Greenwire  [Printer-friendly version]
October 13, 2006


[Rachel's introduction: The chemical industry continues to oppose
REACH, Europe's proposed new precautionary chemicals policy -- but
the handwriting is on the wall. REACH is coming, in one form or

By Russell J. Dinnage

A landmark European Commission plan for overhauling chemical
regulations is on its way to becoming law.

Five years in the making, REACH -- the Registration, Evaluation,
Authorization and Restriction of Chemicals Act -- is a 600-page tome
that has been making the rounds in government offices and corporate
headquarters throughout Europe, generating thousands of public
comments for European Union officials to review. The proposal is on
track to become law sometime next year.

Some experts are questioning U.S. readiness for a such a sweeping
proposal that figures to reshape the global regulatory landscape for
chemical manufacturers and all businesses that use chemicals.

"Businesses in the United States are completely not focused on this
topic," said Angela Logomasini, who tracks risk and environmental
policy for the Washington-based Competitive Enterprise Institute. "The
reality of REACH is that it will affect everything in the business.
From downstream manufacturers, importers, domestic users -- people are
not aware that it could become a globally focused phenomenon."

But it is not easy to assess REACH's effect on U.S. interests. There
is, first of all, a lack of consensus about how deeply the law would
dig into industry's bottom line.

The Bush administration, for example, considers REACH "a very
important issue," but it has yet to produce an official evaluation of
its potential economic impact on the U.S. chemical industry, said Matt
Braud, spokesman for the Department of Commerce's International Trade

Nonetheless, the administration has a strong opinion on REACH. "In our
view, and as expressed by many other governments, the E.U.'s proposal
remains overly expansive, burdensome and would be difficult to
implement effectively," Braud said. "We believe the E.U.'s stated
objectives of protecting human health and the environment are worthy
policy goals; however, achieving those goals must be applied in ways
that are consistent with the E.U.'s obligations to its trading
partners under the World Trade Organization."

Small and mid-sized U.S. chemical companies are keenly aware of REACH
"and are actively preparing for its impacts," said Jim Cooper, a
spokesman for the Synthetic Organic Chemical Manufacturers

The American Chemistry Council, which represents large companies, did
not return calls for comment on REACH's potential financial effect,
and DuPont Chemical Corp. spokesman Dan Turner said the company is
examining REACH but it does not have any comprehensive financial
impact estimates yet. A price tag in the billions

REACH would require the registration of more than 30,000 chemical
substances used in manufacturing within 11 years for the stated
purpose of protecting human and environmental health. The proposal
resembles the Federal Insecticide, Fungicide and Rodenticide Act,
which regulates pesticides in the United States.

A November 2005 Government Accountability Office report said REACH
would "eliminate the distinction between new and existing chemicals
and require chemical companies to submit certain basic information on
chemical products produced over certain volumes."

Specifically, REACH affects all chemicals manufactured in or imported
into the European Union in quantities of 1,000 kilograms (2,204.6
pounds) or more.

REACH's Article 23 requires all chemical companies doing business in
Europe to submit testing data to the new European Chemicals Agency. If
a substance has qualities deemed "carcinogenic, mutagenic or toxic,"
further testing must be conducted at a company's expensive on animals
and results submitted to the agency for a safety review.

Of 30,000 substances expected to come under regulation in 2010, 1,500
are estimated to have carcinogenic qualities, the European Union says.

No one can say with certainty how much it will cost to register a
substance. But the E.U.'s 2003 "Extended Impact Assessment" estimates
it would cost about $250,000 per chemical -- or $15 billion for the
industry as a whole over the 11 to 15 years it is expected to take to
fully implement the regulation.

Another study -- "E.U. 2004 REACH: the Impact of REACH" -- puts the
total industry testing cost at $3 billion and estimates that it will
cost between $10,000 to $37,000 to register a single substance,
depending on the size of the registration and whether animal testing
is needed.

And then there is a study by the German chemical industry association,
BDI, predicting REACH will cause a 1.4 percent loss of production for
German manufacturers and the loss of 150,000 to 2.3 million jobs.

Cooper, of the chemical manufacturers group, predicts testing will
quickly become an expensive burden. "Most of the official estimates
from the European Commission... do not seem to take into account
administrative costs, analytical method development, consulting fees,
interpretation of test results and other potential burdens," he said.
Cooper's group puts the cost of screening level tests for a single
chemical at about $250,000."For some chemicals, it will be in the
millions of dollars," Cooper said. "As with certain pesticides,
companies will probably choose to leave those markets rather than pay
for the testing."

Deadline looms

Most U.S. companies preparing for REACH implementation are pointing to
the 2008 deadline for pre-registering chemicals. A chemical that is
not pre-registered cannot be sold in the European Union.

Rob Donkers, the environment counselor to the European Commission's
U.S. delegation, said a manufacturer can pre-register by sending an e-
mail or even a postcard to the European Chemicals Agency that includes
the name of the company and the substances they want to register.

"It's just to signal an intention to be involved in the program and
does not stop production or importation," Donkers said. He dismissed
the 2004 E.U. study that says industry pre-registration costs would
range from $62 million to $125 million.

But Cooper and Logomasini see the pre-registration being a lot more
complicated than Donkers maintains.

"It is unlikely that the E.U. will have the resources or
infrastructure in place to handle all of the pre-registrations, let
alone sorting through them all and determining which companies should
be playing in which sandboxes," Cooper said.

Said Logomasini: "The fact that the E.U. officials are saying all pre-
registration will require is for a company to send in a postcard shows
that they have no idea what they are doing."

'A driver for innovation'

REACH is currently being read, debated and amended in the European
Parliament's Environment Committee. From there, it will likely go to a
plenary session of the full parliament the week of Nov. 13, Donkers
said (Greenwire, Oct. 10).

After a full parliament vote, he said, the measure will go to the
Council of Minister for a second reading in early December, when the
ministers will decide on new amendments. If there is contention over
the amendments, the proposal will go to a conference committee next
March for a vote on proposed changes.

"So by the summer of 2007... we will see full passage," Donkers said.
It would still take "another few years" until various administrative
agencies and the act "can be implemented effectively on a day-to-day

Donkers predicted that REACH would "serve as a driver for
manufacturing and process innovation" and assure consumers that
products are safe.

"REACH will benefit companies that are more responsive and have a no-
questions-needed attitude about the safety of their products," Donkers
said. "Industries that are responsible will have a competitive edge
under REACH."

But Logomasini said REACH will present a global regulatory morass for

"Quite frankly they have no idea what they are doing in Europe,"
Logomasini said. "There's no enforcement plan for this act. The E.U.
is simply saying 'trust us,' but even they don't know what it's going
to cost. It just doesn't seem rational, and I don't think we should
trust the bureaucracy when they say the impact will be minimal."