Business as usual for hazardous environments until Brexit deal concluded

Author : Ian Rippin, UK Managing Director, CSA Group

04 August 2016

Last month, after years of discussion and argument across the political spectrum, the UK voted to leave the European Union. A member of the Union, or its previous incarnations, since 1973, the country was split down the middle with rancorous debate on both sides. The vote to leave will have far-reaching consequences, far beyond the debates and arguments touched on during the campaign.

In particular, years of EU legislation will have to be reviewed, with the UK parliament deciding whether to retain, rewrite or scrap laws which touch almost every aspect of our everyday lives. In the meantime, we can already see a direct impact of the referendum on exchange rates and economic growth forecasts. It remains to be seen whether these are short-term signals or longer-term trends. When it comes to hazardous areas, the main piece of European legislation that will be affected will be ATEX, which governs the equipment and work environment within explosive atmospheres.

ATEX is actually two separate directives, 2014/34/EU (formerly 94/9/EC), which relates to the manufacture and sale of Ex equipment and 1999/92/EC, which is concerned with the classification of Hazardous Areas and the selection, installation, inspection and maintenance of Ex equipment. The two directives provide a baseline for requirements with the former ensuring goods and services traded across the Union meet minimum safety requirements, and the latter guaranteeing safety standards for workers across the EU.

As with all EU directives, it is up to individual member states how they implement these requirements. In the UK, the requirements of Directive 2014/34/EU are put into effect through the BIS regulation "The Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations 1996 (SI 1996/192)”. Member states were actually required to adopt and publish regulations for the implementation of Directive 2014/34/EU by the 19th April 2016. However, due to the upcoming EU referendum vote, the act did not pass through parliament. Therefore SI 1996/192 remains the current UK legislation for equipment and protective systems intended for use in potentially explosive atmospheres. These regulations apply to all equipment intended for use in explosive atmospheres, whether electrical or mechanical, and also to protective systems. Separately, Directive 99/92/EC is put into effect through regulations 7 and 11 of the Dangerous Substances and Explosive Atmospheres Regulations 2002 (DSEAR) which requires employers to eliminate or control the risks from dangerous substances.

The withdrawal of the UK from the European Union clearly throws all aspects of the relationship between the two into doubt. This is especially true of the laws made in Brussels that have instructed and directed lawmakers in London, to this point – including the ATEX directives. However, how the withdrawal of the UK of the European Union ultimately plays out will govern the extent to which European laws and directives such as ATEX, and the local laws and standards that necessarily inform them, remain in place.

The process for the UK to withdraw from the European Union is long and complicated. The mechanics for a withdrawal will follow Article 50 of the Treaty on the European Union. Once invoked, Article 50 specifies a two-year exit period. Any extension to this two-year period must be agreed by the European Council unanimously. Each legal treaty within the EU agreement must be re-confirmed, re-negotiated or subjected to an agreed withdrawal. While this is negotiated, the UK remains part of the EU with rights and obligations.

However, uncertainty exists about when or how - or even if - these negotiations will take place. New Prime Minister Theresa May has stated, “Brexit means Brexit” but there are arguments around whether a parliament that generally favours remaining in the EU needs to approve of any deal, while legal challenges against the referendum are already being prepared.
In the case that Brexit does happen, what do the potential scenarios look like? Currently, some European countries have close relationships with the European Union without being members. This includes those in the European Economic Area (EEA) – Iceland, Lichtenstein and Norway. Members are part of the single market, with free movement of goods, services, people and capital. These countries must also implement EU rules around employment, consumer protection, environmental and competition, which all govern the Single Market. However, they have no influence over the policies they must implement as part of this single market membership. EEA members do not implement home and foreign policy and are not part of the EU customs union or the Common Agricultural Policy (CAP).

If the UK joined the EEA, ATEX directives would still apply. UK businesses selling products or solutions in the EU or EEA designed to be sold for use in explosive atmospheres would continue to be bound by Directive 2014/34/EU, currently enforced in the UK by the BIS regulations. Similarly, as EEA countries are also covered by EU employment law, the UK would have to comply with ATEX Directive 1999/92/EC which governs working conditions in explosive atmospheres, enforced by DSEAR currently.

Another possibility is the ‘Swiss model’. Switzerland has bilateral treaties with the European Union which govern the relationship between the two in a number of areas. Effectively, this gives Switzerland the ability to pick and choose how it engages with the EU. However, the goods and services that it sells into the EU must comply with EU regulation, while Switzerland has little to no power to influence the regulation. In this scenario, UK companies wanting to sell equipment within the EU would have to comply with the standards of ATEX Directive 2014/34/EU. Any legislation drafted by the UK government relating to safety standards of this kind of equipment may also naturally converge with Directive 2014/34/EU, in order to smooth market access and prevent companies from having to comply with two or more sets of regulations.

Outside of the single market, however, the UK would not need to comply with the second directive as employment standards would not apply. Instead, the UK government would have to enact its own legislation relating to working conditions in explosive atmospheres. Any company operating in environments with potentially explosive atmospheres within the UK would then have to comply with this legislation, and show compliance through certification by the relevant bodies.

Ultimately, we will only truly understand the consequences of Brexit on companies working in hazardous environments once the final details of the post-referendum deal are thrashed out between the UK and the EU. The final settlement may resemble the scenarios described above – or may look completely different depending on a whole range of factors.

For now, companies that operate in the UK in the field of explosive atmospheres must continue to comply with the UK laws which are informed by the ATEX directives. At the same time, the certifications that demonstrate compliance with these standards also remain valid until this settlement is agreed. Until then, it remains business as usual.