Perspectives from Outside of the United States REACH’s Lesson – Transparency is Key September 18, 2013 Arnold J. Guikema Tetra Tech, Inc. None of the information contained in this presentation is to be construed as legal advice.
Agenda • What is REACH? • Transparency : • Data generation and supply chain communication • Information on existing chemicals • Harmonized enforcement • Transparency for all stakeholders 2
What is REACH? • Registration, Evaluation, Authorization and Restriction of CHemicals • Why REACH? • 100,000 chemicals in EU commerce lacking hazard/exposure data • Existing chemicals are favored versus new chemicals • Uneven requirements and enforcement approaches across EU • Lack of critical data for consumers and regulators, predictability for businesses, and level regulatory playing field for all actors 3
What is REACH? • How does REACH address these issues? • across EU 100,000 chemicals in EU Task EU industry with commerce lacking data generation and supply hazard/exposure data chain communication Provide EU public with Existing chemicals favored information on existing versus new chemicals chemicals already in commerce Implement an EU ‐ wide Uneven requirements harmonized enforcement and enforcement approach amongst approaches 4 REACH is largely an effort to engage all stakeholders in a collaborative endeavor to increase transparency
Transparency: Data generation and supply chain communication • Substance Information Exchange Fora (SIEFs) • Mandated data sharing and cooperation for generating hazard and exposure data for products containing chemicals • Third party trustees for confidential information • Resource-sharing benefits • Levels playing field for SMEs • Create sensible (and favorable) best practices and interpretations • Authorization Consortia have emerged – although not legally mandated 5
Transparency: Data generation and supply chain communication (cont’d) • Supply Chain Communications Responsibilities • SDS requirements enhanced – exposure scenarios for high volume uses • Requirements for supply chain to communicate upstream and downstream regarding uses • Although technically not REACH, per se, CLP creates new harmonized classification, labeling and packaging requirements, and certain other requirements even for non-hazardous substances • Article 33 of REACH is a completely new type of requirement • Must disclose presence of SVHCs in articles if greater than 0.1% concentration, and must provide safe use information 6 • Huge increase in scope of communications requirements, for articles although companies subject to RoHS and ELV aren't taken by surprise
Transparency: Data generation and supply chain communication (cont’d) • How would data generation work in the US? • Voluntary consortia have long existed • US companies with global presence have SIEF experience • US industry may benefit as a “free-rider” on EU-generated data - although we all paid for the data generation • California SCP (as proposed) • Alternatives assessments • Look like REACH authorizations • Priority products as a proxy for exposure • Producer responsibility concepts abound • Direct links to EU SVHC lists 7
Transparency: Data generation and supply chain communication (cont’d) • How would supply chain communications work in the US? • SDS - US is adopting GHS, but not requiring quite as extensive supply chain communications regarding uses and exposures • Hazardous substances in articles communications • Automotive and electronics industries are prepared due to ELV and RoHS requirements • REACH has prepared other industries due to the globally interconnected nature of the supply chain • California did not adopt much from REACH’s article 33 concept • We are still largely risk-focused in the US 8
Transparency: Data generation and supply chain communication (cont’d) • How would supply chain communications work in the US? (cont’d) • We do have facility-based communication – e.g. TRI • But for product-based communication, information must flow from upstream producer to downstream actors 3. Article 4. Article 1. Raw material 2. Formulator component assembly supplier producer producer 7. Consumer 5. Distributor 6. Retailer • The current status quo in US is that most product-based hazardous chemical information communication stops at Actor 3, unless there is a potential release from an article 9 • Focus of communication is on occupational exposure and on immediate risks to consumers
Transparency: Information on existing chemicals • Industry transparency mandates ultimately provide consumers with hazards and exposure information on existing chemicals via: • SIEF data generation • Supply chain communications (directly via Article 33.2) • Equal protection for all EU citizens is an aspiration of harmonized enforcement • The claim is made that favoring existing chemicals hinders innovation • At any rate, it is fairly defensible to assert that there are some market distortion effects of requiring higher barriers for new products to enter the EU market 10
Transparency: Harmonized enforcement • EU = 28 member states, plus 3 EEA countries • Sovereign jurisdictions • Differing politics and economies • Differing enforcement agencies NORDIC REGION UK CENTRAL EU RECENT ACCESSIONS 11 THE SOUTH
Transparency: Harmonized enforcement (cont’d) • REACH is a regulation, as opposed to a directive • Self-executing, does not require implementing measures • Member states are prohibited from obscuring the direct effect • However member state authorities are responsible for enforcement • Effective, proportionate and dissuasive (Article 126) • Enforcement Forum • Information exchange amongst regulators • Inspector exchange program • Trainings and workshops on best practices 12 • Adjudication at ECJ level
Transparency: Harmonized enforcement (cont’d) • This presentation will spare you the dreaded US “Patchwork Map” • As in EU, we have regional distinctions and regulatory “coalitions” PACIFIC NORTHWEST NEW ENGLAND GREAT LAKES PEOPLES REPUBLIC OF CALIFORNIA 13
Transparency: Harmonized enforcement (cont’d) • Federalism vs. central coordination of interstate commerce • Chemicals are products manufactured, distributed, sold and consumed across jurisdictional boundaries • Facility environmental impacts (air, water, waste) generally are local issues • Reasonably well-defined stakeholders • Hazards and exposure generally known • Responsible parties easy to find (and sue) • Products (including chemicals) are very different • Exposure is much more difficult to control • Negative externalities much more widely dispersed along vast supply chains • Consequences very difficult to predict 14 • Hence, centralized coordination of enforcement for product environmental compliance is preferable
Transparency: For all stakeholders (cont’d) • When information is available to all stakeholders, they are empowered to make decisions with knowledge of trade-offs and consequences • Industry gets • Resource-sharing • Level playing fields • Predictability • Control over interpretations • Consumers get • Information on hazards/risks • Information about companies/brands • Increased innovation (?) 15
Transparency: For all stakeholders • Consumers • Purchasing decisions based on potential harm to self/family • Desire to support socially responsible brands • Investors • Need knowledge of risks material to company’s financial health • Socially responsible investors • Executives • Need predictability for long-range resource planning • Need a true understanding of compliance risks • Employees • Occupational risks may exist based on downstream users not fully understanding safe use scenarios • Regulators 16 • How to enforce for supply chains which span jurisdictional boundaries
Transparency: For all stakeholders (cont’d) • In the US, product feature representations and financial disclosures already require high levels of transparency • Ignorance is not an excuse • Political consensus is (in theory) achievable • Appreciable level of industry support for federally harmonized enforcement • Requiring transparency and allowing market to regulate itself presents lower barriers for legislative initiatives • Much of the groundwork has been done • EU REACH data-generation • EU producer responsibility requirements prepared automotive/electronics for supply chain disclosures 17 • Supply chain transparency game-changer: DODD-FRANK , Section 1502, a.k.a. Conflict Minerals
Transparency: For all stakeholders (cont’d) • Questions to be resolved • Who interprets raw data? • How are disagreements about results reconciled? • What are legal implications of increased knowledge? • Will transparency mandates require companion legislation to fix perverse incentives? • Confidentiality of trade secrets will always be an issue – how can this best be dealt with? 18
A.J. Guikema Tetra Tech, Inc. reach@tetratech.com 734-213-4095
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