RoHS enforcement: Penalties and lost sales

Over the past three months, Ageus Solutions has been brought in to support companies that are facing two to six months revenue gaps, loss of contracts, qualification of alternative vendors, and return of product from customs in the European Union (EU) due to non-compliance issues discovered by distribution partners or EU government officials.

These enforcement and related actions are going to intensify and companies are going to see the revenue pinch. RoHS enforcement and the impact of non-compliance is more complicated and more diverse that originally expected, but it would be extremely unwise to let down your guard right now. This is particularly true for a North American-based electronics brand owner using distributors or distribution partners in Europe.

To properly describe RoHS enforcement, how it is being implemented, and how companies are being impacted, it is important to explain the implementation process of the RoHS directive. The RoHS directive (2002/96/EC) itself does not directly affect any person or company. It is a directive from the European Union to each member state requiring the creation of national legislation based on the agreed upon tenants and articles contained in the EU directive. The online encyclopedia, Wikipedia, provides an excellent and concise definition of an EU directive that highlights the principle challenges related to government level RoHS enforcement.

"A directive is a collective legislative act of the European Union, which requires member states to achieve a particular result without dictating the means of achieving that result."

The entity that creates the legislation — the EU — is not responsible for its implementation. Instead, the implementation of the directive is the responsibility of the government in each specific member state. The Government of Germany is responsible for the implementation of the RoHS directive in Germany. The Government of the U.K. is responsible for the implementation of the RoHS directive in the United Kingdom. In short, the entity responsible for creating the directive has very little responsibility in its implementation and enforcement. This includes determining or standardizing the means used to do so.

The individual member states are responsible for the method of enforcement and, as important, budgeting for enforcement activities and personnel. The budgeting and resource allocation activities are particularly critical to the how and when of RoHS enforcement. One of the principle causes for the delay in full and comprehensive government enforcement in each state is the complexity of the steps and approvals required to put the correct resources and equipment in place.

Furthermore, the decision regarding who will receive the budget also affects the form of enforcement. If customs has the enforcement in their budget, the country will conduct most of its enforcement on import. If the ministry of environment has the budget, the country will conduct most of its enforcement via documentation or physical inspections at places of business. As much as companies would like to see one comprehensive, predictable and transparent enforcement system across the EU, the actual enforcement in each member state will differ profoundly based on their particular implementation and resource allocation.

Even with the differences from EU member state to EU member state, the general methods used for RoHS enforcement follow one of the two following models: request for technical documentation or physical inspection.

1) Request for technical documentation
A common form of this approach of RoHS enforcement can be seen in the RoHS enforcement guideline document circulated by the "EU RoHS Enforcement Authorities Informal Network" on May 2006. A letter or other form of request would be delivered to the relevant producer in the EU member state and would detail the required information to be returned. The letter or similar request would be circulated on a case-by-case basis, following a discrepancy upon physical inspection, a third-party complaint (e.g. competitor or environmental group), or by using the national WEEE registration list as a mailing list of all producers of targeted products within the specific EU member state.

Typical information required in a RoHS due diligence request include:

• Organizational details of producer
• Products or brands sold
• Justification for any products excluded from RoHS
• Exemptions claimed and justifications
• Details of internal control processes for RoHS compliance
• Certification
• Compliance records
• Statement of internal controls

The technical documentation method of enforcement involves significant amounts of documentation. It is also fairly resource intensive, subjective, and not well supported in the EU member states lacking a tradition of due diligence as a legal defense. The first step in enforcement in any member state, is physical inspection using XRF or similar tools.

2) Physical inspection

Many governments, such as the Netherlands and Belgium, are using handheld XRF units for product inspection. These units are not up to the level of detecting precise ppm concentration in homogenous materials, but when combined with visual inspection, provide a basis for detecting significant RoHS non-compliance issues.

Physical inspection using XRF is useful for detecting gross violations such as heavy metals on the surface of the product and in connectors. This method is not very useful in detecting PBB or PBDE, but does provide a hint to the presence of heavy metals such as lead, mercury and cadmium in the product.

XRF inspection for hexavalent chromium, would likely not stand up in court (although very few brand owners would want to publicize non-compliance by going to court), but if used in combination with other techniques including visual cues and analytical testing, physical inspection with XRF can denote areas of high risk for hexavalent chromium. In circumstances where tests are indicative of restricted substances, but not conclusive, producers may be required to provide technical documentation on compliance.

To support consistent testing for manufacturers and enforcement authorities, the International Electrotechnical Commission (IEC) is developing an international standard on test methods for the six RoHS substances (IEC62321).