Asso ciation's plans for Title III related activities in 1988/89 as developed by the ad hoc Title III Coordinating Group. These included: continuing encouragement and support for companies to pursue their local communications activities; Association education programs for members and downstream customers; ability to assess and analyze EPA's 313 data base; member company assistance programs for waste minimization and air quality improvement; more regional and local data on air quality; promotion of sound methods to evaluate health effects impacts; promotion of exposure and health assessment models; preparing for possible Title CMA 038818 2423 III Legislative/regulatory changes; providing continuing support for local (amergency planning committees, including development of a satisfactory response co their funding needs; pursue Section 313 delisting procedures; and assisting member companies in the second cycle of 313 reporting in July 1989. c. CSV Exchange Hr. Sunshine presented a joint Environmental Management (EMC) and Health and Safety Committee (HSC) pilot project (Exhibit A) to gather and share community exposure values (CEVs). Following the initial six month piloting of this effort with EMC and HSC members, the project will be brought back to the Executive committee and the Board for review. It was stressed that only those companies who were providing data would be entitled to access. Companies represented on the Board were invited to participate during the pilot phase. d. Title III Release Reduction Goals Dr. Forney led a discussion of the potential for developing a CMA Title III release reduction program now that companies had submitted their 1987 reports and were developing their own individual company programs of reduction. He reviewed some of the principle questions and concerns that have arisen about such an effort: Should it be quantitative (per unit of production) similar to CMA's energy program of the 1970s; should it apply more broadly than Title III reporting and cover prior years; should we target all or just some of the 313 materials; and should it focus on air, land and water, or j.ust one or two media? He solicited the Board's comments and there was considerable discussion which was to be factored into the subsequent Executive Committee and Board discussions on this issue. 8. CHEMICAL WEAPONS TREATY NEGOTIATIONS Mr. Carpenter reported on the activities of CMA's Chemical Weapons Work Group and the progress in negotiating a chemical weapons ban treaty. He indicat ed that cooperation with our counterpart groups in Canada, Japan and Europe had been productive and that agreement had been reached in four areas. The group was currently working on a trial inspection of several U.S. facilities and that briefings had been held for both the Bush and Dukakis campaign staffs. He also indicated that several more facilities might be needed to test the plant in spection protocols being developed. While progress on a final treaty was slow, Mr. Carpenter indicated that an agreement was possible in the next four years. Mr. Roland expressed the Association's gratitude for Mr. Carpenter's exceptional leadership. 9. LEGISLATIVE REPORTS a. Federal Issues Mr. Brown presented a status report on pending federal legislation including clean air, waste minimization, chemical diversion, product liability, tax and trade. He reported on efforts to reach out to both Presidential candidates' campaign staffs and transition teams and indicated that more resources may be needed in member companies' Washington offices regardless of which candidate wins. There was a brief discussion of the prospects for passage of the Clean Air Act legislation, which was still a possibility. Mr. Brown indicated that if the legislation began to move, the GRC was prepared to work with the Officers on the use of the fallback positions. Chairman Forney indicated his satisfaction with the two major achievements since the June meet ing: not being excluded in the product liability bill and prevention of passage of Clean Air legislation like S. 1894. ^ CMA 038819 2424 b. State Issues Mr. Hurwitz reviewed the outcomes of the 1988 state legislative sessions. He focused particularly on the implementation of California's Proposition 65 and the pending Massachusetts Toxic Use Reduction Act. He indicated that the State Affairs Committee would be bach to the Board later with specific reconmendations for action on the Massachusetts proposal *** The meeting adjourned at 11:30 a.m. until Tuesday, September 13. TUESDAY, SEPTEMBER 13, 1988* * 10. EXECUTIVE COMMITTEE REPORT Mr. Kennedy reported on the items discussed and the actions taken at the Executive Committee meeting held the previous afternoon. These included: o Approved the appointment of Joseph Catto of the American Cyanamid Company to the Distribution Committee. o Approved a new charter for CMA's Distribution Committee, reflect ing its reorganization and its more activist role. o Discussed in detail the Advocacy Committee's recommendation for an integrated state advocacy program reflecting a significantly higher commitment by CMA, state CICs and member companies. Agreed that a preliminary report should be made to the Board at its September 13 Meeting, that copies of the report should be mailed to the Board in several weeks, that the Officers should discuss the report in the near future, and that it should be brought to the Executive Committee and the Board for consideration at the October 30/31 meetings in Hew Orleans. * o Approved and recommended for Board concurrence a proposed policy on oil exploration in the Alaskan National Wildlife Refuge. o Approved and recommended for Board concurrence a proposed Process Safety Management Policy. o Deferred discussion of the waste minimization awards program. o Approved and recommended for Board concurrence a proposed policy on above ground storage tanks. o Approved and recommended for Board concurrence proposed policies on preshipment notification and the multilateral trade nego tiations (MTN) o Discussed possible concepts for a CMA Title III release reduction program. CMA 038820 2425 o Approved and recommended for Board concurrence three changes to the dues structure: - A revised Definition of Chemical Soles; - A phase-in program for those companies impacted 20% or more by the definition change; and - Guidance for the Finance Committee on setting and annually adjusting the maximum fee. o Heard a preliminary report from the Nominating Committee on a revised selection process for Executive Conmiittee members for next year. o Approved and recommended for Board concurrence the ERIC pilot project. Clarified that the two principle objectives of the pilot phase of this program were to develop a common protocol for epidemiology studies and to encourage and support the development of epidemiology programs by those companies who currently are not doing this work. Also agreed that the search for a project manager should start immediately upon Board approval of the pilot project* even though formal budget authorization for $300,000 was not yet approved. o Approved and recommended for Board concurrence the Responsible Care program, with several clarifications to the materials includ ed in the meeting book. o Agreed that requests for loaned executives for CMA programs should be accompanied by a written job description. 11. STATE ADVOCACY IMPROVEMENTS Mr. Davis presented an overview of the Advocacy Committee's recommenda tion, for an integrated state advocacy system which would require a significantly higher commitment by CMA, state CICs and member companies. He indicated that a copy of the full recommendations would be mailed to the Board in several weeks and that it would be brought to the Executive Committee and Board for consid eration at the October 30-31 meetings. 12. DOES 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 B-l. a. Definition of Chemical Sales ON MOTION, duly made and seconded, it was VOTED: That the revised Definition of Chemical Sales as set forth in Exhibit B-2 be adopted. CMA 038821 b. Fee Schedule the Finance Committee: 2426 The following motion was presented as guidance to ON MOTION', duly made and second, it was VOTED: o That the changes in the Definition of Chemical Sales does not by itself necessitate any adjustments to the fee schedule. o That those companies whose sales are impacted 20% or more by the definition change should be entitled to a phase in period of two (20-30% impact) or three years (more than 30% impact). o That there should be an upward adjust ment of the maximum fee for 1989/90 such that the maximum represents 3.1% of the 1988/89 fees and subsequent annual increases should be made to reflect the proportional increases experienced by those members not at the maximum. All as specifically set forth in Exhibit B-3. 13. NOMINATING COMMITTEE Chairman Forney commented on the Nominating Committee's intentions for its 1989/90 Executive Committee membership selection process. He indicated that it was the Nominating Committee's belief that: the Executive Committee should remain at no more than 14-15 members; maximum dues payers should continue by custpm to be continuously represented on the Board but not the Executive Commit tee; and those maximum dues payers may expect Executive Committee membership in years two and three on the Board, but not in the first year the individual Director serves on the Board. 14. RESPONSIBLE CAKE 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. ON MOTION, duly made and seconded, it was unanimously VOTED: To approve the Responsible Care Initiative as specifically set forth in CMA 038822 # Exhibit C, including the allocation of $250*000 and three staff for the re mainder of the 1988/89 fiscal year. 2427 15. HEALTH EFFECTS COMMITTEE a. co"""ittee Activities Mr. Wilson reviewed the activities of the committee which focus on the following areas: data development and sharing: epidemiology promotion; and risk assessments based on valid exposures. He indicated that plans were progressing for a worldwide industry conference on these issues. b. Epidemiology Resource and Information Center Mr. Wilson present d the Health Effects Committee's proposal to establish on a one year pilot basis an Epidemiology Resource and Information Center (ERIC). During the discussion, 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. ON MOTION, duly made and seconded, it was VOTED: To approve the Epidemiology Resource and Information Center, as set forth in Exhibit D with the recommendation that the search for the ERIC project director begin isuediately even though the target up date for the center is June, 1989. 16. TITLE III RELEASE REDUCTION PROGRAM CONCEPTS * Chairman Forney summarized the input from the Board and Executive Committee meetings on the development of a Title III release reduction program as follows: o We should try to develop a program for reduction of Title III releases that will be responsive to public concerns. o We should time at least the announcement of such a program to recognize the heightened concerns that will be expressed when the EPA releases the 1987 data early next year. o We should talk about our local, company-wide or industry-wide (Association) programs as ones that further increase margins of safety. o We should try, if we can, to focus our own and the public's attention on the most dangerous of the materials being released. o We should avoid industry-wide numerical goals for percentage reduction of releases and emphasize local and/or company goals. CMA 038823 2428 o The program might best be handled as a Code or Codes of Management Practice in the Responsible Care program (Air Quality and Waste Management). He requested the Association to begin development of a proposal with these considerations in mind. 17. PROPOSED POLICIES The following policies were presented for Board approval by Messrs. Seay, Blass, Damron and Sunshine, respectively. ON MOTION, duly made and seconded, it was VOTED: To approve the following policies: o Above ground storage tanks (Exhibit E) o International Trade (Preshipment Inspection - Exhibit F and Multi lateral Trade Negotiations - Exhibit G) o Alaskan National Wildlife Refuge Exploration (Exhibit H) o Process Safety Management Policy (Exhibit I) Consideration of the waste minimization awards program was deferred. The meeting adjourned at 11:05 a.m. dL Charles W. Van Vlack Vice President-Secretary Certified correct: Dr. Robert C. Forney, Chairman CMA Board of Directors CMA 038824 EXHIBIT A PILOT INFORMATION EXCHANGE ON COMMUNITY EXPOSURE VALUES Background: Tha Chemical Manufacturers Association's Environmental Management Committee (EMC) and Health and Safety Committee (HSC) are undertaking a six-month pilot program to determine the feasibility and desirability of establishing an information exchange of CMA member ambient air community exposure values (CEVs). The purpose of the Information Exchange is to facilitate and encourage the exchange of this and related Title III information among CMA members. Immediate past and current CMA member companies represented on the EMC and HSC are being asked to participate in the pilot program. Member companies represented on CMA's Board of Directors also are invited to participate and any other CMA members which want to participate are also welcome. Participation will be voluntary. Companies represented on the HSC and F.MC are: Air Products and Chemicals, Inc. Amoco Chemical Company American Cyanamid Company Chevron Chemical Company The Dow Chemical Company Dow Corning Corporation E.I. du Pont de Nemours & Company Ethyl Corporation Exxon Chemical Company W.R. Grace & Company Hoechst Celanese Corporation ICI Americas Inc. Lonza, Inc. Mallinckrodt, Inc. Mobay Chemical Corp. Mobil Chemical Company Monsanto Company Occidental Chemical Corp. Olin Corp. PPG Industries, Inc. Quantum Chemical Corp. Rohm & Haas Company Shell Chemical Company Shell Oil Company 3M Corp. Union Carbide Corp. Sharing community exposure values and the methods used to derive them is consistent with CMA's Air Quality Program, and with industry's discussions of SARA Title III data with people in plant communities. In addition, the committees want to encourage sharing of technical (health-based) information. To respond to possible legislative or regulatory efforts to regulate community exposure values, companies need to know why various CEVs for the same chemicals are heing selected by other member companies in different geographical areas, and on what basis these decisions are being made. Accumulating this data may increase the exposure of CMA and member companies to certain legal risks. However, the CMA Office of General Counsel not only believes these risks can be limited to acceptable levels, but that a larger interest is involved. The industry needs to fully understand the technical information it is using and comnunicating in response to SARA Title III. A more precise estimate of potential legal risks and the benefits of this program can be made after the pilot project. CMA 038825 exhibit b-i RATIONALE FOR NEW DEFINITION OF CHEMICAL SALES Objective: The goal of tha Duas Study Group was to develop a relatively simpla, but equitabla, Mans of assessing duas on chemical products which anjoy CMA support. Findings Concerning Currant Duas Definition: Analysis of tha currant definition of chemical sales for duas purposes revealed several deficiencies whan measured against tha- objective described above: A. The current definition merely states that dues shall be paid on sales of all chemicals and chemical products, intending, in general, that anything undergoing chemical transformation is included. However, there is no ex plicit guidance as to what constitutes a chemical product other than specif ic exclusions which eliminate certain products from the dues base. This gives rise to two problems: (1) Many of these excluded itests are downstream products resulting from previous chemical manufacturing steps. For example, fabricated plas tic products (which are currently excluded) are derived from polymer resins, which, in turn, are derived from basic petrochemical building blocks. This type of exclusion is inequitable since fully integrated companies pay no dues on the entire product chain (since the final product is excluded), while companies who produce just the chemical intermediates are assessed dues. Certainly both types of firms enjoy the same level of CMA support on the manufacture of the intermediates and should pay dues accordingly. Examples of products in this catego ry currently excluded from the dues base are textile fibers and molded or extruded plastic products. (2) The lack of explicit guidelines defining chemical sales results in different interpretations by member firms as to which products should be included in their dues base. For example, it is not clear wheth r duas should be paid on pharmaceuticals; consequently, some members may pay on this category, while others do not. Similarly, the lack of clarity of some current exclusions (such as the products of mining operations) also results in different interpretations. B. The current definition also contains soma internal inconsistencies. In October 1987, the CMA bylaws were adjusted to explicitly include products of mixing, formulating and compounding. (This was consistent with the Association's drive to increase its membership.) However, a number of the current exclusions are products which are the direct result of such opera tions. (Examples are mixed fertilizers and blended pesticides.) Thus, the intent in amending the bylaws is not correctly reflected in the exclusions and reconciliation is required. CMA 038826 Proposed Changes; Industry Modal The basis for the proposed dues structure is to assess dues in accordance with the types of products and activities that CMA supports. As a conceptual start ing point, the chemical industry was divided into a series of steps progressing from natural resources, to Category I products (e.g., petrochemicals resulting from chemical synthesis or processing steps involving natural resources) to Category IX products (products resulting from blending, fabricating, formulat ing, etc., of Category I products) to Category III products (products which are sold by CMA members in the same physical form as sold to the ultimate consumer and include in their margin a large component of advertising, marketing or re tail distribution expenses). These steps are further illustrated below. 1. The interface between natural resources and Category I is defined as the point at which fractionated or separated components of a natural resource are first subjected to chemical processing/synthesis. The product remains in Category I throughout subsequent synthesis steps. For example, ethane (a natural resource) could be cracked into ethylene (a Category I product), which, in turn, could be polymerized into polyethylene which is sold in the form of flake or chip (also a Category I product). 2. Secondly, the interface between Category X and XI is defined as the point at which chemical processing/synthesis stops and formulating/fabricating/blending begins. There are multiple steps taken before the produce is fully converted and sold as a final consumer product. Continuing with the above example, the polyethylene flake could be calendared into a fine gauge film (a Category IX product). 3. Finally, the interface between Category II and III is the point at which a Category XI product is converted to a product which is in the same form as is sold to the ultimate consumer and the sales price of such product in cludes a large component of marketing, advertising or retail distribution expense. For example, the polyethylene film could be fabricated into gar bage bags and distributed in retail outlets under a brand name (a Categ ry III product). Not all products neatly fit into this mold, but the concept is broadly applica ble. Figure I further illustrates this concept. Methodology for Assessing Dues The abjective in creating three product categories was to acknowledge the de creasing level of chemical manufacturing involved as a product progresses from its basic raw material to a finished good. Accordingly, the level of CMA sup port is different for each of these categories. Thus, the proposed methodology introduces a three-tiered dues structure which attempts to accomodate these differences. -2- CMA 038827 Category I product* clearly anjoy the support of CMA activities and, therefore, duaa ara assessed at a 100% level on their sale. Similarly, tha aala of Category II and III product* should ganarata duas slnca tha production of thasa good* is also supportad by CMA activitias. However, thar* is a larga nonchamical component involved in tha manufacture of Category XI products and an even larger such componant in Category III products. Consequently, it is proposed that they be assessed duas, respectively, at a 50% and 15% level. Because there is no simple means of determining tha exact value of tha nonchamical componant of this group, thasa figure* represent a general proxy for tha value of tha final goods sold vhieh is not supportad by CMA. -3- CMA 038828 FIGURE I Natural Resources (Not Conaidarad Ckaalcal Industry Operations) Natural Gas natural--------- ------------ 9a liquid Category I (CheaUcal Synthesis) polyathylana -> / / / ethylene'--^ alpha-olefins sulphonates--^ \ * 1 athylana glycol t t 1 Catagory II 1 1 (Blandlog/ 1 Formulating/ l Fabricating) 1 | polyathylana ilia 1 1 formulated - - 1 datargents 1 1 1 1 1 Catagory III 1 1 l (Ma r ka ting/Adeartising/ l Retail Distribution) 1 1 1 garbage bags 1 J'--branded detergents 1 ( t | Crude --^naphtha ----------------------- y y y y y 'v y J acid Minin? --) ilnanita ora---------- --------- 1 ^meta-xylene -> iaophthalic -Granin acid ' % 1\ \ l 1/ $ 14 titan iua diox ids pigment - -- --------------* I 1 1 1 ">| 1 1 fibers, films --^finished consumer goods 1 1 1 | 1 paint ---------------- 1 branded household paint 1 -4- CMA 038829 Chemical Manufacturers Association, Inc. DEFINITION OF "CHEMICAL SALES** As revised October 12, 1987, and approved by the Board of Direc tors, pursuant to Section 2 of Article IV of CMA Bylaws. For use by each member firm in determining and reporting calendar year "chemical sales* dollar volume to the Treasurer for the sole pur pose of membership fee computation. The term "chemical sales" includes both, domestic and export sales of all chemicals and chemical products sold to others, with the exception of the products listed below, and provided that the sales value of chemical products prepared by mixing, mechanical forming or coating operations not involving chemical synthesis shall be equal to market value less the cost of purchased materials used in the production of such products! 1. Interdepartmental (Intracompany) Transfers. (However, transfers out side the specific partnership, joint venture, corporation, division, or other unit of a corporation as approved for membership shall be consid ered a sale to others and shall be valued at comparable market value). 2. Resale Products (chemicals purchased for resale as such). 3. Products of Mining Operations (except when sold for use in chemical processing). Examples: Phosphate rock, fluorspar, barytes, ilaenite, coal, salt, borax, potash, natural salts, and limestone. 4. Certain Structural Metals and Their Alloys (except when sold for use in chemical processing). Examples: Aluminum, chromium, columbium, copper, hafnium, iron and steel, lead, magnesium, manganese, nickel, tantalum, titanium, vanadium, zinc, zirconium, and all fabricated metal products. 5. Food 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 be 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, waxes. "Sales of products manufactured outside the United States, its territ ries, or possessions sh uld be excluded. CMA 038830 2 11. Mixed Fertilizers. (Synthetic components such as urea, ammonium and sodium nitrates and sulfates are considered to be chemicals and are not in the excluded group). 12. Mixed Pesticides. (Manufactured or synthetic componentsare consid ered to be chemicals and are not in the excluded group). 13. Coated Fabrics and rioor Covering. 14. Formulated Detergents. (Manufactured or synthetic components are considered to be chemicals and are not in the excluded group). 15. Molded or Extruded Products. Examplest Bristles, combs, brushes, containers, and similarly fabricated 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 synthetic resins and plastic materials in unfinished form such as liquids, molding powders, flake, sheets, rods and tubes, are consid ered 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: 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. Examples; Coke ovens, gas producers, electrolytic cells, sulfuric acid plants, cutting and welding equipsMnt, tractors, mowers, sprayers, pumps. b. Devices. Exas^les; Fusees; blasting accessories; signals; jet perforators; ammunition, powder cartridges; cameras; photographic accessories, including light-sensitized film and paper; instru ments; welding rods; batteries. 23. Textile Fibers and Fabrics. Examples: Rayon, "Dynel", saran, nylon, "Dacron," "Orion," "Acrilan," "Creslan", "Fortrel," "Kodal," "Zefran," cellulose acetate, glass, and asbestos, including staple, yam, tow, and knitted, woven, and felted fabrics. CMA 038831 -3- COMPARISON OF CHEMICAL PRODUCTS UNDER CURRENT DEFINITION AND PROPOSED NEW DEFINITION Currant Exclusion* 1. Interdepartmental (Intracompany) Transfers. (How ever, transfers outsida the specific partnership, joint venture, corporation, divi sion, or other unit of a corporation as 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 Metals and Their Alloys (except when sold for use in chemical processing)}. Examples: Aluminum, ehronium, Columbian copper, hafnium, iron and steel, lead, magnesium, mananese, nickel, tantalum, titanium, vandium, zinc, zirconium, and all fabricated metal products. S. Food Products. Examples: Natural extracts, vitamins from natural sources, vege table 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 be chemicals and are not in the excluded group.) Status under Proposed Definition* No change. No change. No 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 and barium carbonate, resulting from the chemical processing of mining products, are Category X products. No change. No change. No significant changes. Natural animal and vegetable products are excluded. Synthetic products such as synthetic fatty acids, datergents, rubber and glycerine are Category I products. CMA 038832 7. Carbon, Bona, and Lamp Black. Examplest Electrodes, activated carbon, and carbon papars. 8. Rubber Products. (Synthetic rubbar sold as such is considarad to ba a chemical and is not in tha axcludad group.) 9. Paints, Varnish, Lacquers. 10. Inks, Polishas, Maxes. 11. Mixad Fertilizers. (Syn thatic componants such as urea, ammonium and sodium nitrates and sulfates ara considarad to ba chemicals and ara not in tha axcludad group.) 12. Mixad Pasticidas. (Manu factured or synthatic componants ara considarad to ba chemicals and ara not in tha axcludad group.) 13. Coatad Fabrics and Floor Covering. No change No change. Tha manufacture of paints, varnishes and lacquars involves substantial chemical manufacturing operations followed by blending/formulation. These are. cither Category II or Category III products*. Inks and polishes ara produced through chemical synthesis/proces sing followed by formulation, and, therefore, ara included as Category II or Category III products*. Syn thatic waxes ara considered Category II or III products*; natural waxes ara axcludad. Individual synthatic fertilizers ara Category I products while blends of such compounds ara Category II or III products*. All pasticidas (crop protection chemicals) are considered Category II or Category III products*. Most are sold as formulated products. Tha production of coatad 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*. *S the Revised Definition, Paragraph B(2) and (3) for tha definition of Category zi and Category III Products. CMA 038833 14. Formulated Datargants. (Manufactured or synthetic components are considered to be chemicals and are not in the excluded group.) -5- Synthetic detergent compounds sold as such are Category I products. However, formulated detergents are considered Category 11 or Category III products*. IS. 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. IS. Tar, Asphalt, Pitch, Creosote. Examples: Roofing, paving, wood preserving products. 19. Naval Stores. Examples* Turpentine, rosin, pine oil. 20. Mood Products. Examples* Mood 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 III products*. No significant change. No change. No change except creosote is in cluded as a Category II product due to its associated environmental issues. The production of turpentine, rosin and pine oil involves substantial chemical processing. These are, therefore, included as Category II or III products*. No change. *Sa the Revised Definition, Paragraph B (2) and (3) for tha definition of Cat gory II and Catagory III products. ' CMA 038834 21. Industrial Gas*a. Examples: Helium, argon, neon, oxygen and nitrogen. (When sold for use in chemical processing, these products are considered to be chemicals and are not in the excluded group.) Gases produced by separating the components of air are excluded unless sold for us* in the chemi cal industry in which case they are Category I products. Gases produced by chemical processes, e.g., chlorine, are considered Category I products. 22. Equipment and Devices. a. Physical Facilities. Examples: Coke ovens, gas producers, electro lytic acids, sulfuric acid plants, cutting and welding equipment, trac tors, mowers, sprayers, pumps. b. Devices. Examples: Fusees; blasting acces sories; signals; jet perforators; ammunition, powder cartridges; cameras; photographic accessories, including light-sensitized film and paper; instruments; welding rods; batteries. 23. Textile Fibers and Fabrics. Exasples: Rayon, "Dynel", saran, nylon, "Dacron*, "Orion", "Acrilan", "Creslan", "Fortrel", "Kodal", "Zafran", cellulose acetate, glass, and asbestos, including staple, yarn, tow, and knitted, woven, and felted 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 038835 CHEMICAL MANUFACTURERS ASSOCIATION WORKSHEET FOR CALCULATING CHEMICAL SALES SUBJECT TO DUES A. Cross Salts in 1987 of Category I Chemical Products as defined in Paragraph (B) (1) of the attached Definition of Chemical Sales: B. Cross Sales in 1987 of Category II Chemical Products as defined in Para graph (B)(2) of the attached Definition of Chemical Sales: Cross Sales --x .5 __ C. Cross Sales in 1987 of Category III Chemical Products as defined in Para graph (B)(3) of the attached Definition of Chemical Sales: Cross Sales X .15 D. Total Sales in 1987 subject to dues (A+B+C): _____ Company Name Upon completion, please return to: Mr. Cary C. Herman Vice President, Treasurer Chemical Manufacturers Association 2501 M Street, NW Washington, DC 20037 Date -2- CMA 038836 cAniaiT B-2 CHEMICAL MANUFACTURERS ASSOCIATION PROPOSED DEFINITION OF CHEMICAL SALES BACKGROUND At the June 6, 1988 Greenbrier meeting, survey results of the proposed Definition of Chemical Sales 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 REQUESTEDi 1. Approval of the proposed Definition of Chemical Sales as described herein to be effective for the year beginning June 1, 1989. Imple mentation 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 CMA 038837 Chemical Manufacturers Association, Inc. DEFINITION OF "CHEMICAL SALES" As revised ,19XX, and approved by the Board of Directors, pursuant to Section 2 of Article IV of Q1A Bylaws. For use by each member fin in determining and reporting calendar year "ehemical sales" dollar volume to the Treasurer for the sole purpose of oambership fee compu tation. A. DOES BASIS Dues shall be based on the sales of "Chemical Products", including domestic and export sales of products manufactured 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 sales except that transfers outside the specific partnership, joint venture, corporation, divi sions, or other unit of a corporation as approved for membership shall be considered a sale to others and shall be valued at comparable "Market Value." B. DEFINITION OF CHEMICALS SALES Dues shall be assessed on sales using a three-tiered structure, in accordance with three different categories of chemical products, and dues levels. Dues shall be paid on 100% of Sales of Category I Chemical Products as described in paragraph (1) below; n 50% of Sales of Category II Chemical Products as described in paragraph (2) below; and 15% of Sales of Category III Chemical Products as described in para graph (3) below. (1) Category I Definition Category I Chemical Products shall 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, Joetones, amines, ethers, alde hydes, esters, nitrites, amides and halides; organic and inorganic industrial chesucals such as acids, anhydrides, salts, caustics, sulfates, nitrates and halogens; organometallic compounds (such as tetraethyl lead) and polymers in unfinished form Including plasties and elastomers such as polyolefins, poly vinyl chloride, polyaerylie, polyurethane, polyacetals, cellulosic polymers and styrene/butadiene rubber. (2) Category II Definition Category II Chemical Products shall include products whose manufacture involves a 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. Hence, the following examples pertain to industrial sales or **!*> of products in sasdfiniahed form, rather than retail sales. a CMA 038838 a. Paints* Varnish#*, Lacquers. b. Ink*, Polish**, Synth#tic Maxes. c. Crop Protaction Chemicals, except genetically-engineered products. d. Mixed Synthatic Fertilizers. (Individual eo^tonents such as uraa, awoniua and sodium nitrata and sulfate ara conaidarad Category I products. Blands of thasa individual coaponants ara considarad Category II products.) a. Formulated Detergents. f. Molded or Extruded Synthatic Products. Examples: Bristles, combs, brushes, containers, and similarly fabricated plastic products; mechanical rubber goods; films formed by extrusion of materials such as saran, polyvinyl chloride, polyethylene and polypropylene. g. Chemical* 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, woven felted and coated fabrics and floor covering. i. Synthetic Rubber Products. Examples: V-belts and conveyor belts. . Category HI Definition Category III Chemical Products are those which meet the description of Category II Products set forth above, but which, in addition, are sold by CMA members in the seam form 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 paint, and pesticides sold to the final consumer. C. EXCLUSIONS For the guidance of CMA members, several 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 limestone. However, chemical products, such as titanium dioxide and barium carbonate, resulting from the ehesUcal processing of mining products, are meant to be covered as Category I Products. 3. Structural .Metals and Their Alloys. Exa^les: Aluminum, chromium, columbi.ua, copper, hafnium, iron and steel, lead, magnesium, manganese, nickel, tantalum, titanium, vanadium, sine, zirconium, and all fabricated metal products. 4. Animal or Vegetable Products. Examples: Oil, fats, tallow, grease, animal glue, gelatine, glycerine, vitamins from natural sources, natural rubber prod ucts. (Synthetic fatty acids, synthetic detergent*; synthetic rubber and syn thetic glycerine, ar considered t be Category I Chemical Products, however, and ar* not in the excluded group.) -2- CMA 038839 5. Carbon# Bona, and Lamp Black. Examples: Electrodes, activated carbon. 6. Natural Fertilizers. 7. Rafinary products from luba oil basa stocks. Examples: Lubricating oils# grass es# waxes# asphalt. 8. Fuels. Examples: Coke# diesel oils, gasoline. (However# fuel additives pre pared by chemical synthesis such as tetraethyl lead and fCTBE are Category X products). 9. Gases derived from air# except to the extant sold for use in the chemical indus try. Examples! Helium# argon# neon# oxygen and nitrogen. (All gases produced through chemical processes are considered Category I 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# mow ers# sprayers# pu^s. b. Devices. Examples: Fuses, blasting accessories; signals# jet perforators; ammunition# powder cartridges; cameras; photographic accessories, including light-sensitized film and paper; instruments; welding rods; batteries. 11. Pharmaceuticals (including over-the-counter drugs), cosmetics# personal health care products and food additives. 12. Hood Products. Examples: Hood pulp for paper and rayon manufacture. 13. Tar, Asphalt and Pitch. 14. Pr ducts of genetic engineering. Examples: Recombinant DNA, monoclonal antibod ies, interferon. 15/ Cerastes, including powders and formed or molded components. June 8, 1988 -3- CMA 038840 EXHIBIT B-3 CHEMICAL MANUFACTURERS ASSOCIATION PRELIMINARY CONSIDERATIONS ON THE FEE SCHEDULE FOR THE 1989/90 FISCAL YEAR BACKGROUND; The charter of the Finance Committee of the Association includes the responsibility to recommend a "schedule of fees" to fund the approved budg et and activities of the Association. At the March 6, 1989 meeting, the Finance Committee will prepare recommendations on the "schedule of fees" for the 1989/90 fiscal year. These recommendations will 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 fee schedule for the Association. During the review of the Definition of Chemical Sales, the Executive Committee consnissioned 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 Committee 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 1989/90 in the amount of 3.1% 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 maximum 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 be 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 recommendations as general guidance for Finance Com mittee deliberations. CMA EC - 09/12/88 BD - 09/13/88 CMA 038841 CHEMICAL MANUFACTURERS ASSOCIATION MEMBERSHIP FEE CLASSIFICATION (Chemical Sales Basis) Fiscal Year Beginning June 1,1988 The following schedule of fees was established by the Board of Directors as provided under the CMA Bylaws Article IV, Section 2. Canadian Members Under- 10.0 10.0- 25.0 25.0- 50.0 50.0- 100.0 100.0- 400.0 Over- 400.0 Maximum Fee $ 7,500 $ 7,500 S 10.000 0.0371%' 0.0339% 0.0309% 0.0277% $460,000 would ba omened by mummying tha minimum amount ot inv nsii riQnv cnwrioi wn DrscxK oy in# pimnBQf *faioc.tooroaaddicoOia to tfto higher bracket and not leaa man CMA 038842 iArtitill C PROPOSED ASSOCIATION INITIATIVE: RESPONSIBLE CARE: A PUBLIC COMMITMENT BACKGROUND The CMA Board Public Perception Committee has proposed an initiative designed to help the chemical industry improve its performance in the management of chemicals. At the April and June Board of Directors and Executive Committee meetings, the committee described the need for the initiative and the committee's progress in framing the program. This summer, the Public Perception Committee, in conjunction with CMA's Officers, held three regional Executive Contact meetings to discuss the Responsible Care proposal. One hundred eighteen industry leaders representing eighty-eight CMA member companies attended. There was widespread support for an initiative such as Responsible Care to help the industry improve its performance in health, safety and environmental quality. Executive Contacts who were unable to attend one of the regional meetings or designate a representative were sent letters enclosing all materials prepared for the regional meetings. The tetters urged the executives to review the materials and provide their feedback prior to the September Board meeting. A copy of the final recommendation has also been sent to every Executive Contact. RECOMMENDATION The Board Public Perception Committee recommends approval of the following: I. CMA adopt the Responsible Care initiative which includes the following elements. A description of each element is attached (Exhibit A): o Guiding Principles for Responsible Care of Chemicals; o Codes of Management Practices; o Public Advisory Panel; o Member Company Self-Evaluations of Management Practices; o Executive Leadership Groups; o Obligation of Membership. , As the Public Advisory Panel, Executive Leadership Groups, and self-evaluation process program elements are developed, they will be brought forward for Executive Committee and Board consideratIon and approval prior to being implemented. As Codes of Management Practices are developed by the CMA standing committees, they must be discussed with the Public Advisory Panel and distributed for comment to the CMA membership, prior to being brought to the Executive Committee and the Board of Directors for approval. CMA 038843 2 II. Approve that participation in Responsible Cara is an obligation of membership. This will require the Executive Contact of each member company to make a commitment to Responsible Care by: o Signing the Guiding Principles for Responsible Care of Chemicals statement (Exhibit B); o Communicating the commitment to Responsible Care to employees; and o Instructing management to make good faith efforts to implement the Codes of Management Practices, participate in the self-evaluation process, and meet the expectations of the Responsible Care Program. III. Approve the Guiding Principles Statement (Exhibit B). IV. Approve the proposed bylaw change and a Board Resolution implementing the bvlaw change (Exhibit C) in order to make the endorsement of Responsible Care an obligation of membership. If approved by the Board, the bylaw change will be submitted to the membership for final approval. V. Approve the announcement of the Responsible Care initiative to the membership during the Chemical Industry Conference in October -- and thereafter proceed to obtain individual member company commitment to the Guiding Principles Statement. VI. Approve a budget not to exceed S250.000 for the remainder of the 1988/89 fiscal year in order to provide the following additional resources the Association will require to begin implementation of Responsible Care: o A professional staff executive to coordinate the development and implementation of the initiative's elements; o A donated professional from a member company to assist during the initiative's start-up period; o Two support staff personnel; * o Outside purchase service funds to develop and operate the Public Advisory Panel; and o Member company personnel to work through the standing committees to begin development of the Codes of Management Practices. ACTION REQUESTED Approval of recommendation. CMA EC 9/12/88 BD 9/13/88 CMA 038844 SUMMARY DESCRIPTION OF RESPONSIBLE CARE PROGRAM ELEMENTS The Guiding Principles for Responsible Car of Chemicals is a statement of commitment by ach aanbar company to fully support a continuous affort to improve the industry's responsibla management of chemicals. Each member company would pledge to operate according to the principles statement and would sign to that effect. This signed statement would be considered an obligation of membership in CMA. These Guiding Principles are based on CMA's 1983 policy statement on health, safety and the environment and on the Canadian Responsible Care principles. They also incorporate guidance received from member company Executive Contacts. Following Association adoption of the Guiding Principles, various CMA Committees will begin development of Codes of Management Practices. Each set of management practices would focus on a different concern. Impetus for developing an individual Code of Management Practices would come from either an industry belief that there exists a substantive need to take voluntary action or a substantial public concern to which the industry should be responsive, or both. Initially, code packages will be considered for CAER, Air Quality, Distribution/Transportation, Waste Management and Plant Operations. Based upon the implicit obligations of the Guiding Principles, the Codes of Management Practices will be designed by identifying expected management practices as objectives rather than prescribing any absolute or quantitative standard. Since the codes are intended to serve as objectives, they would complement any existing member, company programs or practices that achieve the same goals. Responsible Care would therefore become an integral part of the existing company program, not a replacement or another duplicative overlay. Each Code of Management Practices would be approved by the Board after the opportunity for comment by all member companies. Another important element in the Responsible Care initiative is a Public Advisory Pamel which will be composed of a cross-section of environmental, health and safety thought leaders. The panel will be an industry (CMA) effort, not a company responsibility. It will be assembled and moderated by an experienced facilitator working at the Association's direction and will serve to assist the industry in identifying and developing programs and actions that are responsive to public concerns and viewed as proactive by key policy groups. Meeting several times a year, the panel will review issues on which CMA requires comment and advice as well as to discuss subjects which panel members believe require industry response. The panel will critique (but not approve) all proposed Codes of Management Practices and is expected to provide early definition of public concerns involving the chemical Industry. Community Advisory Panels at the local or regional level can serve companies and the industry in a similar menner. They will be called for as a milepost of a "CAER - Code of Management Practices" and CMA will offer support to facilitate companies' formation and operation of these local panels. Effective performance evaluation is a critical element of Responsible Care. Member Company Self-Evaluations of Management Practices, as well as compilation f quantitative results, will be necessary to meet three CMA 038845 vital objectives. In order to build a collective record of tangible improvement in the responsible management of chemicals, specific management practice codes may call for CMA to collect and maintain statistical trends from data that members currently make available to governmental organize* tions. Details of quantitative trend statistics programs will be*defined by task forces developing the respective management practice code package. Two additional objectives are served by Member Company Self-Evaluations of Management Practices. The first is to provide feedback from the membership on the value and relevance of codes of management practices and on any additional CMA support activities that may be needed. Second, such evaluations along with quantitative trend data will build CMA credibility and confidence on behalf of its members in dealing with government, the public and other external groups. Each management practice code will contain definition of management practice "progress mileposts" that member coaipanies would use to measure and evaluate their performance versus the commitment. Details of the member management practice evaluation program will be developed by a designated work group for the Board of Director's consideration and approval. The work group will be requested to define the mechanics of a practical system based on member company self-evaluation of their progress. Evaluations will be coordinated through the member companies' Executive Contacts and will be designed to maximize the value to companies' efforts to Improve their performance. Due to their varying size and circumstances, individual member companies would not be expected to be at the same level of performance for each Code f Management Practices at the same time. However, it would be expected that each member company would be able to report continued progress. T facilitate and support each member company's continual improvement in . responsible management of chemicals. Executive Leadership Groups will be formed to provide an opportunity for Executive Contacts to periodically discuss progress and share experiences with each other that have been successful. These regional groups of ten to twenty Executive Contacts will meet several times a year to review Codes of Management Practices under development, discuss members' progress on existing codes, Identify areas where individual companies need assistance from CMA or other companies, and to address other priority industry issues. Understandings developed during these meetings will be reviewed and acted on by the Association's Officers, Executive CoMittee and Board of Directors. Endorsement of the Responsible Care Initiative will be an Obligation of Membership in the Association. Each member company's Executive Contact is expected to make a commitment to Responsible Care by: a) signing the Guiding Principles for Responsible Care of Chemicals statement; b) coesmnicating the commitment to Responsible Care to employees; and e) instructing management to make good faith efforts to implement the Codes of Management Practices, participate in the self-evaluation process, and meet the expectations of the Responsible Care Program. A member company's bligation to Responsible Care applies to those segments of the company's operations included in the CMA dues base (CMA Definition of Chemical Sales). CMA 038846 Member companies are also expected to participate in the development of the codes and programs. The Codes of Management Practices are intended to include mileposts that provide a road map for responding to industry priorities and the public's concerns. Member companies are expected to make "good faith" efforts to move up the milepost ladder and meet the expectations of the Responsible Care initiative. In an extreme case, vhere a member company has consistently not conducted its operations in accordance with the Guiding Principles and program elements of Responsible Care, Association representatives will meet with the member company's Executive Contact to seek the company's positive involvement in the program. If this fails to produce a commitment to pursue the objectives of Responsible Care, the Executive Committee and Board could take appropriate actions including the disassociation of the company from membership after due process requirements have been met. CMA EC 9/12/88 BD 9/13/88 CMA 038847 GUIDING PRINCIPLES FOR RESPONSIBLE CARE OF CHEMICALS As a member. of the Chemical Manufacturers Association, this company is committed to support a continuing effort to improve the industry's responsible management of chemicals. Ve pledge to manage our business according to these principles: o To recognize and respond to community concerns about chemicals and our operations. o To develop and produce chemicals that can be manufactured, transported, used and disposed of safely. o To make health, safety and environmental considerations a priority in our planning for all existing and new products and processes. o To report promptly to officials, employees, customers and the public, information on chemical related health or environmental hazards and to recomend protective measures. o To counsel customers on the safe use, transportation and disposal of chemical products. o To operate our plants and facilities in a manner that protects the environment and the health and safety of our employees and the public. o To extend knowledge by conducting or supporting research on the health, safety and environmental effects of our products, processes and waste materials. o To work with others to resolve problems created by past handling and disposal of hazardous substances. o To participate with government and others in creating responsible Isms, regulations and standards to safeguard the community, workplace and environment. o To promote the principles and practices of Responsible Care by sharing experiences and offering assistance to others who produce, handle, use, transport or dispose of chemicals. CMA EC 9/12/88 BD 9/13/88 Member Company Name Signature Name and Title of Signer CMA 038848 RESPONSIBLE CARE OBLIGATION OF MEMBERSHIP PROPOSED BYLAW CHANGE AND IMPLEMENTING BOARD RESOLUTION PROPOSED BYLAW CHANGE That the Bylaws of the Chemical Manufacturers Association, Inc., be amended by adding a new Section 5, Obligation of Membership, to Article III (Membership) and by renumbering the current Sections 5, 6, 7 of Article TIT to Sections 6, 7, 8: Section 5. Obligation of Membership It shall be an obligation of membership to participate in the Association's Responsible Care Program as that program is defined by the CMA Board of Directors. PROPOSED RESOLUTION As an obligation of membership, each member company, through its Executive Contact, shall manifest its commitment to Responsible Care by: o Signing the Guiding Principles for Responsible Care of Chemicals statement; o Communicating the commitment to Responsible Care to employees; and o Instructing management to make good faith efforts to implement the Codes of Management Practices, participate in the self-evaluation process, and meet the expectations of the Responsible Care Program. CMA EC 9/12/88 BD 9/13/88 CMA 038849 EXHIBIT D EPIDEMIOLOGY RESOURCE AND INFORMATION CENTER PILOT PROJECT Background In June 1988, th Board of Directors approved a recommendation from the Board Health Effects Committee to develop a proposal for an Epidemiology Resource and Information Center (ERIC). The ERIC concept was developed in response to increasing demands for human health effects/epidemiology studies from regulators, courts, communities and employees. The purpose of an industry epidemiology initiative, such as ERTC, is to improve the quality and consistency of industry epidemiology practices and programs to enhance the database on human health effects and chemical exposures. This improvement is essential in order to: o Provide better worker health protection: o Promote development of human health data to make regulatory risk assessments more relevant and rational; and o Promote scientifically-based decisions regarding causation in toxic tort and workers' compensation claims. A description of a one year ERIC pilot project follows. Racomendat ion The Board Health Effects Committee recommends that CMA approve an ERIC pilot project to be reviewed at the. end of one year to determine if the ERIC concept is viable. The objectives of th* ERIC pilot project are to: o Develop resource materials for establishing industry epidemiology programs for member companies. Materials will emphasize the prospective development of quality databases. Materials will include information on uniform data collection, quality control/quality assurance procedures and data management. o Encourage companies without epidemiology capabilities and programs to begin developing these areas. o Promote the use of the resource materials to companies with ut or with minimal epidemiology programs. CMA 038850 2- - o Explore avenues for developing a consensus on how epidemiologic decs should be acquired and retained. Funding/Staffing/Location: The budget for the ERIC pilot project is estimated at $300,000. Approximately $150,000 is for personnel and operating expenses (salary, benefits, facilities and equipment, etc.) and $150,000 is for outside services contracts. A project director will staff the ERIC pilot project. Administrative support will be provided by CMA. The director will provide day-to-day management of the pilot project and oversee the work of consultants hired to assist with developing epidemiology program guidance and resource materials. The director will report to CMA's Technical Department for administrative and policy oversight. The ERIC pilot project will be located at CMA. Initial funding should be provided by CMA to facilitate rapid development- of the pilot project. Scientific Advisory Committee: The ERIC pilot project will have a Scientific Advisory Committee to provide technical expertise and oversight. The President of. CMA, in consultation with the Health and Safety Committee, will appoint the Advisory Committee. Members of the Committee will be drawn from the CMA Epidemiology Vork Group and may also include representatives from government, academia or other disciplines complimentary to epidemiology. Action Requested Approval of recommendation. No funds are requested for the remainder of the 1988/89 fiscal year. The targeted start up date for the project is June 1, 1989; therefore, specific funding wil] he requested as part of the 1989/90 budget process. Authorization is requested to begin an immediate search for the project director. CMA EC - 9/12/88 BD - 9/13/88 < CMA 038851 EXHIBIT E Proposed Policy On Above Ground Storage Tank Control Legislation Background The Ashland Oil Company 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 Congress, and hearings may occur later this year. In addition, state legislation is moving forward in Pennsylvania and is likely to be enacted this year. The Government Relations Committee 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, 1988, 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, there 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 substances or petroleum 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. These requirements may be of greater impact to the chemical industry than catastrophic release provisions. Potential problems with the current Congressional direction are: (1) 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 requireamnts to existing tank systems. Her nsmiendatlons The Environmental Management Committee has coordinated its policy development activities with API. Although CMA has some different substantive interests (i.e., 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 Committee recommends the following: Basle Policy No additional legislation for above ground storage tanks is needed at this time. However, CMA would support legislation that CMA 038852 2 requires EPA to collect data to determine the need for additional standards or legislation. Backup Position 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, and 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 testing 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 Dateetion/Proteetion 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 Comsittee has advised that CMA needs to carry out these discussions as soon as possible 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 038853 EXHIBIT F PRESHIPMENT INSPECTION BACKGROUND AND STATUS: For over 20 years, private gauging companies have been performing a wide variety of customs services, known as preshipment inspections (PSI), for less developed countries (LDCs). About four years ago, these preshipment inspection services were expanded to include price inspections. This elevated the level of PSI programs from the nuisance level to that of a severe impediment to companies exporting to the LDC's who required these services. A group of Florida exporters filed a formal complaint with the Office of the U.S. Trade Representative over PSI activities and later withdrew the complaint on the assurance that the Administration would initiate an investigation by the U.S. International Trade Commission as well as pursue both bilateral and mulitlateral solutions to the problem. CMA ACTIVITIES: CMA testified before the USITC during its investigation on PSI. CMA has also taken a major role in the development of a proposed model regulation for PSI activities which has been approved by the International Chamber of Commerce (ICC). The model regulation contains the following elements: o PSI companies should be licensed o PSI activities will be limited to physical inspection of goods or services and price inspection will be limited to verification of the financial terms of the export transaction o Price comparisons with goods from other countries of supply or to other countries of destination are prohibited o A list of business practices which the PSI companies are expected to follow is provided and includes assurances of confidentiality, no unreasonable delays as a result of PSI and the creation of "good customer" status so that all shipments not be subject to PSI o The creation of an arbitration procedure to be monitored by each country's licensing authority, so that the exporter has opportunity to appeal a negative decision by a PSI company ACTION REQUESTED: t Endorsement of the position of the International Chamber of Commerce. CMA EC - 9/12/88 BD - 9/13/88 CMA 038854 MULTILATERAL TRADE NEGOTIATIONS exhibit g BACKGROUND AND STATUS: The eighth round of multilateral trade negotiations (MTN) since the formation of the General Agreement on Tariffs and Trade in 1946 is currently underway. The current MTN is known as the Uruguay Round and is scheduled to continue through 1990. The Board had previously approved a position on the Uruguay Round on January 28, 1986. At that time, the agenda for the Round had not been finalized. The GATT has a total of 17 Working Parties dealing with agenda items for this MTN. Of these, 12 are dealing with issues which affect the chemical industry. CMA has already met with the U.S. negotiating team in Geneva to discuss our views on the Uruguay Round and will do so again in September. Dexter Baker, the Chemical Industry Trade Advisor, and Max Tnrnipseed of Ethyl Corporation, CMA's Special Advisor on GATT matters, have been invited to attend the mid-term review of the GATT Ministers this December in Montreal. That review will provide, yet another opportunity for CMA to make known the views expressed in the position. RECOMMENDATIONS: The CMA International Trade Committee has revised its earlier paper to address all of the issues of the Uruguay Round which could impact our industry. This statement of principles covers trade barriers and other concerns of primary importance to the chemical industry including: o Improvement of market access and development of sound trading and investment practices, o De-emphasize tariff reductions by employing a request and offer approach, with exception provision for import-sensitive products, o Development of a GATT Investment Code, o Development of a GATT Intellectual Property Rights Code, o Improvement of GATT Dispute Settlement Procedures, o Improvement of the Subsidies Code, o Development of a Safeguards Code, o Coverage of energy sources and chemical feedstocks unde.r the Natural Resource Based Products Negotiating Group, o Narrowing the GATT definition of Infant Industries, and o Other Non-tariff Measures, including Preshipment Inspection. A copy of the full text of the Statement of Principles is attached. ACTION REQUESTED; Approval of the recommendation. CMA EC - 9/12/88 BD - 9/13/88 CMA 038855 STATEMENT OF MTN PRINCIPLES U.S. Negotiating Policy for MTN The MTN oust foster the development of sound trading and investment practices. Primary objectives of the United States in the MTN should include the elimination of trade distorting practices and the expansion of U.S. export opportunities. The reduction of U.S. tariff rates should not be among the primary U.S. negotiating objectives in the Uruguay Round. F reign policy concerns, other than thosa of a national security nature, sh uld not affect decisions on U.S. trade policy. Ample opportunity should be provided for Congressional consultation and for private sector input and review, both in setting U.S. objectives and through out the negotiations process. This should include feedback from the Adminis tration during the formation and negotiation of U.S. positions. Market access should be considered in totality. Tariff reductions should include bindings. In addition, all GATT member countries should be required to accede to the various market access related codes consistent with the phase-out of tariff reductions agreed to during the Uruguay Round. U.S. negotiating authority should not prevent the President from conducting separate trade negotiations with other countries during the Uruguay Round. In addition, the Administration should not slow the implamentation or timely and aggressive pursuit of actions brought under U.S. trade remedy laws during the Uruguay Round. Foreign Market Access GATT signatory countries should be required to grsnt U.S. exporters fair access to their markets without unreasonable barriers or conditions, in exchange for their retaining relatively free access to U.S. markets. U.S negotiators should make a special effort to gain full access to the markets of those countries that maintain the most severe tariff and non-tariff barriers. Tariff Negotiations The emphasis of the Uruguay Round should not be on tariff cutting. Reduction or elimination of chemical tariffs should not be offered in exchange for concessions in non-chemical sectors. No reduction offers should be proposed unless well-justified, and should be made only to achieve competitive market access, taking into account both tariff and non-tariff barriers. 9 In the interest of reaching a balanced and equitable agreement, the United States should negotiate changes in U.S. chemical tariffs only on the basis of request lists, rather than imposing formula cuts across the board, or automat ically eliminating tariffs below certain levels. Any U.S. plan to reduce or eliminate chemical tariffs should include provisions enabling affected Indus CMA 038856 tries to obtain exceptions from tariff reductions on import sensitive prod ucts. Less Developed Countries (LDCs), and especially Newly Industrialized Countries (NICs), must substantially reduce and bind their tariffs. These principles should be included in any legislation authorizing U.S. participation in the MTN, and specifically in legislative language providing tariff negotiating authority for the Uruguay Round. Foreign Investment Practices A GATT code on foreign investment should be negotiated with the benefits of such code being limited to contracting parties who are signatories to the code. The code should be based on national treatment for foreign investments and should ensure the elimination or substantial reduction of trade-distorting foreign investment practices, including: o prohibitions or restrictions on foreign investment in certain economic sectors, such as chemicals, o screening of foreign investment proposals by government agencies, o limitations on the amounts and/or percentages of equity that can be owned by foreigners, o performance requirements, including mandated local purchase of equipment, supplies and services, and the share of production which must be dedicated to exports, o limitations on royalties and licensing, and, o limitations on repatriation of earnings. Intellectual Property Rights a U.S. negotiators should seek binding commitments from foreign governments to provide adequate protection of intellectual property rights. As part of such commitments, minimum standards and enforcement provisions are essential. Agreements should be negotiated to improve the protection afforded patents, trademarks copyrights, proprietary information and trade secrets. Foreign nationals operating in other countries should be able to exercise and obtain enforcement of their intellectual property rights in those countries. GATT Dispute Settlement Procedures The GATT dispute settlement process must be improved to make it more transpar ent and to include binding, time-certain requirements for the resolution of disagreements on issues covered by GATT rules. A permanent reviewing body must be established in order for the dispute settlement process to function better. This body should consist of neutral, non-governmental experts who have experience either in traditional dispute settlements or in arbitration cases. CMA 038857 Subsidies and Countervailing Duties GATT Articles VI and XVI and the Agreement on Subsidies and Countervailing Measures should be strengthened. Objectives should include: o a workable definition of the term "countervailable subsidy," o support for strong and effective CVI) remedies. o international enforcement provisions as an effective and integral part of the Code, o commitments from countries to phase out GATT inconsistent export subsidies over 3 -* 5 years, and, o narrowing or eliminating the injury test requirement for actionable export subsidies, i.e., who is eligible and when. Safeguards A Safeguards Code should be negotiated to set strict and substantive ^ules. Only if this is achieved will the "grey area" measures, such as voluntary restraint agreements, be phased out. The Code should establish discipline over all measures to be taken under the GATT rules. It should also contain rules that are enforceable, transparent and require consultation and surveillance. Further, there should be a mechanism to provide for compensation when a Safeguard action has been invoked. Departures from a strict, Most-favored Nation (MFN) basis to a disciplined, selective basis should be al lowed. Natural Resource Based Products The negotiations on natural resource based products should include materials used as chemical feedstocks and energy sources for the production of chemical 'products. Agreement should be reached to eliminate practices which ia^ede the free flow of trade and investment in natural resource-based products. Infant Industries The current GATT definition of an infant industry should be narrowed to prevent it from being used for the allocation of resources to uneconomic activities. Measures .taken to protect an infant industry should be temporary in nature. Preshipment Inspection The practice of preshipment inspections should be addressed by the GATT Non-tariff Measures Group. As currently practiced, preshipment inspections cause costly delays for exporters, has resulted in Interference with free market pricing of products and has increased the cost of exporting. The GATT should develop a set of uniform practices for preshipment inspection companies to follow. CMA 038858 Other Non-tariff Measures The GATT Non-Tariff Measures group also should examine other actions which impede the free flow of goods in international trade. Measures to be ad dressed should include, but not be limited to import licensing, discriminatory use of export notification procedures and regulations aimed at controlling the diversion of chemicals for illicit uses. % CMA 038859 CMA SPECIAL ADVISOR ON GATT MATTERS BACKGROUND AND STATUS: In the early 1960's, the General Agreement on Tariffs and Trada (GATT) bald a round of Multilateral Trade Negotiations (MTN) knotm as tha Kennedy Round. Tha chemical industry was of tha opinion that it was forced to make many concessions for which it received little benefit. In the mid 1970's, when the next round of MTN known as the Tokyo Round began, the industry sought to prevent a repeat of past mistakes by having an industry executive work full time with the association during the negotiations. Vith the Uruguay Round negotiations underway, the industry has once again assigned an executive to work full time with CMA. The Ethyl Corporation has generously allowed Max Turnipseed, Manager of International Trade, to devote the next two years to CMA to work as Special Advisor on GATT Matters. CMA ACTIVITIES: For the last six years, CMA's International Trade Committee has conducted regular annual meetings with the trade committee of the European Council of Chemical Manufacturers' Federations (CEFIC). Such a meeting was held earlier this year in Brussels. At that time, the two organizations prepared a joint position on topics which are being addressed by the negotiations at the Uruguay Round talks. A joint CMA/CEFIC delegation took this paper to Geneva where it was discussed with the U.S. Delegation to the GATT, the European Community's Delegation to the GATT and officials of the GATT Secretariat. Max Turnipseed will lead a CMA delegation back to Geneva where additional issues will be discussed. Mr. Turnipseed has also been invited along with Trade Advisor Dexter Baker to accompany the U.S. negotiators to Montreal in December where the GATT ministers will conduct a mid-term review of the Uruguay Round. Mr. Turnipseed will coordinate CMA's efforts on the Uruguay Round through frequent, direct discussions with officials of the Office of the United States Trade Representative here in the U.S. and will participate in similar discussions in Geneva as appropriate. ACTION REQUESTED! None. For information only. EC: 9/12/88 BD: 9/13/88 CMA 038860 EXHIBIT H 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 million acres of the 19 million acre Arctic National Wildlife Refuge (ANWR) for oil and gas exploration and development. ANWR is located approximately 65 miles east of the Prudhoe 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 Coanittees 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 Comnittee. 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 heavily dependent on petroleum'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 foes or quotas which put energy-intensive U.S. industries at a competitive disadvantage in world markets. For this same reason, economically and environmentally sound policies that encourage development of domestic energy supplies are of significant interest to the chemical industry. The continuing decline of U.S. crude oil reserves and production is of particular concern to energy-intensive industries. The potential resources from undiscovered 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 the Nation's economy. The 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 the 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 the Strategic Petroleum Reserve. While continuing its strong opposition to such measures, the chemical industry must als try to shift public attenti n toward actions that would enhance U.S. energy security without having a d trim ntal CMA 038861 impact on th competitiveness of energy*intensive industries or the U.S. manufacturing base. RECOMMENDATION: CMA should support legislative efforts to open ANWR to petroleum exploration and development in an environmentally sound manner. Such efforts represent a positive step to improve U.S. energy security and enhance feedstock supplies for the domestic chemical industry. CMA's advocacy role should be directed to participation in coalition efforts with other industrial energy users. ACTION REQUESTED: Approval of recommendation. CMA EC - 9/12/88 BD - 9/13/88 CMA 038862 exhibit I PROPOSED PROCESS SAFETY MANAGEMENT POMCY 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 cheeks 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 (J.S. Occupational Safety and Health Administration. OSHA 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 BD 9/13/88 CMA 038863