European Union: EU Court Clarifies "Article" Containing SVHC But Questions Remain

On September 10, 2015, the European Court of Justice ("ECJ") delivered a key decision on the concept of an "article" containing a substance of very high concern ("SVHC"). The decision, which was highly anticipated, particularly in France, responded to a request for a preliminary ruling of France's Supreme Administrative Court (Conseil d'Etat) of February 26, 2014.
 
The decision examined the following obligations under the Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals ("REACH"). Article 7(2) REACH requires a notification to the European Chemicals Agency ("ECHA") of any article placed on the market in the EU that contains an SVHC in a concentration above 0.1% w/w (percentage weight/weight). Article 33 REACH requires the provision of such information to recipients of the article and upon request to consumers.
 
The legal issue is whether the 0.1% w/w threshold should apply either to (i) a complex product, consisting of several separate component articles, or (ii) each of such component articles.
 
Article 33 REACH defines an "article" as "an object which during production is given a special shape, surface or design which determines its function to a greater degree than does its chemical composition." This definition, however, was inadequate for determining the scope of application of the 0.1% w/w threshold. Thus, the European Commission addressed this issue in an opinion dated February 4, 2011. It indicated that "objects which at a certain step in their life-cycle meet the definition of article under REACH cease to be individual articles and become components once they are assembled into another article. For this reason, the obligations in Article 7(2) and 33 apply only with respect to such assembled article, and not with respect to its individual components" (emphasis added).
 
ECHA's guidance on requirements for substances in articles took a similar view. However, six EU Member States (France, Germany, Belgium, Denmark, Sweden, and Austria) and Norway did not share the Commission's and ECHA's views and published dissenting opinions in May 2008. The French Ministry of the Environment also published an opinion in June 2011 asserting that the concept of "article" should be understood as each item falling under the definition of an "article" under REACH. Thus, "French authorities will apply the provisions of Articles 7(2) and 33 relying on these elements. Controls will be progressively enforced in order to ensure compliance with these provisions through an approach both pragmatic and proportionate with regards to sanitary and environmental concerns."
 
Two French professional federations challenged this June 2011 opinion before the Conseil d'Etat, claiming that it did not comply with either the European Commission's opinion or ECHA's guidance.
 
In its decision of September 10, 2015, the ECJ ruled in favor of the French Ministry of the Environment's more expansive interpretation of the concept of "article." Thus, the obligations to notify and inform equally apply to any article, including those incorporated as component articles of a complex product, containing a concentration of an SVHC above 0.1% w/w.
 
Specifically, the requirements now apply as follows:
 
With respect to the notification obligation under Article 7(2) REACH, EU producers of articles must notify ECHA of any articles they produce containing SVHCs above 0.1% w/w. This obligation, however, does not apply to component articles containing SVHCs supplied by third parties (who are presumed to have already notified these).
 
EU importers must notify ECHA of all articles, including any component articles from which they are assembled, containing SVHCs above 0.1% w/w.
 
The information obligation under Article 33 REACH applies in the same manner to both EU producers and EU importers. Relevant information must be provided for any article, including any component article from which they are assembled, that contains SVHCs above 0.1% w/w. This is to ensure that the SVHC information is provided throughout the whole supply chain.
 
Thus, any EU supplier of articles must have sufficient information about the content of SVHCs in any of the component articles. This is particularly burdensome for EU importers, who often have limited information about the components of the article that they import. This is due to the fact that the article as a whole, or its sub-assemblies, might have been supplied by non-EU manufacturers that have no regulatory obligation to communicate the SVHC content (companies established outside the EU are not subject to REACH).
 
To address the ECJ's findings, ECHA has already announced the update of the Guidance.
 
In our view, guidance is particularly needed on the definition of "component articles," i.e., what should be the lowest component level of reference. For example, EU legislation on the restriction of dangerous substances in electronic products applies the weight thresholds on "homogeneous materials" inside the products, including coatings, containers, etc. In our view, for REACH purposes, suppliers should be able to apply a less minutely detailed identification of components.
 
In its Opinion preceding the Judgment, the Advocate General stated that any item should be considered a component article as far as it retains, after the incorporation into the final product, its own original shape, surface, or design. Seats were used as example: each distinct component of a seat should be considered as a component article, e.g., upholstery, springs, or the seat frame.
 
However, this means that any component that, after the incorporation, has lost its shape etc., should be considered as an integral part of the whole product. This will be the case with, for example, plastic film (previously an article) that is incorporated into the final product. Also, components that had been substances previously (e.g., polymer pellets) should not be considered as component articles after they have been shaped during the production of the final product.
 
Since the ECJ has now ruled that the notification obligation triggers at the component level, arguably the notification under Article 7(2) and Article 33 should always clearly identify the component article in addition to the 0.1% w/w statement, in particular since the Commission and ECHA might take the view that this is necessary to allow the safe use of such articles under Article 33(2) REACH. However, from a practical point of view, this seems unworkable in the case of complex articles.
 
The ECJ's interpretation is immediately applicable as it does not require any implementation or amendment of REACH. The Commission, however, might recommend that national enforcement authorities apply a grace period for component articles already in the EU supply chain. Nevertheless, companies must be aware that immediate enforcement remains a possibility, particularly in those Member States that already endorsed the ECJ's interpretation (including France).
 
The judgment is available at C‑106/14 FCD and FMB v Ministre de l'Écologie, du Développement durable et de l'Énergie, September 10, 2015.

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