The European Chemicals Agency (ECHA) Board of Appeal has annulled a critical decision regarding the compliance check of the registration of the substance 1,6-dichlorohexane, filed by BASF SE, a major chemical company based in Germany. The decision, issued on 3 November 2022, required BASF to fulfil certain information requirements under Annex IX of the REACH Regulation. However, the Board of Appeal has now partially overturned this decision, asserting that BASF's downgrade in the tonnage band was not properly considered.
Background to the Dispute
The dispute arose from the ECHA's compliance check of BASF's registration for 1,6-dichlorohexane, a chemical used in various industrial applications. BASF initially registered the substance at a higher tonnage band of 100 to 1,000 tonnes per year. However, in May 2022, BASF downgraded its registration to a lower tonnage band of 10 to 100 tonnes per year, citing a significant reduction in demand from a key customer.
The ECHA, despite acknowledging the tonnage downgrade, proceeded with its compliance check based on the original higher tonnage band. This led to the November 2022 decision, which imposed extensive information requirements on BASF under Annex IX of the REACH Regulation.
Arguments and Proceedings
BASF appealed the decision, arguing that the ECHA failed to properly consider the tonnage downgrade and breached its right to good administration as set out in Article 41 of the Charter of Fundamental Rights of the European Union. BASF contended that the downgrade was a legitimate commercial decision and that the ECHA had wrongly applied the higher tonnage band requirements.
The ECHA, on the other hand, maintained that the tonnage downgrade should not impact the ongoing compliance check, as BASF was still operating at the higher tonnage band in the preceding calendar year. The agency argued that its decision was consistent with the REACH Regulation and that it had followed standard procedures.
Board of Appeal’s Decision
The Board of Appeal found in favour of BASF, concluding that the ECHA had indeed breached its duty to examine each case individually. The Board determined that the ECHA's decision to disregard BASF's tonnage downgrade was unjustified and that the agency had failed to consider other relevant factors, such as the volume of the substance produced in the year following the downgrade and the specific reasons provided by BASF for the downgrade.
The Board emphasized that the ECHA's assessment should not have been limited to the volume produced in the calendar year preceding the downgrade. Instead, a comprehensive evaluation of all relevant circumstances was necessary. As a result, the Board annulled the decision insofar as it required BASF to provide information under Annex IX.
Implications and Next Steps
The annulment of the contested decision has significant implications for BASF and potentially for other companies subject to ECHA compliance checks. The case has been remitted to ECHA for further action, taking into account the Board of Appeal's findings. Additionally, BASF will receive a refund of the appeal fee, as the appeal was decided in its favour.
This ruling underscores the importance of thorough and individualised assessments in compliance checks under the REACH Regulation, particularly when companies adjust their registrations based on legitimate commercial considerations. ECHA will need to refine its procedures to ensure that such factors are fully considered in future compliance checks.
