EU more risky than ever for chemical users

For chemicals must now be approved as safe under the Registration, Evaluation and Authorisation of Chemicals (Reach) regulation, which is intended to ensure protection of human health and the environment. Chemicals that are not approved will be banned.

Companies must carry out a risk assessment for each use of a hazardous substance and identify risk management measures. “Risk managers have to be very involved in the key steps of Reach: registration, evaluation, authorisation and restriction, knowing also the frame of responsibilities for each and every step (industry, agency, member state authorities and European Commission),” said the Asociación Española de Gerencia de Riesgos y Seguros (Agers), Spain’s risk management association.

Break the rules and you risk fines—some very large and some unlimited—and criminal prosecution in some EU countries. Although Ursula Schliessner, Managing Partner of the Brussels office of the law firm McKenna, Long and Aldrich, said that huge fines may never be levied, she warned that enforcement is likely to differ greatly among EU member states.

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“This is a concern,” said the Dutch paint and coatings firm AkzoNobel. “However, the knowledge base across the various countries is large and so standardisation across the [EU member] states is foreseen.”

Companies could also face similar rules in other markets before long, as Reach-like schemes are in the pipeline in countries that include Turkey, South Korea and China.

Alongside Reach, EU companies have also had to reclassify materials, under the new Classification, Labelling and Packaging of Substances and Mixtures regulation, based on the United Nation’s Globally Harmonised System of Classification and Labelling of Chemicals.

Companies should realise that officially approved collaboration between them under Reach could fall foul of EU competition rules, according to Nicole Coutrelis of French law firm Coutrelis & Associates.

Companies can share data and other information in order to register chemicals, in consortia and in Substance Information Exchange Forums (Siefs). This means detailed communications with suppliers and customers about substances and products and their uses.

However, Ms Coutrelis said that companies find it difficult to ‘draw the line’ and not share prices, production volumes and customer information. Such exchanges would breach competition rules. “It is absolutely necessary to restrict information only to what is necessary under Reach,” she warned. “It’s a very tricky thing. You have to be cautious.”

Echa. The European Chemicals Agency, has also issued warnings about copyright and ownership of data used in registrations. Agers told CRE that the necessity to share information ‘could raise some concerns over security about intellectual property’.

However, Dutch paint and coatings company AkzoNobel told CRE: “We have not found the data sharing aspects too problematic. We have had no specific issues regarding copyright rules and we have been working mainly with other data rich companies.”

If companies refuse to share data, or charge too much for sharing the data, they could face charges of abusing their dominant market positions, said Ms Coutrelis.

Registration consortia and Siefs also risked holding ‘collective dominant positions’, she added, if groupings are large or if associated downstream companies using the registered chemicals control their markets.

Market strategies, including the allocation of registration costs with non-EU firms, could also lay firms open to market abuse charges, said Ms Coutrelis: “When you talk about strategies, competition issues may arise.”

Cyril Jacquet, a legal adviser in Echa, accepted that there could be legal risks with data sharing: “This is certainly something that is a problem.”

Although Reach has been in place in effect since 2007, registration is being phased over 11 years, with an initial focus on the most hazardous substances and those produced or imported in large quantities.

By 1 December, 2010, firms had to register, for approval, substances produced or imported in volumes of more than 1,000 tonnes/year, as well as carcinogenic, mutagenic or toxic-to-reproduction substances with volumes of more than 1 tonne/year. By the deadline, 4,300 substances had been registered in 24,675 dossiers.

By 1 December, 2013, manufacturers and importers must register substances with volumes of more than 100 tonnes/year and, by 1 December, 2018, substances with volumes of more than 1 tonne/year.

Substances of very high concern (SVHC)—which are carcinogenic, toxic for reproduction or persist in the environment and accumulate in living organisms—will be banned within a few years unless authorisations are granted to individual companies for their usage. Firms will need to demonstrate safety measures to control the risks, or that the benefits for the economy and society outweigh the risks. About 48 candidate SVHC are listed so far.

Even large firms have not found Reach plain sailing. For example, Anja von Hahn, in the legal department of the German chemical company Basf, which has registered more than 600 substances, said that although its Reach people were experts on the substances, not all of them were capable of negotiating with competitors: “We had some problems,” she commented.

The development of agreements for Siefs, data sharing and cooperation has also been a big effort, said Ms Von Hahn, who added: “We need to work on these a little.”

The European Commission says that one aim of Reach is to improve industry’s competitiveness. AkzoNobel, for one, supports Reach as ‘a very positive step forward: it will help us create a level playing field in the chemicals industry because all companies will now be held to the same high standards that we hold ourselves to’. The company has not felt the need to change its insurance cover for Reach.

It added: “On a more strategic note, Reach also helps us define ourselves in the marketplace as a company that’s serious about meeting its obligations.”

“From a company point of view, there are actually several advantages,” said Liisa Rapeli-Likitalo, head of Reach at Finnish chemicals company Kemira, with customers mainly in water-intensive industries such as pulp and paper. “Data is more harmonised, streamlined and publicly available. There is also better management and control of chemicals throughout the supply chain.”