18 March 2016
New EU Law Clarifies Joint Submission and Data-sharing Requirements of REACH Chemicals Law
On 26 January 2016, the European Commission’s Implementing Regulation 2016/9 on the joint submission of data and data-sharing in accordance with the REACH Regulation entered into force. This Regulation is of particular importance in light of the last registration deadline, expiring on 31 May 2018, for manufacturers and importers of low-volume chemicals (between 1 tonne and 100 tonnes per year).
The rationale of the Implementing Regulation can be found in its recital 2, where the Commission acknowledges that the REACH provisions on data-sharing and joint submission “have not been used to their full potential, their implementation falling short of expectations”. Recital 3, clarifying that the Regulation seeks to ensure the efficient implementation of agreements (between manufacturers/importers of chemicals), is complemented by Article 1, which provides that the Regulation lays down specific duties and obligations for parties to agreements where the sharing of information and associated costs are required under the REACH Regulation.
Data-sharing requirements under the REACH Regulation: With regard to data-sharing, Articles 27(3) and 30(1) of the REACH Regulation stipulate that registrants “shall make every effort to ensure that the costs of sharing the information are determined in a fair, transparent and non-discriminatory way”. The meaning of the terms “fair, transparent and non-discriminatory” is, however, not elaborated upon. To avoid further confusion in this respect, the Implementing Regulation has further clarified this obligation.
Article 2 of the Implementing Regulation sets out rules to ensure that the data-sharing agreements in substance information exchange forums (SIEFs) are clear and comprehensive. More specifically, this Article provides that a data-sharing agreement must include: (a) the itemisation of the data to be shared, including the cost of each data item and an explanation of how it meets the REACH information requirements; (b) the itemisation and justification of any relevant management costs associated with the data-sharing agreement and/or registration; and (c) a cost-sharing model, which must include a reimbursement mechanism.
Article 4 of the Implementing Regulation subsequently elaborates on the obligation of including a cost-sharing model in data-sharing agreements. According to Article 4(2), the cost-sharing model shall apply to all registrants of that substance, including the possibility of future registrants joining the data-sharing agreement at a later stage. Article 4(2) also requires registrants to estimate the number of potential registrants for a substance, and future additional information requirements, and to take these elements into account when agreeing on the cost-sharing model. In addition, Article 4(4) states that the cost-sharing model shall include a method of proportional reimbursement to each co-registrant once a new registrant joins the agreement in the future.
The Regulation applies to both existing and future data-sharing agreements. However, for already existing agreements, parties can unanimously waive the obligation to include the data as described in points (a) and (b) as well as the obligation to include a reimbursement mechanism in their cost-sharing model. In the case of such unanimous consent, potential registrants will nevertheless have the right to request such itemisation and to obtain the inclusion of a reimbursement mechanism.
In addition, where registrants of the same substance have shared information and submitted it jointly in accordance with the REACH Regulation, they shall document yearly any further costs incurred in relation to the operation of their data-sharing agreement. Such annual documentation shall contain the points (a) to (c) set out above, and include, for the purpose of the reimbursement mechanism, a record of any compensation received from new registrants.
The “one substance, one registration” principle under the REACH Regulation: Articles 11 and 19 of the Reach Regulation foresee the obligation of a joint submission of data by multiple registrants. Under this “one substance, one registration” obligation, manufacturers and importers of the same substance are required to jointly submit their registration. Through the Implementing Regulation, ECHA is granted a stronger mandate to ensure that all companies registering the same substance are part of the same registration.
In order to implement this obligation in a more adequate manner, ECHA has adapted the REACH-IT submission tool to reject submissions outside of such a joint registration. As of 27 January 2016, if a company submits a separate registration for a substance for which a certain registration already exists in REACH-IT, its registration will be rejected at the ‘business rules’ step of the REACH-IT submission. In this scenario, in order to submit jointly, the involved manufactures or importers will be instructed to cooperate with the existing registrants of the same substance. The companies will need to discuss with their competitors about substance sameness, share data and costs, and, subsequently, submit their registration as part of a joint submission.
While Article 3 of the Implementing Regulation provides that ECHA “shall ensure that all registrants of the same substance are part of the same registration”, this is done “[w]ithout prejudice to Articles 11(3) and 19(2)” of the REACH Regulation. It thus remains possible for a registrant to submit certain information separately for reasons including disproportionate costs, confidentiality concerns and disagreement with the lead registrant. However, even in such exceptional circumstances, all registrants of the same substance remain part of the joint registration.
Practical consequences: Due to the Implementing Regulation, the notion of “fair, transparent and non-discriminatory” has become more clear. However, as a consequence thereof, there might be an increase in data-sharing disputes under REACH as to what constitutes “fair, transparent and non-discriminatory” cost sharing. Article 5 of the Regulation states that, when settling such a data-sharing dispute, ECHA will take into account the parties’ compliance with the obligations set out in the Implementing Regulation. In turn, an increase in data-sharing disputes is likely to entail an increase in administrative costs.
The Implementing Regulation does not provide a clear answer of how the “one substance, one registration” principle will be enforced in circumstances where two or more submissions are already co-existing. In this respect, ECHA reported on 27 January 2016 that it will, for the time being, continue to accept requested updates on already existing individual dossiers. These requested updates will follow a formal ECHA decision on, for example, technical completeness checks, compliance checks or confidentiality claim assessments. ECHA also states that more support material on how it plans to carry out the requirements set forth in the implementing regulation will be available in the near future.
The Implementing Regulation itself does not include the possibility of imposing sanctions or penalties. It should however be recalled that, under Article 126 of the REACH Regulation, Member States are under the obligation to adopt and apply penalties for infringements, including the data-sharing and cost-sharing obligations. Such penalties must be “effective, proportionate and dissuasive”. Thus, insofar as a breach of the Implementing Regulation entails a breach of the REACH Regulation, such penalties are to be imposed.