Business Law & Compliance
2018 deadline: A guide to the EU REACH regulation
10 min read
22 April 2014
The costs of registration under the EU regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) are often very high, despite the fact that SMEs benefit from reduced European Chemicals Agency (ECHA) registration and other fees.
According to the legislation, the main aims of REACH are to ensure a high level of protection of human health and the environment from the risks that can be posed by chemicals, the promotion of alternative non-animal test methods, the free circulation of substances on the internal market and enhancing competitiveness and innovation.
REACH makes industry’s responsible for assessing and managing the risks posed by chemicals and providing appropriate safety information to their users. In parallel, the European Union can take additional measures on highly dangerous substances, where there is a need for complementing action at EU level.
The final registration deadline for substances produced or imported in the EU in quantities between one and 100 tonnes per year (tpa) is 31 May 2018. Since this deadline concerns relatively low-volume substances, a high number of SMEs are expected to get involved in the registration process. The data requirements for substances registered in quantities below 100 tpa are lower compared to those registered in quantities above 100 tpa, and this helps to reduce costs to SMEs. However, REACH Letter of Access (LOA) and other charges also have to be taken into account and these can be significant.
It is important to accept that the costs of REACH need sharing across industry’s. Historically, larger organisations have spent considerable sums of money on substance safety assessments from which SMEs have usually benefited free-of-charge. Going forward, it is not unreasonable to expect SMEs to shoulder some of this burden in a fair manner. The problem lies with those aspects of REACH, where the term ‘fair’ will take on different meanings depending on your viewpoint. For example, did ECHA really expect ‘fairness and transparency’ to be the universal norm in REACH consortia, which largely operate as monopolies, charging essentially what they like for LOAs?
An EU Commission report into the workings of REACH (COM/2013/049), identified specific problems in relation to the powers of Lead Registrants (LRs) in consortia, whose role is more frequently exercised by larger companies. Remedial proposals included the imposition of flat-fees on LOAs and more specific guidance on transparency, non-discrimination and fair cost sharing in the framework of the Substance Information Exchange Forum (SIEF). It remains to be seen if these sorts of measures, designed to ease the burden of REACH on SMEs, will be effectively enacted or not.
What should SMEs do?
Costly errors are being made by inexperienced SMEs that adopt a do-it-yourself approach to REACH compliance in order to avoid consultant costs. Some SMEs have inadvertently placed themselves in the wrong substance SIEFs and subsequently undertaken incorrect registrations; it can be difficult and costly to change these. Others have failed to undertake registrations on time and found themselves subject to enforcement action. When necessary, SMEs should be prepared to accept specialist REACH support given the considerable complexity of the legislation.
When choosing a REACH consultant, care should be exercised. There are no official standards or certifications for REACH consultants, so the quality and level of support can vary widely. SMEs should be especially wary of consultants that do not have the will or capability to defend their interests in the event they come up against unfair consortium practices and charges.
Most substances placed on the EU market have yet to be registered and many more SMEs will be shouldering LR responsibilities than was seen at the previous 2010 and 2013 deadlines. Invariably, they will be inexperienced and require significant specialist support. These LRs should allow plenty of time (at least one or two years, depending on their circumstances) to set themselves up in consortia with other SIEF members and fulfil all the tasks associated their special role.
Even if a SME is not a LR, it may still need to undertake a Joint Submission (JS) registration – the most common route to a REACH registration. In this case, most of the technical work on a substance is completed by the consortium members and/or their consultants and the SME buys into the substance registration via the LOA. Under REACH rules, the LOA applicant is entitled to request a full explanation of the basis for the LOA charges. Since these can be complex and include different types of technical and administrative costs, independent valuation of LOA charges is best left to REACH experts.
Should a valuation conclude that some or all LOA charges and/or content is unjustified, it is permitted to ‘opt-out’ of some or all parts of the JS registration in order to reduce costs, avoid association with unnecessary animal tests, etc. Should the LR/consortium refuse to negotiate about the LOA, another option is the stand-alone Individual registration. In this case, clear evidence of a refusal to negotiate must be provided to ECHA on request.
An agreement will need to be signed in order to become a member of a JS registration. Usually running to many pages and often containing considerable legalistic language and jargon for the unwary, the temptation for the SME is to simply sign the agreement and hope it is not disadvantaged. This can be a big risk, since there could be clauses in an agreement which compel the SME to contribute to future, as yet unknown costs, even though these may not be justified.
In fact, many LOAs are poor value for money and a lot of re-work could be required. For example, some consortia are known to have undertaken unjustified animal testing with which an SME may not wish to be associated when selling to the cosmetics sector. Agreements should only be signed when the SMEs obligations are fully understood.
Irrespective of any requirement to register their materials under REACH, all SMEs should establish a REACH plan. This should clearly identify registration and other obligations and costs, those products which the SME believes it is likely to be to support through REACH (or not), and the ‘who, what, when, how’ practical steps to achieve overall REACH compliance.
Imports to the EU – the little-known threat from REACH
There is still a widespread belief among non-EU companies with a REACH only representative (OR) in place, that they and their EU customers have little to worry about provided they receive confirmation that their upstream non-EU suppliers have achieved REACH registrations of relevant substances. They often do not realise that an additional REACH condition relating to this indirect-supply of substances to the EU must be met if they are to avoid registration obligations themselves.
Consider the following scenario: non-EU manufacturer A sells to non-EU formulator B, which then supplies its mixture to EU customer C. Company A holds a REACH registration which covers the substance tonnage it ships directly to the EU. To avoid registering itself, company B must come to a special arrangement with company A. Company A must agree that its EU-based representative will act as OR for that portion of its tonnage that routes to EU company C via company B, in addition to its current registered tonnage.
In practice, even some large companies have refused to extend their REACH registration programmes to encompass their non-EU customers in this way. In that case, additional registration(s) must be made either by the OR of the non-EU customer, or ultimately the EU importer. Non-EU companies and their EU importer-customers should pay particular attention to this little-known threat to the supply of formulated products and polymers originating from outside the EU.
Dr. Chris Eacott is a chemicals management expert with over 30 years’ experience gained in the chemical industry. He founded Stewardship Solutions in 2003 and supports the REACH/CLP compliance needs of EU and non-EU companies in a wide range of industry sectors.