REACH: THE SAGA CONTINUES Posted July 21, 2017 by Jim Cramer Let us first try to get a general idea of what REACH is and the current impact of this regulation. REACH stands for the Registration, Evaluation, Authorisation and Restriction of Chemicals and is a European Union (EU) Regulation that went into effect June 1, 2007. It is officially known as Regulation (EC) No 1907/2006. Additionally, Substances of Very High Concern (SVHC) are chemicals/substances regulated by REACH. REACH regulates what chemicals can be imported and used in the EU common market. The SHVC Candidate List currently contains 173 chemicals as of this writing that may negatively impact human health and the environment. When the REACH regulation was established, the European Chemicals Agency (ECHA) generated a budgetary forecast of 440 basic substances that were expected to be formally reviewed for eventual placement on the list by 2020. This information was also included in the 2009 “SVHC Roadmap to 2020” plan. While the current inclusion curve would require a sharp upturn in volume of formal reviews it should be expected that at a minimum ECHA and the EU will eventually formally review those 440 substances. Additionally, there are subsets of chemicals under separate lists for various consideration brings this total to well over 1000 substances. REACH was first implemented with the purpose to broadly define a concern for the environment and the human consumer as it relates to substances/chemicals. ECHA began with identifying a list of chemicals that had been proven to have a negative impact on human health and the environment. It also identified a “de minimus” level that must be measured, declared and monitored for a “cost/benefit” judgement for regulation, labeling, usage, exposure and a disposal/recycling pathway. As the regulation evolved, definition of the wording was expanded to provide a clear guidance for manufacturers, importers, resellers and consumers. Article 33 of REACH was created to define the meaning of the word “article” and how that term is applied for substance threshold calculation. It reads as follows “an object which during production is given a special shape, surface or design which determines its function to a greater degree than its chemical composition.” In laymen’s terms this was to clarify at what level in a product the measure of the chemical concentration was to be applied. If a substance in an article is to be measured as a percent of a product, would the manufacturer apply that to a component in a (radio) or to the entire radio? Example: a single piece volume dial would be considered an article compared to the radio. Where does a substance change into an article? This is a central question in environmental/chemical composition regulation and compliance to a regulation. To comply with the law, the article threshold must begin to apply when the substance/mixture changes to an article. The requirements for a raw material/substance, mixture or article are each slightly different. Each has a threshold level that if crossed activates the requirements for communication and notification. Communication applies to the manufacturer or importer of an article. As an example, the raw material threshold is observed at the point when an importer or manufacturer imports more than one ton per year of the substance or concentration of the substance in a mixture. For an article, if the supplier is located within the EU that supplier must provide a declaration/substance list. If the article is manufactured outside of the EU/EEA the importer is responsible for identifying the material contents for the purpose of declaring any SVHCs. If the substance exists in the article above the threshold of .1% or 1000 ppm of the article, then the declaration must be made from the moment the substance is added to the candidate list. To fully comply with the “letter of the law” the manufacturer or importer must be ready and making the official declaration of the presence of the new substance at the moment it is added to the candidate list. With the continual addition of new substances to this list a manufacturer must know every substance and its concentration in their final product to get ahead of the compliance curve. Consumer facing companies have 45 days to respond to a request from a consumer/customer. In a practical, real world situation the company must know the full material content of the product to the article level at the time of manufacture to fully comply with the regulation. If a company waits until a substance is announced or officially added to the list it will be hard pressed to test every component to the article level for the specific substance and receive the results from a testing agency in time to make the deadline for declaration. Additionally, the costs to get a full material report at the article level for every component in a final product can only be expected to increase if time is of the essence. The formal way to notify customers is with a Declaration of Compliance (DOC). Requirements for DOCs and examples will be included in a follow-up article later this summer.