On 1 June 2007, after years of hard fought political lobbying, the EU's Regulation on the Registration, Evaluation and Authorisation and Restriction of Chemicals (REACH) finally came into force. Viewed by many as the most complex piece of EU legislation to date, REACH changes how chemicals will be made, imported and used within the EU.
The impacts of REACH will extend well beyond both the chemicals sector and the borders of the EU. So, if you haven't heard about REACH or dismissed it as not being directly relevant to your business, you may be in for a few surprises in the coming years.
Essentially, REACH replaces a patchwork of over 20 European Directives and Regulations with one single system which aims to more effectively control what chemicals are placed on the European market and how they are used. One of the principle aims of the new regime is for more to be known about the 30,000 or so chemical substances currently used and sold in the EU.
Responsibility has been firmly placed on industry to ensure that substances (and, in some instances, that includes substances in end-products) are adequately controlled. Undoubtedly the petrochemical industry will be most acutely affected by this new regime. However, since nearly every aspect of our modern world is in some way dependent on chemicals (and the products which they are used to make), almost everyone will, to a greater or lesser extent, feel the impacts of REACH. Moreover, due to the regime's broad scope, these impacts will extend far beyond the boundaries of the EU.
How does REACH work?
In a nutshell, REACH requires the people who place chemicals (on their own or in end-products – i.e. articles) on the market (predominantly the manufacturers and importers), in quantities of over one tonne per year, to be responsible for understanding, communicating and managing the risks associated with those chemicals and their given uses. This new registration requirement may well result in significant compliance costs. These will inevitably be passed on down the supply chain to the end users.
From this pool of new information, a more robust mechanism of identifying and controlling chemicals of high risk will now operate. As a result, it is expected that a greater number of chemical substances will be restricted or banned within the EU in the future.
Industry is required to collect, collate and submit a technical dossier to the newly formed European Chemicals Agency (ECHA) on the hazardous properties of all substances manufactured in, or imported into, the EU in quantities above 1 tonne per year. This requirement does not only apply to substances on their own but, in some instances, also to substances contained in end-products or articles. However, it is important to note that there are a number of express exemptions to this new requirement.
Given the number of chemicals needing to be registered, a stepped timetable has been implemented which will be staggered over an 11 year period. The most hazardous and heavily-used chemicals will be the first to be registered.
Information exchange: data sharing
One of the most striking elements of REACH is the requirement on industry to share information with the authorities, customers and, in some cases, competitors. Understandably, this poses a number of fairly alarming problems for industry, as well as further afield. For
example, the value of some businesses may be intrinsically linked to a secret process, application or formula. As a result, it is widely expected that some manufacturers or users will simply withdraw from the EU market altogether in order to avoid leaking such important confidential information (and also avoiding the potentially significant registration costs). This obligation for industry to openly communicate is at odds with well-entrenched national and EU anti-trust legislation.
It is critical that the supply chain effectively communicates to ensure that the various challenges thrown up by REACH are met. The smooth operation of the substance information exchange forums (SIEFs) and, if relevant, consortia will be critical in ensuring data is successfully shared.
The information gathered in the registration phase described above will then be scrutinised (to varying degrees) by the ECHA. The outcome of this initial evaluation may result in substances being added to a list of high risk chemicals to undergo further analysis. This list, which will be agreed by Member States and the European Commission, is often referred to as the "candidate list". The outcome of this more detailed analysis will determine if a "candidate list substance" needs to be authorised or restricted. A close eye must be kept on the "candidate list" for they are viewed by many as being more akin to a substance "black list".
Authorisation and/or Restriction
In certain circumstances, Community-wide authorisations may be granted, allowing high risk substances to be made, imported and/or used. Such authorisations will be reviewed on a continual basis and will generally contain an obligation for the manufacturers and users to substitute the given substance for a less hazardous chemical by a given date. In the most extreme cases, substances or certain uses may be banned outright.
In fairness, this element of REACH is not that dissimilar to the position under the old regime. However, under REACH, since more detailed information will now be available to the ECHA and Member States, it is expected that the number of chemicals authorised or banned will rise sharply.
Substances in articles
The regime also requires the registration of substances contained in articles where those substances are:
- present in articles in quantities of over one tonne per producer or importer per year; and
- intended to be released under normal and reasonably foreseeable conditions of use.
There is considerable uncertainty surrounding the scope of the second limb of this test.
In addition, further notifications and supply chain communication obligations could apply where articles containing certain higher risk substances known as Substances of Very High Concern (SVHC). These obligations trigger when SVHCs are present in concentrations greater than 0.1% (w/w). Article manufactures and importers will need to monitor which substances are on the ECHA's Candidate List of SVHCs. Legal support may also be required for some EU Member States are frustratingly continuing to apply the 0.1% (w/w) threshold in different ways.
In summary, anyone who manufactures articles in (or imports them into) the EU, should assess which of its products could potentially be impacted.
Given the practical impacts of REACH, businesses throughout the supply chain need to look closely at which challenges and opportunities REACH gives rise to. No matter what your sector, you should start to take the following steps:
- Identify who in your business is responsible for managing the impacts of REACH and which parts of the business need to be involved.
- Communicate – engage with your suppliers and customers as to how they expect REACH to be managed.
- Prepare an inventory of substances which may be affected by REACH and assess whether any of those substances need to be pre-registered and/or registered.
- Assess your role in the SIEF(s) (if you have pre-registered).
- Consider whether the use of consortia will be beneficial. If so, consider who else should be members of the consortia and what information you will need to protect.
- Understand whether any of the substances produced or used are likely to be wholly or partially restricted and/or require an authorisation.
- Review and update your substance data sheets (SDSs).
- Assess whether any of your substances will need to be substituted. Is this technically feasible?
- Assess the financial impacts of REACH on your business (it is likely there will be an increasing focus on this area in future corporate transactions).
- Review the adequacy of your commercial contacts and update if necessary.
Our product stewardship & chemicals law practice
Our Environmental & Safety Group is acknowledged as one of the top EHS practices in the UK. Not only is the group widely recognised for its first rate transactional expertise, it also has an excellent stand alone compliance and regulatory practice with considerable chemicals law experience.
We have wide experience in advising on the impacts of chemicals in various applications and on the potential regulatory issues that may arise. We have also advised widely on product liability and stewardship.
We have an enviable international network of product stewardship and chemicals law specialists. This enables us to provide a first-class and bespoke service. We also have strong links with technical specialists as well as the competent and regulatory authorities.
A selection of our team's chemical experience
- Developing REACH compliance strategies for a range of UK and international corporates.
- Stand alone and transactional advice on the interpretation and application of REACH.
- REACH questionnaires, substance itineraries and general supply chain communication.
- Consortia formation and management.
- Reviewing commercial impacts of REACH and reviewing existing contracts.
- Lobbying the Commission in relation to additions to Annex 1 of the Marketing and Use Directive.
- Product liability and worker exposure claims associated with asbestos containing products.
- Representing corporates in large-scale personal injury/toxic tort litigation.
- Further areas of chemicals experience include: RoHS, the Batteries Directive, Food Contact legislation, F-Gas, the Phthalates Directive, as well as the Stockholm Convention.