We will proceed to our discussion of COM (2003) 644, a proposal for a regulation on the registration, evaluation, authorisation and restriction of chemicals, REACH. I welcome the representatives from the Department of Enterprise, Trade and Employment, Ms Anne-Marie O'Connor and Ms Aisling O'Reilly. Before asking Ms O'Connor to begin her presentation, I draw her attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to witnesses. Members are also reminded of the long-standing parliamentary practice to the effect that they should not comment on or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I ask Ms O'Connor to make her presentation and thank her for appearing before the joint committee.
Scrutiny of EU Proposals.
Ms Anne-Marie O’Connor
I thank the Chairman and members for the invitation to update the committee about negotiations on REACH. My predecessor, Margo Monaghan, and the wider REACH team, appeared before the committee in April. Having examined the transcript of that session, I believe the committee received in-depth background information about the aims of REACH. I understand at least some of the concerns that were raised and will focus on what has happened in the interim in order to bring added value to today's session. The first page and a half of my paper, copies of which were sent to the secretariat, contain basic background information.
All of the action has taken place since 1 September. Ms Monaghan told the committee that the UK Presidency was very enthusiastic about REACH and hoped to reach a political agreement by the end of the year, an ambition that it realised at a meeting of the Council of Ministers on 13 December.
The main issues discussed in that three-month period focused around three parts of the regulation. The first and most important part of the regulation is registration. The latter and the obligations imposed by it lead to financial implications for industry and the potential benefits of acquiring data on chemicals. The main change has been in the data requirements for substances at low tonnage brackets, which encompass amounts of between one and ten tonnes. This change affects small manufacturers, importers or users who deal with such amounts on a yearly basis. It was felt that the cost in this area far outweighed the benefits. These costs related to potentially losing chemicals for economic as opposed to environmental reasons.
The testing requirements in this area have been substantially lightened. Only genuinely dangerous chemicals that meet certain criteria will be obliged to have a full data set. Whatever data is available will suffice for the majority of the chemicals in this range. If the chemical is dangerous, the full data set will be required but if it is not, it will be acceptable to produce whatever data is available and no additional testing needs to be carried out.
The other change is in the medium tonnage bracket, which encompasses amounts of between ten and 100 tonnes. It has been agreed that certain testing requirements will be waived if tests are superfluous and a case against carrying them out can be made. This is done on the understanding that the information is superfluous and that testing is not being carried out just for the sake of it.
Another major change in the registration chapter deals with the way in which companies can register. Before it assumed the EU Presidency, the UK had the idea that there would be joint registration and that industry would register in consortia. The idea was that if one was dealing with one chemical, there would be a corresponding registration. It was discovered that matters were not that simple. While this idea sounded theoretically feasible, in practice, chemicals are not the same, even though they might appear so to lay persons, among whose number I include myself.
We managed to agree a process where the operating rule would, for example, be one substance for one registration but that there could be a possibility for industry to opt out of this arrangement were it too expensive to form consortia. Having a company in the west of Ireland and another on the eastern border of Poland, with the workforces of each speaking different languages and so on, would not make sense. Other reasons include confidentiality.
The other major change relates to the ability of a company to be represented by a third party. This important concession for industry was made at the end of November but does not take away from the quality of the data that must be made available to public authorities in order to pursue what they must. It provides a safety net for companies that could have their commercial activities negatively implicated by virtue of association with a particular substance.
From reading the transcript of the previous meeting at which the joint committee dealt with this matter, I know that an issue of concern was raised, namely, that imported articles might not be subject to the same regime in terms of substances as articles manufactured in the European Union. The agreement is that substances in articles that are intended for release will essentially be subject to the same regime as substances in the European Union and substances in articles that have an unintended release must be notified to the agency. Measures are in place to try to level the playing field between non-EU and EU manufactured goods.
The second broad area of change has been evaluation. Under the Commission's proposal, the idea of the European Chemicals Agency, ECA, was that it would be a co-ordinating agency but it is now foreseen that it will have a stronger, more central role. It will co-ordinate but will, for example, be responsible for a rolling Union programme of identifying dangerous substances. The agency will co-ordinate with member states' authorities, such as the Health and Safety Authority in Ireland.
The third broad area is that of authorisation. This is a new feature in the regulation of chemical substances. It was an area of concern at the Council meeting and relates to very dangerous chemicals. The idea is that there should be some type of encouragement for industry to use alternative products and substances where possible. However, it is not always possible. If they are crucial to the manufacturing process, there must be some means of allowing industry to use such substances. Under this regime, as agreed on 13 December, there would be a means whereby industry could be authorised the use of certain chemicals if they have adequate controls in place and there is little or no danger to health or the environment. Where it is not possible to scientifically guarantee that systems are in place to do so, if an overriding socio-economic case were made that justified the use of such a chemical, this would be possible. This was the regime agreed.
At this stage, the Council of Ministers, in its political agreement, and the Parliament, in its first reading opinion delivered on 17 November, are poles apart on the authorisation regime. In its first reading opinion, the Parliament believes there should be a tougher regime on authorisation. All of this can be negotiated at the second reading.
In the briefing note I refer to restrictions in the note but these are not an issue. I refer to industry-friendly features and many of those were elements we sought to include in the final product. On page 4 I have tried to capture the main issues for Ireland. In autumn 2006 the Finnish Presidency would like to finalise this legislation as it will play host to the agency.
The Government decided the Health and Safety Authority should be the designated competent authority to implement REACH in Ireland. It also decided to appoint 44 additional staff in the Health and Safety Authority, the first of whom will be taken on this year, namely, the chief executive. Interviews for this position are under way. There will be a programme linking with industry and small business to find the best way of informing industry about compliance with the legislation.
I welcome Senator Leyden and Deputy McHugh and Senator Callanan, who is deputising for Senator Hanafin.
Ireland had concerns about confidentiality and this has been addressed. The Irish delegation should be congratulated on how these safeguards have been included. Is the Department satisfied with this? Do the sectors mentioned in the ERM Ireland report agree with the findings of the report in respect of the sectors? If sectors do not agree, which are they and what is the nature of the disagreement? We witnessed the horrific oil fire in Britain last week as lay people and one cannot have strong enough safeguards.
Ms O’Connor
The proof of the pudding is in the eating. At a theoretical level, I am satisfied with the confidentiality provisions included. The final one I mentioned was that of giving industry the possibility of being represented by a third party in registration, pre-registration and related activities. That was extremely important and was an issue identified by industry operating in Ireland. It made absolute sense that this would be possible.
Is that principally on cost grounds?
Ms O’Connor
It is not on cost grounds. It is on confidentiality grounds. If a third party represents a company, it means that company is not automatically associated with a particular substance. If a company is identified with a particular substance, reverse engineering could take place as those in the business would know it was undertaking a project through a certain process by virtue of using a particular substance. That is an extremely important issue for a company. It also means that any data a company has on a substance could be made available.
The important questions for environment and health reasons are what does the substance do, whether it is dangerous and if so what are the dangers. Industry has that data. If a particular company is not associated with that data, it can be made available. The idea of having third party representation was good on all counts.
Other confidentiality provisions included in the legislation relate to the type of information that might be made publicly available as opposed to made available to suppliers or to the regulatory authorities. The Aarhus Convention, signed by Ireland and other European Union member states, includes provisions whereby environment related information cannot be deemed to be confidential. However, situations can arise where information can be normally deemed to be confidential. We also succeeded in using the text of the article to put a regime in place whereby if a third party seeks information from the chemicals agency, the agency must assume that it is confidential in certain cases and go through a process before it is released. In terms of business confidentiality, that was an important issue for us.
The second question related to the sectors and the findings of the ERM report carried out by Forfás. I am not aware of any sectors of industry disagreeing with the findings of the report. The Department of Enterprise, Trade and Employment has worked closely with industry, through IBEC, and directly with individual companies to understand what might be the implications for business and whether a certain provision is workable in practice. The feedback after 13 December is positive. I can only infer from that feedback that the industry broadly is happy with the outcome.
The committee's main concern is that the SMEs would have to bear most of the cost. Is that the view taken by the Department? That view has been taken to date in order to make the SMEs aware of the expense that could be involved in this.
Ms O’Connor
I understand the question now.
We have tried to get a result, in the negotiations on the regulation, that would reduce the cost for small and medium sized enterprises. We have not carried out a study since that compiled by Forfás but anything better than the regime and results of that study would be welcome.
The Dutch authorities carried out a study, not yet published, to which their Minister referred during the European Council meeting. It suggested that the regime being agreed by the Council last week would mean a 60% reduction in costs across the board for industry. This is directly attributable to the reduced requirements within the regulations, that is, the abolition of testing for the sake of it. The aim now is to focus on the dangerous substances upon which hard information is required, with existing data on other substances being deemed sufficient.
I welcome the delegation from the Department and thank its members for the outline documents.
I come from Cork, which has the largest number of chemical companies in the country, most of which are American-based. Will these new regulations mean that such companies will bear additional costs? It seems that every day of the week the country is saddled with more and more regulations.
What is the definition of a chemical? Are pharmaceuticals considered chemicals? The document from the Department states that the proposed regulation aims to increase the level of knowledge in regard to chemical substances placed on the market to help ensure that such substances are used safely at all times. Is there a cost factor involved? The proposed regulation also aims to encourage the use of substitutes for the most dangerous substances and to make industry more responsible for substances it manufactures and uses. That will lead to additional costs.
There is already an enormous number of regulations from the Environmental Protection Agency in place. These regulations, not to mention those imposed by local authorities, are making life intolerable for industries. There have been many difficulties in the Cork region, in the harbour area, where both small and large companies are located. How will the issue of costs be addressed? We are trying to promote inward investment and job creation and another company will be setting up in Cork shortly. However, such companies tend to set up in the more business-friendly parts of the world. Cork has been business friendly and, as a result, a substantial number of jobs have been created in the area.
What is the definition of a chemical and how will companies deal with all of the regulations imposed upon them?
The ERM report addresses many of the concerns raised by Deputy Ned O'Keeffe.
I am expressing concern on behalf of my constituents, many of whom are not impressed with the level of regulation being imposed on them.
The Deputy is suggesting that the rest of us are not concerned.
Ms O’Connor
Pharmaceutical products are not included in this regulation.
As a regulator and one who has been involved in the better regulation agenda until recently, I agree with the Deputy's sentiments regarding the regulatory burden on business. However, all industry expects to have some degree of regulation. The approach we have taken in the negotiations on this regulation is to reduce the unnecessary burden for industry in order to minimise unnecessary costs. As I mentioned in replying to the Chairman, the indication from the Dutch study is that the text agreed by the Council of Ministers shows a 60% reduction in costs. This is by virtue of limiting unnecessary testing, especially at the lower ends of the scale.
The feedback we have received from IBEC and the American Chemistry Council, with which we have worked closely, has been positive. There is a recognition that views across the European Union are divided on what constitutes good regulation of chemicals. Some member states would prefer a more stringent belt and braces approach to regulating chemicals. This was a case of attempting to be pragmatic and also trying to find a resolution with which we could work.
We have some of the most advanced environmental regulations in Europe from the EPA. They implement a cost on industry vis-à-vis competitors in the European Union and those worldwide. This issue concerns more regulation.
Will we see new legislation going through the Dáil to put this regulation from Europe into place? Will a Bill and Act be necessary to implement it?
This will be European legislation.
Does the Dáil have to enact European legislation?
Ms O’Connor
This is a regulation. It will be a directly applied piece of legislation from Europe. Part of the problem was that existing chemicals legislation across Europe is quite diverse. Broadly speaking, the Nordic states have far more stringent measures than others. The idea behind this legislation was to ensure that all states have the same regulatory regime. The Commission therefore proposed a regulation instead of a directive. A regulation is directly applicable.
When will it come into force?
I apologise for being late but I could not avoid it. There is a significant dilemma in the psyche of Irish people, more than anything else. On the one hand people are exceptionally grateful for the big employers in Cork harbour that provide good and well-regulated employment to a great extent. Without this the economy and workforce of Cork would be very depleted. On the other hand, people are beginning to demand that issues such as chemicals and pharmaceuticals be regulated more. I realise that pharmaceuticals are not a concern of this regulation.
People are looking for more openness on the issue, and they are concerned that they are not exposed to unwanted substances in any dangerous amounts. This has been evident in the recent incineration debate. This debate will be about balance, specifically how a balance can be obtained which ensures that we do not damage the economy, the environment or the people themselves. This would apply to chemicals in the environment and used within industry.
The regulation as now proposed is probably far more favourable with regard to cost and impact on industry than it was at the outset. Mr. Kissane, our adviser on European legislation, made the point at the very outset that it probably would be a matter for negotiation. He mentioned that the ultimate regulation would be very different from the original proposal. This is the dilemma that faces every negotiator. I do not mind this country being a leader in regulating these matters. We should be to the forefront of ensuring the environment and the individual are protected while balancing the meeting of economic needs.
Will chemicals imported from outside Europe be subjected to the same regime to which the EU is subjected? That is from where the threat comes and about which we are all concerned in regard to the industry and the balance that is struck. Will the regime applying to the importation of such chemicals from outside the EU be as stringent as it is to chemicals imported from the EU?
Ms O’Connor
Yes, imported chemicals will be subject to absolutely the same regime as chemicals manufactured in the European Union under exactly the same circumstances. The differences will occur where for example EU manufacturers of goods, who use a particular chemical which is consumed in the process and does not appear in the final good, may have to register that chemical if it comes within the tonnage bands. Non-EU manufacturers of the same good would not be under the same obligation if it does not appear in the finished article. There are WTO reasons for legislating the way in which that is dealt with. The negotiation process has very much tried to focus on being fair to EU manufacturers and to keeping within the WTO rules. In respect of chemicals, there is no question but that absolutely the same regime applies.
I would like Ms O'Connor to address a number of points. Coming from Cork and with two chemical companies located in my parish, I have an interest in what is happening in this area. I also live close enough to the harbour. The term "hazardous waste" or "hazardous substances" is an extremely broad and all-embracing term. Will Ms O'Connor give an example of what is a hazardous waste? Will the regulation apply to chemicals imported to be used for further refining or blending in an existing industry? If a new substance is used by a company, would it be obliged to notify the planning authority of that, given that the planning approval was given for the use of different substances? The EPA operates here and the planning authority is in place. My understanding of good planning is that notification of a change of use of substance would be required, or use of a new substance would lead to a review of the planning permission granted or perhaps the need to submit a new planning application. It is essential that such requirements be in place. Deputies Ned O'Keeffe and Lynch referred to what is happening in this area.
I would have thought that by and large such companies in Cork are operating to a very high standards. The general perception in Cork is that such industries should not locate there if they do not do that, otherwise they will be asked to leave. Some companies did not operate to the required standards in the past. I have no hesitation in saying that. Cork County Council is the local planning authority and has been in place long before the EPA came into being. It was the position of Cork County Council, and I am certain it remains its position, that if a company does not operate to a high standard, that will be addressed. The regulations will only help only standards and industries interested in operating high standards will welcome them. It is what would be called the "cowboy industry" which will oppose them or be concerned about their introduction.
The regulations will take some time, given that there are 1,000 amendments to the legislation. How do they compare with those in China, Japan and the United States? Are we over-regulating?
With regard to the transportation of chemicals, many are concerned about the Rossport situation. Many remember the time when acrylic nitrate was transported to the Asahi plant in Killala, County Mayo, from Dublin Port and other ports by Iarnród Éireann. Acrylic nitrate is a lethal substance. People were concerned but nobody was locked up. There is more concern about natural gas being brought ashore from the sea than there was about acrylic nitrate which is more dangerous. It is an interesting point.
With regard to the transportation of chemicals to nuclear power plants in Britain, how will the UK authorities deal with the matter? Will any of the material being transported by sea be covered by the restrictions?
Ms O’Connor
The final remark Senator Callanan made about the cowboys and the good guys is absolutely correct. Industry has said as much to us. The important issue is to have a clear set of rules and some certainty in them. Once one is aware of the regulatory framework, one can plan accordingly.
There was a question about hazardous waste. Waste is not subject to the REACH regulation.
That was a misuse of a word by me. I was referring to hazardous substances.
Ms O’Connor
The Senator asked for an example. Arsenic is fatal when used at the wrong time or when not adequately controlled. However, it is used in and crucial to certain production processes. It is one example.
The Senator also asked about new substances, EPA regulations and so forth. The problem REACH tries to address is the lack of data on existing substances. The idea is that it will be a repository for data on substances. The EPA implements environmental emissions regulations. Knowledge of substances will inform other regulations. That is the connection between the two.
I would have thought that if one wanted to introduce a new substance to the manufacturing process — this is always possible — there would have to be an upgrade of the permission or licence to operate. Deputy O'Keeffe asked about notification under the law. Will there be a legal obligation on a company importing a new substance and introducing it to its manufacturing process to notify the local authority and the EPA? If not, planning permission will
I understand that matter is outside the scope of the directive. Section 10 of COM (2003) 644 clearly states new chemicals must be notified and tested in production volumes as low as 10 k per year. There are no such provisions for existing chemicals which before 1981, for example, numbered over 100,000. Since 1993, 140 high volume chemicals have been singled out for risk assessment.
A pesticide or herbicide may have a shelf life of 12 months or two years but what happens to that substance afterwards?
Ms O’Connor
To an extent, the Chairman has clarified the matter. Companies are obliged to conform with whatever regulatory regime is in place. I am not an expert but, as the Chairman rightly pointed out, each regulation does not cover planning or emissions.
Are such issues not covered by other legislation?
Ms O’Connor
Yes.
I am assured the Senator's concerns and fears are being allayed by the consultant, Mr. Kissane, also.
What about my questions?
Ms O’Connor
Senator Leyden mentioned the timescale involved. It is expected the regulation will be agreed before the end of 2006. The Council reached political agreement on a common position on 13 December. It is expected this will be formalised in the first quarter of next year and that the European Parliament will begin its Second Reading shortly thereafter. It is expected the matter will be finalised during the Finnish Presidency.
As regards the Senator's question on the regimes in place in other countries, they are certainly different and have different requirements. I cannot comment on whether this amounts to over-regulation or otherwise but the regimes in place in other countries are certainly different. The transportation of chemicals and nuclear materials is excluded from the scope of the regulation. It is subject to a separate regulatory regime.
I thank Ms O'Connor and Ms O'Reilly for briefing the joint committee and bringing us up to date on the issue. I propose we invite the chemical manufacturers and, particularly, the section connected with IBEC to discuss the matter further because it is a serious issue. Is that agreed? Agreed.
I wish all members of the joint committee, as well as committee staff, including the clerk, technical staff, the ushers, parliamentary reporters and others, a happy and holy Christmas. I look forward to working with all of you early in the new year on the third interim insurance report. The joint committee will meet again at noon on Tuesday, 10 January 2006. I hope you all enjoy the holidays as you deserve a nice break.
We will come back with a star on that day.
I also hope to be in a position to look forward to the future on that day.
The joint committee adjourned at 3.30 p.m. until noon on Tuesday, 10 January 2006.