European Union’s New REACH Environmental Legislation Will Significantly Impact U.S. Companies
With trepidation from industry around the globe, the European Union (EU) enacted new environmental legislation called REACH on June 1, 2007. The new law will have significant and broad-sweeping impacts on businesses in the United States that export products to any EUS country. The basic elements of REACH are Registration, Evaluation, Authorization and Restriction of Chemicals. The new regulations are more stringent and more sweeping than US regulations, and many US manufacturers who do not consider themselves chemical companies will find themselves widely affected by REACH.
The aim of REACH is to improve the protection of human health and the environment through the better and earlier identification of the intrinsic properties of chemical substances. At the same time, the EU hopes to enhance the innovative capability and competitiveness of its chemicals industry. The participating countries do not expect to immediately see benefits of the REACH system. Instead, benefits are expected to come gradually, as more and more substances are phased into REACH.
REACH imposes responsibility on industry to manage the risks from chemicals and to provide safety information on the substances that are contained in process chemicals, are used to manufacture products, or might be released from products. Manufacturers and importers are required to gather information on the properties of their chemical substances, which will allow their safe handling, and to register the information in a central database run by the newly formed European Chemicals Agency. The Agency will act as the central point in the REACH system: it will manage the databases necessary to operate the system, coordinate the evaluation of suspicious chemicals and run a public database in which consumers and professionals can find hazard information. REACH also calls for the progressive substitution of the most dangerous chemicals when suitable alternatives have been identified.
For many companies, REACH registration will be the most costly and time-consuming part of compliance. Generally, anyone that makes a chemical in pure form, in a substance or, in some circumstances, an article that is shipped to the EU above one metric tonne per year (approximately 1.1 tons) will need to register it with the Agency. Registration involves producing a “dossier” of information in collaboration with other manufacturers or importers. The obligations are essentially the same for manufacturers and importers of substances, and apply to substances on their own, within preparations (mixtures of substances) and in articles (items that have a particular shape or design that determines function if the chemical is released from the article during normal use or disposal).
REACH also applies to “downstream users.” For example, any company that uses a chemical to make a product, to clean a floor, to lubricate a machine, to print on their packaging, etc., has to make sure that their use of the chemical is listed within the dossier. There are a few exemptions from many or all of the provisions of REACH. Some substances that are structurally simple and benign are exempt. Other chemicals or preparations already regulated are exempt from certain provisions such as those in medicinal products or in foods.
The first step in REACH compliance is for companies to determine whether the chemicals that are exported to the European Union fall under REACH. Due to the large numbers of substances affected by REACH, there is a transitional or “phase-in” period for registration of substances that have been on the market for some time. To facilitate this process, there is a pre-registration period between June 1, 2008 and December 1, 2008. If a company takes advantage of this fairly simple pre-registration, it will have much longer to compile the detailed technical dossiers required for full registration. Full registration deadlines then depend on tonnage and the hazardous nature of the chemicals and are phased in over the next ten years.
Companies that are based outside the EU cannot register, or pre-register, substances themselves (unless they have an EU-based subsidiary). Instead, they must appoint an “only representative.” Only representatives are EU-based legal entities that are considered competent to carry out the REACH registration process on behalf of companies based outside the EU.
Companies need to prepare now to manage the communication of chemical information up and downstream, and to handle the administrative and technical tasks imposed by REACH. To start the process, each preparation or article that is exported to the EU needs to be evaluated against the list of regulated chemicals. The attorneys and environmental professionals at Frost Brown Todd are prepared to assist your company with meeting these demands.