DUBLIN -- In a stainless-steel cabinet between two gurneys, Josh Moonman stores bottles of a pink fluid, labeled with skulls and crossbones, that is used for embalming bodies. "If I were to open one of those lids now and let you smell it, it would knock you back," says Mr. Moonman, an embalmer for Ireland's Fanagan Group of mortuaries. Because the fluid contains formaldehyde, which is poisonous, European Union regulators are considering banning the chemical as a potential threat to human health and the environment. Among the worries, environmentalists say: decaying bodies leaching toxic chemicals into the ground. But a...