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June 12, 2019

BoA Issues Landmark Decision In Data Sharing Dispute and Other Recent REACH Developments

Bergeson & Campbell, P.C.

BoA Issues Landmark Decision In Data Sharing Dispute: On April 15, 2019, the European Chemicals Agency’s (ECHA) Board of Appeal (BoA) issued its decision in a data sharing dispute concerning access to data and cost sharing for the substance Acid Orange 7. The Appellants in the case before the BoA were REACH & Colours Kft and REACH & Colours Italia S.r.l. REACH & Colours Kft is the Lead Registrant for Acid Orange 7, and REACH & Colours Italia S.r.l. represents “several consortia which manage the substance information exchange forum (‘SIEF’) for Acid Orange 7 and also [manage] SIEFs for over 500 other dyes.” The Interveners in the case in support of ECHA, represented by Centro Reach S.r.l., were Colorex S.r.l., Codyeco S.p.a., Colortex S.p.a., and Triade B.V.

Between November 9, 2012, and April 12, 2017, data-sharing negotiations took place concerning Acid Orange 7. These negotiations “took place mainly between the Appellants and Centro Reach S.r.l.” Centro Reach S.r.l. informed the Appellants that it was acting on behalf of the Dye-Staff Cooperation Group, and that the Interveners were members of the group. Two of the Interveners, Colorex S.r.l. and Codyeco S.p.a., also had individual e-mail exchanges with the Appellants. During the course of their negotiations, the Appellants and Interveners disagreed on the following “four aspects of the terms for sharing data and costs”:

  • The identification of the studies to which access was being negotiated;
  • The calculation of the costs of gathering and submitting to ECHA the information required for the registration of Acid Orange 7 (i.e., administrative costs);
  • An annual surcharge of eight percentage points applied to the price of a Letter of Access (LoA); and
  • A surcharge of 15 percent applied to the value given to each study, regardless of how this value was calculated.

The Appellants and the Interveners did not find an agreement on the sharing of data and costs, and on April 13, 2017, the Interveners filed a data-sharing dispute with ECHA. On July 20, 2017, ECHA adopted the Contested Decision based on Article 30(3) of the Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation. In the Contested Decision, ECHA found that the Interveners “had made every effort to ensure that data and costs were shared in a fair, transparent and nondiscriminatory way, whilst the Appellants had failed to do so.”

ECHA reached this conclusion primarily on the grounds that, despite repeated requests from the Interveners to that effect, the Appellants did not provide the Interveners with the titles and authors of the studies to which access was being negotiated, and failed to address the Interveners’ concerns regarding the calculation of administrative costs, the eight percent annual surcharge, and the 15 percent surcharge. The Contested Decision consequently granted the Interveners permission to refer to four studies on vertebrate animals contained in the registration dossier submitted by REACH & Colours Kft.

The Appellants filed the appeal before the BoA on August 4, 2017, and ECHA filed its Defense on October 9, 2017. On December 20, 2017, the BoA granted the Interveners “leave to intervene in support of [ECHA].” The Appellants requested the BoA to declare the appeal admissible, annul the Contested Decision, order the refund of the appeal fee, and take such other or further measures as justice may require. ECHA, supported by the Interveners, requested the BoA to dismiss the appeal.

The Appellants raised four pleas in law in support of their appeal, alleging that ECHA:

  • Made several errors in its assessment of the parties’ efforts during the data-sharing negotiations;
  • Exceeded its powers by going beyond the requirements of REACH and Commission Implementing Regulation (EU) 2016/9 on Joint Submission of Data and Data-sharing in accordance with the REACH regulation (Implementing Regulation 2016/9);
  • Breached the principle of the protection of legitimate expectations by contravening its Guidance on data-sharing; and
  • Breached the principle of equal treatment by preventing the Appellants from imposing the eight percent annual surcharge and the 15 percent surcharge.

The BoA rejected the first plea, and found that the Appellants failed to be transparent in terms of the identification of the studies to be shared, and insisted on unfair and/or discriminatory terms for the calculation of administrative costs, the eight percent annual surcharge, and the 15 percent surcharge. The BoA found that the Interveners “made every effort” by consistently challenging the Appellants on identification of studies, calculation of administrative costs, and the surcharges. The BoA indicates “[w]hilst the Appellants did respond to the Interveners’ questions, this did not lead to any changes to the proposed terms.” The BoA stated “[ECHA] was therefore correct in finding in the Contested Decision that the Interveners made every effort to ensure that the costs of sharing the information are determined in a fair, transparent and non-discriminatory way.”

The BoA rejected the second plea on the basis that “under Article 5(1) of Implementing Regulation 2016/9, which implements Article 30(3) of the REACH Regulation, [ECHA] is competent to assess, following the submission of a data-sharing dispute, whether the proposed terms to share data and costs are fair, transparent and non-discriminatory.” The BoA indicated this position is consistent with its Decision in Case A-017-2013, Vanadium R.E.A.C.H. Forschungsund Entwicklungsverein, dated December 17, 2014.

Regarding the third plea, the Appellants argued that ECHA disregarded its own Guidance on data-sharing, according to which “administrative costs can be recorded by activity rather than by substance or endpoint.” ECHA, supported by the Interveners, argued that the Appellants had no legitimate expectations that their way of calculating administrative costs would be accepted. The BoA provides that, contrary to the Appellants’ argument, the Contested Decision does not state that administrative costs cannot be recorded by activity rather than by substance or endpoint. In contrast, the BoA states “the Contested Decision correctly finds that the Appellants have failed to address the Interveners’ concerns as regards the calculation of administrative costs.” Regarding the relevant text on pages 117 and 118 of ECHA’s Guidance on data-sharing, the BoA states “[t]his part of the Guidance is couched in very generic language … It is not precise and unconditional within the meaning of the case-law referred to in [paragraphs] 180 and 181 [of the BoA’s decision].” The third plea was rejected by the BoA.

Regarding the fourth plea, the BoA stated that in deciding on a data-sharing dispute, ECHA can either grant or deny permission to refer to information submitted by a previous registrant. The BoA indicates that ECHA was correct in finding in the Contested Decision that the Interveners made every effort to ensure that costs are determined in a “fair, transparent and non-discriminatory way.” The BoA provides that, having reached this conclusion, ECHA “was obliged to grant the Interveners permission to refer to the four studies on vertebrate animals.” The BoA states that ECHA had no discretion in this regard and that it cannot, therefore, have breached the principle of equal treatment. The BoA provides further that the Contested Decision does not prevent the Appellants from recovering costs that they claim are covered by the surcharges. The fourth plea was rejected by the BoA.

As “all the Appellants’ pleas and arguments” were rejected, the BoA dismissed the appeal and decided that the appeal fee will not be refunded. This case is expected to have significant implications for fairness and non-discrimination in data sharing under REACH.

EP Passes Resolution Urging Next EC To Tackle Endocrine Disruptors “Swiftly”: The European Parliament (EP) passed a resolution on April 18, 2019, urging the next European Commission (EC) to tackle endocrine disruptors “swiftly,” especially in toys, cosmetics, and food contact materials. The resolution asks the next EU executive to develop a horizontal definition for endocrine disrupting chemicals based on the World Health Organization (WHO) definition no later than June 2020. The resolution includes provisions calling on the EC to:

  • Make legislative proposals no later than June 2020 to insert specific provisions on endocrine disruptors into the Cosmetics Regulation, similar to those on carcinogenic, mutagenic, or toxic to reproduction (CMR) substances;
  • Draw up legislative proposals no later than June 2020 to insert specific provisions on endocrine disruptors into the Toy Safety Directive, similar to those on CMR substances but without any reference to thresholds of classification, as such thresholds are not applicable for endocrine disrupting chemicals;
  • Calls on the EC to revise the Regulation on Food Contact Materials no later than June 2020 to reduce the content of hazardous substances therein, with specific provisions to substitute the use of endocrine disruptors;
  • Considers that there is an urgent need to accelerate test development and validation to identify endocrine disruptors, including new approach methodologies;
  • Calls on the EC to ensure that data requirements are continuously updated in all the relevant legislation to take account of the latest technical and scientific progress so that endocrine disruptors can be properly identified;
  • Calls on the EC to take mixture effects and combined exposures into account in all relevant EU legislation;
  • Calls on the EC to ensure adequate bio-monitoring of endocrine disruptors in human and animal populations, as well as the monitoring of endocrine disruptors in the environment, including in drinking water;
  • Calls on the EC to ensure that the EU framework on endocrine disruptors becomes an effective contribution to the EU strategy for a non-toxic environment, to be adopted as soon as possible; and
  • Calls on the EC to promote research into endocrine disruptors, in particular with regard to their epigenetic and transgenerational effects, their effects on the microbiome, novel endocrine disruptor modalities, and characterization of dose-response functions, as well as safer alternatives.

The resolution passed by a vote of 447 to 14 with 41 abstentions. It is not legally binding and does not have any immediate practical effect. To date the EC has established criteria to identify endocrine disrupting chemicals only for biocides and pesticides.

Safer Chemicals Conference Materials Available Online: On May 21-22, 2019, ECHA held a two-day conference on safer chemicals. ECHA intended the conference to offer stakeholders insight into the current priorities in EU chemicals regulation after the final REACH registration deadline. The topic on May 21, 2019, was training on notifying hazardous mixtures to poison centers, and ECHA has posted the following materials:

On May 22, 2019, the presentations included:

ECHA Indicates “Improving Compliance” Is Its Key Priority: On May 21, 2019, ECHA issued a press release entitled “Improving compliance is ECHA’s key priority.” In its press release, ECHA indicates that non-compliant information on chemicals is a “serious issue that needs to be fixed.” ECHA notes that REACH places the burden of proof on industry to “make sure that their chemicals are safe to use.”

The press release provides that, by law, ECHA needs to check the compliance of at least five percent of REACH registrations. ECHA indicates that, in ten years of evaluation, it has checked more than 2,700 dossiers for compliance. For high-volume substances, “the checks cover 25 [percent] of the substances.” ECHA states “[t]his has led to improved knowledge and safer use of chemicals.”

According to ECHA, it does not have the legal mandate to revoke market access based on its compliance checks. If companies do not provide the necessary information, national authorities are responsible for enforcing the law. ECHA states “[i‌]mproving compliance with the law is our key priority.” ECHA states that, through its annual evaluation reports, it has consistently highlighted the issue of non-compliant information and given REACH registrants recommendations on how to improve.

ECHA states in its press release that, as a next step, it is preparing an action plan with the EC to increase its actions for compliance checks, “raising the percentage of dossiers to be checked and increasing efficiency.” ECHA states it is committed to “screening all registered substances by 2027, and checking compliance of all substances that need it.” ECHA provides that there can be several reasons for checking compliance of substances, including their hazardous properties. In conclusion to its press release, ECHA states “[t]he plan will be published before the summer.”

EC Grants REACH Authorizations For Diglyme: The EC has granted authorization under REACH to two companies for use of diglyme, a SVHC included in REACH Annex XIV. Diglyme is included in the REACH Authorization List due to its reprotoxic properties, and the substance had a sunset date of August 2017.

On April 24, 2019, the EC granted authorization to Life Technologies for use of diglyme as a process chemical in the manufacture of Dynabeads®. The decision granting an authorization for diglyme to Life Technologies, published in the Official Journal of the European Union on May 2, 2019, provides that the “[d]ate of expiry of review period” is August 22, 2029. The “[r]easons for the decision” section in the Official Journal of the European Union indicates: (1) risk is adequately controlled in accordance with Article 60(2) of REACH; and (2) there are no suitable alternatives.

On May 14, 2019, the EC granted to Roche Diagnostics authorization for use of diglyme as a process chemical in the manufacture of “one specific type of Dynabeads® used in immunodiagnostic assays (in vitro diagnostic).” The decision granting the authorization to Roche Diagnostics was published in the Official Journal of the European Union on May 21, 2019, and includes the same “[d]ate of expiry of review period” and reasons as the decision in favor of Life Technologies.

EC Completes Consultation For Inclusion Of 12 Additional Substances In REACH Authorization List: On May 22, 2019, the EC completed a public consultation on a Draft Regulation and Annex that provide for inclusion of 12 additional substances in REACH Annex XIV, the Authorization List. The Authorization List currently covers 43 chemical substances, and inclusion of the additional 12 substances would result in an expanded Authorization List covering 55 substances.

The EC performed public consultation for the following substances:

  • 1,2-Benzenedicarboxylic acid, dihexyl ester, branched and linear — Toxic for reproduction (Category 1B);
  • Dihexyl phthalate — Toxic for reproduction (Category 1B);
  • 1,2-benzenedicarboxylic acid, di-C6- 10-alkyl esters; 1,2- benzenedicarboxylic acid, mixed decyl and hexyl and octyl diesters with ≥ 0.3% of dihexyl phthalate — Toxic for reproduction (Category 1B);
  • Trixylyl phosphate — Toxic for reproduction (Category 1B);
  • Sodium perborate; perboric acid, sodium salt — Toxic for reproduction (Category 1B);
  • Sodium peroxometaborate — Toxic for reproduction (Category 1B);
  • 5-sec-butyl-2-(2,4-dimethylcyclohex3-en-1-yl)-5-methyl-1,3-dioxane [1], 5-sec-butyl-2-(4,6-dimethylcyclohex3-en-1-yl)-5-methyl-1,3-dioxane [2] [covering any of the individual stereoisomers of [1] and [2] or any combination thereof] (karanal group) — Very persistent and very bioaccumulative (vPvB);
  • 2-(2H-benzotriazol-2-yl)-4,6- ditertpentylphenol (UV-328) — Persistent, bioaccumulative, and toxic (PBT), vPvB;
  • 2,4-di-tert-butyl-6-(5- chlorobenzotriazol-2-yl)phenol (UV-327) — vPvB;
  • 2-(2H-benzotriazol-2-yl)-4-(tertbutyl)-6-(sec-butyl)phenol (UV-350) — vPvB;
  • 2-benzotriazol-2-yl-4,6-di-tertbutylphenol (UV-320) — PBT, vPvB; and
  • Diazene-1,2-dicarboxamide (C,C’- azodi(formamide)) (ADCA) — Respiratory sensitizing properties (Article 57(f) – human health).

The Draft Regulation and Annex will be considered, and potential updates to REACH Annex XIV will be completed, consistent with EU lawmaking procedures.

SweNanoSafe Launches Free Web Tool To Help Register Nanomaterials Under REACH: On May 16, 2019, the Swedish National Platform for Nanosafety (SweNanoSafe) announced the availability of eREACHNano, “a new web tool focused on helping small and medium-sized companies that may lack sufficient in-house expertise on the regulation covering nanomaterials.” The web tool explains the data requirements for nanoforms according to the REACH guideline documents, including:

  • Definition of nanomaterials;
  • Types of nanomaterials;
  • Overview of nanomaterial-specific annexes to existing REACH guidance;
  • Chemical and physical characterization of nanomaterials;
  • Testing of nanomaterials; and
  • Exposure and risk assessment of nanomaterials.

SweNanoSafe notes that the December 2018 amendments clarifying the information requirements for nanomaterials have not yet been included. The information requirements will apply beginning January 1, 2020. The information requirements will be included in a subsequent version of the web tool to be launched later in 2019.