Focus on Environmental Law compliance: substances of very high concern (SVHC)

The REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) regime regulates chemicals in the EU.

Under REACH, the burden of proof is on industry to demonstrate that the use of a chemical on its own, in preparations or in articles, does not pose unacceptable risks to human health or the environment. As a result, compliance under REACH has significant cost implications for manufacturers, importers and downstream users of a wide range of chemicals, including those used in industrial, commercial and household applications and products.

Chemicals classified as substances of very high concern (SVHCs) under REACH, cannot be placed on the market or used unless they are authorised for a specific use or exempted from authorisation. Producers and importers of SVHCs have a duty to notify the European Chemicals Agency (ECHA) if a substance is an SVHC and if the SVHC is present in articles in of specific quantities and concentration. They also have a duty to inform the recipient of the article and consumers (who request the information) with sufficient information to allow it to be used safely.

On 10 September 2015, the Court of Justice (ECJ) delivered an important judgment clarifying the meaning of “article” under REACH in relation to SVHC obligations. In Fédération des entreprises du commerce et de la distribution (FCD) and Fédération des magasins de bricolage et de l’aménagement de la maison (FMB) v Ministre de l’Écologie, du Développement durable et de l’Énergie (Case C-106/14), the ECJ decided that producers and suppliers have SVHC notification and information obligations in relation to each component part of a product, rather than just the finished product (see Legal update, REACH: supplier obligations for substances of very high concern (SVHCs) apply to components as well as finished product (ECJ)). This is the opposite of existing ECHA guidance, which will now have to be revised (see Legal update, REACH: ECHA confirms it will update its guidance on substances in articles following recent ECJ ruling).

Concerning the duty to notify, the ECJ considered that the producer’s duty covers only those articles that the producer itself has made or assembled and not articles made by a third party and used by that producer as an input. The third party is subject to its own duty to notify the ECHA in respect of the article that it makes or assembles.

Similarly, the importer of a product that comprises one or more of the objects coming within the definition of “article” must also be considered to be the importer of that article or those articles. The fact that it can be difficult for importers to obtain the required information from their non-EU suppliers does not alter their duty to notify the ECHA. That creates a significant burden in checking the supply chain.

Regarding the duty to provide information to recipients and consumers of a product, the ECJ considered that the duty applies to all operators along the supply chain when each operator supplies an article to a third party. It is not restricted to the producers and importers.

While this important ECJ decision gives welcome certainty for compliance by suppliers and retailers, it now creates a significant regulatory burden.

The European retailers and wholesalers trade body, Eurocommerce, commented:

“We will need to live with this decision, but it will cause difficulties and extra cost without any tangible benefit to consumers. Where products involve complex supply chains, this will create additional burdens, particularly for importers. While these new burdens are unhelpful, the decision has the merit of providing economic operators with legal certainty, something which has been lacking for a key aspect of REACH”.

Eurocommerce also called for a moratorium on enforcement by EU member states of the ECJ’s interpretation pending the ECHA updating its guidance, calling for the Commission to look again at whether the additional administrative burden was proportionate in the context of its better regulation principles, particularly for complex supply chains. The ECHA recently confirmed it is in the process of briefly updating its guidance to comply with the ECJ guidance, which will be followed by a more comprehensive review subject to consultation.

Practical Law Peter Harvey

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