2020 will bring many changes and uncertainties in European Union (EU) chemical regulatory affairs, especially for companies importing products into the EU customs zone. There is uncertainty about what the borders of the EU customs zone will be in 2020, with the UK making its third attempt to Brexit. Let’s consider Brexit to be the fifth biggest change, and count our way down to #1, based on the estimated amount of preparation that will be required for industry to be in compliance.
Brexit fatigue has set in; and this may create more uncertainty because many firms are starting to lose patience and may be less apt to work on their post-Brexit regulatory plans. January 31, 2020 is the current target date, but since the past two attempts did not lead to any changes, there is more of a “wait and see” attitude starting to take hold in industry.
If this fatigue becomes widespread, it could turn into a self-fulfilling prophecy as companies won’t work on reducing uncertainties because they are uncertain about what those uncertainties will be. This leads to more uncertainty in an unfortunate feedback loop.
Much has already been written about the anticipated impacts of Brexit upon the EU and UK chemical regulatory regimes. However, due to Brexit fatigue, less and less of what is written is being read and that waning level of focus itself may become the biggest risk to regulatory preparedness.
4. EU Focus on Registration, Evaluation and Authorization of Chemicals (REACH) Enforcement
EU enforcement authorities have signaled that they intend to conduct a pilot enforcement study on REACH authorization compliance in 2020. The study would focus on the authorization of chromate compounds, a class of chemicals which has widespread applicability for aerospace, automotive, electronics and other major industries. The pilot will lay the foundation for how the authorization requirement will be enforced for other substances in the future.
In particular, the ECHA Enforcement Forum is engaged in a strategy to adjust the process for authorization and will be attempting to place a greater emphasis on alternatives assessments. This could mean, amongst other possibilities, that more research on substitutes for chromates will be expected from authorization holders in order to support their continued use of the authorized substances.
The 2020 effort is a prelude to a more wide-reaching enforcement initiative (Ref-9) which will look across an expanded set of chemicals on the authorization list and will target companies who place these products on the EU market. Companies placing the substances on the market will need to produce proof of authorization and all users of the substances must demonstrate that they are using the substances in accordance with the provisions of that authorization.
3. Updated Waste Framework Directive (WFD) transposed into law in Member states
EU member states are required to transpose the updated WFD into law by July 4, 2020. As a reminder – EU directives do not apply with direct effect in the manner which EU regulations do, but instead require each member state to draft its own statutory instruments to enact the EU’s intentions. The language of these transpositions will be watched with great interest, as it will indicate what type of enforcement can be expected in each of the member states.
Some of the questions that may be answered in July include: How soon will member states start to enforce the requirements for data to be included in the Substances of Concern in Products (SCiP) database? What will be the sanctions against companies who fail to comply? How will each member state address the many objections industry has made to some of the data provisions of WFD? How harmonized will the national laws be with respect to each other? Will companies need to effectively monitor and comply with a different set of requirements for each member state?
2. Phase-out of IMDS Recommendation 019
The International Material Database System (IMDS) is technically not a regulation, but is instead a tool which provides the means for complying with the EU’s End of Life Vehicles (ELV) Directive. For the automotive industry, this may be a distinction without a difference as the overwhelming majority of automotive manufacturers require their suppliers to enter material content into the IMDS database.
2019 saw some unfortunate events in the EU involving the inclusion of lead in vehicles allegedly being unreported in IMDS, due to the use (or mis-use) of a longstanding shortcut named Recommendation 019. Recommendation 019 allowed automotive suppliers to simplify their reporting of electronic components, provided that they backed up their simplifications with appropriate due diligence measures. There is now evidence that some companies have not been exercising that level of due diligence, and so the decision was made to remove Recommendation 019 in 2020 for new IMDS submissions.
This will be a major difficulty for companies who have high volumes of printed circuit boards in their components, and who had been relying upon Recommendation 019 to reduce their workload and associated expenses for IMDS submissions. Those companies now have only one month to change their manner of IMDS reporting by obtaining material disclosures for all the resistors, capacitors, diodes, etc. which they may never have asked their suppliers to report in the past.
However, the removal of Recommendation 019 for new IMDS submissions (planned for January 2020) pales in comparison to what may happen next. Full details are not available yet, but there has been discussion that at least some automotive OEMs will require suppliers to go back and re-report old IMDS submissions that had previously used Recommendation 019.
That could occur in the summer of 2020, but it is difficult to say how long it would take for the many of the hundreds of thousands of IMDS submissions using PCBs to be re-submitted; or if that is even feasible. Unfortunately, lack of feasibility is sometimes not a prudent due diligence defense in matters of compliance.
1. The SCiP Database
In 2020, the EU will unveil the SCiP database to the world. The European Chemicals Agency (ECHA) recently indicated they plan to have a prototype running by the end of January 2020 and a version 1.0 by October 2020. By Jan 5, 2021, all producers, importers and distributors of articles must report all SVHCs which are above 0.1% in their products to maintain ongoing access to the EU market.
If you are one of these duty holders, you have two possibilities: (1) you have SVHCs and will report them, or (2) you have no Substances of Very High Concern (SVHCs) (or have them at under 0.1%) and do not need to report. There is only one pathway toward making the determination of which category you belong in: you must survey your entire supply chain for SVHCs. Let’s call this the “Pathway of Due Diligence”. There are certainly other, less prudent pathways, a.k.a. shortcuts, to arrive at your determination.
Here is where the lesson learned from 2019’s Recommendation 019 meltdown may be instructive to prudent EU importers. Recommendation 019 was an IMDS provision created in acknowledgement of the fact that demonstrating compliance is difficult and time-consuming. The rationale was that tier 1 suppliers who did the right thing by surveying their printed circuit board supply chain shouldn’t have to jump through additional reporting hoops. The tier 1 suppliers could be trusted to exercise due diligence and would protect the liability of the automakers. Read more here if you are curious about how that worked out for them.
The broader message for all of these above 2020 regulatory challenges is that there are no safe shortcuts to compliance. Whether you are subject to REACH, ELV/IMDS, WFD or any of the other EU chemicals regulations, complete and accurate material content data is quickly becoming the price of admission if you wish to maintain your access to the EU market.
Exemptions and exclusions are dropping left and right, and customers are asking for more and more data to protect themselves from liability. EU enforcement authorities have taken note of industry due diligence shortcomings and failures to meet regulatory deadlines. They have put everyone on notice that they will be watching and waiting for your data. As the REACH regulation summed it up: “No Data, No Market”.
Contact Tetra Tech for more information on how you can protect your access to the EU and other markets.