EU law has Delaware Companies Watching- my paper

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December 26, 2006

Section: NEWS

Edition: Final

Page: A1, A7

EU law has Del. companies watching

LULADEY B. TADESSE

Staff

By LULADEY B. TADESSE

The News Journal

Aggressive new legislation by the European Union aimed at protecting

human health and the environment is expected to create significant

financial and bureaucratic burdens on Delaware's $1.9 billion

chemical industry.

The EU law, called REACH, or Registration, Evaluation and

Authorization of Chemicals, is expected to take effect in June and

get phased in during the next 11 years. It is more stringent and

comprehensive than U.S. laws governing the chemical industry that

haven't changed in 30 years.

Under the new EU law, each manufacturer or company that uses

chemicals in Europe will have to register nearly each chemical it

uses and, depending on volume, test it for safety. Companies also may

have to figure out a way to phase out or find alternatives for

certain chemicals that are considered highly dangerous to humans and

animals.

The EU estimates health benefits resulting from REACH will reduce

health care spending by 50 billion euros, or $65.6 billion, in the

next 30 years.

Delaware's manufacturers in Europe -- ranging from DuPont Co., the

world's third-largest chemical maker; specialty paper maker Hercules;

and W.L. Gore & Associates, which makes fibers, electronics and

medical equipment -- will be forced to adopt the new law if they want

to take advantage of the world's second-wealthiest consumer market.

" Whether we support it or not, we are living with it, " said

Fisher, vice president and chief sustainability officer at DuPont in

Washington. " It's going to require a lot of work for the chemical

companies, and it's going to require a lot of work for the European

regulators. "

EU economic impact studies in 2003 estimate the cost of the

regulations on manufacturers and users of chemicals will cost up to

5.2 billion euros, or $6.8 billion, for the next 15 years.

But there remains a lot of uncertainty by companies about the full

cost of REACH because a lot of the fees have not yet been determined

and rules still are being ironed out.

" We are concerned that there is going to be a poor understanding of

that list, and the market may actually force some manufacturers out

of the business or some chemicals to be withdrawn from the market, "

said Walls, managing director for the American Chemistry

Council, which opposes the EU law along with the Bush administration.

Some consumer and environmental advocates see REACH as the beginning

of a new era in global environmental regulations that will hold the

industry accountable for the risks posed by its products. The EU also

sees itself as creating a new gold standard that others, including

the United States, should emulate.

" It's a step in the right direction, " said Rick Hind, legislative

director at Greenpeace Toxics Campaign in Washington.

But Hind and other environmental advocates following the legislation

closely find REACH not tough enough, claiming it provides " loopholes "

for chemical companies. For example, companies that make certain

chemicals at volumes less than 10 tons don't have to register them as

quickly and they are not automatically expected to provide safety

testing.

It is not surprising for some that years of negotiation with the

industry have loosened some of the original REACH regulations.

" They are not interested in shutting down their own industry, " said

Daryl W. Ditz, senior policy adviser in the chemicals program for the

Center for International Environmental Law in Washington. " I see

REACH slowly reorienting the chemical industry, not crushing it. "

Shift in the burden

Companies like DuPont that make a wide variety of products, from

hybrid corn seeds to automobile paint to Teflon pots and pans, are

used to facing tough regulations on agriculture and biotechnology,

but not chemicals.

The U.S. Environmental Protection Agency's Toxic Substances Control

Act -- the counterpart of REACH in this country -- lacks the

authority to restrict or ban chemicals made before 1976. Unless the

chemicals already are known or suspected to be harmful to humans

and/or the environment, the government does not require companies to

provide data or testing on those chemicals.

This is a concern to some environmentalists because a large portion

of the chemicals in use today are those made before the EPA law was

passed in 1976.

" We are definitely behind if you compare us with directives coming

from Europe, " said Nabil Nasr, director of the Center for Integrated

Manufacturing Studies at Rochester Institute of Technology. " We tend

to focus on targeted areas of known risks. They are seeking a lot of

restrictions to ensure the process is benign and ensure the safety of

the process. "

The EU's goal is to try and uncover chemicals and products that may

be harmful to people but have not yet been identified. Until

recently, its environmental regulations collected comprehensive data

only on chemicals introduced after 1981.

Because recent findings show 70 percent of the new substances tested

in Europe after 1981 are dangerous, EU lawmakers decided to broaden

the scope of REACH to include information and safety data on all

chemicals.

To speed up the process and beef up its regulations, the EU has

shifted the burden of collecting data and conducting testing on the

chemical industry and its customers.

There are an estimated 30,000 or more chemicals that will need to be

registered. Of those, about 1,500 chemicals are considered highly

toxic and are linked to cancer, birth defects and other illnesses.

Those chemicals will need authorization.

Cost of REACH unknown

For DuPont, which has 37 manufacturing plants in Europe and produces

or buys " several hundred " chemicals on a regular basis, REACH will

have a significant impact.

" We will pay a fee we don't currently pay today, " Fisher said.

Because DuPont has a large network of suppliers and customers, it

will also have to figure out the answers to a whole slew of

questions, including who is going to register the chemicals, who will

pay for it and how the safety testing will be conducted.

" It is still not well known what will be the actual cost for carrying

out these registration requirements, " said Jim Searles, partner at

Steptoe & , an American law firm based in Brussels, Belgium.

It represents clients who are in all ends of the chemical supply

chain ranging from raw material manufacturers to chemical purchasers.

There are a variety of estimates of how much it will cost a company

to comply with the registration process, ranging from 30,000 euros,

or about $39,400, to 100,000 euros, or about $131,000 per chemical,

Searles said.

The final impact on companies' products is still unknown. For

example, the jury is still out whether REACH will force DuPont to

make changes to its controversial Teflon products, which use

perfluorooctanoic acid, or PFOA, a chemical that under intense

federal scrutiny in the United States because of concerns the

chemical resists breakdown, accumulates in the environment and in

human tissue, and can potentially cause cancer and other illnesses.

The EPA recently recommended listing the chemical as a likely

carcinogen.

DuPont officials said they plan to register PFOA with the EU but

don't expect to have to go through the hurdle of authorization, which

would entail conducting new tests and developing a substitution plan.

They expect the EU will take into account the company's work with the

EPA to phase out the chemical from its manufacturing process and

products. The company said it has reduced the amount of global

emissions of PFOA by 95 percent from its facilities and products.

" These efforts will go a long way to address any actions taken by the

EU on PFOA under REACH, " said Rick Straitman, spokesman for DuPont.

For companies like Gore and Hercules, which purchase most of their

chemicals from suppliers, the change in law could be unsettling if

certain products are removed from the market.

" We don't have enough information at this time -- nor do an awful lot

of people -- to know if any of the provisions will affect our product

lines, " said Ed Schneider, spokesman for Gore.

But Schneider said he expects the company's research-and-development

team, along with its procurement staff, to be working hard to cope

with possible changes in the sourcing of the essential chemicals used

in their products.

Hercules, which has 11 plants in Europe, also is trying to figure out

how it will be impacted.

" It could affect us from the standpoint of availability and it could

affect the price of it and all this could affect the cost, " said

Riley, Hercules spokesman.

While the chemical industry is not thrilled about increased

regulations, some see REACH as an opportunity to develop greener

products.

" REACH will pose some opportunities for DuPont and maybe others like

us, " said DuPont's Fisher. " Part of their principle or intent of

their legislation is to provide or force the market to bring greener

substances to the market place. That plays very well to our strengths

around science and innovation. "

Greener products

In October, DuPont unveiled plans to double its spending on research

and development of eco-friendlier products and services in the next

decade by introducing at least 1,000 environmentally safer

alternatives such as synthetic fibers with biological components,

instead of petrochemical components, and lower-toxin automotive

finishes.

Some large retailers, including Wal-Mart and Dell, have begun taking

a look at the sourcing of their products to find out if they are made

using environmentally friendly processes.

" These are companies who are saying, 'We are going to be picky about

what chemicals we choose,' and REACH is going to make their life a

little easier, " said Ditz of the Center for International

Environmental Law.

" Some chemical companies are not happy about this, but the net effect

is safer and cleaner chemicals in the marketplace and more knowledge

about chemicals and how they behave. "

Contact Luladey B. Tadesse at 324-2789 or

ltadesse@....

THE NEW RULES

A new European Union law requires each manufacturer or company that

uses chemicals in Europe to register nearly every chemical it uses

and, depending on volume, test it for safety. Companies also may have

to figure out a way to phase out or find alternatives for certain

chemicals that are considered highly dangerous to humans and animals.

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