Despite industry concerns over the cost of a parallel regime, an independent UK REACH appears more likely than ever.
In January 2019 the government of Theresa May published legislation to create a UK REACH and chemicals agency. Drafted to provide a regulatory framework and capacity to deliver the functions currently performed by Echa in the event of a ‘no deal’ scenario, the (twice amended) REACH Amendment Regulations continue to offer the best (indeed only) guide as to how UK chemicals regulations will work after the end of the transition period.
Of course, on paper, everything is still in play in the trade negotiations between the EU and UK, but our reading of the political and practical reality is that Theresa May era concepts such as ‘associate membership’ of EU institutions are not part of Boris Johnson’s thinking. Moreover, they have never been favoured in the EU, and an independent UK REACH seems the most probable outcome.
What would UK REACH look like?
REACH, which governs the regulation of chemicals for the protection of human health and the environment, is one of the most complex legislative instruments ever created by the EU. It has long been accepted by the British government that recreating the regime within UK law is far from straightforward. We explore some of the potential challenges below:
Businesses operating in the UK and the EU will need a separate registration in both markets
One of the most important features of EU REACH is the principle of 'no data, no market', and this concept – that businesses must provide robust data about a substance’s hazard properties before it can be placed on the market – is realised through a system of registration with Echa.
Under the REACH Amendment Regulations, existing EU REACH registrations held by UK-based companies (including only representatives) will automatically ‘transfer’ and become UK registrations. This means that qualifying registrants will not have to re-register their substances in the UK, no new fees will be payable and they will continue to have access to the UK market.
Further, this concept of a ‘transfer’ will also apply to those companies who took the prudent step of changing the legal entity to an EU affiliate on their Echa registrations in preparation for Brexit, making sure that UK entities are not penalised for protecting their access to market on the continent.
That sounds positive. However, there is a catch. The UK agency would no longer have access to the substance data held by Echa, and needs to build that database itself. Therefore, although qualifying EU REACH registrations will automatically ‘transfer’, all transferring UK registrants will need to provide that data over a period of two years, in two stages:
- basic data about the market and the substance will need to be submitted within 120 days of ‘exit day’ (on which, more below); and
- full information appropriate to the registrant’s tonnage band will need to be submitted within two years.
Further, not everyone operating in the UK market will have access to the substance data. Under EU REACH, it was not necessary to own the data studies, only to have purchased the right to refer to existing data (most commonly through the letter of access mechanism). Such purchases often guaranteed only limited rights, and in many cases the right purchased was simply a right to refer to data studies for EU REACH registration purposes. Such access rights are unlikely to be sufficient for UK REACH registrations. Therefore, this resubmission of data will likely have a significant financial impact on businesses in the UK market, including both those who need to purchase access to data and those who can make financial returns on the data studies they own.
Those using chemicals supplied by EU-27 entities may become importers
UK businesses that purchase chemicals from EEA companies might now become importers under UK REACH, with a much more significant regulatory role. This is the logical conclusion to the requirement for a registration in each market, but it may well take many UK businesses by surprise. For years, these businesses will have been ‘downstream users’ under EU REACH, with limited regulatory roles, and so registration will be a new concept.
Again, the REACH Amendment Regulations provide transitional support to these companies through an interim notification system. Under this, those importing chemicals from the EEA will need to submit basic data on the company, substances and information on safe use within 180 days. Full registration is then required within two years (providing time for companies to renegotiate access to data from EU partners).
Businesses should consider their supply chains, and determine whether there will be a need to register as an importer. At the same time, EU manufacturers should consider whether to register through a UK entity or appoint an only representative under UK REACH, to ensure continued participation in the UK market.
The roles and responsibilities of the relevant public bodies
The roles and responsibilities of Echa will be taken on by the UK’s Health and Safety Executive. A key issue will be whether the HSE will seek to replicate Echa’s workload, or whether it will simply ‘rubber stamp’ decisions taken by Echa. The former gives rise to the possibility of the two agencies arriving at different conclusions, with the potential for divergence. If it is the latter, we may nevertheless see challenges to the ‘rubber stamped’ opinions on the grounds that Echa's opinions should have been given more scrutiny, with the differing appeal routes themselves giving rise to different decisions. Our view is that, in keeping with the British government’s mantra of an independent UK that will make its own decisions, the former approach is more likely to be mandated from on high. Whether the HSE will receive the necessary resources and expertise is another matter.
Under EU REACH, the decisions of Echa can be challenged through the Board of Appeal: a specially constituted appeal board that is independent of Echa and has jurisdiction to re-take decisions and come to a different conclusion. Under UK REACH, the appeal route would be to the First Tier Tribunal. This is an existing tribunal system that already hears regulatory appeals in other areas of environmental protection regulation. There are some significant differences between the UK tribunal system and the Board of Appeal. Both bodies might at least consider each other’s decisions, especially where the advocates make those decisions known to the appellate body. But those decisions would not be binding precedent, and it's highly plausible that different decisions from each appellate body will give rise to a divergence between EU and UK REACH over time.
When will UK REACH come into force?
The REACH Amendment Regulations currently come into force on ‘exit day’ – drafted as they were in anticipation of a no-deal Brexit. However, thanks to the convoluted way in which the legislation has come into being, understanding the new timeline and wider framework is not easy.
The phrase ‘exit day’ was originally defined in the European Union (Withdrawal) Act 2018 as 29 March 2019 at 11.00pm. However, anticipating that this date was likely to change, the EUWA 2018 allows the government to amend the definition of ‘exit day’ by statutory instrument. There were several amendments to the definition under the (various) European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019 and, ultimately, ‘exit day’ became ‘31 January 2020 at 11.00pm’.
This definition of ‘exit day’ flows down through the subordinate legislation, applying to the REACH Amendment Regulations despite those regulations not defining the term. However, under the Withdrawal Agreement Act, the REACH Amendment Regulations do not come into force on exit day.
The Withdrawal Agreement Act introduces the concept of an implementation period (IP) and the resulting ‘IP completion day’ – defined as 31 December 2020. Subordinate legislation such as the REACH Amendment Regulations will come into force on ‘IP completion day’ not exit day. The path is now set for UK REACH to come into force at 11.00pm on the last day of this year.
It is important to note that the changes made in October 2019 to the Northern Ireland Protocol within the Withdrawal Agreement mean that EU REACH, as well as other chemicals and product-related EU law, including those related to biocidal products, pesticides and product safety, will continue to apply in Northern Ireland for as long as it "wishes this system to continue", that is to say until consent is withdrawn by the Northern Ireland Assembly. The first consent process will happen four years after the end of the transition period.
As a result, it is assumed that Northern Irish businesses will need to comply with both the UK and EU regimes, including holding registrations at both Echa and the HSE and making notifications (when required) to both bodies. The mechanism for enforcing this regime appears to remain unresolved.
During the implementation period
During the transition period, EU REACH continues to apply to the UK and all registrations, approvals, authorisations and classifications currently in place continue to be valid. This means that the process for registering new chemicals remains unchanged, and UK companies are still required to register with Echa. UK-based businesses have the same rights as EU-based businesses to have their cases accepted and processed by ‘leading authorities’ based in other EU member states.
The HSE has confirmed that it will no longer act as a ‘leading authority’ under the plant protection products, biocides and REACH Regulations, and that it "will work with affected businesses to minimise disruption and delay to any ongoing assessments." The HSE will however continue to process product applications under the plant protection and biocidal products Regulations for the UK market under the national authorisation route, with new applications considered against current EU rules and standards.
Is UK REACH inevitable?
It is anticipated that the REACH Amendment Regulations will be updated in due course so that requirements to provide information to the HSE (for example) will also be pegged to ‘IP completion day’, rather than exit day. The government has a whole year to do this so it may be no surprise that this has not happened yet.
Depending on the outcome of the trade negotiations there may well be other and more fundamental changes to the REACH Amendment Regulations before December 2020. It may be that the government will wait to make all the changes in one go. The industry reaction to recent government comments about ‘no alignment’ with the EU legislative regimes demonstrates that there remains little appetite in the industry for a parallel UK chemicals regime.
In a press release responding to the general election result, Steve Elliott, Chief Executive of the Chemical Industries Association (CIA) said that while the general election provided the "political clarity and certainty" long sought by business, the task is now to "get Brexit right". This encompasses not only the terms of future trading relationships and attracting and retaining talent, but also the sentiment that it is in "our environmental and commercial best interests to secure close regulatory alignment with the European Union". Given the projected additional costs of a parallel REACH regime, industry will no doubt continue to lobby hard for the closest possible alignment. The greatest unknown is of course the extent to which those voices will be heard.
The views expressed in this article are those of the expert authors and are not necessarily shared by Chemical Watch.
This article was first published in Chemical Watch. Copyright Chemical Watch. Reprinted with the permission of Chemical Watch.