Costs for meeting environmental and sustainability regulations are too much for many small companies, blocking markets and interfering with competition. That’s especially true for companies in the United States trying to sell their products in Europe, where the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) regulatory nightmare is denying certain companies market access.
Just ask Sal Monte, CEO of Kenrich (Bayonne, NJ), a specialty chemicals company that has spent millions over many decades developing and patenting specialty additives, including those used in polymers. The EU REACH law is having a detrimental effect on the American plastics industry’s raw material supply chain. While there are many conferences on REACH compliance, nothing is mentioned about the astronomical cost of compliance and there is “little discussion as to EU laws pre-empting USA EPA TSCA (Toxic Substances Control Act) laws,” said Monte. “The point is that EU REACH compliance is too expensive for many materials suppliers to the industry.”
For example, Kenrich has been selling a polymeric aromatic hydrocarbon plasticizer, registered as Kenflex A, globally since the 1950s. The EU REACH law does not allow for a company like Kenrich to register polymers—the company must register the monomer, Monte explained. “The monomer in our case is an aromatic feedstock from ExxonMobil, which they have already registered under REACH,” said Monte. “We finally obtained the ExxonMobil REACH dossier through the heroic efforts of ExxonMobil. Our charge for taking the ExxonMobil data and putting it on a Kenrich dossier was €27,000—and the madness continues.”
REACH is built on a concept that Monte describes as “an unobtainable goal of perfect safety—the precautionary principle—which simply is too expensive, except maybe for life-saving drugs.” Monte explained that if the precautionary principle were applied to everyday situations, life would be pretty austere. For example, we would never:
- Drive a car because of the risk of being injured in a crash or the vehicle being stolen;
- marry because of the risk of divorce, adultery or the chance of growing apart;
- have a baby because of potential medical problems or because the kid might grow up to be a drug addict or a criminal;
- start a business (risk of bankruptcy);
- or even walk down a flight of stairs because you could trip and injure yourself.
“The precautionary principle states that if an action or policy risks causing harm to the public or to the environment, in the absence of scientific consensus that the action or policy is harmful, the burden of proof that it is not harmful falls on those taking the action,” said Monte. “If risk of harm is possible, then we must err on the side of caution and apply the precautionary principle.”
The core problem is that REACH refuses to acknowledge approvals by other agencies—such as the U.S. EPA TSCA for a product being sold in the United States—as valid for that same product when it is sold in the EU. Monte pointed out that he just completed a U.S. EPA TSCA registration for a modification on Ken-React LICA 44 (a neoalkoxy version of KR 44) that Kenrich will use as part of a formula to make an additive for nano-surface modification of Portland cement that reduces the water-to-cement ratio. The cost to a small company (defined as under 1,200 employees) for EPA TSCA registration was a “reasonable” $940.