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Hazardous Substance Strategy: Volume One

Foreword

Executive Summary

1 Introduction

2 Streamlining the Hazardous Substance Application Process

3 Improving how Controls are Communicated

4 Compliance and Enforcement

5 Regulatory Impact Statement - Data Collection

6 Having Your Say

Glossary

2 Streamlining the Hazardous Substance Application Process

2.1 Introduction

This chapter examines proposals to streamline the hazardous substance application process. Our objective is to cut out any steps that do not enhance protection of the environment, and the health and safety of people and communities.

We first consider what lessons we can learn from the process of transferring substances already present in New Zealand to HSNO controls when considering new application pathways. We then examine the issues raised through the development of the Hazardous Substances Strategy in more detail. Finally, we consider a proposal for a group standard, which is the combination of the generic approvals and low-risk pathway ideas that were developed under the strategy. Group standards take the best of both concepts and combine them with the lessons learned through transfer to make a flexible method for streamlining application processes.

2.2 The transfer of existing hazardous substances to HSNO controls

Experience with the transfer of existing substances has provided useful lessons on how best to manage the new hazardous substance applications.

The transfer of hazardous substances into the HSNO regime began in July 2001 when the hazardous substances parts of the Act commenced. With transfer due for completion by 1 July 2006, about 80,000 substances still have to be transferred to HSNO controls. We estimate that these existing substances will make up 95% of all hazardous substances present in New Zealand for at least the next 10 years. [Based on ERMA receiving about 100 applications for new substances per year.]

There have been considerable delays in transfer. The implementation of short-term actions under the Hazardous Substances Strategy resolved many of the transfer delay issues (see section 1.2 above). Challenges remain, however, with respect to the transfer of notified toxic substances.

Under the former Toxic Substances Act 1979, notified substances were merely notified to a regulatory agency and not assessed, and only very limited controls were in place to manage their effects. Just before the commencement of the HSNO Act, 215,000 substances were notified or deemed notified toxic substances. [Animal remedies and pesticides, which were not 'notified toxic substances' under the Toxic Substances Act, were included with the notified toxic substances to address a lack of transitional provisions for these substances.] ERMA has had to confront the issue of how to manage the transfer of such a large number of substances before the end of the transition period on 1 July 2006. Consequently, ERMA staff have developed several strategies to streamline processes for assessing and applying suitable controls to the substances under their transfer plan.

The transfer plan starts by eliminating from consideration substances that do not require transfer; for example, medicines, which are exempt from the HSNO Act, or substances that are not hazardous. The transfer plan then seeks to specify substances that are of low regulatory concern and so can be considered in groups rather than by individual assessment. To do this ERMA has defined some substance groups with low exposure potential based on use and quantity. [Examples of the groups ERMA currently proposes are: cosmetics, contained uses, polymers of low concern, non-isolated intermediates, animal vaccines, consumer products imported in packages, and naturally occurring substances.] ERMA is also developing standard sets of controls for these groups to manage their effects. Each of these groups will be given a single set of labelling, packaging and safety data sheet controls.

ERMA has also grouped together higher-risk substances [Higher-risk substances include: anything that requires approved handlers or tracking; carcinogenic, mutagenic, reproductive toxicant substances; persistent bio-accumulative toxics and very persistent very bio-accumulative substances.] that will be subject to individual consideration. ERMA estimates there are about 3,000 of these higher-risk substances.

The delays in transfer have also meant delays for applicants for new substances because they have been unable to use the 'rapid assessment pathway' available in the Act to its full potential. This provision states that if a new substance is similar to an existing already approved substance, then it qualifies for consideration under the rapid assessment pathway, which is quicker and cheaper than the full application pathway.

In considering how to streamline the application process for new substances, we note that:

• transfer, when complete, will allow for much more use of the rapid assessment pathway
• substances can be grouped together by use and quantity as well as by hazard as a means of defining a lower-risk group
• individual assessment of each substance in a lower-risk group is not required to develop controls appropriate to manage the effects of the substances.

A number of industry groups have advised us that once transfer is completed they will have little need to seek new approvals under the Act. This is particularly true for substances such as paints, solvents and fragrances, where the technology is at a stage where any changes in the composition are likely to be minimal.

2.3 Inefficiencies in the current new hazardous substance application system

Applicants have indicated to MFE that applications are costly and time consuming, particularly when it comes to collecting the information required to make an application.

For those used to operating under the old Dangerous Goods or Toxic Substances Acts, HSNO requirements present a significant increase in information needed to support an application. The previous legislation did not require any public submissions and hearings or consultation with iwi - all of which may now be required under HSNO. We are not proposing to change these features of HSNO, as public consultation is one of the tenets of the HSNO regime. We do, however, wish to ensure that the HSNO application system works efficiently to achieve the objectives of the legislation.

During development of the Hazardous Substances Strategy, inefficiencies were identified in two areas of the current application system:

• a complicated and costly approval process for substances used in a low-risk manner
• individual approvals for similar products, resulting in unnecessary work for applicants and ERMA.

These are discussed in more detail below. We have also identified other inefficiencies with some of the existing application pathways. These are discussed in section 2.5.

It is important that these inefficiencies be resolved, given the costs of the New Zealand approval system relative to the small size of the New Zealand market for many hazardous substances. Newer substances tend to be more environmentally friendly and so we want to remove barriers to their introduction.

2.3.1 The HSNO application process is overly complicated and costly for substances used in a low-risk manner

The risks posed by hazardous substances are a combination of two factors: hazard and exposure. The risks posed by exposure are primarily determined by the quantity used and how the substance is used. ERMA has processed several substance applications where it considered the risks posed by the substance to be very low and so did not warrant individual consideration by the full ERMA Board, which the Act required.

As pointed out earlier in this chapter, many more new substances will qualify for the existing rapid assessment pathway as the transfer of substances to HSNO controls progresses. There will, however, still be substances that do not qualify for rapid assessment as currently framed.

An example of such a substance might be a new veterinary medicine with a high hazard classification. Because it is imported in pre-packaged, labelled 30 ml syringes, can only be administered by veterinarians and is metabolised when injected into the animal, there is little likelihood of exposure and so the substance poses a low risk to people and the environment. Another example is high-temperature marking ink used for aircraft maintenance, which is only imported in quantities of 1-2 litres per year. The small volume of product used means the likelihood of exposure is very low and hence the substance poses only a low risk to the environment.

In both cases the full application pathway, with its requirement for information on environmental effects and consideration by the ERMA Board, is overly onerous, given the low risk of exposure. However, these substances do not qualify for the containment and rapid assessment application pathways because the criteria in the Act are not met and no similar substances have been approved or transferred.

There has also been criticism of the requirement in the present system for applicants to provide information about a substance when it is irrelevant given the way the product will be used. For example, detailed information on the ecotoxicity of a hazardous substance is not relevant in cases where the substance is being used in completely contained automated processes. In these instances the substance will only enter the environment if other controls, such as packaging, storage and labelling controls, fail. Detailed information on its ecotoxicity would not prevent effects occurring in this instance. On the other hand, for substances that are applied in the environment (eg, pesticides), detailed information on ecotoxicity is vital so that environmental exposure limits can be developed and safe application rates determined.

These problems could be resolved by changing the qualifying criteria for the existing application pathways or by creating another application pathway that can take into account the way a substance is used or the amount being imported or manufactured when determining:

• the type of information an applicant should be required to provide ERMA
• the level of ERMA assessment required to determine appropriate classifications and controls
• the type of controls appropriate to manage the effects of the substance.

We describe a new proposed pathway in section 2.4 with greatly reduced information requirements, minimal or no ERMA assessment, and default sets of controls for managing the effects of substances that qualify for this pathway. This new pathway is designed to link to the existing rapid assessment pathway.

2.3.2 Duplication of hazardous substance approvals

Currently most approvals are for narrowly defined substances. As a result, multiple approvals are required for similar products. This is because the applicant defines what a substance is and most applicants, for competitive and liability reasons, prefer to define a substance in such a way that it is difficult for competitors to use their product's approval. [Except for innovative agricultural compounds, approvals are not personalised and can be used subsequently by other parties.] This means there are many more applications to ERMA than necessary for the same or similar substances. Many applicants may also be collating and lodging the same information with ERMA, and many substances may be being individually considered only to end up with the same sets of controls. This situation is clearly inefficient.

This could be improved by:

• encouraging industry or their agents to make generic applications for similar substances, using broad substance definitions to which common sets of controls will apply, or
• allowing ERMA (as opposed to the applicant) to develop and maintain broad substance groups and control sets.

ERMA has tried to encourage industry organisations to make generic or joint applications for similar substances, but commercial realities have made this very difficult to achieve. For this reason we consider that ERMA developing and maintaining broad substance groups and controls is the preferred way of significantly reducing the duplication of individual product applications. We consider the proposal in more detail as part of the new proposed pathway described in section 2.4.

As noted in section 2.2 above, ERMA is already using this approach in its handling of the transfer of notified toxic substances and is finding it an efficient way to manage large numbers of substances.

2.4 Group standard pathway proposal

As discussed above, ERMA's experience with transfer is that:

• substances can be grouped together according to use and quantity as well as hazard, thereby enabling the definition of a lower-risk group
• individual assessment of each substance in a lower-risk group is not required for developing controls appropriate to manage the effects of the substances.

Currently, however, HSNO does not allow ERMA to take into account the proposed use or quantity to be used when determining the appropriate application pathway for a new substance. The decision is made solely on the hazard category the substance comes under. [This statement applies only to the comparison of the rapid assessment and full application pathways. The containment and transhipment pathways do take into account 'use', but have a very specific and defined use criterion.] As a result, some substances are subject to overly onerous processing. As well, if ERMA were able to develop and maintain broad substance groups and controls it could significantly reduce the inefficient practice of duplicate product applications.

We have combined these concepts to develop a new type of application pathway we have called the 'group standard pathway'.

2.4.1 Setting up a group standard

Under the proposed group standard pathway, ERMA would set up groups of substances and apply a single set of controls to all the substances in that group. The substances could be grouped together according to:

• compositional and/or hazard classification bands, and/or
• exposure characteristics such as use type or volume considerations.

The controls would include, for example, labelling, packaging and safety data sheet requirements. (The nature of the controls is discussed in more detail in Chapter 3.)

As well as controls, ERMA would be able to apply conditions to the group. These might be requirements to provide information on how much of the substance would be used on an annual basis, or a stipulation that applications are to be made under the rapid assessment pathway for certain uses of the substance.

ERMA would be required to allow time for submissions on a proposed substance group and its controls, and would be required to consider those submissions when finalising the detail of the group standard. Once the consultation process is complete, the group and its controls would be posted on the ERMA website for public access. The group, its controls and conditions would make up a 'group standard'.

Anyone would be able to apply to have a group standard reviewed if new information came to light about the effects of substances in the group - a system similar to the existing reassessment process. ERMA would have the power to make minor changes without going through public consultation, but would be required to consult publicly on more substantial changes.

2.4.2 How an applicant would use the group standard pathway

Anyone planning to import or manufacture a substance would first have to check whether or not it had an HSNO approval or whether the substance was covered by a group standard. If the substance was covered by a group standard, there would be no need for an application to ERMA. The user would, however, be required to comply with the conditions and controls set out in the group standard. If the applicant did not think the controls or conditions were appropriate, they could apply to ERMA for a variation to the controls or make an application under another approval pathway.

The group standard might also require that an application be made through the rapid assessment pathway. This could apply if, for example, it was considered appropriate that ERMA should take into account an aspect of the substance's use on a case-by-case basis. In this case the standard would specify the information required from the applicant and would outline the discretion ERMA had in applying controls to substances in that group. The objective of this new type of rapid assessment pathway is to give applicants more certainty and reduce processing time. This is a similar concept to the 'controlled' activities under the Resource Management Act 1991.

Applicants would pay a fee if an application to ERMA was required.

2.4.3 Examples of group standards

In this section we describe three examples of possible group standards to demonstrate how the proposal could work. Please note that these are examples, not proposals on which we are inviting comment. If the group standard concept goes ahead, any group standards created would be released for public consultation.

The first example is for a relatively low-risk group of substances, cosmetic products, which would attract relatively straightforward controls. About 20,000 substances would fall into a group standard for cosmetic products. The group standard describes controls and conditions that must be met by importers and manufacturers of these products. If you were manufacturing a new cosmetic product that came within this definition, then you would not have to make an application to ERMA. You would, however, be required to follow the controls and conditions set out in the standard.

The second and third examples are for a higher-risk group of substances, aqueous-based industrial cleaning products and copper- and/or zinc-based anti-fouling paints. About several thousand substances would qualify for the aqueous-based industrial cleaning products group standard, while tens of substances would qualify for the copper- and/or zinc-based anti-fouling paint group standard.

Given the potential effects of these latter two groups of substances, they attract more controls and would require some interaction with ERMA. In the case of the anti-fouling paints, you would have to submit an application to ERMA before you could import or manufacture the substance. However, the information required and the type of controls ERMA could apply would be set out in the standard, giving you more certainty about the application process in advance.

The controls would bring together all the relevant parts of the HSNO regulations into a simple statement about what needs to go on to the label, for example. In order to be a simple statement, the labelling control would need to be less performance-based and consequently less flexible than the requirements set out in the HSNO regulations. The controls aspect of the proposal is described further in Chapter 3.

2.4.4 Discussion of the proposal

The group standard idea captures the 'low-risk' proposal outlined in the Hazardous Substances Strategy. In our subsequent investigations we found that while it was possible to draw up one set of generic criteria that captures low-risk substance uses and to apply a single set of controls to that group, the number of substances that actually qualified was very small - too small to adequately address the efficiency issue. The group standard proposal, however, allows for the development of several low-risk groups of substances and will hence be more flexible and efficient. In effect, the group standard combines the low-risk concept, the generic approvals concept and the standard sets of controls concept, all three of which were outlined in the Hazardous Substances Strategy.

The proposal maintains public involvement in the process for both defining the group and setting controls for a group of substances. Submitters on the standard will, however, need to consider a group of similar substances rather than a single substance. This may increase the work involved in compiling submissions, but the advantage is that it potentially reduces the number of submissions individual submitters have to make to ERMA.

This proposal increases certainty for importers and manufacturers. They would be able to see in advance the controls applying to this group of substances before making a decision about whether or not to import or manufacture.

Another advantage of the proposal is that it would allow agricultural compounds and veterinary medicines to be dealt with more efficiently than under the current provisions. While we consider it to be appropriate for such compounds to continue to be controlled under both the HSNO and ACVM Act, group standards will reduce the need for dual approvals for some of these products. For example, a group standard could be developed for 'finished-dose companion animal medicines' like antibiotics or anti-inflammatories prescribed by veterinarians. It would eliminate the need for an application under HSNO while still requiring the importer to comply with the HSNO controls. It is worth noting that once transfer is complete, many new ACVM products will qualify for the rapid assessment pathway.

A disadvantage of the proposal is that there will be a time lag between the legislation being passed and the establishment of the groups. However, given that ERMA is already consulting the public on groups of existing notified toxic substances and developing a single set of controls for these groups, it will not take long for ERMA to complete a wide range of group standards.

2.5 Options for improving the efficiency of the existing application pathways

There are two areas to be considered when considering how the efficiency of existing application pathways might be improved:

• the efficient classification of substances
• efficient pre-application steps.

2.5.1 The classification process

In the case of new substances, ERMA is required to classify the substance in detail even though the detail may not be needed for determining whether to approve the substance or what controls to apply to it.

Substances are first classified (eg, 6.1A acutely toxic or 6.3A skin irritants), and default controls based on those classifications then apply. ERMA then reviews the default controls and varies them as appropriate. If a substance is 6.1A, then it triggers all the default class 6 controls. So for the purpose of determining what controls apply to the substance, it does not matter whether the substance also has other class 6 classifications - it has already triggered all the controls. While there may be other reasons why this information is necessary, it is not necessary for determining controls.

Determining the detailed classification can be extremely time-consuming and expensive for ERMA, and it would be more efficient if ERMA were given more flexibility in the level of information it was required to gather for classification. ERMA already has the flexibility to judge how much detail it must gather for classifying substances for transferred substance assessments, and in the interests of greater efficiency in new application processing we propose to introduce a similar provision for those applications.

2.5.2 Pre-application information

The most important stage for a potential applicant under HSNO is the pre-application step. At this stage it is determined:

• whether the substance is hazardous and covered by HSNO, and if it is,
• whether the substance is already approved, and if not,
• which of the five application pathways is the appropriate one to follow.

It is currently difficult to determine the answers to these questions in the case of some substances, meaning that intending applicants need to be in frequent contact with ERMA. This means extra and unnecessary costs for both ERMA and the applicant.

One way of making the system more efficient is to improve existing information systems, and the Ministry for the Environment is currently working with ERMA on ways this pre-application step can be automated as much as possible. One proposal is to adapt the ERMA approvals database so it can automatically answer questions on the status of substances.