Legal Spotlight - Are you prepared for REACH enforcement?

REACH has been in force since 1 June 2007. However, as REACH enforcement has been entrusted to Member States' authorities and they were only obliged to lay down provisions on penalties for REACH infringement by 1 December 2008, it is only recently that this has become an important issue. Jean-Philippe Montfort explains.

Thirteen Member States failed to comply with the obligation under Article 126 of REACH to adopt national provisions on penalties for REACH infringement and notify these provisions to the European Commission by 1 December 2008 (CW 2 December 2008).

Indeed, according to the Commission, four months after the deadline, eight member states have still not notified it of their enforcement provisions and it is considering infringement proceedings (CW 20 March 2009).

Enforceable obligations

So assuming REACH is enforceable in a particular Member State, what are the REACH obligations that can be enforced today? Essentially, these are:

• The obligation to register, or to have pre-registered, phase-in substances manufactured or imported in the EU in quantities above or equal to one tonne per year (Articles 5 and 28);
• The obligation to register non phase-in substances before manufacturing or importing them in the EU in quantities above or equal to one tonne per year, after submitting an inquiry to the European Chemicals Agency (Articles 5, 24 and 26);
• The obligation to submit a notification before engaging in production and process orientated research and development activities (Article 9);
• The various obligations on only representatives, including to keep record of quantities, importers, customers sold to and supply of safety data sheets (SDS), but also to comply with other obligations of importers under REACH (Article 8);
• Data sharing obligations and in particular the obligation for data owners to respond to requests for data within a SIEF, once established, for phase-in substances and as part of the inquiry process for non-phase in substances (Articles 26-30);
• The obligation to communicate information down the supply chain, in the form of a SDS, when required or requested (Article 31) but also other information down the chain for substances for which SDS do not apply (Article 32). Importantly these obligations apply regardless of quantity for substances that may not need to be registered;
• The obligation to submit new information up the supply chain (Article 34);
• The obligation to communicate information to workers (Article 35);
• The obligation to communicate information on the safe use of Candidate List substances present in articles above 0.1% w/w to supplied customers and to consumers upon request (Article 33); and
• The obligation to keep information on REACH compliance that can be made available to the authorities (Article 36), which we discuss further below.

Future obligations

In time, other obligations will be added to this list, including:

• Registration obligations for pre-registered phase in substances, including for instance, obligations concerning joint submission and chemical safety reports;
• New communication obligations in the supply chain after registration and updates of the registration dossiers;
• Obligations related to the evaluation, restrictions and authorisation phases of REACH; and
• Obligations pertaining to notifications on substances in articles;
• Obligations pertaining to the newly adopted classification, labelling and packaging Regulation which have now replaced REACH obligations concerning the establishment of a classification and labelling inventory.

For those obligations that are already enforceable, how should companies prepare for inspections and controls? Article 36 is key in that respect. It requires each manufacturer, importer, downstream user and distributor to:

• assemble and keep available for ten years all the information it requires to carry out its duties under REACH, and
• submit this information or make it available without delay if requested by Member State competent authorities or by ECHA.

This means, for example, that companies that have taken the necessary steps to pre-register in time and to meet their obligations as described above, could still be found in breach and fined, if they fail to keep the required information and submit it, on request, to enforcement authorities.

Essential preparations

It is therefore essential for companies to:

1. Verify which of the above obligations apply to them (as manufacturers, importers, downstream users or distributors) for each substance and each legal entity;

2. Gather the information required to demonstrate compliance with each obligation for each substance;

3. Set up a system so that this information is available for inspection as well as an internal procedure to handle such events.

This is not a simple task and companies should think about taking legal advice on the best way to prepare as well as how to audit their current practices and processes to ensure compliance. By way of example, below are some of the potential difficulties that companies should consider:

• The obligation to pre-register may seem straightforward, but companies could be asked, for instance, to justify the exemptions they relied upon, how they calculated the quantities imported or manufactured or for substance identity information in order to verify the legitimacy of its phase-in status. How well is that information recorded and is it available?
• The concrete application of Article 8 on Only Representatives is also raising a number of difficult questions, in particular in terms of taking over the obligations from importers for SDSs and other purposes and especially for indirect imports. This is an area that the legislator has not thought through and for which existing guidance does not provide the necessary answers. What is the company policy on this, whether the company is the foreign manufacturer appointing the OR, the OR itself or the importer?
• The obligation to communicate information on Candidate List substances in articles with the continuing discrepancy in the interpretations of Member States on the 0.1% threshold (CW 12 March 2009). How can a company show compliance with its Article 33 obligation? What information must be recorded? How does one cope with different views in different countries for articles that are sold in several EU countries?
• How far must downstream users go in assessing compliance with REACH by their own EU suppliers? Are they subject to a due diligence obligation before they place products on the market? Should they have certificates or contracts in place to satisfy the enforcement authorities?
• To what extent can a company justifiably argue that it is for the authorities to demonstrate the absence of compliance rather than for the company to demonstrate compliance? In our view, there is a limit as to what Article 36 implies and for some of the applicable requirements the burden of proof should largely be incumbent upon enforcement authorities. How far could the company legitimately rely on this?
• Is the company prepared if enforcement authorities show up at their local production site in a given Member State? Is someone on site responsible for REACH compliance and will they have access to the required information? Will the information be kept centrally or locally? Will the legal department be involved and how? Who will decide on which documents to provide to the authorities upon request?
• With regard to importation, given that verification of REACH compliance for imported products may be more difficult to prove than for EU manufactured products, (particularly given the reluctance on some stakeholders' part to disclose pre-registration numbers) what measures and/or documentation should be provided to establish compliance?

The stakes are high. For example, the REACH enforcement laws of the Netherlands impose penalties of €18,500 and up to six months in jail for unintentionally failing to meet the record keeping obligations of Article 36 and up to two years in jail if the failure was considered to be intentional.