Considering the impact of the proposed Brexit deal on Chemicals Regulation at the House of Commons

• United Kingdom

• Brexit
• Industrials - Chemicals

12-12-2018

On 4 December 2018, Eversheds Sutherland’s Elizabeth Shepherd was on a panel providing oral evidence to the House of Commons Environmental Audit Committee at a one-off session to consider the impact of the proposed Brexit deal on Chemicals Regulation.

The panel considered questions including the scope for associate membership of the European Chemicals Agency (ECHA) as part of a future trading relationship, concerns about possible regulatory divergence, and what more Government could be doing to prepare industry for a no-deal Brexit.

Elizabeth explained that access to the ECHA database should be a fundamental part of any negotiation around associate membership, as copying and pasting the content into UK REACH is out of the question due to data protection issues.

She discussed the challenges potentially faced by UK-based businesses in supplying the UK Health and Safety Executive (HSE) with equivalent data to that already provided to ECHA, in view of the likely limitations on their rights to use that data outside EU REACH.

Industry panellists described the potential effect of a no-deal Brexit on the chemical industry as “catastrophic”.  

Later that day, HSE issued “Additional no deal REACH guidance” which fleshes out some detail on actions needed to maintain or gain access to EU/EEA and UK markets. It is to be read alongside the UK Government’s technical notice on REACH from 24 September 2018. Some key points to note:

• EU REACH registrations held by UK entities at any point within the two years prior to 29 March 2019 will be grandfathered into UK REACH. This means that any UK entity considering transferring its REACH registrations to an EU/EEA-based affiliate before the UK leaves the EU will not lose out on the grandfathering arrangements
  
• holders of those grandfathered registrations must provide HSE with technical information for their UK tonnage band (having provided basic information within 60 days of Brexit) within two years from Brexit. Businesses which are currently importers into the EU relying on EU REACH registrations also have 2 years from Brexit in which to provide HSE with technical information for a new UK REACH registration (having provided basic information within 180 days of Brexit).  These 2 year timescales will be kept under review, possibly tacit acknowledgement by HSE that it may take longer than two years for UK businesses to access the necessary data/carry out testing to fill any data gaps
  
• existing authorisations held by UK companies will be grandfathered into UK REACH. Within 60 days of Brexit, those companies must supply HSE with technical information as specified in the guidance, to enable the effective and safe management and enforcement of the authorised substance. Any UK company relying on an authorisation held by an EEA-based company must notify HSE within 60 days of Brexit
  
• SVHCs and restrictions at the date of Brexit will be carried over into UK REACH
  
• there is advice on safety data sheets, PPORD exemptions and the appointment of Only Representatives by third country manufacturers, formulators and producers of articles who wish to trade with the UK post Brexit (for this purpose “third country” will include any of the EU-27)
  
• where an EU REACH registration is in progress at the point of Brexit, a new registration must be submitted to HSE. There are similar provisions for authorisation applications which are ongoing at Brexit, with a streamlined process and procedure to be followed where the application is at final decision stage
  
• no fees will be charged by HSE in respect of grandfathered UK REACH registrations. Fees will be charged in respect of new registrations, including those by UK importers which are currently relying on EU REACH registrations. The ECHA Fees regulation will be transposed into UK law, using the average exchange rate for 2017. New applications for authorisations for the UK market will also incur administration fees
  
• An IT system mirroring REACH IT is being built, to be operable from March 29, 2019.The guidance states that the system will, for example, “allow IUCLID to be used so that the same dossiers can be uploaded to UK REACH-IT”

There are various practical points on which businesses should reflect, including the following:

• the guidance urges UK businesses to review their roles within the EU and UK REACH regimes, as actions may be needed to maintain or gain access to the EU/EEA markets if there is no Brexit deal. It states that for the UK market, there will be a "phased approach designed to minimise disruption and ensure continuity"
  
• there is a reminder that tonnage bands for UK REACH registrations are those tonnages manufactured in, or imported into, the UK only. There will be no phase-in of new registrations by reference to tonnage bands
  
• appendices A & B to the guidance set out grandfathering data submission requirements, for the 60 day and two year notifications. Appendix C summarises the 180 day notification requirements for UK downstream users and distributors who relied are relying on Brexit on EU REACH registrations pre-Brexit
  
• the challenge of data access remains. The guidance acknowledges that UK companies may need to renegotiate letters of access or similar arrangements for UK REACH purposes, e.g. to submit robust study summaries if required. It suggests early contact with members of the relevant SIEF (Substance Information Exchange Forum) to find out what renegotiation may entail. However, this is unlikely to be straightforward. Under EU REACH SIEFs were only operational until 1 July 2018, the last REACH registration deadline. A company’s previous dealings with the SIEF may have been through the Lead Registrant only, not its wider membership. Finally, data access for UK REACH will be a matter of commercial negotiation. Whilst data sharing is required to be fair, transparent and non-discriminatory for the purposes of UK REACH, UK REACH registrants may still have to repay for access to data to which they previously had access for EU REACH purposes
  
• new UK REACH registrations would be required for placing chemicals on the UK market in all scenarios save where grandfathering applies
  
• there is still concern that EU/EEA-based customers may look to suppliers in the EU/EEA as an alternative to their UK suppliers, if they are left having to make new EU REACH registrations themselves. It is essential that UK businesses review their supply chains now,  and the different scenarios in the HSE guidance, to see what steps they should be considering in case there is no Brexit deal

Elizabeth Shepherd is a partner and Head of Eversheds Sutherland’s International Environment group, advising clients on a broad range of environmental matters, Elizabeth and her team are closely involved with the chemical industry, and Elizabeth has previously given evidence to the Environmental Audit Committee on the future of the chemical industry after Brexit.