If your business exports any products into a European Union country and you have not heard of the REACH legislation, it may be time to hit the panic button, or at least move a little closer to it. If you have heard of REACH, the Registration Evaluation and Authorization of Chemicals regulation that went into effect in June of 2007, and it applies to your business, chances are you are probably in the middle of a massive undertaking to identify, quantify and possibly pre-register all regulated substances that are in products that are sold directly or indirectly into EU countries. REACH generally requires that all manufacturers and importers located in the EU register every substance in the products it manufactures or imports in the EU if the collective quantity in all of the products containing that substance exceeds 1 metric ton per year. There is an opportunity to extend the registration deadline of January 1, 2009 by up to 10 years for certain substances IF the manufacturer or importer pre-registers the substance by December 1, 2008. After January 1, 2009, if the substance is not registered or pre-registered, products that contain that substance will not be permitted to be manufactured, imported or placed on the market in the EU.
Non-EU manufacturers legally do NOT have direct responsibility for registering its substances. It is the Importer's obligation to register. However, non-EU manufacturers may appoint an "Only Representative" based in the EU to pre-register and register their substances and thereby relieve the importer of the legal obligation to do so. Most importers (i.e., your EU Customers) of non-EU manufacturers are putting the cost and burden of complying with REACH on their Suppliers and asking their Suppliers to provide proof of pre-registration. Chances are, someone in your sales or technical organization has already received numerous letters and/or phone calls from EU Customers or non-EU customers that sell products containing one of your products into the EU, regarding your company's REACH compliance status. These inquiries typically request documentation and/or certification that you have pre-registered all of the regulated substances in your products.
The following is an overview of the pre-registration process and some of the common issues that companies are facing as they proceed to the process.
The first step in the pre-registration process is to determine if your company exports any regulated substances into the EU directly or indirectly in excess of the 1 tonne per year threshold. Creating a current inventory of products and substances with historical volumes, expected volumes, Supplier and Customer locations is the most time-consuming and critical aspect of the process. Having a thorough and accurate understanding of your supply chains is essential to making smart business decisions. The result of this step is usually "the Mother of All Spreadsheets" that organizes the information and defines the potential scope of your REACH requirements.
Practical Tip #1: This is a complex, cross-functional and potentially global exercise. Senior management needs to be educated about the significance of this program and the consequences of non-compliance so that cooperation across key functions such as sales, sourcing, manufacturing, product management and finance can be obtained to ensure an accurate inventory. Also, a basic timeline that works back from the ultimate deadline and contains interim deadlines for key tasks is critical to keep track of all the steps necessary for pre-registration.
Step 2 involves identifying which substances from the inventory may require registration. This likely involves a combination of looking at historical and projected volumes and considering any potential exemptions, such as the Article or Polymer exemptions. These determinations are often complex and require technical or legal analysis of the over 20,000 pages of Guidance Documents currently available. The result of this step is usually a shorter list of critical substances that require pre-registration.
Practical Tip #2: Assemble a competent team using internal and external resources very early in the process. This team should include persons familiar with the manufacturing, supply chains and customers as well as legal and technical personnel familiar with REACH requirements. Weekly calls are a great way to keep this train on the right track. Also, document any analysis regarding whether an exemption applies to a particular substance.
Step 3 consists of contacting all of your suppliers to inform them that their substances are being incorporated into products exported to the EU and therefore are subject to REACH. The contact should include a request and deadline for the Supplier to inform you of their plans to comply with REACH and to provide the proof of pre-registration.
Practical Tip #3: Consider identifying the substance to more than one Supplier so your business has future flexibility to switch Suppliers quickly.
Step 4 involves making the final commercial or business decisions regarding which substances need to be registered by your company and which may be left to your Suppliers. Some common questions to consider when making these decisions include: Has my Supplier provided adequate proof of pre-registration? If we want to switch Suppliers for this substance after 1/1/09, can we do so quickly? Should we pre-register all of our components to ensure that regardless of what our Suppliers do, we have maximum flexibility regarding our products? There are different strategies and considerations for each of these questions that should be discussed with your technical and legal experts.
Practical Tip #4: There is no fee for pre-registration and you may withdraw your pre-registration after January 1, 2009 without penalty. To avoid potential business interruption due to a Supplier's failure to pre-register a substance, some companies are pre-registering all or at least their critical substances themselves. This may or may not be an appropriate strategy for your business.
Finally, Step 5 involves retaining an "Only Representative" to take the data from Master spreadsheet for the list of substances you wish to pre-register and file it electronically with the European Chemicals Agency (ECHA). The non-EU manufacturer must also notify its down stream users (i.e. importers and customers) of its intent to retain an Only Representative and pre-register the substance. For the actual pre-registration, very basic information (such as the contact information of the Only Representative, the substance identity as specified by the EINECS number, the IUPAC chemical name and the projected tonnage) regarding the substance is required.
Practical Tip #5: If your business needs assistance with the technical interpretation and application of REACH, make sure that the Only Representative you retain also has a competent U.S. counterpart to assist in the technical and strategic discussions.
Common Pre-Registration Questions/Issues
The pre-registration process has been proceeding since June 1, 2008 with over 8,000 substances already pre-registered. As a result, a number of common questions are arising among registrants. Although the answers to the questions vary, here are some of the main issues:
- Do I pre-register all of my raw materials or do I rely on my Suppliers?
- If I rely on my Suppliers, what documentation/proof should I request?
- Does the Article Exemption apply to the substances in my product?
- Does the Polymer exemption apply to my product?
- What if I decide to change Suppliers in 2009?
- Iif my production volume increases above the threshold in 2009, do I have to register the substance?
- If I introduce a new product in 2009, can I get the benefit of the extended deadlines or do I have to proceed through the registrations process?
- How do I protect my business confidentiality? And finally:
- After pre-registration, what happens next?
In response to the last question, there is a lot of uncertainty about the next phase of the REACH process but after a substance is pre-registered, based on volume and nature of the substance, an extended deadline for registration is established ranging from 2010 to 2018. To facilitate the data collection necessary for registration, REACH provides that in January of 2009, ECHA is supposed to publish a list of companies/Only representatives that have pre-registered for each substance. Those companies pre-registering that substance are encouraged to form a voluntary group called a Substance Information Exchange Forum (SIEF). If a SIEF forms for a particular substance, the members of that group can share information and the costs to perform the required testing to jointly develop the data necessary for registration.