JOHN PHYPER Atrion International Inc.
PHILIPPE DUCAS Atrion International Inc.
PETER J. BAISH Independent Contractor to Sandler & Travis Trade
Advisory Services
A JOHN WILEY & SONS, INC., PUBLICATION
Innodata
0471494275.jpg
JOHN PHYPER Atrion International Inc.
PHILIPPE DUCAS Atrion International Inc.
PETER J. BAISH Independent Contractor to Sandler & Travis Trade
Advisory Services
A JOHN WILEY & SONS, INC., PUBLICATION
Copyright © 2004 by John Wiley & Sons, Inc. All rights
reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
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Library of Congress Cataloging-in-Publication Data:
Phyper, John-David. Global materials compliance handbook / John
Phyper, Philippe Ducas,
Peter J. Baish. p. cm.
ISBN 0-471-46739-1 (Cloth) 1. Hazardous substances—Transportation.
I. Ducas, Philippe.
II. Baish, Peter. III. Title. T55.3.H3P59 2004 363.17—dc21
2003014217
10 9 8 7 6 5 4 3 2 1
www.copyright.com. Requests to the Publisher for permission should
be addressed to the
To my wife, Christine, for her patience, and daughters, Megan and
Madison, for constantly reminding me of the important things in
life.
J.D.P. To my wife, Catherine, for her understanding and loving.
Also to Stéphanie,
Pascale, and Pierre-Olivier, who are the most beautiful gifts of my
life. P.D.
To my wife, Mary Alice, and children, Meg, Sarah, Liz, and P.T., I
love you! P.J.B.
CONTENTS
1 Introduction 1
1.1. Overview, 1 1.2. Types of Legislation, 6 1.3. Government
Enforcement, 8 1.4. Content, 10
References, 12
2 Chemical Registration, Notification, and Listing 15
2.1. Introduction, 15 2.2. Requirements for North America, 15
2.2.1. United States, 15 2.2.2. Canada, 21
2.3. European Requirements, 21 2.3.1. Current Requirements, 21
2.3.2. REACH Program, 27
2.4. Pacific Rim Requirements, 28 2.4.1. China, 28
vii
2.4.2. Australia, 32 2.4.3. Philippines, 35 2.4.4. Korea, 36
References, 39
3 Material Safety Data Sheets 41
3.1. Introduction, 41 3.2. Global MSDS Requirements, 42 3.3. North
American Requirement, 53
3.3.1. United States Requirement, 53 3.3.2. U.S. Approach to GHS,
58 3.3.3. Canadian Requirements, 60 3.3.4. Mexican Requirement,
61
3.4. European Safety Data Sheets, 62 3.4.1. Overview of Labeling
(Classification), 62 3.4.2. Substance Versus Preparation, 94 3.4.3.
Environmental Classification, 96 3.4.4. SDS Format, 97 3.4.5.
Languages, 99
3.5. Pacific Rim MSDS, 100 3.5.1. MSDS for Japan, 100 3.5.2. SDS
for Korea, 114 3.5.3. SDS for China, 120 3.5.4. SDS for Australia,
123 3.5.5. SDS for Malaysia, 126 3.5.6. SDS for Thailand, 129
3.6. Global Harmonization System (GHS), 130 References, 143
4 Product Label Requirements 145
4.1. Introduction, 145 4.2. North America, 146
4.2.1. United States, 146 4.2.2. Canada, 149 4.2.3. Mexico,
154
4.3. Europe, 157 4.3.1. Information Contained on a European Label,
158 4.3.2. Final Choice of Risk and Safety Phrases, 158 4.3.3.
Chemical Name(s) to Be Displayed on the
Label, 159 4.3.4. Choice of Danger Symbols, 160 4.3.5. Choice of
Risk Phrases, 160 4.3.6. Choice of Safety Phrases, 161
viii CONTENTS
4.3.7. The EC Number, 162 4.3.8. The Dimensions of the Label
for
Preparations, 162 4.3.9. Special Cases: Substances, 163 4.3.10.
Special Cases: Preparations, 163
4.4. Pacific Rim, 163 4.4.1. Japan, 163 4.4.2. Korea, 164 4.4.3.
China, 168 4.4.4. Australia, 170 4.4.5. Malaysia, 171 References,
176
5 Transport Requirements 177
5.1. Overview of Transport Legislation, 177 5.2. International
Requirements, 181
5.2.1. United Nations (UN), 181 5.2.2. ICAO and IATA, 192 5.2.3.
IMO, 193
5.3. North American Requirements, 197 5.3.1. U.S. DOT, 197 5.3.2.
Canadian TDG, 203 5.3.3. Mexican, 212
5.4. European Requirements, 218 5.4.1. ADR, 218 5.4.2. EU Inland
Waterways, 220 5.4.3. Navigation on the Rhine, 221 5.4.4. RID-OTIF,
223
5.5. Other Country Requirements, 223 5.5.1. Australia National
Dangerous Goods Policy, 223 5.5.2. China Transport Packaging of
Dangerous
Goods, 229 References, 232
6 Import Compliance 233
6.1. Change in Strategy at the Border, 233 6.1.1. Overview of
Content, 233 6.1.2. Historical Perspective, 233
6.2. Import Compliance Issues, 235 6.3. Self-Assessments?, 237 6.4.
Import Requirements of Individual Countries and Economic
Unions, 238 6.4.1. United States, 239
CONTENTS ix
6.4.2. Canada, 246 6.4.3. Mexico, 250 6.4.4. European Union, 255
6.4.5. Australia, 261 6.4.6. China, 266 6.4.7. Japan, 268 6.4.8.
Korea, 273 6.4.9. Taiwan, 276 References, 277
7 Export Compliance 279
7.1. Overview, 279 7.2. General Export Control Legislation, 280
7.3. International Agreements for Export Control, 282 7.4. North
America, 282
7.4.1. United States, 282 7.4.2. Canada, 291 7.4.3. Mexico,
294
7.5. European Union, 295 7.6. Pacific Rim, 297
7.6.1. Australia, 297 7.6.2. China, 300 7.6.3. Japan, 301 7.6.4.
Korea, 304 7.6.5. Taiwan, 305
7.7. Corporate Export Compliance Programs, 306 References,
308
PART II MATERIAL COMPLIANCE SYSTEMS 309
8 Impact of Terrorism on the Supply Chain 311
8.1. Introduction, 311 8.2. Effect on Cargo Movements, 312 8.3.
Dangerous Times: Next Attack?, 313 8.4. Countermeasures, 314
8.4.1. Tightening Legal Requirements, 314 8.4.2. Private Sector
Partnerships, 316 8.4.3. Overseas Targeting of Container Freight,
317 8.4.4. U.S./Canadian Border Clearance and Security
Enhancements, 318 8.5. New Reality, 318
References, 320
x CONTENTS
9.1. Overview of Management System, 321 9.1.1. General Management
System Principles, 322 9.1.2. Key Components of a MCS, 324 9.1.3.
Reasonable Care, 328
9.2. Material Compliance Policy, 331 9.3. Planning, 332
9.3.1. Areas of Potential Risk, 332 9.3.2. Legal and Other
Requirements, 334 9.3.3. Objectives and Targets, 335 9.3.4.
Management Programs, 336
9.4. Implementation and Operations, 337 9.4.1. Structure and
Responsibility, 337 9.4.2. Training, Awareness, and Competence, 338
9.4.3. Communications, 340 9.4.4. MCS Documentation, 341 9.4.5.
Document Control, 343 9.4.6. Operational Control, 345 9.4.7.
Emergency Preparedness and Response, 346
9.5. Checking and Corrective Action, 347 9.5.1. Monitoring and
Measurement, 347 9.5.2. Nonconformance and Corrective and
Preventative Action, 348 9.5.3. Records, 349 9.5.4. MCS Audits,
350
9.6. Management Review, 352 References, 353
10 MCS–Information Systems 355
10.1. Introduction, 355 10.1.1. Overall MCS-IS Components, 355
10.1.2. Business Drivers, 358
10.2. Identifying Preferred Approach, 359 10.2.1. Documenting
Business Requirements, 359 10.2.2. Documenting Current/Future
Costs, 360 10.2.3. Maintain Status Quo, Build, or Buy?, 361
10.3. Implementation of Selected Solution, 366 10.3.1.
Implementation Process, 366 10.3.2. Project Team, 370 10.3.3.
Project Management, 372 10.3.4. Uncertainty of Implementation
Costs, 376 10.3.5. Implementation Schedule, 376 10.3.6. Do’s and
Don’ts, 378
CONTENTS xi
Application), 383 10.3.11. Legacy Data Migration, 383 10.3.12.
Interfaces, 385 10.3.13. Testing, 386
10.4. Go Live and Post Implementation, 387 10.4.1. Going Live, 387
10.4.2. Maintenance, 388 Reference, 389
APPENDICES 391
1 Glossary 391 2 Audit/Inspection Checklists 397 3 Material
Management Web Sites 423 4 Import/Export Web Sites 437 5
Occupational Exposure Limits Legislation 441
INDEX 459
xii CONTENTS
PREFACE
This book is primarily directed to assisting those individuals who
are respon- sible for material compliance (MC). The term MC refers
to activities and processes used to ensure an organization is
compliant with legislation related to hazardous (regulated) goods
across all aspects of its business; for example, purchasing,
research and development, testing, manufacturing, selling, docu-
menting and distribution of regulated materials. Currently,
companies spend hundreds of billions of dollars to satisfy these
regulatory requirements. Exam- ples of job functions related to MC
include the following:
• Personnel who generate and distribute regulatory documents, e.g.,
safety data sheets, workplace safety cards, labels.
• Staff or third party contractors who train personnel on hazard
communi- cation requirements and import/export legislation.
• Personnel involved in the purchase, importation, manufacture or
use of hazardous (regulated materials).
• Personnel who take new orders, transport goods
locally/internationally or export hazardous (regulated
materials).
• Research personnel involved in the development of new/modified
for- mulations or products.
The primary purpose of the hazard communication documents is to
prevent injury to workers or consumers, identify potential danger
to the environment and be able to quickly and effectively respond
to an incident, for example, tanker spill along a roadway or
consumption of product by a child.
xiii
The book was designed to assist readers to answer the following
questions relative to their organization:
• What is MC legislation? • What components of global MC
legislation should my business care
about? • How do I keep track of all this legislation? • What are
the components of a good material compliance system (MCS)? • What
is a MCS-information system (IS) and how can I incorporate
one
into our business?
In many cases, a lack of knowledge or poor execution of global MC
requirements has prevented companies from filling international
orders. Most companies now realize that the successful management
of MC activities pro- vides a competitive advantage for companies
doing business globally, espe- cially as North America and Europe
“de-industrialize” and companies move their businesses abroad to
capture lower labor costs. Key components of a suc- cessful MC
management program include a well-defined process, personnel
knowledgeable in both regulatory matters and supply chain issues
and tech- nology for information transfer.
xiv PREFACE
ACKNOWLEDGMENT
This handbook represents the efforts of more than the three
authors.To ensure that the information has been presented properly
and is current, the follow- ing experts reviewed draft versions of
the chapters. All of the these people freely gave of their time and
ideas and authors are indebted to each of them for their
assistance: Leo Appelman, Azko Nobel Coatings; Frank Arcadi, Atrion
International Inc.; Sarah K. Baish Milin; Joe Cella,Atrion
International Inc.; Taco de Jong, Akzo Nobel Coatings; Gil Duhn,
General Motors Corpo- ration; Steve Fogel, Applied Materials;
Pierre Gravel, Canada Customs and Excise, Retired; Jerry Hagan,
Atrion International Inc.; Scott Harter, Atrion International Inc.;
Lea Johnson, Weyerhaeuser Corporation; Ian Jones, BP International
Limited;Aad van Keulen,Atrion International Inc.; Sally Meier, IBM;
Luc Seguin, Kemika XXI Inc.; Jill Thomas, Applied Materials; and
Henk van Peske, Kodak Polychrome Graphics.
xv
1 INTRODUCTION
1.1 OVERVIEW
Whether a company operates facilities across the globe or merely
imports or exports goods to a single jurisdiction, company
personnel and their advisors must be aware and understand
regulatory requirements pertinent to their activities. The term
material compliance (MC) refers to activities and processes used to
ensure an organization is compliant with legislation related to
hazardous (regulated) goods across all aspects of its business, for
example, purchasing, research and development, testing,
manufacturing, selling, documenting, and distribution of regulated
materials. Currently, companies spend hundreds of billions of
dollars to satisfy these regulatory requirements.
In many cases, a lack of knowledge or poor execution of the
requirements has prevented companies from filling international
orders. More and more companies are realizing that the successful
management of MC activities pro- vides them a competitive
advantage. This is becoming more critical as North America and
Europe companies move their businesses abroad to capture lower
labor costs.
Within a company’s supply chain activity there are multiple areas
that need to interact with a proper MC process. These include, as a
minimum, the following:
1
Global Materials Compliance Handbook, Edited by John Phyper,
Philippe Ducas & Peter J. Baish ISBN 0-471-46739-1 Copyright ©
2004 by John Wiley & Sons, Inc.
• Review of suppliers’ Material Safety Data Sheets (MSDS) or Safety
Data Sheets (SDS) to ensure material can be imported and that
documenta- tion addresses pertinent regulatory requirements.
• Approval of vendors for specific chemicals, taking into
consideration import/export legislation (e.g., embargos).
• Create Workplace Safety Cards (WSC), primarily in Europe, and
labels using key information from suppliers’ MSDS/SDS and
country-specific regulatory information.
• Train workers on how to use these chemicals and make the MSDS/SDS
and WSC readily available.
• Use a new chemical within a research and development activity and
identify potential regulated criteria that will be associated with
new or mod- ified finished products (product optimization) that use
this new chemical.
• Create MSDS/SDS and WSC for the newly design product. • Verify
registration and import quantity limitations for targeted
countries. • Verify the inventory listing for each substance (pure
product) that is used
to create the new product. • Verify export information (banned
list, embargo screening, etc.). • Create label (potentially
multilingual) information for product selling and
shipment. • Send MSDS/SDS to client prior to shipment (distribution
by mail, fax,
e-mail) in appropriate language and jurisdiction. • Create driver
instruction cards, in appropriate language, for road ship-
ment (Tremcards). • Print all documentation needed with the
shipment, addressing local
languages and legislation for areas through which the shipment may
pass.
It is important to note that the primary “purpose” of the hazard
communi- cation documents listed above is to prevent injury to
workers or consumers, to identify potential danger to the
environment, and to be able to quickly and effectively respond to
an incident, for example, a tanker spill along a roadway or
accidental consumption of product by a child.
To effectively manage MC on a global scale, the following are
required:
• well-defined process • personnel knowledgeable in both regulator
matters and supply chain
issues • technology for information transfer
Most companies who ship or receive goods internationally have
developed material compliance systems (MCS) that address these
regulatory require-
2 INTRODUCTION
ments. These MCS are typically labor intensive, address mainly the
primary business location (e.g., U.S. or German operations only),
and are not updated in a timely manner as legislation changes. More
and more proactive compa- nies are automating the screening of
orders and generation of regulatory doc- uments while incrementally
expanding regulatory content to address global requirements.
This book provides guidance to companies importing, exporting, or
trans- porting hazardous (dangerous) goods around the world. The
terms hazardous and dangerous are used here in general context;
both can have very specific meanings within particular legislation.
Key issues addressed by the book include:
• proper classification of hazardous goods according to
import/export, health and safety, and transportation
legislation,
• review of prohibition rules related to shipments of hazardous
goods to and from countries and product registration
requirements,
• preparation of proper shipping/transportation documents, labels,
WSC, and MSDS/SDS,
• proper screening of shipments to ensure compliance with
import/export legislation,
• helpful hints on antiterrorism activities to ensure ongoing
security of ship- ments, and
• development of global MCS and MCS information systems.
The book also provides information on the important components of
suc- cessful MCS and MCS information systems. The proposed
components were derived from the International Organization for
Standardization quality (ISO 9000) and environmental (ISO 14000)
series of standards and the U.S. Bureau of Industry and Security
(BIS), formerly the Bureau of Export Administra- tion, Export
Management System (EMS) guidelines. Components, if not prop- erly
addressed, can quickly translate into:
• Development of new products that contain ingredient(s) that may
cause significant risk and, in some cases, are banned from being
imported into some countries.
• Delays and uncertainties in custom clearance that result in parts
short- ages and the requirement to provide excess inventory.
• Return or impoundment of goods as prohibited from
entering/leaving a country due to prohibition on material,
incorrect containers, or documentation.
• Monetary fines, civil and/or criminal prosecution. • Prohibitions
on the import/export of goods by the company.
OVERVIEW 3
• Damage to company reputation as a result of incident or
prosecution. • Audits of shipments and operations by government
agencies.
The presence of a MCS by itself will not relieve an organization of
crimi- nal and administrative liability under law if a violation
occurs.A well-designed MCS, however, should greatly reduce the risk
of noncompliance events and will serve as a mitigating factor
during an investigation should a violation occur. This role of an
effective MCS may be further highlighted as U.S. Customs implements
its “informed compliance strategies” for importers; a strategy that
shifts focus from a transaction-based operation to an account-
based processing.
The evolution of global MC legislation related to business
processes can be “generally” described as follows:
Command and control period—In the early 1980s, companies began
implementing the precursor to MCS to ensure ongoing regulatory
compliance. Their focus shifted from simply executing import/export
and transportation, to managing the quality of the processes and
resulting output.A shift that may have been accelerated by the
United States’ introduction of the Enhanced Proliferation Control
Initiative (EPCI) and a rewrite of Export Administra- tion
Regulations (EAR). These regulations placed emphasis on the end use
and end-users of the exported products. Companies quickly came to
see cor- porate control of compliance processes and output as
critical to meeting regulatory requirements, however, it was still
considered a labor intensive “operational” issue, with a focus on
only key manufacturing sites in the United States or Europe,
depending upon the location of the company’s corporate
headquarters.
Costs/risks aversion period—In the 1990s, most major corporations
mas- tered (or believed they had) basic MC issues related to
government reporting and refocused on cost reduction and risk
aversion—especially when they real- ized how much money it was
costing to ensure ongoing compliance.As a result, MCS moved from
being an “operational” issue to a “tactical,” issue with a
significant amount of MC transactions (document generation,
screening, etc.) being automated or semi-automated. However,
systems were still primarily U.S. or European Union (EU) regulatory
focused, with other jurisdictions being addressed partially, if at
all, using local personnel and storage of data with no central
repository of MC information.
Management period—In the early 2000s, multinational companies began
to reevaluate their MCS as they realized that their
country-specific, independent, unilingual systems did not reinforce
their integrated business process, but rather hindered it and were
expensive to operate. In doing so, they also real- ized that the
“ship button” present on a company’s internal/external Web system
is linked to a series of time-consuming, manual activities that
fre- quently involve complex regulatory matters or the processing
of significant amounts of data.
4 INTRODUCTION
They also realized that a well-designed MCS that includes a central
data repository of MC data, integrated with other key business
systems, can:
• significantly reduce costs • promote dialogue with suppliers on
hazard information and testing
requirements • standardize business processes • ensure trade and
regulatory compliance • minimize business risks of current and
proposed legislation • in the event of government action, show
“reasonable care,” as per
U.S. Customs Informed Compliance Strategy, and potentially mitigate
penalties
Examples of key business information systems include the following:
Laboratory Information Management Systems (LIMS), courier tracking
systems, formulation systems, Enterprise Resource Planning (ERP),
Supply Chain Management (SCM), or Manufacturing Resource Planning
(MRP) software systems, and government reporting/content databases,
for example, specific requirements for interfacing with U.S.,
British, and Canadian Custom systems.
The overall business objective for most companies is to drive costs
out of the supply chain and improve services levels. Key activities
related to MCS that support this objective include:
• Ensuring compliance with global regulatory requirements. •
Reducing the time period for preparation of new documents
especially if
multi lingeral, and provide more accurate data. • Minimizing the
time goods sit in customs, thereby decreasing the need for
excess inventories (especially customs holding areas). • Developing
a single product that can be sold in numerous markets and
complies with legislation in every country rather then regional
products that must be rolled out separately, avoiding costly
product launch delays and, potentially, prohibitions on entering
some markets.
• Potentially allowing chemists to run “what-if” scenarios to find
out what the consequences of adding/eliminating a particular
component are in terms of where it is to be sold.
• Integrate business information systems to minimize manual data
entry.
These all have significant impact on costs, with some companies
reporting decreases of up to 50% of supply chain costs and
significant expansion to new markets.
By assessing MC issues at the “strategic” level, companies can
account for
OVERVIEW 5
compliance strengths and weaknesses when deciding against which
competi- tors, in which markets, using what products (to develop,
introduce, or phase out), or how best to deploy company resources
to maximize market opportu- nities. This new direction allows all
personnel in the enterprise, from the shipping clerk to the CEO, to
have visibility into compliance and hazardous materials issues
impacting their decisions, from checking whether an MSDS is valid,
to choosing to expand sales into a new country. Each person has
access and the tools necessary to draw the right conclusions for
minimizing costs and ensuring compliance at all levels.
It is important to note that automation can reduce cost and ensure
high quality when processing large amounts of data. Significant
cost savings, however, typically only come from the integration of
systems, as it eliminates manual data entry as well as associated
errors.
1.2 TYPES OF LEGISLATION
MC legislation has become significantly more complex over the last
few years. Historically, some companies have believed that the
generation of documen- tation in English, in conformance to U.S.
legislation, is adequate to ship goods anywhere in the world.
However, companies must be aware of and comply with local
legislation (approximately 126 countries have local MSDS require-
ments) and linguistic requirements. This legislation, when
compiled, would fill several large bookshelves. In some areas,
these requirements are significantly different, and potentially
more stringent, than U.S. requirements, for example, the approach
to MSDS used in the EU versus the United States.
Several types of instruments are used by government agencies to
manage or regulate MC legislation:
• acts, statutes, regulations, directives, and standards • permits,
certificates, licenses, and orders • local/municipal ordinances and
by-laws • codes of practice, policies, criteria, objectives, and
guidelines
Legislative bodies pass acts or statutes (laws passed by
legislators). Acts or statutes are typically general in nature in
terms of requirements and have a broader policy perspective.
Regulations or directives are made pursuant to authority set out in
an act or statute and provide specific operational details on the
general powers listed in the act or statute. A bill is a proposed
law that, following passage by the legislative body, becomes an act
or statute. Typically, standards are numerical values stipulated in
a statute regarding allowable levels, for example, emission levels,
occupational exposures, etc.
In the United States, the rule-making process involves the
publication of proposed regulations in the Federal Register,
allowing the public an opportu-
6 INTRODUCTION
nity to comment on the regulation. The final regulation is also
published in the Federal Register and has the effect and force of
law when it becomes effective. Annually, the regulations are
combined into the Code of Federal Regulations (C.F.R.).
It is important to note that there are three key dates for acts,
statutes, regulations, and directives: publication of the
proposed/draft legislation; the date final legislation is published
(often referred to as the promulgation date); and the date the
legislation or key components become effective (also referred to as
the enforcement date). Typically, the more a piece of legislation
will impact the business community, the longer the time period
between the date of promulgation and enforcement date, for example,
significant EU leg- islation typically has a transition period of
18 months. It is important to note that for some regulatory
changes, for example, occupational exposure limits (OEL), the
transition period, if any, may be very short, depending upon the
jurisdiction.
Permits, certificates, or licenses are issued to specific parties
by government agencies.Some acts, statutes, regulations,or
directives require such instruments. Orders are issued to specific
parties by government agencies,usually in response to failure by
the party to comply with an act, statute, regulation, or directive,
or on the strong suspicion that noncompliance has occurred or could
occur.
Codes of practice, policies, criteria, objectives, and guidelines
are used by government agencies to address many MC issues.Although
not legally binding on their own, these types of instruments need
to be reviewed and assessed as part of MC compliance. They can
illustrate an agency’s position toward a par- ticular situation. If
these are incorporated into the terms of a license, permit, or
other approval, or referred to in a regulation or directive, these
types of instruments can be legally binding.
There exist potentially five levels of legislation:
• international (e.g., United Nations) • regional (e.g., EU) •
national (federal) • state or provincial • municipal
For the purpose of MC legislation, and thus this book, the primary
focus is on the first three levels, that is, items of national
concern. Generally provinces/states are not precluded from
enforcing criteria more stringent than those required by federal
laws, and are given considerable leeway to follow enforcement
interpretations that may not be fully consistent with those applied
at the federal level. Thus, the laws and interpretations used to
apply and enforce federal laws may vary considerably from
province/state to province/state and these variations may not be
readily apparent.
Note that under the U.S. Constitution’s commerce clause (Article I,
Section
TYPES OF LEGISLATION 7
8), Congress has the authority to regulate commerce with foreign
nations, among several states, and with Indian tribes. If the
courts find that the state statutes or regulations impermissibly
burden interstate commerce, then they are found to be
unconstitutional and unenforceable.
1.3 GOVERNMENT ENFORCEMENT
Failure to comply with MC legislation may result in the following
government agency responses:
• Delays in clearing of goods by customs personnel • Audit of
shipments and operations • Orders to perform specific activities •
Return or impoundment of goods as prohibited from
entering/leaving
a country due to prohibition on material, incorrect containers, or
documentation
• Prohibitions on the import/export of goods by the company •
Monetary fines (ranging from ticketable offences to several
million
dollars depending upon offence and jurisdiction), criminal
prosecution of employees and executives, and civil prosecution of
the company.
One of the largest fines to date was against Sony Corporation by
the Dutch authorities for importing game consoles containing
cadmium levels above the limit allowed under regulations. Sony
corporation estimated an impact on sales of approximately EUR 110
million and on operating profit of approximately EUR 52 million,
including costs of rework, on a consolidated basis for the fiscal
year ending March 31, 2002 (S&EA EN, 2002).
In many cases, the fine associated with incorrect MC document
(e.g., MSDS or transportation manifest) is relatively minor,
however, the resulting impact from personnel using this
documentation can be catastrophic (e.g., damage from
spillage/fires/explosions resulting from the incorrect storage of
haz- ardous materials or inappropriate response to an emergency
condition result- ing in worker injury/death and damage to
equipment/property).
An example of this type of incident is the explosion at the Motiva
Refin- ery in Delaware City, Delaware, in July 2002.The incident
resulted in the death of an employee, injury to eight other
workers, and the release of a large quantity of acid into the
Delaware River, killing fish and other aquatic life. A spark from
the work crew’s welding tools ignited hydrocarbon vapors from a
415,300-gallon spent sulfuric acid storage tank. Motiva’s MSDS for
spent sul- furic acid did not include important information about
the mixture’s flamma- bility. In addition, Motiva had assigned a
zero for the National Fire Protection Association (NFPA) rating on
the MSDS (US CSHIB, 2002).
A commonly asked question by companies when discussing a
government
8 INTRODUCTION
agency’s response, outside of the United States, is “do they really
enforce the legislation?” The answer is that, unfortunately for
workers and the public, the response depends upon the jurisdiction.
In almost all developed countries, any event that triggers injury
to workers or the public, loss of life, or sig- nificant damage to
the environment will result in significant penalties and government
intervention. In nondeveloped countries, the response can vary
significantly.
In the United States, enforcement has been relatively steady for MC
legis- lation, and, if anything, is increasing related to
import/export of hazardous goods because of the threat of
terrorism. Many developing nations are also taking a much more
stringent look at what hazardous goods are being
imported/exported.
The EU is starting to increase enforcement activities via the
European Clas- sification and Labelling Inspections of Preparations
(ECLIPS), including SDS. The objective of the ECLIPS project is
first to assure a harmonized European enforcement of the Directive
99/45/EEC (legislation related to SDS) and sec- ondly to show the
necessity of appropriate classification and labelling as well as
complete and correct SDS of dangerous preparations, also focusing
on chemicals classified as carcinogenic, mutagenic, and/or toxic
for reproduction.
Main goals of this project include the following:
• exchange of information and experience between the member states
to avoid differences in the way the directive is enforced in the
different member states and as a consequence to avoid different
competitiveness of the relevant enterprises
• finding enforcement strategies for each country that are suited
for its national situations
• reduction of risks to workers, public and environment requires
high quality of safety data sheets and an appropriate
classification and label- ing of preparations containing dangerous
substances
• equal market conditions • correct labeling of dangerous
preparations as a tool to attract attention
of the users (workers and public in large) in order to interfere in
the buying decision
Agreement on ECLIPS was reached in the following countries:
Austria, Belgium, Denmark, France, Finland, Greece, Germany,
Ireland, The Nether- lands, Norway, Spain, and Sweden. The Czech
Republic and Slovakia are interested in the project as observer. A
working group, consisting of Austria, Germany, Spain, and Sweden,
has adapted the ECLIPS project proposal.
The project is currently in the operational phase, whereby the
national authorities are selecting companies and inspections of the
companies will be carried out. Inspections will include:
GOVERNMENT ENFORCEMENT 9
• checking whether preparations are classified and labeled
correctly, • checking safety data sheets, and • support and
information for the companies.
To review what happens to companies that do not comply with U.S.
regu- latory requirements, please review the U.S. government BIS
Web site under “Press Release” or compliance and enforcement
section of the U.S. EPA web site.
1.4 CONTENT
This text provides easy to understand guidance on MC to
shipping/receiving personnel, safety inspectors, MSDS/label
authors, and transportation and logistics managers. It also
provides senior management insight into the com- plexities of
shipping goods globally and a quick guide to the basic components
of well-run MCS and MCS-IS. The book was designed to assist readers
answer the following questions relative to their
organization:
• What is MC legislation? • What components of global MC
legislation should my business care
about? • How do I keep track of all this legislation? • What are
the components of a good MCS? • What is an MCS-IS and how can I
incorporate one into our business?
This book is divided into two parts: Part 1 is an overview of
global MC leg- islation and requirements imposed on organization
that import, export, and/or transport hazardous (dangerous) goods
and Part 2 covers Material Compli- ance Systems. In this part of
the book, MC, MCS—Information Systems, and antiterrorism activities
are discussed. The latter is provided to assist compa- nies respond
to a new business risk that can have a profound impact on the
movement of hazardous goods.
If a chapter deals with regulatory requirements, we have subdivided
the section into the following geographic regions: North America,
Europe, and Pacific Rim. North America addresses legislation
pertinent to the United States, Canada, and Mexico. In the EU
sections, legislation pertinent to the current 15 EU member states
is addressed: Austria, Belgium, Denmark, France, Finland, Germany,
Greece, Ireland, Italy, Luxembourg, The Nether- lands, Portugal,
Spain, Sweden, and the United Kingdom. Where information was
available, we also tried to address countries that have a high
probability of being accepted as EU member states in 2003: Cyprus,
the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta,
Poland, Slovakia, and Slovenia. In the Pacific Rim sections the
five largest trading partners with the United States were selected:
Japan, China, Taiwan, Korea, and Australia.
10 INTRODUCTION
The following are brief descriptions of each section of the book
and how they assist readers in addressing key business
requirements:
Part I—Regulatory Requirements Chapter 2 covers chemical
registration, notification, and listing as derived
from product registration and national inventory legislation. This
type of legislation can prohibit a material from being allowed into
a country, limit its use (e.g., research and development), or
require a company to provide a significant amount of documentation
as part of a very timely registration process.
Chapter 3 addresses the regulatory requirements related to
generation and distribution of MSDS, the second most generated
document in many organizations. Efforts are underway to harmonize
the requirements around the world, however, individual countries
continue to put forward their unique requirements that in several
instances result in a conflict between jurisdictions.The concept of
a single system is still seen by many as an elusive dream.
In Chapter 4, legislation pertinent to product label requirements
is pre- sented. The chapter deals primarily with precautionary
labels for prod- ucts and shipments and presents the key
requirements in an easy to understand format that promotes
comparison jurisdiction.
Chapter 5 presents requirements related to transportation of haz-
ardous goods. These include the classification and preparation of
ship- ping documents for all modes of transportation: air, water,
rail and roadway.
Chapter 6 provides an overview of global import compliance. Key
compo- nents include classification, prohibitions, custom
notification and foreign trade zone execution.
Chapter 7 presents information on export compliance in a manner
similar to Chapter 2. The key components include classification,
prohibitions (e.g., restricted parties and embargoes), and customs
notification.
Part II—Material Compliance Systems Chapter 8 covers the impact of
terrorism on the supply chain. Topics
addressed include effect on cargo movements, planning for the next
attack, and countermeasures.
Chapter 9 presents the basic components of material compliance
systems along with the proposed links to well-defined business
systems, that is, the International Organization for
Standardization (ISO) publications on quality and environment
management systems and the U.S. BIS Export Management Systems (EMS)
guidelines.
Chapter 10 discusses key issues associated with MCS–Information
Systems: business drivers for implementing a MCS-IS, overall
components of MCS, needs analysis/financial feasibility studies,
preimplementation, implementation activities, and ongoing system
maintenance.
CONTENT 11
There are appendixes, that list the following: a glossary of terms:
govern- ment audit/inspection checklists; material compliance Web
sites; import and export Web sites; and legislation on occupational
exposure limits.
REFERENCES
U.S. Chemical Safety & Hazard Investigation Board (US CSHIB),
2002. “Investigation Report Refinery Incident (1 killed, 8 injured,
offsite environmental impact).” Report No. 2001-05-I-DE.
September.
Social & Environmental Activities Environmental News (S&EA
EN), 2002. “Sony Europe Press Statement on Temporary Halt of
Shipments of Some Sony Models in Europe.”
12 INTRODUCTION
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