A Year of UK REACH: Challenges and Considerations for Businesses

After nearly a year into the post-Brexit chemicals regulatory regime, the infrastructure to accommodate UK REACHⁱ registrations has yet to run smoothly. As a result, importers and distributors of chemical substances are struggling to assess and fulfil their obligations. For those companies that have not completed their registrations or notifications—and even for those that believe the necessary steps have been accomplished—the end of the Downstream User Import Notification (DUIN) transitional deadline, updated functionality in the “Comply with UK REACH IT” (UK REACH IT) platform, and other developments make this an appropriate time to review obligations for compliance.

By Raminta Dereskeviciute, Counsel, and Ludovica Rabitti, Associate, at law firm McDermott, Will & Emery

UK REACH TRANSITIONAL DEADLINES

UK REACH transposes the same registration requirements as EU REACHii into UK law: any legal entity based in Great Britain (i.e., England, Scotland and Wales but excluding Northern Ireland) intending to manufacture in or import a substance into Great Britain at or above one tonne per year is required to submit a registration to the Health and Safety Executive (HSE) for said substance.

UK REACH also included transitional provisions to help ensure the uninterrupted supply of chemical substances from the European Union and to allow businesses to adjust to the post-Brexit regulatory requirements. GB-based companies that held EU REACH registrations prior to Brexit were able to transfer such registrations to UK REACH by 30 April 2021, without having to pay a registration fee (a process known as “grandfathering”). Additionally, companies based in Great Britain that sourced chemical substances from EU suppliers as downstream users were able to submit a DUIN to HSE until 27 October 2021, in order to continue supplying substances from the European Union without having to register until 27 October 2023, 2025 or 2027 (depending on the tonnage band and hazard profile of the substance).

The consensus from the industry is that the process for grandfathering EU REACH registrations and submitting DUINs has been straightforward. However, it is important to note that HSE did not scrutinize information provided in the DUINs before sending confirmation of receipt, nor has there been any compliance check with respect to grandfathered registrations. It is unclear whether HSE will examine compliance of grandfathered registrations and DUINs or take a more pragmatic approach with respect to enforcement in an event of non-compliance before 2023.

NEW REGISTRATIONS: ARTICLE 26 INQUIRY

As both transitional deadlines have now passed, companies that were unable to grandfather their EU REACH registrations or could not rely on DUINs (such as EU exporters to Great Britain), or that have missed the DUIN deadline, will need to submit a new registration under UK REACH before substances can be imported to Great Britain or risk their products being held at the border.

Only companies established in Great Britain are able to register under UK REACH. EU manufacturers can either appoint a GB-based only representative (OR) or establish a new GB-based entity. EU-based traders or distributors, however, cannot appoint an OR and, therefore, will need to establish a GB-based entity if they wish to register a substance under UK REACH. In addition to the usual considerations when establishing a new entity, EU importers or manufacturers establishing a new GB-based entity for the purpose of UK REACH compliance will also need to address the issue of how ownership title passes throughout the supply chain and whether any commercial changes have to be made.

The process for submitting new registrations is similar to that under EU REACH whereby the initial step is to submit an Article 26 inquiry. New registrants are required to prepare an IUCLID 6 dossier with basic information about the legal entity and substance they wish to register and upload it to UK REACH IT. The IUCLID software can be downloaded for free, however, it can be quite complex to navigate.

Once submitted on UK REACH IT, the inquiry dossiers then proceed through two automated checks—the Business Rules Check and Technical Completeness Check—and then a completeness check by HSE. Once all checks are passed, new registrants are added to the relevant Substance Group (the equivalent of EU Substance Information Exchange Forums) and can proceed to the full registration.

Article 26 inquiries as such do not entitle companies to import substances into Great Britain. They have to be followed by a new registration dossier containing information requirements relevant to their tonnage band and pay the required registration fee in order to be compliant with UK REACH.

UK REACH registration fees for joint submissions are as follows:

New registrants may be unable to fulfil the information requirements if the Lead Registrant has not yet been selected and the lead dossier submitted. In such cases, once the Article 26 inquiry passes all the checks, HSE recommends that the company submits an IUCLID dossier, which contains a waiver in Section 13.2 (NRES data waiver) with the following language:

“The registrant is a New Registrant of an Existing Substance (NRES). Full study data is not yet available as the lead registration has not yet been submitted. The registrant agrees to make every effort to negotiate with the other members of the Substance Group and will subsequently either provide the data themselves as lead registrant, or will become a member of the joint registration.”

Companies should be aware that the verification process for Article 26 inquiries and for submitting new registration dossiers is not immediate—HSE has up to 10 working days to review inquiry dossiers. If there are any issues that may require the resubmission of the inquiry dossier, then the process can become fairly lengthy. Numerous entities have had their Article 26 inquiries fail the completeness check due to how the substance identity and composition was recorded in EU REACH IUCLID files, possibly because analytical information is no longer considered adequate or because dossiers submitted under EU REACH are outdated. Delays during the new registration process can result in a window of non-compliance where companies are unable to continue supplying chemicals to Great Britain. It is, therefore, essential that any company whose imports to Great Britain are not covered by a grandfathered registration or a DUIN starts the inquiry process immediately.

Additionally, even where DUIN submissions are made, it is only a temporary solution to compliance, and GB-downstream users will also need to submit new registrations if they wish to continue importing substances after 27 October 2023, 2025 or 2027. As DUINs do not entitle a company to become part of a Substance Group, some companies may wish to commence their registration process sooner in order to be able to participate in data sharing discussions and Lead Registrant selection.

LEAD REGISTRANT SELECTION FUNCTIONALITY NOW AVAILABLE ON UK REACH IT

After some delay, the UK REACH IT system has now been updated to allow companies in a Substance Group to claim the Lead Registrant role and continue to joint registration.

Among other responsibilities, the Lead Registrant is tasked with submitting, via REACH IT, a lead joint registration dossier containing the relevant information under Article 11 UK REACH. According to HSE’s helpdesk guidance, the same EU REACH dossier should suffice; however, it appears that completeness checks may pick up information gaps—which were not an issue when the dossier was originally submitted with the European Chemicals Agency (ECHA). Therefore, Lead Registrants should plan their timing and efforts to accommodate such issues. Following the submission of the dossier, the Lead Registrant will be responsible for approving membership in the joint registration group.

The Lead Registrant role can only be claimed after communicating such intention to the wider group and receiving approval from the co-registrants. Should disputes arise with respect to which entity should act as the Lead Registrant—if, for example, there is disagreement about who should be the Lead Registrant, or if co-registrants feel that the Lead Registrant is not performing their duties as required—Substance Group participants are requested to resolve the dispute among themselves. However, HSE has the power to remove the Lead Registrant based on the evidence provided, as well as get involved in dispute resolution. It is yet unclear how such disputes would be facilitated by HSE or what information would be sufficient to remove a Lead Registrant.

Lastly, it should be noted that Article 26 inquirers will not be able to claim the Lead Registrant status until their registration dossier has been submitted and accepted by HSE and the registration fee is paid.

CHALLENGES REMAIN FOR GB IMPORTERS, MANUFACTURERS AND TRADERS

As UK REACH obligations start coming into force, issues and concerns faced by the industry will inevitably continue to increase, including:

Difficulties in communicating with HSE. As the regulator taking over the role of ECHA in Great Britain, HSE now has significant additional responsibilities. However, due to the number of inquiries HSE receives, some companies are encountering issues when trying to obtain guidance. Although a helpdesk and email contact for UK REACH queries have been set up, response times are lengthy and lack of communication between HSE’s internal teams may cause further delay and complications.

Additional costs for data. Companies should not forget that their existing contractual arrangements (such as Letters of Access) will likely only grant legitimate access to data for the purposes of EU REACH registrations and may not entitle them to transfer data on the EU REACH dossier for the purpose of complying with UK REACH. It will be a matter for individual companies to negotiate with their respective Lead Registrants or REACH consortia to determine whether the scope of the existing Letters of Access can be expanded to include UK REACH or new Letters of Access will need to be granted, including the remuneration for such new access to data. Most Lead Registrants and EU REACH consortia are taking a sensible approach and only charging companies nominal fees to extend the rights to use existing data for UK REACH purposes. However, this is not always the case, and some companies may be requested to pay additional amounts for the rights to use data for UK REACH registrations.

Data sharing disputes. The EU REACH and Implementing Regulations provisions in relation to data sharing are retained in UK REACH, including the principles that costs are to be shared in a fair and transparent manner. In the event of disagreement on cost and data sharing, potential registrants can notify HSE, who will then have the power to grant potential registrants permission to refer to information. Appeals against HSE’s decisions will be brought in front of the UK First Tier Tribunal (FTT). The dispute resolutions procedure under UK REACH represents a significant departure from the procedure under EU REACH, whereby ECHA’s decisions on data sharing can be appealed to ECHA’s Board of Appeal. Unlike ECHA’s Board of Appeal, the FTT has discretion to make costs orders, potentially resulting in an unsuccessful appellant having to pay the legal costs of the other side in addition to their own legal fees.

Great Britain’s market size raises new issues for UK REACH registrants. Great Britain is a significantly smaller market than the European Union. As a result, substances with dozens of registrants under EU REACH may only have one grandfathered or submitted as a new registrant under UK REACH. These entities will have to take the role of the Lead Registrant and, will need to negotiate and pay for access to data (if they did not also act as the lead for the EU REACH dossier), take sole responsibility for updating the registration dossier, and cover the costs of any new tests required. This will be particularly problematic for substances without well-established consortia who can assist sole UK REACH registrants with their compliance obligations. Additionally, registration fees under UK REACH remain the same as those under EU REACH despite the smaller market size. These issues may ultimately result in certain substances being no longer available in Great Britain.

Divergence between EU and UK REACH will increase compliance costs. Although the UK chemicals regulatory system is currently closely aligned with the European Union one, there is a high likelihood of divergence in the future. On 14 October 2021, the European Union published its Chemical Strategy for Sustainability (CSS) to achieve its zero-pollution ambition, which is a key part of the EU Green Deal. As part of CSS, the European Union aims to ban the most harmful chemicals in consumer products and polyfluoroalkyl substances (PFAS) in the EU – allowing their use only where essential. The European Union is also considering merging the authorisation process under EU REACH into the restriction process. Unless these changes are also mirrored in UK REACH, they will result in significant divergence between the two chemicals regulatory systems and, in turn, increased costs of compliance.

Costs and competitor non-compliance may shake up markets. HSE has been taking a pragmatic approach to enforcement in light of the challenges faced by companies adapting to the post-Brexit regulatory landscape. Companies that are fulfilling their obligations have expressed concerns that other importers’ non-compliance with UK REACH registration requirements may give the latter an unfair competitive advantage. On the other hand, some importers and distributors see potential opportunities to increase market share should other companies determine that the costs associated with registration outweigh predicted profitability.

Supply-chain disruptions are adding pressure to chemical companies. As the United Kingdom’s dependence on imports of base oils, lubricants, chemicals, and other products subject to UK REACH continues to grow, post-Brexit supply chain issues are in turn having a greater impact. Transport shortages, increased distribution costs and other uncertainties are likely to persist well into 2022. These uncertainties add to the financial calculus required of UK-based downstream users.

The UK REACH regime continues to evolve, and its provisions and deadlines are subject to change. McDermott Will & Emery is keeping up with the latest developments as they become available and is here to answer any questions at mwe.com.

i REACH etc. (Amendment etc.) (EU Exit) Regulations 2019 (UK REACH), as amended.

ii Regulation (EC) No 1907/2006 of the European Parliament and of the Council on the Registration, Evaluation, Authorisation and Restriction of Chemicals, as amended.