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Regulatory Matters
Responsible Care
As a member of the Chemical Industries Association (CIA), Johnson Matthey has adopted the principles of Responsible Care® and the sustainable development goals and guiding principles outlined by the CIA in its ‘Chemistry of Sustainability’ report. Responsible Care® is a voluntary programme in which companies commit to continuously improving their environmental, health and safety performance, with a particular emphasis on product stewardship and sustainability, and to communicating with stakeholders about their products and processes.
Regulatory Issues
On 2nd December 2008, Johnson Matthey Inc. (JMI) was sentenced in the US District Court, Salt Lake City, Utah, for a single felony violation of the US Clean Water Act (CWA), namely knowingly rendering inaccurate a reporting method in January 2000. The conviction arose from a federal investigation into wastewater practices at the company’s Salt Lake City refinery that began in 2002 and led to prosecution by the US Department of Justice. JMI’s conviction followed the September 2008 conviction of two former managers of the Salt Lake City refinery who had entered guilty pleas to a single felony under the CWA. The outcome for JMI came about by means of plea agreements entered into with the federal government following a successful challenge in Utah state court to the underlying permit that was fundamental to the indictment. As a result, nearly all the charges in the indictment were withdrawn.
The criminal violation related to the selective screening of wastewater samples for compliance analysis. Even though there was no harm to the environment, the company was ordered to pay a fine of $2.25 million and contributed $750,000 to the National Fish and Wildlife Fund. JMI will be on probation for three years. The two managers were also placed on probation and ordered to pay nominal fines. Their employment with Johnson Matthey has been terminated. In further resolution of the issues arising from this investigation, JMI has entered into a three year Compliance Agreement with the US Environmental Protection Agency, effective 2nd December 2008.
Chemical Control Regulations (REACH, GHS, TSCA and Related Standards)
Johnson Matthey’s corporate REACH compliance programme is well advanced. Key REACH pre-registration requirements were successfully completed to ensure efficient future phasing of our substance registrations and several hundred declarations covering various product ranges were submitted. We continue to collaborate in industry consortia under the auspices of trade associations to share the costs and technical efforts for compliance and individual substance registrations remain on track to commence in 2010. During 2008/09, a corporate REACH website was launched to support our customers and enhance supply chain communication.
Preparations also continued to implement the Globally Harmonised System (GHS) for chemical classification and hazard communication. During January 2009, the European Union commenced enactment of GHS and work is well underway within our European businesses to ensure we meet the requirements of the legislation timescales.
In addition to REACH and GHS, chemical control policy reform has become a regulatory focal point in a number of regions. The US EPA Chemical Assessment and Management Program (CHAMP) and the Canadian Chemicals Management Plan (CMP) have both set new data targets for industry and the company has developed a related response plan to manage the necessary requirements. As part of our continuing improvement programme on product stewardship, internal systems to cover further chemical control regimes, such as the US Toxic Substances Control Act, were upgraded.
European Emissions Trading (EU ETS) Directive
The EU ETS cap and trade scheme was introduced in January 2005 and the company’s facility at Royston, UK is the only site affected. The site opted out of Phase 1 of EU ETS as part of the Climate Change Levy Agreement (CCLA) scheme, but commenced participation in Phase 2 on 1st January 2008.
The allowances granted to the site in Phase 2 are 14,748 tonnes of CO2 per annum based on the average performance measured in the baseline years of 2000 to 2003. For 2008 the site had a verified output of 22,434 tonnes which gave a deficit of 7,686 tonnes. In future years, the level of deficit will depend on site demand and amount of combined heat and power (CHP) operation achieved. Energy saving measures continue across the Royston site which will help to reduce the level of purchased additional credits.
The current Phase 2 allowance cost is trading low at €15 per tonne due to the economic crisis but as a tradable commodity, the price of credits can fluctuate. For example, Phase 2 allowance prices have ranged from €22 per tonne at the introduction of the scheme in January 2008 to a high of €28 per tonne in July 2008.
Carbon Reduction Commitment (CRC)
During 2009, the UK government will begin the implementation of the Carbon Reduction Commitment, a mandatory emissions trading scheme to promote energy efficiency and help reduce carbon emissions. This cap and trade scheme is designed to capture significant users of electricity (>6,000 MWh per annum) that are not already covered by the UK’s Climate Change Levy Agreement. The scheme applies to organisations rather than individual operations and so should not affect Johnson Matthey’s UK sites while they remain part of Johnson Matthey Plc (the parent organisation). Johnson Matthey Plc will be registered with the CRC but we expect to be exempt from participation given that substantially more than the current threshold of 25% of our total energy is covered by Climate Change Levy agreements. The threshold of 25% could be raised in future which could potentially affect exemption.
