The Future Costs of REACH - Part 2 - Data Costs

The fair, transparent and non-discriminatory principle of REACH is now well established. The original SIEF agreements were written to reflect this and have now been replaced by Joint Submission Agreements (JSAs) which also maintain the same basic philosophies.

The general principle is that a registrant only pays for a share of the data endpoints required for a compliant dossier to be submitted at their registration tonnage band. For example, an Annex VIII registrant pays for a share of the Annex VII and VIII data, and no more. However, on-going and originally unexpected cost related in part to CoRAP, controversial CLP classifications and the expected revision to REACH are causing many Lead Registrants and consortia to reissue JSAs.

The first SIEF agreements drafted in line with the Cefic template were only really designed to get registrants through the phase-in period. Although compliance check data requirements were included, the potential on-going costs of REACH were not fully considered. It was almost expected that future costs would not arise after the completion of registrations. These agreements even had a clause stating that at the end of SIEF activities the agreement would automatically terminate. Any registrant who has been asked to pay additional costs to a Lead Registrant since 2018 would have a strong argument that the SIEF agreement is no longer in place and the Lead should issue a new one should they wish to continue sharing costs and data.

Many Lead Registrants are indeed issuing new JSAs, but co-registrants should not feel obliged to sign without fully understanding the implications and detail. Industry understands that there may be some additional costs for future data requirements, but some new JSAs include far more than is required under REACH and the implementing regulation on data sharing. For example, CLP and advocacy clauses give Lead Registrants the possibility to charge joint registrants for almost anything they consider necessary.

It may be necessary to reissue JSAs in future to reflect changes brought about by the anticipated updates to REACH. This may have additional data requirements or fee models currently outside of the scope of JSAs. Future proofing may be the intention of some consortia, however until the REACH update is published, joint registrants should proceed with caution.

Some new JSAs even appear to lock registrants in and allow them to be charged a share of future costs even if they have withdrawn from the market and submitted a cease manufacture / import notice to ECHA.

At the infancy of REACH, some consortia considered wholly inappropriate and excessive charges in their cost sharing models. Although many of these have been challenged, these new JSAs effectively give consortia the right to charge whatever they want or restrict the market to only those prepared to pay the price for access. Broadening the scope of JSAs in this way allows consortia to charge registrants for almost anything the consortia want, irrespective of the registrants need for or interest in that data.

Of course, the necessary regulatory costs should be paid for, but this should be fair. Under REACH this is only those tests required for the endpoints needed for the registration. Far from fair are costs for either unnecessary testing or manging bloated and consortia.

For example, the consortia for a high-volume commodity substance with over 350 registrants had originally priced an Annex VII Letter of Access at ca. €4,000 are now expecting ca. €25k for each of the next three years. It is unrealistic to expect importers of a few tonnes of materials to pay these charges and retain profitable products.

Should non-REACH registration work be shared on the same basis?

The cost sharing principles of REACH do not apply to other pieces of legislation or general advocacy work. Those parties with a common interest have already formed trade bodies or consortia to allow them to share costs outside of REACH.

There are certain benefits and incentives for joining consortia, and there are risks, liabilities and therefore costs which come with that. However, the desire to pass those costs on to those who do not enjoy those benefits goes against the fair, transparent & non-discriminatory principles of REACH and the implementing regulation on data sharing. In short, the consortia want to have their cake and eat it.

As with any contract, it is critically important to fully understand what you are signing up to. Registrants are under no obligation to sign new JSAs and should not do so if they don’t think the terms are not in their interest. Or even if it is in fact not necessary to replace the existing SIEF agreement.?