With just a little over a month to go until the 29th of March and still no sign of a deal, recent guidance from the European Chemicals Agency (ECHA) and the UK Health and Safety Executive (HSE) makes clear that urgent action is required to ensure continued access to the EU market and REACH registrations after the UK’s withdrawal from the EU.
For UK based REACH registrants, ECHA has identified a ‘Brexit transfer window’ from 12 to 29 March. Unless the transfer of existing UK REACH registrations to EU based entities* is legitimately initiated or completed by the end of this period, existing REACH registrations will be VOID and UK based REACH registrants will lose access to their registrations on REACH-IT post hard Brexit. As anticipated, UK HSE will ‘grandfather’ all existing REACH registrations held by UK entities pre-Brexit for no fee and such registrations will, in time, become UK REACH registrations. Nevertheless, the main registration dossier filed with ECHA will have to be re-submitted to the new UK REACH-IT system.
For UK based downstream users and distributors who currently rely on the REACH registrations of their EU suppliers, new registrations may be required under the new UK REACH regime. Even though a grace period of 180 days is foreseen, registration fees will be identical to those under the REACH Fee Regulation (up to EUR 33,699 for the highest tonnage band) and will apply per substance placed on the UK market.
In this alert we set out some of the key considerations for UK based entities holding REACH registrations or relying on such registrations within the supply chain. It is clear that “time is of an essence” and that creative solutions by businesses may be required to avoid losing access to REACH-IT platform or doubling registration fees under the new UK REACH regime.
To help companies with UK registrations prepare, K&L will also be holding a webinar in early March 2019.
Transferring UK registrations to an EU successor
ECHA has recently released updated guidance on ‘How to transfer your UK REACH registrations prior to the UK withdrawal from the EU’. In many ways, this guidance provides helpful additional clarity, and ECHA appear to be taking a pragmatic approach to UK registrants’ need to transfer registrations to the EU. On the other hand, ECHA take a hard-line on registrants who fail to take the necessary action prior to the UK’s withdrawal date; existing UK registrations to be void post-Brexit and registrants will lose access unless the registrations are validly transferred to an EU entity pre-Brexit.
- Choosing the right type of transfer - manufacturers, importers or only representatives: Any transfer to an EU entity must be a ‘valid’ transfer recognised under the REACH Regulation 1907/2006 and applicable guidance. The type of transfer and appropriate strategy will be different for manufacturers, importers or only representatives (‘OR’), and will also depend upon the supply chain and group structure. Helpfully, on an exceptional basis ECHA is allowing UK manufacturers and formulators to appoint an OR based in the EU and transfer the UK registration to that OR (see ‘legal entity change’ below for further detail). Yet for importers (including traders), the only valid means of transfer is to another importer in the EU by way of transferring the importer business and responsibility for import; this is more challenging and potentially requires substantial shifts in business arrangements. An OR transfer remains straightforward, though new agreements with the EU based OR will need to be put in place prior to March 29. UK-based OR service providers, however, may find it challenging to agree with their clients on who bears the financial implications related to establishing a new entity in the EU or paying ECHA for the transfer.
- ‘Brexit Window’ and timing: ECHA have allocated a ‘Brexit transfer window’ between March 12 to 29 to initiate REACH registration transfers to EU entities, which enables the transfer to be initiated during this period and then completed after the Brexit date. The transfer to the EU-based successor of the REACH registrations will only be deemed complete where the successor pays the invoice for the transfer fee within the extended due date (14 days after the successor accepts the transfer followed by an extended period of 30 days). If the fee is not paid on time, the transfer in REACH-IT will automatically be undone and any remaining UK registrations will be void post-withdrawal. Interestingly, in the event Brexit is delayed (or cancelled), there is no obligation to complete the transfer and existing REACH registrations will remain valid with the UK based entity.
- Using the ‘legal entity change’ option: ECHA have taken the pragmatic approach of re-purposing the ‘legal entity change’ function in REACH-IT on an exceptional basis for transfers required as a result of Brexit, even where there is no typical ‘legal entity change’ such as a merger or split taking place. Registrants should select ‘merger’ where all registrations will be transferred to one single successor, or ‘split’ where there are multiple successors for different substances. UK based manufacturers appointing an OR in the EU will also be able to utilise this function on REACH-IT. If in doubt, all registrations should be transferred to an EU-based entity.
- Preparing for the transfer: There are numerous steps involved in REACH-IT to make the transfer effective, including ensuring the successor is ready in REACH-IT and preparing the appropriate documentation / transfer agreements that are required to be uploaded as supporting evidence on REACH-IT. This may take time to get in place and agree with the relevant parties.
- Cost: A single fee of EUR 1,631 is payable to ECHA for each transfer (reduced fees apply for SMEs), even where multiple substances are migrated together as part of the same transfer to the same successor.
- Additional steps and considerations: Any transfer of a joint submission should have the agreement of the members before effecting the transfer, so joint registrants should co-ordinate their approaches. Registrants should also inform their downstream users of the approach so that they can plan their actions accordingly and contracts may need to be updated to reflect the new arrangements. After the REACH registration transfer, the successor will need to ensure that the registrations on REACH-IT are up-to-date and assign a contact person to each registration; the successor will become responsible for the relevant obligations under REACH and for complying with any ECHA decisions addressed to its predecessor prior to the transfer.
Grandfathering REACH registrations held by UK entities to the new UK REACH regime
To ensure that REACH registrants based in the UK have continued access to the UK market, the UK HSE has confirmed that existing UK registrations will be legally recognised (i.e. ‘grandfathered’) in the UK REACH system at the point that the UK leaves the EU.
- Application: Grandfathering will apply to all UK registrations that exist at the time of exit, as well as all registrations held by UK entities at any point within the two years prior to 29 March 2019. This means that any UK registration transferred to an EU entity in the run up to Brexit will still be carried over into the UK system.
- Cost: UK HSE will not charge any fee for grandfathering registrations.
- Notification: UK registrants will need to open an account on the new UK REACH-IT system, to be launched by the time the UK leaves the EU. UK HSE require certain preliminary basic information to be submitted within 120 days of the UK leaving the EU.
- Full registration: The relevant information on the substance required under REACH will need to be provided within two years of the UK leaving the EU (this timescale will be kept under review). The information requirements for UK REACH will remain the same as the current REACH requirements.
- Supply chain considerations: Again, the new UK REACH regime and access to the registrations may require existing commercial contracts or letters of access to be re-negotiated, and early contact with joint registrants is advised. Transfer of the Lead Registrant’s IUCLID REACH file will be a necessity for any joint registration to be valid in the UK.
UK entities relying on REACH registrations of EU based entities
UK companies currently procuring REACH registered substances and mixtures from EU suppliers will, post withdrawal, become importers under the UK REACH regime to be established in the wake of Brexit. Therefore, such companies will need to hold a valid UK registration as importers:
- Notification: UK HSE has currently proposed a free ‘notification’ system before full registration obligations apply for UK-based downstream users. This will entail opening an account on REACH-IT and providing certain information within 180 days of the UK leaving the EU.
- Full registration: UK based downstream users will then need to register the substances with UK HSE by providing the technical dossier appropriate to their tonnage band to support UK REACH registration within two years of the UK leaving the EU; this timescale will be kept under review.
- Cost: The registrations will be considered as new registrations, and therefore subject to the fees payable to the UK HSE; these fees range from 1,304 EUR for the smallest tonnage band, up to EUR 33,699 for substances above 1,000 tonnes under individual submissions. Reduced fees for SMEs are foreseen (similarly to under the REACH Fee Regulation No 254/2013).
- EU registrants taking over the registration burden by establishing an OR in the UK: EU manufacturers exporting to the UK may choose to appoint a UK-based OR to take on UK REACH obligations. Again, this would be classed as a new substance registration and full registration duties (e.g. a full data package submitted on registration) and the appropriate registration fee would apply. If the EU manufacturers’ UK-based OR registers within 2 years of the UK leaving the EU, UK importers from the EU would regain the status of downstream users within UK REACH, and would therefore not need to become registrants themselves. If the OR completes this registration within 180 days of the UK leaving the EU, this would relieve their UK downstream users of the duty to notify the HSE within 180 days. UK downstream users may make use of the notification process in the first instance, and consider further steps depending on their suppliers’ intentions in relation to the UK market. If you are not sure what to do or whether a transfer is required, you can get in touch for advice to help decide on the most appropriate action for your business. As it may take time to implement any necessary changes, we recommend businesses seek advice on the available options as soon as possible to avoid the potential risk of UK-registrations being void post-Brexit.