Legal Spotlight - How to comply with candidate list obligations

CW Briefing, October 2008

After pre-registration of phase-in substances, the forthcoming publication of the first list of substances of very high concern - the ‘candidate list’ will mark another important step in REACH implementation. While pre-registration has been mainly an affair for chemicals manufacturers and importers, dealing with candidate list effects will be the responsibility of suppliers of articles. Indeed, the publication of the list will trigger communication obligations for companies that supply articles containing candidate list substances in excess of a certain concentration. How will that work in practice? What should companies do to ensure compliance? Jean-Philippe Montfort and Giovanni Indirli investigate.

Background

The REACH Regulation establishes a process for the identification of substances of very high concern (SVHCs) that will eventually be included in the list of substances subject to authorisation. Substances considered to meet SVHC criteria will progressively be identified on a list published on the European Chemicals Agency (ECHA) website. This is commonly referred to as the "candidate list" of substances proposed for authorisation. The process for their eventual inclusion in the list of authorised substances in Annex XIV to REACH will take time - substances on the candidate list will first need to be prioritised by ECHA before becoming subject to the authorisation process.

In the meantime, however, the publication of the first candidate list will immediately trigger the communication obligation provided for in Article 33 of REACH. Any supplier of an article (article producers, importers and distributors) containing a candidate list substance in a concentration above 0.1% weight by weight (w/w) is required to provide the recipient of that article, such as professional end users and distributors, including retailers, with sufficient information, available to the supplier, to allow safe use of the article. Article 33.1 requires that, as a minimum, this should include the name of the substance. Article 33.2 then provides that the same information must be provided to consumers within 45 days of receipt of a request.

ECHA’s Member States Committee has now agreed on 15 of 16 nominated chemicals to place on the first candidate list, which is expected to be published in October.

A first version of a ‘registry of intentions’ has also been published to give an indication of other dossiers that may be prepared in coming months including five proposed by the Commission for SVHCs .

Article 33

Important features of Article 33 include the following:

  • Unlike the notification obligation for candidate list substances in Article 7.2, the communication obligation in Article 33 is exclusively triggered by the concentration of the substance in the articles supplied. It therefore applies regardless of the annual volume of candidate list substances in products supplied.
  • All article suppliers are subject to communication obligations, not only article producers and importers, as is the case with the notification obligation;
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  • The obligation to communicate information to recipients of articles (Article 33.1) applies as soon as the inclusion of the SVHC in the candidate list is published on ECHA’s website (unlike the communication in response to consumers’ request under Article 33.2 for which a 45-day delay applies).
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  • Article 33 applies not only to articles that have been produced or imported after the publication of the list, but also to those produced or imported before that date and held in stock at the supplier premises at the time of the publication of the list, provided that they are "supplied" in the EU after that date.
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  • There remains a serious disagreement between Member States on the application of the 0.1% threshold. The guidance document on requirements for substances in articles indicates that ‘article’ refers to the product as produced or imported (this may be a mono-material simple product or a multi-material complex/assembly) and that the 0.1% w/w concentration should be calculated against the weight of the whole article. However, six Member States still disagree with this interpretation and take the opposite view that the concentration of SVHC should instead be calculated against the weight of the material in which the SVHC is present or at component level. Their position has been notified in writing to ECHA and a reference to this effect has been added to relevant parts of the guidance document.

    How to obtain information

    Article 33 will oblige article suppliers to determine if, and in what concentration candidate list substances are contained in articles. Article suppliers are also expected to document the result of their compliance checking. This does not mean that article producers should always generate hard evidence. In a number of cases, the article supplier should be able to exclude the presence of a candidate list substance in its articles, for example, if the candidate list substance is a gas that evaporates. Concentration limits for relevant substances in existing supply contracts can also be a means to demonstrate the absence of candidate list substances in the articles supplied. In all other cases, relevant information should be gathered through supply chain communication.

    Communications up the supply chain

    In principle, producers of articles know what materials their articles are made of. However, that does not necessarily mean they know the detailed composition of the preparations and articles that are supplied to them and that are used to produce the articles they sell. Safety data sheets (SDS) contain information on the presence of SVHCs already classified as dangerous in preparations. However, they do not specify their exact concentration, nor do they include information on non-classified SVHCs present in the preparation. Furthermore, SDSs are generally not supplied with components or parts that are used as raw materials.

    To discharge their obligations under Article 33, article suppliers will have to actively ask their suppliers to provide them with information on SVHCs contained in preparations or in articles used to produce the articles they supply in the EU.

    Considering the complexity of some supply chains and the billions of articles marketed in the EU, this is a titanic exercise, especially in the case of imported articles, for which non-EU companies may not be prepared to provide relevant information. REACH guidance recommends that article importers inform their suppliers outside the EU of the relevant REACH requirements and make special arrangements to receive information.

    Below are some of the main options open to suppliers of articles to obtain the information needed to discharge their duties under Article 33:
  • Monitor each publication/update of the candidate list and ask suppliers every time SVHCs are included in the candidate list whether the presence of those SVHCs in the articles can be excluded, or if the supplied articles contain those substances and in what concentration. This will limit the number of chemical substances to be reviewed but multiply the number of communications, as a new communication will be needed each time the candidate list is updated.
  • Ask suppliers to monitor the candidate list and provide relevant information as soon as they establish that a candidate list substance is present above 0.1% in a supplied article. This may seem to be an attractive option but it may prove difficult to rely upon in the case of complex, international supply chains where some of the suppliers abroad do not even know what ‘REACH’ stands for.
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  • Ask the supplier to obtain and communicate full compositional information in advance of the publication of the list. This option may be considered by some producers in circumstances where the reputation of major brands is at stake, but seems hardly recommendable on a large scale, not to mention the fact that compositional information is often considered to be confidential business information, and that receipt of this information would involve increased liabilities with regard to handling the information so received.
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  • Test the supplied products for content in candidate list substances. This clearly is an impossible option on a large-scale basis as it may require interruption of supply for the time necessary to conduct the testing. Also, the guidance document recommends that chemical analysis is used as a last resort in selected cases.
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  • Any combination of the above.

    As an alternative, some companies have elaborated a company-specific ‘restricted substance list’ (RSLs) to identify those substances that are likely to fulfil the SVHC criteria before they make it onto the candidate list. They contractually require their suppliers to avoid use of RSL substances in their products. Supplier guarantees of compliance with RSLs would allow their customer, the supplier of the articles, to ensure compliance with Article 33. Of course, should a newly identified SVHC not be on the company’s RSL, the article supplier should communicate up the chain, as in the first option above.

    Eventually, it is for every supplier to select the most appropriate option or combination thereof, taking into account the specific nature of their supply chain and the availability and sophistication of the resources available in the chain.

    Communication down the supply chain

    The next step is for suppliers of articles to inform recipients of articles in the EU if the articles they supply contain candidate list substances above 0.1% w/w. The customers/article recipients may in turn be article suppliers or industrial and professional users and need this information to either fulfil their own duties under Article 33 or to take measures necessary to protect their workers or comply with other applicable EU and national legislation. If the article is used to make assembly products, this information will also form the basis for the calculation of the concentration of SVHC in the new article, as indicated in the guidance.

    Below are some of the main options open to suppliers of articles to communicate information down the chain in accordance with Article 33:
  • Monitor each update of the candidate list and communicate to customers that the supplied articles contain/do not contain the listed substances above 0.1%.
  • Proactively inform customers that the company is monitoring the candidate list and will inform its customers as soon as they have information that a SVHC is present above 0.1% in a supplied product.
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  • Respond to customer questions on an ad-hoc basis, including on request, to confirm absence of substances on a customer black list.
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  • Any combination of the above.

    Article producers and importers may also receive enquiries drawing attention to their need to fulfil their Article 33 duties, asking how they intend to do so. The continuing disagreement on the interpretation of Article 33 and 7.2 will certainly not facilitate communication. Certain dissenting Member States have already announced that they will use the stricter interpretation as a basis for enforcement action and this might prompt recipients of articles located in these countries to ask their EU suppliers to apply the stricter approach.

    Handling consumer requests

    Article 33.2 requires that the information that article suppliers provide to article recipients should also be provided to consumers within 45 days of receipt of a request.

    Some important features include:
  • As with the communication to article recipients, the obligation to respond to consumers’ requests applies to articles supplied after the publication of the list; there is no obligation to respond to a consumer’s request in relation to articles supplied before that date.
  • Only those suppliers who have supplied the article after the publication of the list are required to respond to consumer requests. These may be article producers or importers, distributors or retailers. Article suppliers up the supply chain who have already supplied the article concerned at the time of the publication of the list do not have any obligation with regard to articles that article suppliers down their supply chain have supplied to the consumers after that date. They may nevertheless be expected to receive requests from the retailer to provide relevant information and should therefore be prepared to provide that information in any case, which may prove difficult.
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  • Only individual consumers to whom the product has been made available can request the information. NGOs acting exclusively in their name and on their own behalf are not in principle entitled to request information pursuant to Article 33.2.
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  • In case of articles for which batch to batch variations in product composition are possible/likely, indication of product reference or the batch to which it belongs may be necessary to avoid providing inaccurate information.

    Here again, several options exist, including:
  • Responding to consumer questions (either directly or forwarded by customers) on an ad-hoc basis;
  • Proposing to customers that consumer inquiries should be directed to the company to handle requests;
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  • Proactively preparing and publishing on company websites statements to show that the company is monitoring the candidate list and will publish an updated statement each time the candidate list is updated on the absence/presence of listed substances above 0.1% in its products.

    Conclusions

    In our view, there is no doubt that the required level of transparency in the supply chain that Article 33 requires, the confidential nature of some of that information, and the lack of unanimous interpretation of Articles 33 and 7.2, makes compliance with Article 33 duties for all articles produced or imported in the EU a totally unrealistic proposition.

    Eventually, it will be a question of "due diligence". As in many cases companies will not be able to ensure that all the articles they supply are free from candidate list substances above 0.1%, their key objective should be to determine what level of due diligence they need to put in place to ensure their products are "safe".

    This information should then be communicated down the chain as soon as they obtain information that their products do contain a candidate list substance above 0.1%.