Overview
The United Kingdom has restored its ‘sovereignty’ over the rules for the Great Britain market following its exit from the EU Single Market and Customs Union, but it doesn’t start with a blank sheet of paper. After decades of EU institutions setting the rules for chemicals, on their own, in products, and for particular uses, as part of a growing health and environmental policy agenda, there is a significant body of law to unpick. Now that the UK is operating a parallel but independent regime with scope to deviate further from the EU’s rulebook, this article explains some of the issues that global chemicals businesses should be watching.
There is already divergence
The goal on 1 January 2021 – the first day of the independent GB market – was to minimize disruption to business through replicating EU laws onto the UK statute book. However, achieving the same rules under the great ‘lift and shift’ exercise was always a fiction. As businesses have discovered, there are hundreds of differences between the new GB regimes and the EU versions upon which they were based. Some came into effect immediately, such as the requirement to have a UK responsible person for the ingredients in cosmetics. Many have been allowed a transition period, such as the requirement to affix the new UKCA mark (the UK’s replacement for the EU’s CE mark) to electronics to confirm low levels of certain hazardous substances. In certain cases, in order to benefit from transition periods, businesses have been required to get to grips with new administrative devices, such as the new ‘downstream user import notification’ under UK REACH. Across the board, the lesson is: don’t assume nothing has changed.
Data rights will be the source of disputes
One of the more challenging aspects of the EU’s approach to chemicals regulations such as REACH and biocidal products was the requirement for competitors to share data costs in a ‘fair, transparent and non-discriminatory’ manner. The rationale – to avoid unnecessary animal testing and avoid duplicated costs – has merit, but it generated a significant number of disputes within the EU.
The UK has replicated these requirements as part of the copy and paste exercise, but this has generated a good deal of confusion in the market. In the vast majority of cases, market participants in the EU did not purchase the data itself, but simply a ‘right to refer’ to data, for a limited purpose. Having paid good money for that ‘right to refer’, there appears to be an expectation in some quarters that there is no need to pay again for access to data in the GB market. However, in many cases, the rights were limited to the EU regulatory regime only. Although some data owners have gone public with announcements that they won’t seek to recover data costs in the UK, this is certainly not true for all data owners, and it is anticipated that confusion will spill out into data sharing disputes before the UK’s Health and Safety Executive and into the UK’s tribunal system, with private law rights enforced in the UK courts. A robust audit of data ownership and data rights is recommended.
There are new checks and balances
Much of EU chemicals regulation is contained not in a static set of rules on chemicals, but rather within a framework under which EU institutions and agencies can make decisions based on both the information provided by industry and future developments in scientific understanding. In order to avoid misuse of such wide powers, there are numerous checks and balances built into the system, such as the requirement for independent scientific advice, the role of Member States in decision making, rights of appeal to a specially constituted Board of Appeal, and oversight by the Court of Justice of the European Union.
The UK could never have simply replicated these checks and balances for the GB market, but in setting its own direction, the UK has deviated significantly from the EU blueprint. Independent scientific advice will come mostly from ‘challenge panels’ to scrutinize draft decisions, rather than hard-wired into the decision-forming process, and will be made up of experts picked by the regulators. The UK has decided against creating a Board of Appeal, and will instead send appeals into the existing Tribunal system (part of Her Majesty’s Courts and Tribunals Service), an adversarial system with a general regulatory caseload. Industry seeking to exercise their rights to scrutinize government decision-making will need to navigate these British systems.
There is a competence gap
The UK institutions do of course already have significant expertise in chemicals regulations and have been engaging in the EU system for many years. However, the UK is no longer one of 28 Member States working with the well-resourced European Chemicals Agency: it is picking up that entire workload itself. The official line is that the UK has no need to match ECHA’s size and scope, but that is difficult to reconcile with the observation that, in its current form, UK REACH is no smaller in size or scope. The HSE, as the body that inherits most of ECHA’s functions and roles, has been on a recruitment drive, but don’t expect these jobs to be taken up by seasoned veterans of EU chemicals regulation. The fact that the HSE’s work plan for 2021/2022 has budgeted for 25% of staff time to be given to training tells its own story. The UK authorities are on a steep learning curve and industry needs to be ready to take a proactive role in regulatory decision-making rather than sitting back and hoping for the ‘right’ outcome.
More significant change is on the cards
EU REACH, in particular, has often been cited by politicians searching for examples of objectionable EU regulation. Prime Minister Johnson made reference to REACH in the referendum campaign, and many have done so since.
As recently as 16 September 2021, REACH was cited by Minister of State Lord Frost, as an example of EU laws which were “unsatisfactory compromises”, “overly detailed and prescriptive” and passed into UK law “with very limited genuine democratic scrutiny”. Lord Frost was addressing the House of Lords of the UK Parliament on his plans for a legislative drive to “change this situation”.
In parallel, the Environment Bill, a landmark post-Brexit overhaul of environmental regulation and standards, is working its way through UK Parliament, which will provide Ministers with significant powers to set environmental standards and change environmental regulations with more limited Parliamentary scrutiny than full Acts of Parliament. One chapter of the Bill will allow changes to many existing provisions of UK REACH. Although described as a mechanism to ensure more flexibility to tweak REACH for the GB market, the potential for changes using these powers is not insignificant.
Whether there is genuine political will for significant change to the GB market’s chemicals regulation remains to be seen. It is, however, yet another issue for global chemicals businesses to watch as we wait to see just how different the newly independent GB market will turn out to be.