The European Court of Justice recently ruled in four cases related to the REACH Regulation’s Candidate List. These cases, which were brought by companies involved with chemical substances included on the Candidate List (borates1 and acrylamide2), dealt with standing requirements for plaintiffs and the deadline for bringing actions seeking annulment of decision to include a chemical on the Candidate List. Three of the four cases were dismissed for lack of standing, while the fourth one was dismissed for having been filed out of time.
The Candidate List is a list of chemicals regarded as hazardous under the REACH Regulation, the EU’s new chemical legislation. The REACH Regulation is intended to ensure the safety of chemical production and use of chemicals from cradle to grave. Not only EU producers and importers of chemicals in bulk but also manufacturers and importers of products (called “articles”) have obligations under REACH. The inclusion of a chemical on the Candidate List triggers information and notification requirements for producers and importers of products. Further, chemicals on this list are evaluated to determine whether they should be subjected to the authorization regime of the REACH Regulation. Under this regime, listed chemicals may be used only if specific authorization has been granted.
The Candidate List currently includes 53 chemicals and the European Commission is committed to expanding it to 136 by the end of 2012.
1. The Candidate List, Requirements for the Industry
A major new regulatory program created by the REACH Regulation, the authorization program empowers the European authorities to require prior authorization for the use of a chemical on its own or in a mixture, or for its incorporation into a product. Authorization is required for use of a chemical listed on Annex XIV of REACH. Before a chemical is listed on this annex, it must first be included on the Candidate List.
- Procedure for Inclusion of a Chemical on the Candidate List
The REACH Regulation provides that any CMR, PBT, vPvB substance or substance of “equivalent concern” may be placed on the Candidate List.
The listing procedure starts with a dossier prepared either by the European Chemicals Agency (“ECHA”) or a Member State. This dossier is made available for comments to all Member States and to all stakeholders in a public consultation.
If no Member State or the ECHA makes any comments, the chemical must be included on the Candidate List. If they do make a comment, the ECHA’s Member State Committee may decide by unanimous vote to include the chemical. In the absence of consensus, the Commission must prepare a proposal for a decision that will be subject to approval under the comitology procedure. The ECHA must publish “without delay” on its website the inclusion of a chemical on the Candidate List.
- Requirements for Industry
The REACH Regulation provides that the listing of a chemical on the Candidate List triggers requirements for both suppliers of chemicals and producers and importers of products:
- Suppliers of chemicals: They must supply a SDS to their customers, if they were not already required to do so. In practice, chemicals on the Candidate List are already treated as hazardous and thus suppliers are already subject to the obligation to supply a SDS, irrespective of the inclusion of the chemical on the Candidate List.
- Producers and importers of products: If the chemical’s concentration in a product exceeds 0.1 percent w/w, information on safe use must be provided to customers and, upon request, to consumers. This information must, at a minimum, include the name of the chemical. If, in addition, the annual volume exceeds one ton, the ECHA must be notified.
2. Standing for Challenging the Inclusion of a Chemical on the Candidate List
The inclusion of a chemical on the Candidate List is in the form of a decision that is not addressed to any particular individual or legal entity. The standing rules for private parties were somewhat relaxed by the Lisbon Treaty with effect as of December 2009. A regulatory act of general application may now be challenged by an individual or a legal entity but only if the decision is of “direct concern” to that individual or entity and the decision does not entail implementing measures. Under settled case law, this requires, first, that the challenged decision directly affects the legal situation of the applicant and, second, that it leaves no discretion to the addressees of that measure who are to implement it without application of further rules.
The four cases concerning the Candidate List were launched by suppliers of the chemicals concerned, not by producers or importers of products. The applicants argued that the inclusion of the chemicals on the Candidate List was of direct concern to them because it (i) would trigger the requirement to either supply or update a SDS, (ii) would trigger obligations for them to provide information, (iii) would trigger obligations for them to provide information for their customers and iv) would possibly cause their customers to stop using the chemicals concerned.
The European Court rejected all of these arguments:
- Supply a SDS: The chemicals concerned were treated as dangerous prior to their inclusion, and thus the applicants were already required to supply a SDS to their customers. The inclusion on the Candidate List did not add any requirement.
- Update a SDS: The inclusion of a chemical on the Candidate List does not trigger any requirement to update a SDS, because such inclusion is neither new information on a hazard nor new regulatory information.
- Separate information requirement: The applicant misinterpreted the legal provisions, which impose obligations on customers to inform their suppliers, not on suppliers. Further, these obligations are limited to communicating new hazard information, and in this case no new hazard information was implied in the contested decision.
- Requirements imposed on customers: The requirements imposed on customers are irrelevant to determining whether suppliers have standing.
- Risk of losing business: The alleged risk of losing business does not amount to “specific circumstances” resulting in direct concern.
3. Deadline for Challenging the Inclusion of a Chemical on the Candidate List
An action in annulment must be instituted within two months from publication of the decision. The European Court’s Rules of Procedure provide that, in the case of publication, this time limit is extended by 10 days on account of distance and it only begins to run from the end of the 14th day following the date of publication in the Official Journal of the European Union.
As discussed below, the Court dismissed the two acrylamide cases because they were not timely submitted.
- The first case challenged the unanimous agreement of the ECHA’s Member State Committee to include acrylamide on the Candidate List, which was made following the positive opinion of the executive director of the ECHA. The publication of the listing itself was certain, though due only later in time. The European Court ruled that the limitation period starts to run as of the effective inclusion of a chemical on the Candidate List, which takes place upon publication on ECHA’s website.
- The second case was brought against the effective inclusion of acrylamide on the Candidate List, and filed more than two months and 10 days after the relevant date. The European Court ruled that the applicant inappropriately relied on the 14-day extension of the time limit, which applies only in the case of publication in the Official Journal of the European Union. In this case, the inclusion of a chemical on the Candidate List was published on ECHA’s website and the time limit to challenge such decision starts to run immediately upon publication.
The rules regarding the listing of chemicals on the Candidate List and the standing requirements before the European Court are relatively new. The Candidate List has an increasing impact on companies as more and more chemicals are added to the list. The European decision makers have not always been sensitive to the concerns of industry, which meant that companies had to bring lawsuits. Under EU law, however, standing requirements and time limitations may prove to be significant obstacles, as the four cases concerning the Candidate List cases show.
First, producers and importers of products should consider bringing the lawsuits themselves, rather than relying on their suppliers to bring actions against the inclusion of chemicals on the Candidate List. This is so even if suppliers of chemicals have more resources and are more sophisticated than their customers, because, as these cases illustrate, suppliers will have a hard time establishing standing. Producers and importers of articles containing chemicals on the Candidate List will incur obligations directly as a result of their inclusion on the Candidate List and may thus have a better chance to establish standing based on the “direct concern” requirement. On the other hand, they should not presume that they will necessarily meet this requirement. Further, even if producers and importers of articles have a direct concern, they must still establish that the contested decision is a “regulatory act” and “does not entail implementing measures.” So far, with the exception of some preliminary rulings and an interim injunction against the inclusion of acrylamide on the Candidate List that was lifted later on, no annulment action related to the REACH Regulation has resulted in a judgment on the merits.
Second, the time limit for bringing any legal action is short, and shorter than some expect. An annulment action must be brought within two months from the inclusion of a chemical on the Candidate List as published on ECHA’s website. This means that a company must proceed diligently if they want to launch a lawsuit.
Finally, these four cases provide some clarification on the information requirements within the supply chain, assuming the European Court maintains its position if it were to judge on the merits, rather than on the standing of an applicant. If the recent judgments can be extrapolated, suppliers of chemicals have no obligation to update their SDS and do not need to inform their own suppliers of the mere inclusion of a chemical on the Candidate List.