Chemical regulations for US companies are changing rapidly these days, as the bill that will reform the Toxic Substances Control Act moves closer to the president’s desk and as states implement — or modify — their own chemical laws, such as California’s Proposition 65.
Another chemical rule that may not be in a company’s direct line of site is the European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH). Although it’s EU legislation, it’s worth paying attention to for companies in the US as its reach extends beyond far Europe.
First introduced in 2007, REACH affects a wide range of producers, importers, exporters and downstream users of chemicals in industries from automotive to textiles manufacturing. If the European Chemicals Agency deems a chemical to be unsafe to human health or the environment, it places it on the REACH restricted substances list. There are 59 categories of restricted substances in REACH Annex XVII, involving more than 1,000 substances.
Although REACH applies only to products sold in the EU, US and other global businesses are affected, because REACH compliance throughout the supply chain is required to do business in Europe.
“Since REACH has the potential to affect all chemicals and chemical products produced or imported into the EU, any company that wants a chemical on the market in the EU should pay close attention to REACH chemical rules and regulations,” says Greg Skelton, senior director, international, regulatory and technical affairs at the American Chemistry Council. “Regardless of where a company is based — US or otherwise — companies are required to comply with applicable REACH requirements in order to export to the EU.
The legislation aims to protect human health and the environment by replacing hazardous chemicals with safer new ones — but it comes at considerable cost. The European Commission estimated that it would cost the chemicals industry 5.2 billion euros ($5.9 billion) over 11 years. The European Electrical Insulation Manufacturers say other estimates place the figure as high as 12.8 billion ($14.6 billion).
Under REACH, all chemicals produced and imported in the EU must undergo comprehensive testing and be registered with the European Chemicals Agency. This process can take several years and requires all businesses registering the same substance to share data to limit animal testing and compensate each other financially.
During the first registration phase in 2010 for chemicals produced or imported in quantities above 1,000 metric tons per year, 3,400 substances were registered.
Under the upcoming REACH 2018 deadline, substances that are manufactured in the EU or imported from outside the EU in quantities of between 1 and 100 metric tons per year must be registered. Under this final REACH deadline, the European Electrical Insulation Manufacturers expects applications will be made for 25,000 substances.
“Since its implementation, European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals has proven to be overly bureaucratic and costly for both government and industry,” Skelton says. “As highlighted in the 2012 Centre for Strategy & Evaluation Report, most chemical manufactures continue to struggle with the resource, both financial and personnel, drain of the REACH requirements.”
Because complying with REACH has required a large proportion of company resources, the report describes the impact on companies’ resources for innovation thus:
Firms’ business strategies may have to change as a result of the impact of REACH. This could involve rationalization of production for manufacturers and downstream users and the possible withdrawal, or restrictions placed on production or use, or chemical substances, for downstream users.
Skelton says lessons learned from REACH have informed the ongoing efforts to reform the primary US chemical management system: the Toxic Substances Control Act. “A reformed TSCA that it is risk-based, less bureaucratic and more efficient than REACH could serve as a gold standard for other countries developing their chemical management systems, leading to continued innovation in the industry.”
Any “forward-thinking company,” from electronics manufacturers to building materials producers, should pay attention to REACH because it has made Europe the de facto chemical standard, says Dr. Mark Rossi, executive director of Clean Production Action, which works with companies and governments to promote safer chemicals and products.
“If you are thinking about selling globally, you have to comply with REACH,” Rossi explain. “Even if you think my market is just here in the US, if you are forward thinking at all you want to watch what is happening in Europe. It certainty could happen here because of TCSA and because of what is happening at the state level.”
Plus, it costs less to make a substitution to a product ingredient on your own time as opposed to switching a formulation to meet a compliance deadline or new chemical regulation: “it is much more expensive under crisis conditions to comply with regulations,” Rossi says.
Using safer chemicals and products also gives companies a competitive advantage, Rossi says. “In any sector companies are benchmarking themselves against other companies in that same sector,” he says. “If you see your competitor is already making those moves, you want to follow that.”
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