Within the next two years, the European Union is expected to implement a massive new chemical regulation system that will affect companies around the world. U.S. chemical makers are especially concerned about the impacts of this law because the 25 countries of the EU are a key export market for them. The Bush Administration has worked diligently to carry the industry's concerns to EU officials.
To facilitate understanding on this and other chemical issues, key government, industry, and environmental group representatives met April 26–28 at the U.S.-EU Transatlantic Environment Conference on Chemicals, held in Charlottesville, Va. The meeting was the second such trans-Atlantic gathering on chemical issues--the first was held in 1999 in Italy.
Although attendees of the conference discussed chemical issues such as using genomics information and an international system for classifying and labeling hazardous substances, a major focus was on an EU proposal called Registration, Evaluation & Authorization of Chemicals (REACH).
Under REACH, chemical manufacturers and importers must provide EU officials with two sets of information to register any substance produced in quantities of 1 metric ton or more per year. One set includes data on basic physical and toxicity characteristics of the chemical. Companies may have to do tests on the compound if they do not already have the data. The second set is data on use of the compound by downstream customers, such as formulators of household products. Chemical manufacturers must provide information about safe handling of their products to the downstream users.
Finally, the European Commission (EC), the administrative arm of the EU, will authorize restricted uses for certain substances: those that are carcinogenic, mutagenic, or toxic to reproduction; chemicals that are persistent, bioaccumulative, and toxic; or compounds classified as very persistent and very bioaccumulative.
AT THE CONFERENCE, Margot Wallström, European commissioner for the environment, defended the impending EU legislation. The biggest misunderstanding about REACH is how much it will cost, she said. According to Wallström, who has spearheaded the REACH effort in the EU, costs for compliance with the program are estimated to be between $3.3 billion and $6.1 billion over 11 years. The wide range of estimates is due to uncertainty about the number of substances that companies may withdraw from the EU market because of REACH.
The benefits of the plan, estimated with the help of the World Health Organization, are expected to be about $59 billion over 30 years, Wallström said. This is based on the assumption that REACH would reduce illnesses related to chemical exposure.
"I have no interest in making a too costly system," Wallström told the conference. REACH "is not overly burdensome, and it's not impossible."
She criticized some in the chemical industry who argue that REACH will cost far more to implement as "exaggerating the figures to such an extent that nobody will believe them."
The Bush Administration has lobbied heavily on behalf of the U.S. chemical industry, pushing the EU to modify REACH. A recent congressional report revealed that the Administration has relied on an American Chemistry Council (ACC) analysis of REACH, and that officials across the U.S. government, including Secretary of State Colin L. Powell, have been part of the lobbying effort (C&EN, April 12, page 7).
Daryl W. Ditz, senior program officer in the World Wildlife Fund's (WWF) Global Toxics Program in Washington, D.C., criticized the Bush Administration's contention that the pending EU legislation would cause economic harm. This argument, Ditz said, "is based on an analysis I've never seen."
Michael Warhurst, head of EU toxics policy at WWF's European policy office in Brussels, charged that the chemical industry's analysis of REACH's costs assumes that no company already has any data on the chemicals it makes. Finding out how much toxicity data the industry already has in its files now is difficult, he added.
Suzan B. Hazen, Environmental Protection Agency principal deputy administrator for prevention, pesticides, and toxic substances, said, "Cost estimates range all over the place" for REACH because of the magnitude of the policy proposal and uncertainties about it. As the plan gets refined, "the numbers will change," Hazen said.
U.S. chemical industry officials defended their estimates of the economic impacts of REACH. Michael P. Walls, senior assistant general counsel for ACC, called industry estimates that the EU proposal would cost $8 billion to implement "entirely reasonable." This figure mounts into the trillions of dollars when REACH's impacts on imported products and other indirect effects are considered, he said.
James Cooper, manager of government relations at the Synthetic Organic Chemical Manufacturers Association (SOCMA), said the industry analysis was well-thought-out. "We do our economic and science homework," Cooper said.
But Irving (Pep) Fuller, a consultant who worked in EPA's chemicals program for decades before he retired recently, said costs of environmental policies, including regulation of chemicals, "are almost always overestimated" before their implementation.
"There has been too much scaremongering" about REACH, Wallström said. "This will not cause the death of the European chemicals industry. We've not done it in a conspiracy to kill off competitors or destroy trade or what have you."
Far more influential than the U.S. lobbying effort, Wallström said, have been detailed suggestions from the European chemical industry, especially German companies, on ways to improve REACH.
"They know this issue, and they know the proposal," she said. The European Parliament must agree on REACH--and may modify the proposal--before the new regulatory scheme becomes law. But Wallström told conference attendees that they should not expect the plan to die off.
"REACH will happen, believe me," Wallström stressed.
Some European officials at the meeting pointed out that REACH will not merely impose costs on the chemical industry. The new system will bring benefits to chemical manufacturers too, said Robert H. Donkers, environment counselor at the EU office in Washington, D.C. He added that the Bush Administration has emphasized the costs of REACH and has not acknowledged these benefits.
Nicholas Burge, who heads work on REACH in the EC's Directorate-General for Enterprise, said benefits estimated at $59 billion over 30 years would accrue based on the assumption that REACH would save 4,500 lives per year by reducing diseases related to exposure to chemicals. In addition, the EU will accumulate a "treasure" of data on chemicals in the next 10 to 15 years as REACH is implemented, said Uwe Lahl of the German Ministry for the Environment. This information will help in managing risks from chemicals, lead to better computer models based on structure-activity relationships to predict the properties of new compounds, and contribute to the design of new chemicals, he said.
U.S. REGULATORS could benefit from the chemical information that will be made public through REACH, said Joseph H. Guth, senior policy analyst with the Center for Environmental Health in Oakland, Calif. He urged EPA officials to explore how they might be able to use these data to support U.S. regulations.
The U.S. public and industry will also reap benefits from REACH, according to WWF's Ditz. Goods produced by EU companies that are exported to the U.S. will be safer and will be better for public health, he said. Also, U.S. exporters will benefit because they will only have to comply with a single regulation when shipping chemicals to the 25 EU nations, rather than 25 individual systems, Ditz added.
In view of these perceived benefits, some participants at the conference said that the U.S. chemical regulation system needs reform similar to REACH. Joel A. Tickner, research assistant professor at the University of Massachusetts, Lowell, told the conference that REACH is designed to address limitations of the current EU regulatory system for managing chemicals. Those limitations are "strikingly similar" to those of the U.S. chemical control system, he said.
Such limitations include a lack of toxicity information on most chemicals in commerce, Tickner said. This is because companies did not have to provide regulators with toxicity data on chemicals that were already in production when the current EU and U.S. regulatory systems were put in place.
To address this data gap, the proposed REACH legislation calls for basic information on chemicals manufactured in volumes of at least 1 metric ton per year as part of registration. This is expected to affect about 30,000 substances. In contrast, the U.S. chemical control law--the Toxic Substances Control Act (TSCA)--never included broad data collection requirements on existing chemicals, Fuller noted.
"We didn't realize how detrimental that was" when TSCA was enacted in 1976, Fuller said. By not having deadlines in that law for manufacturers to provide the government with basic toxicity data on existing chemicals, "we lost the opportunity to get information in a timely manner," he said.
But the U.S. has taken some steps to fill these gaps. EPA, in cooperation with industry and Environmental Defense, launched a voluntary initiative in 1997 to collect basic data on more than 2,200 high-production-volume (HPV) chemicals. These are substances produced in quantities of 1 million lb per year or more. This effort is called the HPV Challenge Program.
Charles M. Auer, director of EPA's Office of Pollution Prevention & Toxics, said the HPV Challenge Program data and a new reporting regulation that chemical manufacturers will have to comply with in 2006 will supply the U.S. agency with "roughly the same information" as the EU will collect under registration provisions of REACH. The EPA regulation Auer referred to will require companies to provide information on worker exposure and on uses for many of the higher volume chemicals they produce. However, EPA would also like to obtain basic toxicity and exposure data on chemicals made in volumes of less than 1 million lb per year, Auer said, and it remains unclear how the agency could do so.
Warhurst of WWF-Europe said U.S. policymakers must begin discussing the failures of TSCA on basic data for the tens of thousands of chemicals whose manufacturing began before that law was enacted. "Otherwise, the U.S. will be left behind" in competing effectively with European chemical makers, he said.
ANOTHER SIMILARITY between the current EU chemicals policy, which was enacted in 1981, and TSCA, Tickner said, is that both involve a slow and resource-intensive chemical-by-chemical risk assessment process that places the burden on the government to prove that substances need to be controlled. And both systems lack incentives for replacing "problem chemicals" with safer ones, he said.
Michael P. Wilson, a research industrial hygienist at the University of California, Berkeley, said REACH could be a model for the U.S. as a way to prioritize chemical risks for further government action rather than regulating chemicals one by one, as it currently does. He noted that, in the absence of federal action, state legislatures sometimes establish their own controls on substances. For instance, lawmakers in California, Maine, and Hawaii this year banned certain brominated flame retardants, and legislatures in other states are considering similar legislation. A more systematic approach, similar to REACH, could surpass this "chemical of the day" approach to controlling substances deemed to pose unacceptable risks, Wilson said.
Meanwhile, Tickner suggested that EPA apply some of the tools it has developed for new chemicals to existing substances. One such tool, which EPA developed with the U.S. chemical industry, is a Web-based application that screens new chemicals for environmental persistence, bioaccumulation, and toxicity (C&EN, Oct. 7, 2002, page 9).
Discussion at the conference also touched on some of the challenges that REACH will pose to industry. Specialty chemical producers, which are often small or medium-sized enterprises, will be at a disadvantage compared with commodity chemical makers under REACH, said Cooper of SOCMA. The legislation will require chemical manufacturers to supply toxicity data on their products. Several commodity producers may share the burden for supplying data for a single substance they produce in bulk, while specialty chemical companies often are the only manufacturer or importer of their products, he explained. This makes toxicity testing especially costly for the small firms.
Attendees of the conference were also reminded that this concern goes beyond the EU and U.S. Wolf-Rüdiger Bias, head of BASF's corporate regulatory affairs and product safety, said small and medium-sized chemical firms and companies from the developing world that export chemicals to the EU are going to need assistance in complying with REACH.
Germany's Lahl said much of the data that REACH would require "should already be available in the files of the chemical industry because without such data, there can be no Responsible Care in handling substances." He referred to a voluntary program by the chemical industry to improve environmental, health, and safety performance beyond levels required by government regulations. Chemical firms currently need data that REACH will require to label, transport, and safely store their products, he said.
Despite the concerns and discussions, REACH is not yet a done deal. Proposed as a white paper in 2001, the plan was modified by the EC in 2003 and forwarded to the European Parliament. The EU legislature can modify the plan further before approving it. Action on the draft legislation is not expected until after parliamentary elections this summer.
Wallström and other EU officials told the conference they are planning for implementation of REACH in early 2006. And they warned industry to be ready for the new regulatory scheme.
"There is no way back," Wallström said.