Bills Digest No.167 2002-03
Industrial Chemicals (Notification and Assessment)
Amendment Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Industrial
Chemicals (Notification and Assessment) Amendment Bill 2003
Date Introduced:
28 May 2003
House:
House of Representatives
Portfolio:
Health and Ageing
Commencement:
Royal Assent
To amend the Industrial Chemicals
(Notification and Assessment) Act 1989 ('the Act') to:
- allow the introduction of increased volumes of new industrial chemicals
to Australia
under the commercial evaluation permit system; and
- change the process for registration of companies under the Act.
The Act establishes a system of notification and assessment
of industrial chemicals to protect health, safety and the environment
and to provide for registration of people or companies proposing to introduce
industrial chemicals into Australia.
The National Industrial Chemicals
Notification and Assessment Scheme (NICNAS) administers the Act and is
located within the Commonwealth Department of Health and Ageing.
The commercial evaluation permit ('CEP') system
was introduced by the Keating Labor Government in 1992. The then Minister
for Consumer Affairs, the Hon Jeanette McHugh MP, explained that the new
system would:
allow for the introduction(1) of new industrial
chemicals for the sole purpose of commercial evaluation. New industrial
chemicals introduced for this purpose are to be exempt from the assessment
provisions of the Act. This means that importers and manufacturers may
evaluate the commercial potential of a new industrial chemical without
having to invest resources in preparing the detailed notification package
covering the chemical's physical and chemical properties and toxicology
which is currently required. The Bill enhances innovative product development
by significantly reducing regulatory requirements.(2)
According to a recent Government report:
The amendment established a fast track mechanism to allow
for innovation and development of new industrial chemical products and
processes, while maintaining adequate health and environmental safeguards.(3)
The Explanatory Memorandum states that NICNAS
has issued over 500 commercial evaluation permits to approximately 120
companies since the commencement of the CEP system.(4)
A need to reform the CEP provisions was identified by
NICNAS in 1999 in response to representations by the chemical industry.
These included formal representations from industry members of the NICNAS
Industry Government Consultative Committee (IGCC) who argued that regulatory
barriers were an obstacle to technical innovation within the industry.
The IGCC agreed that the reform of the CEP provisions was a priority issue.(5)
NICNAS commissioned a survey of industry practices relevant
to commercial evaluation of industrial chemicals. The findings were presented
to the IGCC, the chemical industry and representatives from relevant departments
in State and Territory Governments.(6) The survey suggested
three main areas for reform:
- chemical volume;
- time periods of permits;(7)
and
- customer agreements.(8)
According to NICNAS:
Resolving the issues with time periods of permits and customer
agreements has been estimated to lead to an estimated 8% increase in applications.
Resolving the issues with volume would lead to an estimated 28% increase
in applications. Overall, a substantial increase in useability of the
CEP would be achieved, with the added value of encouraging research, development
and the introduction of new technology with industry.(9)
While a change to the Act was required to address the
issue of chemical volume, NICNAS believed that time periods and customer
agreements could be effectively covered by in-house administrative changes
and improved guidance for the chemical industry on how to use the CEP
category.(10)
In December 2001 NICNAS released a public discussion
paper canvassing reforms to the CEP system. Three submissions were received.(11)
The final report prepared by NICNAS in response to the discussion paper
(the 'NICNAS Final Report') is available on the NICNAS
website.(12)
The CEP system allows introduction of up to 2000 kg of
a new industrial chemical for up to two years, with the Director of NICNAS
able to refuse the application if not satisfied the volume applied for
is needed for effective commercial evaluation.
Under the current system, companies wishing to introduce
more than 2000 kg for commercial evaluation need to submit an application
for an 'assessment certificate.' Applications for assessment certificates
involve a longer NICNAS assessment time (more than 90 days unless the
chemical is of low hazard), a more detailed notification package, including
test reports (which may include toxicity and ecotoxicity test reports)
and a higher assessment fee (up to $11,700 for a standard notification).
In comparison, CEP data requirements are minimal, the
NICNAS assessment time is 14 days and the assessment fee is $2,600.
The Bill proposes that the maximum volume for introduction
of new industrial chemicals under the CEP scheme be doubled to 4000 kg.
The justification for this increase appears to be 'anecdotal evidence
(which) suggests that the existing volume limit can be restrictive on
industry.'(13) According to the Explanatory Memorandum:
NICNAS internal analysis of current CEP users suggests that
the needs of most of the current users are covered by the existing 2000
kg limit….Responses to the Industry Survey revealed that across a range
of industry sectors and production processes, the chemical volume required
for commercial evaluation ranged from 25-1000kg, with 1000-2000 kg being
the most frequent volume needed. Twenty-eight per cent…of responses
indicated that the current 2000 kg maximum is too low for effective commercial
evaluation, however thirty-eight per cent…of companies rated their reliability
to forecast the volumes of chemicals needed as poor. Most respondents
did not nominate the volume increase they required and taken as a whole,
the responses did not provide clear direction for any specific percentage
or volume increase that would satisfy most requirements.(14)
NICNAS estimates that with a new maximum volume of 4000
kg, there will be an increase of 99 per cent per year in the quantity
of industrial chemicals covered by CEP applications. NICNAS internal analysis
suggests that the needs of more than 97 per cent of potential CEP users
would be covered with a volume limit of 4000 kg.(15)
In proposing a greater maximum volume under the CEP system,
the Parliamentary Secretary to the Minister for Health and Ageing, Trish
Worth MP, stated that 'a strong prerequisite for the reform was that worker
and public health and environmental standards were not to be compromised'.(16)
According to the Explanatory Memorandum:
NICNAS maintains that the risk in allowing introduction to
Australia
of the higher volume of chemical not supported by a full data package
(currently set at 2000 kg under the CEP system), is offset by the capacity
under the Act to assign CEP conditions.(17)
The Government plans a range of additional regulatory
measures to balance any risk arising from increasing the volume of industrial
chemicals that can be introduced under the CEP system. In her Second Reading
Speech, Ms Worth noted that:
In moving to the higher volume, there are additional responsibilities
for NICNAS and industry in maintaining community standards for chemicals
introduction. Applicants are to provide a summary of health and environmental
effects of the chemicals for NICNAS to use in the risk assessment. NICNAS
is to upgrade its guidance on the use of the commercial evaluation permit
system. In addition, it is introducing a raft of administrative changes
to help ensure that companies understand and comply with permit conditions,
including the requirement that they report back to NICNAS on any adverse
effects experienced during the commercial evaluation and the success or
otherwise of the commercial evaluation process. NICNAS is to compile this
information and provide feedback to the public.(18)
At present, according to NICNAS:
The CEP is currently the only NICNAS new chemicals assessment
category that does not require the applicant to provide some information,
however brief, on the health and environmental effects of the chemical.(19)
The Government has indicated that this will be remedied.
The Explanatory Memorandum refers to 'the proposed legislative
change…to include a summary of the health and environment effects of the
chemical as a data requirement.'(20) The NICNAS Final Report
suggested that the Industrial Chemicals (Notification and Assessment)
Regulations 1990 ('the Regulations') could be amended to include
such a requirement as part of the CEP system.(21)
Industrial chemicals cannot be introduced into Australia
without registration under the Act. Under current provisions, a company
has to renew its registration 30 days before the registration actually
expires. The Second Reading Speech notes that compliance with the registration
date has been 'persistently low (around 50% each year)' and that 'companies
cannot understand a renewal deadline which precedes expiry of registration
by a month'.(22)
The Bill will align the deadline for renewal of registration
with the expiry date. It will also introduce a late renewal penalty.
Company registration fees and charges are currently prescribed
in the Act. As the Second Reading Speech notes:
This is an exception rather than a rule as all other NICNAS
fees and charges are placed in regulations. This has resulted in an inflexible
fee system which cannot readily respond to cost recovery needs.(23)
The Bill removes registration fees and charges from the
Act. They will be specified instead in the Regulations and will allow
for the application of consumer price indexation.
Part 1 of Schedule 1 amends section 21(E) of
the Act by increasing the maximum quantity of a new industrial chemical
permitted to be covered in a CEP application from 2000 kg to 4000 kg.
Part 2 of Schedule 1 amends Part 3A of the
Act by aligning the deadline for renewal of registration under the
Act with the expiry date of registration, and by introducing a penalty
for late renewals. It also removes references in Part 3A to a specific
registration fee, replacing these with provision for the payment of 'the
amount prescribed' for the purpose of registration.
Under new section 80B of the Act, it will be an
offence of 'strict liability' to introduce industrial chemicals without
a current registration. Such an offence places the onus on the company
to establish a valid reason for not ensuring that its registration was
in force when introducing new chemicals.
It may well be the case, as the Parliamentary Secretary
said in her Second Reading Speech, that:
The change in maximum chemical volume allowable under
the commercial evaluation permit will enable the faster introduction of
new and innovative chemicals and technology…(24)
However, despite the fact that 'NICNAS consulted
widely for this reform',(25) the justification for the increase
appears to rest largely – as the Explanatory Memorandum says –
on 'anecdotal evidence' from industry that the existing 2000 kg limit
is a barrier to timely commercial evaluation. In particular, there is
no specific justification cited in the Explanatory Memorandum or
the NICNAS Final Report for doubling the volume of chemicals allowed
to bypass the normal approval process.
NICNAS plans to introduce a range of additional
environmental and safety measures to compensate for what it describes
as 'the risk' in allowing an increased quantity of chemicals to be introduced
without a detailed assessment of the chemical's physical and chemical
properties and toxicology. It is clearly beneficial for the community
that companies will now be required to provide as part of the CEP process
a 'summary of the health and environment effects of the chemical'. Even
with the objective of encouraging the introduction of new technology in
mind, Parliament might be entitled to ask why the CEP system has not required
until now even basic information on the potential dangers of new chemicals.
It appears from the NICNAS Final Report
that some of these additional safety measures will be introduced in regulations.(26)
However the increase in the allowable quantity of industrial chemicals
under the CEP system is not tied to the introduction of new safety measures.
There is nothing in the Bill that prevents the
introduction of the additional quantities of industrial chemicals before
the planned new safety measures are in place.
- 'Introduction' includes importing and/or manufacturing.
- House Hansard, 24 June 1992, p. 3844.
- National Industrial Chemicals Notification and Assessment
Scheme, Reform
of the Commercial Evaluation Category (CEC) Permit Scheme, Final Report,
November 2002 ('NICNAS Final Report'), p. 1. (at
http://www.nicnas.gov.au/publications/pdf/cep-reform-jan2003.pdf)
- Explanatory Memorandum, p. 4.
- NICNAS Final Report, p. 1.
- ibid., p. 2.
- According to NICNAS: 'The Director of NICNAS can already
specify permit conditions for a period of commercial evaluation that
extends beyond the period allowed for the introduction of the chemical,
conditional on safe use. To raise industry awareness, NICNAS is to promote
to clients that the period of use for a CEP can extend beyond the maximum
introduction period allowed in the CEP. This will be included in NICNAS
Guidance.' Ibid, p. 3.
- The NICNAS Final Report notes
that the term “Customer Agreement” has been changed to 'User Agreement'
so that all users of the new industrial chemical introduced under the
CEP system must provide such agreements. In addition, in order to provide
more flexibility in relation to User Agreements, applicants can submit
these with CEP Permit applications, obtain a preview copy of the CEP
conditions to take to potential users, and submit additional User Agreements
after the CEP has been issued. Through such measures, NICNAS anticipates
that downstream users will become better informed about the CEP conditions.
(Ibid, p. 3.)
- ibid., p. 2.
- Explanatory Memorandum, p. 9.
- Details of submissions and the Government response
are at Attachment A in NICNAS Final Report, p. 6 ff.
- http://www.nicnas.gov.au/publications/pdf/cep-reform-jan2003.pdf.
- Explanatory Memorandum, p. 6.
- ibid, p. 6.
- ibid., p. 6.
- Second Reading Speech, House Hansard, 28
May 2003, p. 14747.
- Explanatory Memorandum, p. 9.
- Second Reading Speech, House Hansard, 28
May 2003, p. 14747.
- NICNAS Final Report,
p. 4.
- Explanatory Memorandum, p. 6.
- NICNAS Final Report,
p. 4.
- Second Reading Speech, House Hansard, 28
May 2003, p. 14747. The Explanatory Memorandum does
not explain the reason for the current renewal procedure.
- Second Reading Speech, House Hansard, 28
May 2003, p. 14747.
- ibid.
- Explanatory Memorandum, p. 9.
- NICNAS Final Report,
p. 4.
Peter Prince
4 June 2003
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
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