EU Regulatory Bulletin - January 2016
Data-sharing regulation under REACH published in the EU Official Journal
Further to Fieldfisher's publication on 17 December 2015, on Wednesday 6th January 2016 the Commission published in the Official Journal of the EU the Implementing Regulation 2016/9 on joint submission of data and data-sharing in accordance with Regulation 1907/2006 ("REACH"). It will enter into force on 26 January 2016, with retroactive effect.
In essence, the Regulation increases the record-keeping and administrative burden on REACH registrants. New data-sharing agreements must be drafted in compliance with the new obligations.
The Regulation applies to data-sharing agreements that are entered into before or after 26 January 2016. This is an important consequence envisaged by the legislator. Practically, it means that if a data-sharing agreement exists prior to 26 January 2016, companies should review and amend (if necessary) their data-sharing agreements to ensure they comply with the Regulation. They should also make every effort to establish proof of costs incurred before entry into force of the Regulation.
Waiver for existing agreements
Parties to data-sharing agreements already in existence when the Regulation enters into force will be able to waive certain obligations by unanimous consent: the obligation to itemise costs when all parties to the agreement consent; and the obligation to include a reimbursement mechanism. However, a new party to an existing agreement is not bound by an existing waiver and will have the right to request inclusion of a reimbursement mechanism and itemisation of all study and administration costs incurred.
EU Court judgment on criteria for endocrine disrupting substances – Sweden v. Commission
On 16 December 2015, the General Court of the European Union delivered an important judgment in case T-521/14 Sweden v. Commission. The Court ruled that the European Commission has failed to comply with its obligations under the Biocidal Products Regulation (EU) 528/2012 (''BPR'') by not adopting in a timely manner criteria for endocrine disrupting substances (EDS).
Over the last two years, the debate in Europe on setting up EDS criteria for biocides, agrochemicals, and other chemicals horizontally, has proved to be quite problematic for two main reasons: (i) the proposed hazard-based approach as opposed to a risk assessment; (ii) and the delay of the process for setting up the criteria on the part of the Commission. According to Article 5(3) of the BPR, the Commission must adopt delegated acts specifying scientific criteria for the determination of endocrine-disrupting properties of substances no later than 13 December 2013.
In this context, the Swedish government lodged a complaint before the General Court arguing that by failing to adopt acts to specify scientific criteria for EDS by the deadline of 31 December 2013, the Commission has infringed its obligations under the BPR. The purpose of actions for failure to act under Article 265 of the Treaty on the Functioning of the European Union (''TFEU'') is to have a declaration from the EU Court that an institution unlawfully refrained from laying down rules. The success of these types of actions is comparatively rare.
In declaring that by not adopting delegated acts to define clear scientific criteria for EDS the Commission has failed to act under the BPR, the Court upheld four sets of arguments:
(i) Firstly, it is explicit in the regulation that the Commission had a clear, precise and unconditional obligation to adopt delegated acts as regards the specification of the scientific criteria for the determination of the endocrine disrupting properties of substances and that that was to be done by 13 December 2013. Nevertheless, the Commission did not adopt such acts. In other words, given that the wording of the regulation is perfectly clear and does not give rise to any ambiguity, there is no reason to interpret the obligation in the light of its context or its purpose.
(ii) Secondly, in reply to the Commission's defence that the scientific criteria which it had proposed were the subject of criticism, in the summer of 2013, the Court states that this criticism is irrelevant to the fact that the Commission had an obligation to act before the deadline envisaged in Article 5(3) of the BPR.
(iii) Thirdly, the BPR reflects a desired balance between harmonized rules for the functioning of the internal market with regards to biocidal products, on the one hand, and maintaining a high level of protection of human health and the environment, on the other. In that regard, the Court concludes that in exercising its delegated powers, the Commission cannot jeopardize this balance.
(iv) Finally, pertaining to the alleged ''necessity'' argument, raised by the Commission, of carrying out an impact assessment with a view to evaluating the effects of the various possible solutions, the General Court finds that that there is no provision of the BPR which requires such an impact analysis. Moreover, even if the Commission ought to have carried out such an impact assessment, that does not in any way exonerate it, in the absence of provisions, from complying with the deadline set for the adoption of those delegated acts.
The judgment has far-reaching consequences because it: (i) will trigger a more rapid resolution of setting up criteria for EDS, which is an imporant regulatory exercise not only for biocides but also for pesticides, and cosmetics; (ii) sets a precedent in which the Court clearly concludes that the Commission has failed to perform its duties under the BPR; (iii) it indicates that Member States are capable of influencing the delegated powers granted to the Commission under the TFEU in a way which improves administrative and legislative efficiency, and most importantly, the functioning of the EU market and the protection of human health and the environment.
Commission release legislative roadmap to include biostimulants in the Fertiliser Regulation
The European Commission recently released an indicative roadmap setting out plans to revise Fertilisers Regulation 2003/2003 to include organic fertilisers and biostimulants. The initiative is subject to change but sets out options being considered.
Regulation 2003/2003 harmonised the previous fragmented regulation of fertilisers across the EU and for inorganic products classed as "EC-fertilisers", it ensured free movement on the internal market. However, approximately half of available fertilisers are out of its scope. This includes biostimulants, which contain substances or organisms that stimulate natural processes e.g. nutrient uptake.
2. Options and impact
The roadmap sets out five policy options of increasing intrusiveness ranging from maintaining the status quo (Option 1) to a fully harmonised New Legislative Framework.
2.1 Option 2
Extend the type-approval of Regulation 2003/2003 to include organic fertilisers and biostimulants. Introduce limit values for heavy metals applicable to all fertilisers.
This could grant access to the internal market for organic fertilisers but the administration would likely be slow which would mean a fragmented market for many years and a procedure unable to keep up with an innovative industry.
2.2 Option 3
Extend harmonisation to organic fertilisers and biostimulants via ingredient-approval leading to a positive, exhaustive list of materials which can be used in a fertiliser. Introduce limit values for heavy metals applicable to all fertilisers.
This could also grant access to the internal market for organic fertilisers and with significantly more flexibility than under Option 2. Increased competition may reduce prices. Administration costs for producers and public authorities should reduce.
2.3 Option 4
Extend harmonisation to organic fertilisers and biostimulants via a New Legislative Framework which builds on mandatory quality and safety standards and voluntary, harmonised technical standards. Third party involvement in assessing conformity with requirements to apply across the board is envisaged. One essential requirement will be compliance with limit values for heavy metals.
This could also grant access to the internal market for organic fertilisers and with significantly more flexibility than under Option 2. Increased competition may reduce prices. However, high third party involvement is likely to increase administration costs for producers.
2.4 Option 5
Extend harmonisation as per Option 4, but where third party involvement in assessment of conformity with essential requirements varies between material categories. Again, one essential requirement will be compliance with limit values for heavy metals.
Similar benefits as Option 4. Administration costs are likely to fall for public authorities but could rise for some producers of particularly variable materials. Options 4 and 5 have the highest potential to lead to simplification.
2.5 Full/optional harmonization
For any of Options 2-5, full harmonisation would entail not allowing those fertilisers which did not comply to be placed on the market anywhere in the EU.
Alternatively, under optional harmonisation, national legislation could continue to exist, but those fertilisers complying with the harmonised legislation would receive a CE mark and be able to be placed anywhere on the internal market. Non-harmonised products could still remain on national markets. It has the benefit of affecting only producers with a genuine interest in access to the markets of several Member States.
However, cross-border food contamination and higher administrative costs for national authorities could result.
Whichever form the updated legislation takes, it will impact producers of biostimulants and other organic fertilisers, particularly those from Member States with small home markets. Waste treatment plants will be able to monetise their output. Farmers should see increased choice and the public should be better protected.
An Impact Assessment report was prepared by the former Commission which is now being revised to ensure compliance with the priorities of the new Commission.