Brussels sprouts more eco-law

You may have noticed that, alongside committing himself to ridding the legal landscape of Guantanamo Bay, President-Elect Obama will re-commit his country to the Kyoto Protocol, and has offered the development of alternative energy sources as part of his economic recovery package. The environment is suddenly a big thing again across the Pond. But if you had not noticed that, you may be forgiven because your attention was probably on Brussels and Strasbourg, what with the raft of environmental legislation that is currently on the European Union legislative agenda.

Brussels leads the world in environmental law. What gets decided in its corridors for the benefit of Spanish savannahs, Finnish steppes and Scottish Highlands is invariably replicated for the benefit of Californian forests and Chinese valleys at some point or another.

The cynic would say that the Nordic lobby (Sweden, Denmark, and the non-EU but very influential Norway) does a fine job of imposing its environmental will on the rest of the EU – much to the pleasure of lawyers, it has to be said, because the more regulation there is, the more there is to challenge in court or advise on how to comply.

“Environmental law”, it should be clarified, is effectively a euphemism for chemicals law, for while one is trying to save the world, ensure its sustainability and protect human health, it generally boils down to imposing more regulations on the chemicals industry. Translated into everyday life, it means regulating what the farmer can spray on his crops (to ensure a weasel-free harvest, for example), what you can spray on your roses in the garden to get rid of aphids, what types of carcinogenic substances can be in your nail varnish, what flame retardant you can use in your overheating laptop, how many phthalates you can have in a baby’s toy, and what additives are allowed in unleaded fuel, etc.

Times of plenty

While there are already thousands of different environmental/chemical laws on the Brussels and Holyrood/Westminster law books, a whole stream of others is about to be adopted. Whether they are recasts of existing legislation to make things (allegedly) simpler or the introduction of new rules altogether, the European Union is not slowing down just because we are headed into recession. Indeed, it is almost cruel of our European Commission civil servants, elected Members of the European Parliament and Government-appointed ministers in the Council to be so focused on passing yet more environmental legislation, given the straitened financial times that we are all facing.

Although these laws are being promulgated in Brussels, their effect at local level will be immediate – businesses, individuals, associations will need to be ready from the off in order to avoid difficult questions from enforcement authorities (that would be a downside), or to take advantage of the new regulatory situation and get one up on the competitors (that would be an upside). Scottish businesses need to be particularly alert given the significant number of chemical companies and importers on our shores: Scottish Enterprise has found that the chemicals sector is Scotland’s second biggest export earner, with over 100 companies and 70,000 jobs dependent.

Some examples of what is currently on the legislative agenda in Brussels/Strasbourg and which will become law, either directly (because the law is a directly applicable European regulation), or at some point after a European directive has been implemented as part of national law, include the following wide range:

Toys Directive

Directive 88/378 is about to be significantly revised by a proposal from the Commission which is now at the stage of first reading in the Parliament. Chief amongst the changes are far stricter rules on warning labels and on the chemical properties of toys, the current trend within Parliament being to impose particularly burdensome obligations in that regard on the grounds of the “precautionary principle”.

Many toy manufacturers are small and medium sized enterprises and some will inevitably be unable to comply with the new strict regime. Worse, non-compliance in this very consumer-sensitive area of life will bring with it the potential for extreme negative publicity (think China and mass recalls of late). Adoption is anticipated for early 2009.

Restriction of Hazardous Substances Directive

Directive 2002/95 (“RoHS”) has been due an overhaul ever since the Commission missed the directive’s MOT date of February 2005. A less than admirable three years late, the Commission is putting together amendments which have caused much angst to all those in the “electrical and electronic equipment” sector.

Basically, the directive affects most things that go buzz or otherwise exist off electricity (hairdryers to computers to electric drills, taking in eight product types of the 10 covered by its sister the Waste Electrical and Electronic Equipment Directive), and the suggestion now is (i) to expand its scope to the remaining two categories – medical devices and monitoring/ control instruments; and (ii) to add more allegedly hazardous substances to the list of those already prohibited. If either comes about, producers/ importers of equipment had better check the contents of the goods they are selling and deal with their suppliers accordingly (amongst a few other things to be done). A proposal to the European Parliament and Council of Ministers may be coming before Christmas 2008.

Pesticides Regulation

The new Pesticides Regulation (which when adopted, will be directly applicable in the laws of the member states) seeks to introduce a few controversial issues, one of which is the idea of “cut-off” hazardous criteria. At the moment, pesticide substances are reviewed to see if they are “safe” (i.e. whether they pose a risk). If they are not, they are banned. The new cut-off criteria would involve, however, producers having to show that human exposure to some hazardous substance is negligible under normal use.

The potential consequence is that many “hazardous” substances that do not pose a risk to human health and have been used safely for many years will have to be removed from the market. The distinction between a hazard and risk is a difficult one to draw and, legally, all rather vexed – a simplistic analogy is that you wouldn’t stop someone from crossing the road because it may be dangerous, but you might do so if that person was blindfolded and wearing ear mufflers. The upshot of the criteria, as feared by industry, is that many effective products will be withdrawn from the market, leading to food supply problems. The new law is anticipated to be adopted in 2009.

Fuel Quality Directive

Directive 98/70 sets EU-wide specifications for petrol, diesel and gas-oil used in cars, lorries and other vehicles in order to protect human health and the environment. Its aim is to limit damaging emissions from vehicles. The current proposal before the European Parliament and Council to amend the directive, and which could yet be finalised before Christmas 2008, aims further to reduce air pollutants and greenhouse gas emissions, as well as to update the law in light of evolving fuel and engine technology and the growth in biofuel use. Amongst various goals and deadlines, the proposal sets a target of biofuel share in transport fuels of 10% by 2020, although that figure has been the subject of much debate. A definitive law could be expected for the end of this year.

Classification and labelling

The world of classifying and labelling chemical substances and preparations/“mixtures” is about to change with the soon-to-be-adopted Classification, Labelling and Packaging Regulation, which seeks to implement the Globally Harmonised System of Classification and Labelling of Chemicals (“GHS”). Its aim is to bring the EU into line with commitments made under the GHS system. Simple it is not, but it should eventually (over a phase-in period of time) mean a clearer system of classification and labelling. The new legislation will take the form of a regulation and will be directly applicable throughout member states. It should be published as law early next year.

REACH

Enough has been written about this particular piece of legislation to have felled 100 forests (oh the irony of enacting legislation designed to protect the environment, amongst others). As you may be aware, REACH sets out to establish the ultimate, comprehensive system for the registration, evaluation and restriction of all chemical substances. It is very much in full swing as law, and of recent note is that a 1 December 2008 deadline means that if producers/importers have not pre-registered most of their substances with the newly created Helsinki chemicals agency, they will have to stop selling their substance in the EU until they submit a full registration dossier.

Many more deadlines are set to kick in, and will affect all parts of the supply chain – from the chemical producer itself to the manufacturer of pens, cars and plates. Keeping one’s eyes open for these deadlines should be a monthly/quarterly (at latest) task for all operators, chemical and otherwise.

Open to influence

The above is a mere soupçon of environmental regulatory issues that are pending before one or all of the European institutions and which will be affecting Scottish industry’s bottom line in the very near future. Of course, the fact that the political action appears to be taking place in a land legally and politically far away does not mean that Scottish companies and interests cannot influence what the law will be and how they will be affected by it. Since any legal remedies are often ineffective either because they can only be taken too late or simply because they do not exist, lobbying (transparently and openly in accordance with the new voluntary register for lobbyists in Brussels) should be an integral tool in any company’s legal strategy.

Failing that, many companies should not be surprised if their regulatory affairs managers are a little busy in 2009.

Peter Sellar, Of Counsel, Field Fisher Waterhouse LLP. t: 01721 724 934.

e: Peter.Sellar@ffw.como