Importers and traders cannot afford to register all substances in their portfolio, Rudolf Staab, managing partner at REACH ChemAdvice, a Kelkheim, Germany-based consulting company, told a recent industry event. REACH costs are a major burden for SMEs, he added, questioning the ability of companies that produce less than 100 tons of product annually to pay fees of tens or even hundreds of thousands of euros to register new substances under REACH. It is the reason why many producers have moved to non-EU manufacturing sites, he told ACIs European Base Oils and Lubricants conference in Vienna in September.

Harmonizing Old & New

REACH was created to harmonize the EUs EINECS (European Inventory of Existing Commercial Chemical Substances), introduced to the market before 1981, and ELINCS (European List of Notified Chemical Substances), comprising around 4,400 substances, also known as new chemicals, according to ChemAdvice.

Besides improved protection of human health and the environment, REACH ensures transparency in the whole chemical supply chain, Staab said. It deals not only with chemical producers, but also with the whole supply chain, even with traders, importers and retailers.

REACHs role is also to transfer responsibility from public authorities to the whole chemical industry such as manufacturers, importers and downstream users, as well as to substitute hazardous substances and promote nonanimal testing, Staab revealed. In the past, the authorities were responsible for proving that a chemical is safe, but [EU] politicians were frustrated by the time-consuming process and the inability of the state to process thousands of chemicals annually. So they shifted the responsibility to the other side, to those who know the products and can show us how safe they are, he said.

Based on the old European inventories of chemicals, REACH has harmonized Einecs and Elincs and preregistered more than 143,000 substances. Around 65,000 companies have preregistered under the regulation, and approximately 4,500 substances are finally registered under REACH, Staab confirmed.

REACH consultants believe that many substances are produced and marketed illegally because only 5 percent of the 143,000 preregistered substances have been finally registered. It is just 5 percent of the total. Where are the others? Staab asked. The question is how many illegal imports we have, and how many illegal products do we still have in Europe, he said.

Staab cautioned that the successful implementation of REACH depends on having control mechanisms. The industry should not rely only on the authorities; companies should also rely on their networks and know-how, and what they see on the market, he said, adding that the existing list of substances lacks a significant amount of data regarding toxicity and ecotoxicity.

Increased Enforcement

ChemAdvice discovered a huge lack of awareness about REACH, finding that many companies dont know what it is and seek help only when theyve been visited by authorities. Our experience is that upper management is poorly engaged regarding the awareness of deadlines and the role of REACH. Also, key decisions are made late in the process, Staab reported.

Other experiences include misrepresenting a companys size, leading to the revocation of their registration. In addition, the European Chemicals Agency is concerned that many of the materials registered as intermediates have been misclassified as such, according to Staab. We consider the use descriptor system to be very complex and confusing, and only big companies and consortiums seem to have the capabilities and resources to meet the goals of the regulation. Staab noted that a company has to understand how to position a product, how to identify its important uses and how to evaluate it.

REACH law enforcement activities have increased of late, and company dossier evaluations have been the main target of the European Chemicals Agency. Checks include verification of an enterprises personnel and test proposals in addition to verifying that a company qualifies as a small-to-medium enterprise, producing less than 100 tons of products per year.

Staab indicated that member states authorities, such as customs agencies, are intensively involved in enforcement projects such as tracking product volume across Europe. He added that authorities also routinely check the compliance of material safety data sheets, importers and representatives, as well as auditing manufacturing sites.

Challenges and Problems

According to Staab, REACH has placed such a tremendous burden on the finances of some small-to-medium enterprises that the production of many chemical substances has moved to non-EU countries. Importers and traders cannot afford to register all substances in their portfolio. I know importers that have hundreds of substances. How can they pay 10,000 to 100,000 per substance to be REACH compliant? They have to find a way out of this situation, Staab opined.

Can companies that make 1 million, 2 million or 5 million turnover pay these fees? Obviously not. As a result many non-EU manufacturers have ceased doing business in Europe, he added.

At the moment, two important questions linger, he said. How reliable can supplies be from outside Europe after the next registration deadline in May 2018? Will REACH lead to monopolization of the chemicals market in Europe?

In such a complex environment, ChemAdvice recommends a few guidelines for companies that want to stay in business. They have to be aware of the role their product has in the supply chain, about its use profile, as well as to prioritize their products. Companies cannot afford separate [REACH compliance] costs for each substance, Staab stated.

Other recommendations include preparing now for the next REACH registration deadline in 2018. Prepare the substance identity/sameness check now, including conclusive spectroscopic data.

Also, decide on which dossier format to use. Should it be a substance or intermediate? Take an active role in the registration process and involve toxicologists from the beginning.

It may be advantageous to enter into a consortium as a way to ensure a successful submission. Purchasing a letter of access from a consortium is a critical milestone, and I know successful companies that have failed to do that and lost some major deals, Staab said.

In addition, Staab pointed out that the Substance Information Exchange Forum is not an appropriate place for dossier preparation. He concluded by recommending that companies keep hard copies of all records and conduct a careful review of old files because past case studies have potential value.

What about Biocides?

Staab then addressed the status of the EU Biocidal Products Regulation, No. 528/2012. The BPR has been in effect since September 2013 and applies to manufacturers, importers and distributors of active substances and biocidal products, as well as producers of goods treated with biocides. The purpose of the BPR is to improve the free movement of biocidal products within the EU while ensuring a high level of protection of human and animal health and the environment, he said.

Those affected by the BPR include manufacturers, importers and distributors of active substances or biocidal products, as well as producers of articles treated with biocides. According to the regulation, biocidal products cannot be marketed or used unless authorized in accordance with the BPR. And treated products cannot be placed on the market unless all active substances contained in the biocides with which they were treated or which they incorporate are approved.

Staab indicated that we are presently in a transitional period before certain procedures and dossier requirements taker full effect. During this period, if the active substance is still undergoing review, then products can be marketed without being authorized under the BPR.

However, an authorization will be required once the review of all actives in the formulation is completed; otherwise, the product must be removed from the market within six months. Therefore, companies need to track the status of active substances because they have only 18 months from the publication date of the implementing regulation to gain authorization for the biocidal product.

One aim of the BPR is to ensure that the costs of the data on active substances are fairly shared. Companies that have not already submitted their own dossier on an active substance can either submit a dossier, a letter of access or, if all data protection periods have expired, a reference to an existing dossier, Staab related.

An amendment to the BPR also allows product suppliers to apply for inclusion in the authorization, or Article 95, list. ECHA regularly updates the list to include entities that have successfully submitted the required information.

Staab indicated that applications for inclusion in the list of active substance suppliers can only be made by people established within the EU. Non-EU companies can be represented by an EU representative for this and be indicated on the list next to their EU representative, he said.

Staab offered several points of advice about what companies should be doing now. First, check the Article 95 list to determine whether an active substance supplier is included. Manufacturers of active substances should apply immediately to avoid
being banned from the market.

Second, if an application is necessary, apply for technical equivalence if an active substance is already approved or a chemical similarity check if an active substance is under review. Third, check the ECHA website regularly to keep up to date on active substance approvals.

Finally, if an application for authorization is necessary, run an efficacy test. Then, contact an active substance supplier to buy a letter of access after first checking what information is included. Also, decide whether to apply for a national (with mutual recognition) or EU authorization.

Hefty Price Tag

ChemAdvice found that the total cost to develop an active substance dossier can be as high as 3 million, similar to that for a REACH dossier for production of more than 1,000 t/y. The major portion of that cost is testing. Letters of access can cost 300,000. Besides the cost of testing to prepare active substance and biocidal product dossiers, several fees must be paid to various EU entities.

The fees are modified depending on company size: 40 percent of the standard fee for micro enterprises; 60 percent for small enterprises; and 80 percent for medium enterprises. Add to these the cost of dossier compilation (including summary and evaluation) and letters of access, which are negotiated with active substance suppliers.