The current situation

Currently under section 21 of the ICNA Act it is an offence to introduce (meaning import or manufacture) a new industrial chemical4 into Australia, except in the following circumstances (in which a person is permitted to introduce a new industrial chemical):
  • if an exemption applies because the chemical poses no unreasonable risk (for example, because the chemical is introduced in very small volumes or subject to high levels of control or restricted access)
  • if the introduction is in accordance with a permit (there are 5 different types of permits)
  • the person holds an assessment certificate.
For new chemicals that are subject to an assessment certificate, introducers may also apply for early listing on AICS (after 5 years such chemicals are listed automatically). The effect of this is to define the chemical as an existing chemical and therefore enable anyone to introduce the chemical (within specified conditions of use, where applicable).

In general:
  • the system of ‘exemptions’, ‘permits’ and ‘assessment certificates’ forms a regulatory hierarchy that aligns regulatory effort with risk
  • exemptions apply to chemicals that meet the legislated criteria for an exemption. Such chemicals can be introduced under legislated exemption categories and do not require a certificate or permit. However, there are post-market obligations on the introducers of such chemicals to maintain records and submit annual reports to NICNAS. These obligations are enforceable and NICNAS can monitor compliance. In 2009-10, 6,974 chemicals were reported to be introduced through exemptions5
  • permits are available for chemicals that meet the criteria. Again, these are relatively low risk chemicals and uses. As a result, applications for permits are subject to a streamlined, low-cost NICNAS assessment process. Following NICNAS assessment, a permit is issued to the introducer. The permit may be subject to conditions of use and it is an offence not to comply with any conditions of use. The permit is time limited and may be renewed. Compliance with conditions of use is monitored and enforced by NICNAS. In 2010-11, 117 permits were issued by NICNAS
  • assessment certificates are required for all new chemicals that do not meet the exemption or permit criteria. These chemicals are generally higher risk chemicals or uses. As a result the data requirements are generally more significant, and the NICNAS assessment process is more comprehensive.

Following an assessment, NICNAS issues a detailed assessment report which includes hazard identification, risk assessment and recommendations for regulatory controls and conditions of use. However, unlike for permits, NICNAS does not have the power to refuse an assessment certificate, nor does it have the power to impose conditions. Rather, the responsibility for imposing any regulatory controls or risk management conditions rests with relevant Commonwealth and State/Territory regulators. This might include, for example: public health regulators; Safe Work Australia; environment; transport; mining or other risk managers.

Following the issuance of an assessment certificate by NICNAS, the introducer is able to introduce the chemical into Australia (through import or manufacture) despite the fact that the risk management measures may not yet be in place. While some of the risk managers are able to apply risk management conditions relatively quickly (i.e. 8 weeks) others can take up to 2 years to consider the NICNAS recommendations, complete the necessary regulatory tasks and apply the risk management conditions.

Further, in some limited cases there are no relevant risk managers and so there are no means by which to consider whether conditions of use are required to manage risks and, if they are, to impose enforceable conditions. As a result, until such time as risk managers impose conditions of use, the system depends on the introducer voluntarily observing the recommendations made by NICNAS as part of the assessment.

For example, recently NICNAS considered a water purification chemical for home water filters. In this case, there was no clear risk manager so NICNAS made recommendations to the National Health and Medical Research Council (NHMRC) to consider including the recommendations in their drinking water guidelines. However, NHMRC is not a regulatory agency and as such the manner in which the guidelines will be enforced is unclear.

In 2010-11 NICNAS issued 165 certificates for new chemicals. Of these, NICNAS recommended that risk management measures be implemented by the risk managers for 56 chemicals.
  • AICS - For new chemicals that have been subject to an assessment certificate, the introducer may choose to apply to NICNAS to have the chemical listed on AICS. If the introducer does not apply to have the chemical listed on AICS it is automatically listed on AICS after 5 years. The effect of listing on AICS is that anyone can import or manufacture the chemical.
While NICNAS has a limited capacity to apply conditions of use on chemicals entered on AICS (also known as ‘annotation’), this power is seldom used. In most cases it would not be meaningful to apply a condition of use five years after the chemical has been in use (when there has been no capacity for NICNAS to apply a condition at the time of issuing the assessment certificate).Top of Page

The problem

Risk assessment and risk management functions

As the PC Report noted, there are some advantages in separating risk assessment and risk management functions. As a result, the PC recommended that the power to annotate AICS (to include conditions of use) be removed along with any power to ban or phase out chemicals6. The current power to annotate is not well described, transparent or logical in the regulatory system.

However, it would appear that there are also significant problems (as identified by stakeholders in submissions to the review and in the Australian Government’s response to the PC Report) with both the current approach and that proposed by PC.

While NICNAS is currently undertaking both a risk assessment and risk management function in relation to lower risk chemicals, for higher risk chemicals NICNAS loses the power to refuse an assessment certificate, to impose conditions of use or to monitor and enforce compliance (noting that other risk managers have responsibility for performing this role).

If, as suggested in the PC Report, NICNAS were to focus on hazard and risk assessment only, consideration may need to be given to NICNAS discontinuing its risk management, monitoring and enforcement responsibilities in relation to lower risk chemicals and uses (e.g. exemptions and permits). This approach was not supported by PC.

Alternately, consideration could be given to enabling NICNAS to perform a limited risk management/regulatory role (i.e. have capacity to refuse an application for a certificate, to impose conditions and to monitor and enforce) in relation to higher risk chemicals.

Complexity

The new chemicals notification framework is overly complex with more than 30 different categories for exemptions, permits and certificates. This is confusing for industry and leads to inefficiencies for both industry and NICNAS. A number of these notification categories were introduced in 2004, as an outcome of the Low Regulatory Concern Chemical (LRCC) Reform Initiative, with the aim of improving flexibility. An industry evaluation7 of the first tranche of reforms, however, found that while the LRCC reforms were a ‘step in the right direction’ there was ‘great confusion within industry about the specific details of the LRCC provisions’.

Other issues

Other problems with the regulation of new industrial chemicals include the following:
  • exemptions - Experience demonstrates that the list of exemptions has become outdated and unnecessarily restrictive. This was also raised as a concern by a number of stakeholders
  • permits – The permit system can be confusing and overly restrictive in some cases, and as a result, under utilised.
  • ssessment certificates – The main issues in relation to assessment certificates are:
    • the certificate system can be confusing and overly complex for industry with over 20 different notification categories
    • the legislation does not enable NICNAS to reject an application that does not include the necessary information. Further, additional information can be submitted to NICNAS at anytime which is inefficient and delays the assessment process
    • NICNAS cannot refuse an assessment certificate which means that the chemical can be introduced despite posing unacceptable public health, worker safety and environmental risks
    • the risk managers may take time to impose conditions of use, resulting in a ‘gap’ in regulatory coverage during that period. There are also limited circumstances in which there is no appropriate risk manager and therefore no way to enforce the necessary condition of use in order to minimise risk to public health, worker safety and the environment
  • AICS – The problems in relation to AICS are:
    • NICNAS cannot refuse to enter a chemical on AICS. This means that the chemical can continue to be introduced despite concerns that may have arisen following assessment surrounding unacceptable risk to public health, worker safety and the environment
    • NICNAS cannot effectively impose conditions of use on chemicals on AICS where there is either a regulatory gap and there is no relevant risk manager or the risk manager has not yet acted to impose the necessary condition of use.
Some stakeholders consider there is an additional problem shared by exemptions, permits and assessment certificates in that categories and data requirements do not adequately align with international regulatory systems. This adds regulatory burden for industry and administrative inefficiency for NICNAS.

The objectives of any reform

In addition to addressing the problems detailed above, consideration is being given to how NICNAS can achieve appropriate levels of health and environmental protection faster than it is currently able, noting:
  • the importance of appropriate levels of protection for public health, worker safety and the environment
  • enhancing competition and innovation in the industrial chemicals industry by removing unnecessary regulation and minimising the cost of regulation to industry
  • the desirability of addressing ‘regulatory gaps’ where those gaps:
    • have the potential to pose risk to public health, worker safety or the environment
    • undermine consumer confidence in the regulatory system
    • present regulatory uncertainty for industry
  • the need for clarity, certainty and transparency for industry, consumers and NICNAS
  • the need to preserve and not disrupt the important role of risk managers, noting the complexity of the regulatory system for chemicals
  • the importance of ensuring minimal duplication
  • ensuring an appropriate risk continuum, with regulatory effort (both pre- and post-market) matched to risk.
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Possible options for reform

As noted in Part 3 of this Discussion Paper, numerous suggestions were made by stakeholders about improvements that could be made to the system.

The anomalies identified above were highlighted by stakeholders and the proposed solutions varied enormously. Stakeholders also noted the desirability of being provided with clear options for consideration and comment.

The purpose of this Part of the Discussion Paper is to describe possible options for addressing the issues detailed above.

Please note that this section only applies to new industrial chemicals. Existing chemicals are addressed in Part 6, post-market monitoring and enforcement is addressed in Part 7 and Part 8 deals with other reforms that impact both new and existing chemicals.

Some possible options for reform for new chemicals follow. The options below could be implemented as a package, individually or as a combination of options (note that B4 and B5 are complementary). Please note that each of the options would be likely to result in changes to the ICNA legislation (either the Act or the Regulations) as well as administrative documents.

B1. In relation to all notification and assessment categories (for exemptions, permits and certificates):
  • reduce the number of categories
  • review current volume thresholds, data requirements and applicability criteria with a view to harmonising these with overseas arrangements where possible8. The objective of this would be to better clarify and harmonise data requirements and reduce complexity for industry.
B2. In relation specifically to exemptions:
  • consider new or expanded exemptions (e.g. options described in the LRCC evaluation report on increasing the volume limits and extending the 1% concentration exemption for non-hazardous chemicals in products). 9
B3. In relation to permits and assessment certificates:
  • introduce a pre-assessment statutory screening process, with timeframes, to enable NICNAS to refuse an application if it does not include all the necessary information. Additional information would only be able to be provided following a request from NICNAS or under the legislative obligations to provide new relevant information (note the PC Report – recommendation 4.5).
B4. In addition, in relation specifically to assessment certificates:
  • streamline the assessment process (note the PC Report – recommendation 4.1). For example, a model operating in the US EPA involves four distinct successive technical phases: chemistry review, hazard evaluation, exposure evaluation and the risk assessment/risk management phase. These phases are structured to ‘drop’ (from further assessment) chemicals of low risk early in the review enabling resources to focus on higher risk chemicals. As an example, polymers which meet select criteria are commonly dropped during the chemistry review. Such an approach could be considered for the assessment of new chemicals
  • enable NICNAS to refuse an assessment certificate in prescribed circumstances if NICNAS considers that there is unacceptable public health, worker safety or environmental risk and risk management strategies cannot manage the risk to an acceptable level. The legislation would clearly define the very limited circumstances in which this power would be used and would also ensure there are in-built procedural fairness and consultation mechanisms
  • enable NICNAS to impose conditions of use on an assessment certificate where such conditions must be removed/lifted once NICNAS receives notification from the relevant risk manager that they have implemented measures that the risk manager has determined are necessary to manage the risk10. Any conditions of use imposed by NICNAS would only extend to the introducer (importer or manufacturer) as is the case with permits. Further, NICNAS would not impose conditions which are general obligations under, for example, work health and safety law. Conditions would only be imposed where a control is necessary beyond a generic obligation11. For example, where a concentration limit is necessary.
B5. In relation to AICS:
  • provide that after five years, or if the holder of an assessment certificate applies to NICNAS to have the chemical entered on AICS (to enable its introduction by anyone), require that if the chemical is subject to conditions of use (because risk management measures have not yet been imposed by the relevant risk manager) that either: the chemical not be entered on AICS until these measures are in place; or these conditions also carry over to AICS. As for assessment certificates, the conditions on AICS would be removed once other risk managers have ‘filled the gap’ (note the PC Report – recommendation 4.4)
  • enable NICNAS to refuse to enter a chemical on AICS in prescribed circumstances if NICNAS considers that there is unacceptable public health, worker safety or environmental risk and risk management strategies cannot manage the risk to an acceptable limit. The legislation would clearly define the very limited circumstances in which this power would be used and would also ensure there are in-built procedural fairness and consultation mechanisms
  • provide that if, during the 5 years following assessment of a new chemical, the introducer decides (for commercial reasons) to stop introducing the chemical, NICNAS may choose not to enter the chemical on AICS provided this occurs with the agreement of the company.
B6. Ensure that, if the legislative changes detailed above are progressed, that all necessary consequential changes are made to the legislation. For example, to ensure the protection of applicant’s appeal rights, align confidentiality provisions and provide for adequate transparency and input into regulatory decisions. Statutory timeframes for regulatory decisions would also need to be reviewed and adjusted in line with the new processes.
    The possible advantages and disadvantages of the model described above are:
    • it improves efficiency by expanding exemptions, introducing screening of applications for permits and certificates and adopting a streamlined modular assessment process for certificates
    • it improves consistency with international approaches by better aligning exemption, permit and certificate categories with international models and also by introducing a modular assessment process
    • it enables regulatory gaps to be filled without usurping the role of existing risk managers
    • it may create some uncertainty for industry if the conditions of use imposed by NICNAS (on the assessment certificate) are not consistent with the measures subsequently imposed by the relevant risk manager. However, to the extent that industry is currently expected to follow NICNAS recommendations, this problem already exists
    • at present NICNAS adopts a relatively conservative approach to pre-market assessment. This is, in part, because this is the only point of control for new chemicals. Whereas if there is capacity to ensure that necessary post-market obligations and conditions are in place, NICNAS’ pre-market risk tolerance could increase, within the policy framework. This could potentially mean that the time within which products are brought to market could be reduced.

    Input sought from stakeholders

    What are the strengths and weaknesses of the options for addressing the problems and objectives identified?

    If weaknesses are identified in relation to any of the options, are there other options that also meet the objectives?

    If these options were to be adopted, what are some of the implementation issues that would require consideration?

    What would be the likely impact on your organisation, if this approach were adopted?

    If NICNAS were able to refuse both an assessment certificate (Option B4) or listing on AICS (Option B5), under what circumstances would this be appropriate?

    4 A new industrial chemical is defined in section 5 of the ICNA Act. In summary, a new industrial chemical is a chemical that is not listed on the Australian Inventory of Chemical Substances (AICS) or a chemical whose introduction is subject to a condition of use.

    5 Please note that this is the number of chemicals reported to NICNAS under exemptions and does not take into account where several companies introduce the same chemical under exemptions.

    6 Noting that the PC acknowledged the need to retain the capacity to annotate the AICS to require secondary notification (p65).

    7 Industry evaluation

    8 Option F1 also explores the use of foreign schemes and international assessments (Refer Part 8 of this Discussion paper).

    9 LRCC Reforms evaluation report

    10 An alternative to this approach is to delay the issue of an assessment certificate (or delay the date of effect) until such time as the relevant risk managers have notified NICNAS that appropriate risk management strategies/conditions of use are in place. This option was not supported by the PC (refer page 70 of PC Report).

    11 On the basis of a preliminary examination of past assessment certificates it is estimated that approximately 10% of assessment certificates would include recommendations that require controls that go beyond general legal obligations.

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