Issue Date: August 13, 2007
New Regulatory Era In Europe Begins
BY THE BEGINNING of June, the shouting that had surrounded the rollout of the European Union's REACH chemicals regulatory program was all over. That's when the agency that will administer it—the European Chemicals Agency (ECHA)—opened its doors in Helsinki, Finland.
REACH, which stands for Registration, Evaluation & Authorization of Chemicals, will standardize chemicals regulation throughout the 27-member EU. An estimated 30,000 chemicals and compounds will be affected, at an expected total cost of about $3 billion to the European chemical industry over the next 11 years.
Geert Dancet, ECHA's acting executive director, on temporary assignment from the European Commission in Brussels, acknowledges the challenges in setting up what will be one of the most powerful agencies in Europe. He points out that ECHA "is one of the few agencies in the EU with the power to make binding decisions."
ECHA is hiring, Dancet says. From about 20 people today, the staff is expected to reach 100 at the end of the year and to double that level next year. By the time the agency's work is in full swing, he adds, some 450 staffers are expected to be employed at its headquarters in central Helsinki.
The agency's budget for its launch year is $20 million. That will increase, Dancet says, over the next 15 years to a working maximum of about $100 million annually. ECHA will be funded mostly by fees paid by industry, with a small balance covered by the EU.
REACH supercedes old legislation, some of which goes back more than 40 years, notes Jukka Malm, director of expert services at the Finnish Environment Institute and the chairman of ECHA. In the intervening decades, a growing patchwork of regulations in member countries and the EU have become a burden on the chemical industry. Additionally, many chemicals on the market have little safety data available, and the burden of proof of chemical safety and toxicity has been on government authorities. The industry thus has had little incentive for innovation and development of safer, less hazardous chemicals, Malm says.
THE REACH LEGISLATION that was finally adopted in December 2006 by the European Parliament and the Council of Ministers gave ECHA the job of ensuring compliance with the regime all along the chemical manufacturing chain, from production or importation to finished consumer products.
ECHA will cover three basic sets of chemicals. The first set consists of chemicals introduced prior to 1981, when toxicity testing was updated and strengthened. With a few exceptions, industry will need to generate a full set of tests and data for these "existing" chemicals.
The second set, "new" chemicals, includes those introduced since 1981. They already have full data packages, ECHA figures, so the agency doesn't have to worry about adding to that information.
The third set consists of new introductions, which need full testing before they can be marketed and will be registered as they are introduced.
The first order of business for ECHA, Dancet says, is preregistration. In 2008, between June 1 and Dec. 1, manufacturers must declare, in online submissions, what chemicals they intend to register. Sharing data from animal testing studies, Malm adds, is mandatory, to minimize such testing.
Registration will involve submitting a technical dossier containing information on the substance and guidance on how to safely handle and use it. This step kicks off in December 2008 for chemicals produced in volumes of more than 1,000 metric tons per year. Industry estimates peg the European-wide number of chemicals in this category at about 2,600.
By 2010, manufacturers of chemicals made in volumes of 100 to 1,000 metric tons per year will have to start submitting dossiers on their products, an estimated 2,900 in total. And at the beginning of 2013, chemicals of 1- to 100-metric-ton-per-year production volume—probably about 25,000—will be registered. The job of registering all existing chemicals will be wrapped up by the end of 2018, ECHA predicts.
During this time, the agency will be evaluating the dossiers to see if further testing is needed and if the data provided by industry are satisfactory.
Substances that are of very high concern must be authorized for use. This category includes carcinogens and mutagens as well as substances that are persistent, bioaccumulative, or toxic. Manufacturers supporting the production and use of such chemicals must show that the risks they pose are adequately controlled or that the socioeconomic benefits from their use outweigh the risks. The aim is to spur industry to substitute safer alternatives when technically and economically feasible.
Having spent so many years taking part in the REACH-shaping debate, through both their own lobbying and the Brussels-based European Chemical Industry Council, larger chemical companies are well-prepared for the new regime.
Degussa, for example, is "actively preparing for preregistration as a first step" to meeting REACH regulations, says Jochen Rudolph, the company's head of chemical environment, safety, health, and quality.
Ernst Schwanhold, head of the BASF Competence Center for the Environment, Safety & Energy, says his company, the world's largest chemical producer, will register about 2,500 chemical entities under REACH. He expects annual costs of more than $65 million until completion of its registration work in 2018.
Kemira established its REACH Competence Center early last year at its research facility in the Helsinki suburb of Espoo. REACH center Manager Liisa Rapeli-Likitalo observes that compliance permeates her company. "We have maybe 250 substances," she points out. "Every substance needs to be registered; it is quite likely people will preregister everything."
One facet of registration that can cause costs to mount, Rapeli-Likitalo notes, is that a chemical must be registered by a legal entity—a subsidiary or branch office, for example. A company with operations in different countries usually has a legal entity in each country. So under REACH, she says, if a company has a dozen legal entities making a particular chemical, each one must register it.
Vesa Mäkinen, group vice president for health, safety, environment, and quality at the Finnish adhesives maker Dynea, observes that companies typically will be affected by REACH on three fronts.
"We are importers," he says. "We import some raw materials directly into the EU, for example, methanol, monomers, and additives. We are manufacturers, making substances, polymers, preparations, and intermediates. And we are downstream users of substances in chemical processes, for example, and consumers of different chemicals such as lubricants and cleaning agents." For Dynea, total compliance costs will amount to about $4 million, Mäkinen says.
The fact that REACH will affect chemical imports concerns companies around the world, not just those within the EU.
This was obvious in the attendance list at a recent workshop in Bonn sponsored by the German Federal Industrial Health & Safety Agency and the Department of the Environment. Among the more than 200 delegates were representatives from the Embassies of Chile and Thailand, the Malaysian Palm Oil Board, U.S. companies, the Japan Chemical Industry Association, and the China Industrial Development Foundation.
Already, observers at ECHA's Helsinki headquarters say, there are indications that a group of Chinese chemical manufacturers intend to establish a permanent delegation office in the city to maintain close contact with ECHA about REACH implementation.
MEANWHILE, the Environmental Technologies Center of Industrial Collaboration at England's University of Hull and the Japan Environmental Management Association for Industry have formed a REACH agreement. JEMAI will translate training materials developed for ETCIC's postgraduate certificate in REACH management and have exclusive rights to deliver them in Japan.
And Finland's national REACH help desk—every EU country has one—is issuing publications in various languages, points out Hannu Vornamo, director general of the Chemical Industry Federation of Finland. Publications in Russian, he says, "are important for us, because the Russians export a lot to the EU, especially through Finland. They are building their own REACH program, and we have given them a lot of advice."
The impact of REACH is global, agree Raymond S. Calamaro and Jacqueline Mailly, senior advisers at the international law firm Hogan & Hartson. The two have been involved with REACH on both sides of the Atlantic.
As Mailly sees it, the EU "stepped into a vacuum created by a global demand for updated chemical safety rules." The work, she says, was completed in the face of significant opposition from industry groups representing both EU and non-EU companies. "Foreign governments, notably the U.S., also opposed major provisions of REACH," Calamaro adds.
REACH will be a particular challenge for chemical users, predicts Walaiti Rathore of the U.K. law firm Berryman, since the regulations require downstream users to share information with their suppliers. "Downstream users have been brought into the legislative system governing chemicals for the first time," Rathore says. Their total bill may hit $4 billion, "depending on the amount of costs to be passed on by the chemical suppliers."
"Will REACH become the global standard?" muses Dancet. As a good bureaucrat, he answers only, "We hope that what we do will be useful to others." Dancet points out that what REACH is aiming for, in terms of chemicals safety, is a common goal throughout the developed world.
As Hogan & Hartson's Mailly sees it, REACH "is significant and far-reaching and affects manufacturers and suppliers within, as well as outside, the European Union. REACH cannot be ignored."
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