THE APPLICATION OF REACH AND THE PRECAUTIONARY PRINCIPLE TO MINING AND MINERALS

• Jurisdiction: Derecho Internacional

Mining and Oil and Gas Law, Development, and Investment - Book 1
(Apr 2007)
CHAPTER 8A
THE APPLICATION OF REACH AND THE PRECAUTIONARY PRINCIPLE TO MINING AND MINERALS
Kristina Nordlander
Hazel Pearson ¹
Attorneys
Sidley Austin LLP
Brussels, Belgium

KRISTINA NORDLANDER

Kristina Nordlander is an attorney in the Brussels office of Sidley Austin LLP, where she focuses on EU regulatory and competition law. She has particular experience in regulatory and competition counseling and litigation on issues affecting the chemical and pharmaeutical sectors, as well as State aid law.

Ms. Nordlander has been involved in several major cases concerning EU environmental regulation, including representing the Nickel Institute in connection with challenges to proposals by the European Commission for so-called group classifications of certain nickel substances under the EU Dangerous Substances Directive, and representing a major mining company in contesting the proposed classification of a substance by the European Comission and related EU and national litigation.

In addition to chemicals and pharmaceuticals, Ms. Nordlander has advised clients in a wide variety of other industries and business sectors, in particular media and broadcasting, agrochemicals, motor vehicles, consumer electronics, and pulp and paper.

Ms. Nordlander publishes and speaks widely on topics such as EU chemical and pharmaceutical regulation, legal privilege, State aid law and EU antitrust policy and procedure.

Ms. Nordlander is member of the American Bar Association. She earned her law degrees at the University of Stockholm in 1996 and at Harvard Law School in 1998, and earned European Masters in Law and Economics at the Universities of Hamburg, Ghent and Vienna in 1995. She is admitted to the bars of Sweden, Brussels and New York.

INTRODUCTION

This paper discusses the European Union's major new legislation on chemicals, the Registration, Evaluation and Authorisation of CHemicals (REACH) Regulation. Under the new REACH Regulation, which will come into force on 1 June 2007, enterprises that manufacture or import more than one tonne of a chemical substance per year in or to the European Union (EU) will be required to gather comprehensive information on properties of their substances produced or imported and to submit the necessary information to demonstrate their safe use in a registration dossier to the new European Chemicals Agency, based in Helsinki, Finland. Failure to register will mean that the substance cannot be manufactured or imported to the EU market.

The paper is set out in five parts: Part I is an Executive Summary; Part II explains the background to REACH; Part III gives an overview of the REACH Regulation and its application to mining and minerals companies in particular; Part IV describes the relationship between REACH and the precautionary principle; finally, Part V explains the interaction between REACH and the EU's system of classification and labelling.

I. EXECUTIVE SUMMARY

REACH represents a major change in the EU's policy on chemicals. It will have significant implications for the mining and minerals industries and companies, not just in the EU, but wherever they are located in the world.

REACH responds to perceived flaws in the EU's current system of chemicals legislation, which evolved in a piecemeal fashion. REACH aims to protect human health and the environment by establishing a single coherent system for assessing and testing chemicals, while protecting European competitiveness, the single market and minimising testing on animals. One of the keys to this is to reverse the current burden of proof so that it is for industry, rather than the EU Member States, to demonstrate that chemicals can be safely used.

The REACH Regulation was hugely controversial and took over three years to negotiate and agree. Now that it is finally (almost) here, its likely impact is still not completely clear. However, it will surely be significant: in terms of regulatory requirements to access the EU market, forced substitution of some chemicals of "very high concern", and possible withdrawal from the market of others, simply because they are no longer economic. Perhaps of even greater import for companies conducting business outside the EU is the

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possibility of "regulatory creep": REACH will generate a huge amount of new data about chemicals and regulatory authorities located elsewhere in the world will be paying attention and are likely to act on it. Some have predicted that REACH will be the standard that other chemicals regulatory regimes will aspire to.

As its name suggests, REACH is founded on a number of complementary principles: registration, evaluation and authorisation; but also market restrictions, data sharing, passing information up and down the supply chain and corresponding obligations for downstream users.

REACH was not designed with inorganic chemicals like minerals and metals in mind. Strong lobbying by industry and non-European governments and organisations during the negotiation stage resulted in some major improvements, such as recognition of the special properties of alloys and a partial exemption for naturally occurring minerals, ores and concentrates that are not chemically modified. Nevertheless, REACH poses a number of challenges that are specific to the mining and minerals industries and their downstream customers: for example, even a requirement as basic as naming and identifying a particular chemical is not straightforward when it comes to minerals.

While it is likely that most minerals, ores and concentrates will be exempted from the onerous requirements of registration and evaluation, they will not automatically be exempted from authorisation. As many minerals contain elements of CMRs, many will be caught and will end up on the authorisation candidate list. Even if they never end up on the authorisation list itself, this will almost certainly have considerable commercial consequences.

REACH is explicitly founded on the precautionary principle, i.e., the principle that, where a chemical appears to pose a serious risk to human health or the environment, it is appropriate for regulatory authorities to take action even if it is not scientifically proven that the chemical is responsible. This naturally raises concerns that regulation will become overly political, rather than based on sound science.

The European Union's chemicals policy has come a long way since the European Commission first published its White Paper at the beginning of 2001. However, European chemicals policy and legislation is by no means settled. The Commission only completed its public consultation on the proposed new classification and labelling system, which is to be based on UNECE's Globally Harmonised System of classification and labelling (GHS), towards the end of 2006. GHS will be a further major change to European chemicals policy. There is still a long way to go before we can know whether the concerns set out in the White Paper have been successfully addressed.

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II. BACKGROUND TO REACH

A. Commission's White Paper

In February 2001, the European Commission ("Commission") published is White Paper setting out a "Strategy for a future Chemicals Policy" for Europe ("White Paper").² The White Paper was the Commission's response to deficiencies that had been identified in the existing European chemicals regulatory policy, which is set out in four main pieces of legislation:

• The Dangerous Substances Directive 67/548/EEC; ³

• The Dangerous Preparations Directive 88/379/EEC; ⁴

• The Existing Substances Risk Assessment Regulation 793/93; ⁵ and

• The Marketing and Use Directive 76/769/EEC. ⁶

The White Paper responded to concerns that the current European system of chemicals regulation did not provide sufficient protection for human health or the environment. It also noted several specific criticisms of the current system, including:

1. Distinction between "new" and "existing" chemicals

The current European system distinguishes between "new" and "existing" chemicals. "Existing" chemicals are those that were deemed to be on the European market and which manufacturers had listed in EINECS⁷ by 18 September 1981. "New" substances are those that have been place on the market since then. There are just over 100,000 existing substances listed in EINECs, but, as of February 2007, only 4,381 new substances on the market in the EU.

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New substances are subject to extensive testing and assessment requirements before they can be placed on the EU market in volumes of 10 kg or more per year. Existing substances are not subject to testing requirements before they can be place on the market. The White Paper noted that existing substances account for more than 99% of the total volume of chemicals on the market in the EU, but they are not subject to the same stringent testing and information requirements.⁸ This is despite the fact that experience has shown that the most serious harm to human health and/or the environment has often been caused by substances that were used and marketed before their risks were known, for example, DDT and asbestos.

2. Excessive testing requirements

The 10 kg threshold for new substances is onerous and has led to a disincentive to register new chemicals or to carry out research and development into new and possibly less harmful chemicals. Innovation has moved to countries outside the EU as a result. The low threshold has also resulted in excessive levels of testing on animals for those new chemicals which were developed in the EU.

3. Complicated system with information deficiencies

The current system is a complicated patchwork of badly coordinated legislation. Many of the key legal instruments (particularly the Dangerous Substances Directive) have been amended on numerous occasions. This has resulted in a lack of clarity as well as actual...