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Hazardous Substance Strategy: Volume Two

Executive Summary

1 Introduction

2 Environmental and Tolerable Exposure Limits

3 Research on Hazardous Substances

4 Substances Imported for Export Only

5 Improving Compliance Monitoring and Enforcement

6 Data Protection Issues

7 New Pathways

8 Regulatory Impact Statement - Data Collection

9 Having Your Say

10 Glossary

Appendix 1: How Environmental and Tolerable Exposure Limits are Set

Appendix 2: Issues with the Exempt Laboratories Regulations

3 Research on Hazardous Substances

Concerns have been raised with the Ministry for the Environment about section 33 of the HSNO Act. This provision potentially exempts research and teaching institutions and laboratories from the full range of HSNO controls. Four policy issues have been identified.

As this discussion paper is about possible amendments to the Act, issues concerning Hazardous Substances (Exempt Laboratories) Regulations are not discussed here. A separate policy process for this will be undertaken later in 2004.

3.1 Overview of how the HSNO Act provides for research under section 33

Section 33 states that a qualifying laboratory does not have to:

• obtain an approval for the importation or manufacture of an unapproved substance, or
• directly comply with the HSNO controls that have been assigned to each approved hazardous substance (eg, for test certification or approved handlers).

Section 33 is specifically for research and development (and teaching) and allows a substance to be developed to the point at which it might be used outside research laboratories. It does not, however, apply to all laboratories engaged in small-scale work. For example, laboratories doing quality assurance work probably do not qualify and have to operate under the full provisions of the HSNO Act, even though their work is 'small-scale'.

The term 'research and development' is defined in the Act so that it can apply to institutional research organisations and to research and development carried out in an industrial context. For more details on the definition of research and development, see section 3.3.2.

The term 'small-scale' is not defined, recognising the fact that quantities vary according to the type of research being undertaken. The point of section 33 is, however, that the quantities involved must be related to the requirements of a research or teaching programme. To ensure the exemption is not used to avoid the HSNO approvals process, section 33(d) stipulates that substances used or made under section 33 exemption cannot be sold. This provision was designed to constrain section 33 to the laboratory research and development phase.

Existing section 33 provisions do not compromise the risk management outcomes the HSNO Act is designed to deliver. Section 33 requires:

• managers and workers to have the necessary knowledge to handle substances safely
• hazardous substances to be contained within the laboratory and not allowed to escape into the environment
• substance management plans to be well developed and include provisions for tracking and record keeping.

3.2 Teaching and research laboratories may opt out of section 33

If section 33 is invoked, the person in charge must ensure compliance with section 33 and with the exempt laboratory regulations. If section 33 is not invoked, the person in charge must ensure compliance with the HSNO controls assigned to each hazardous substance in the laboratory.

Organisations with more than one laboratory on a single campus may find it works to their advantage to have laboratories operating under both systems. Such a strategy could overcome the problem that section 33 laboratories cannot on-sell substances to another lab after importation or manufacture.

Schools and other institutions with limited expertise in managing hazardous substances may also find it to their advantage to stay outside the section 33 provisions entirely. For them, it may be better to have third-party verification of compliance through the test certification of facilities and to have key staff certified as approved handlers.

3.3 Policy issues

Four issues have been identified from material given to us by stakeholders concerning the operation of section 33 of the HSNO Act:

• the section 33 prohibition on sale is too restrictive given current practices in research and development, and teaching
• the definition of 'research and development' needs to be modified
• the definition of 'laboratory' should be widened to include those on ships and other water craft used in research
• section 33 should be amended to allow the use of declined hazardous substances.

The Ministry for the Environment has, following discussion with other departments, formed a preliminary view on what should be done with respect to each of these issues. Where there was a range of possible policy options, we considered each option against the following criteria:

• risk management
• equity (we want to prevent the possible exploitation of section 33 provisions for 'backdoor' manufacture of hazardous substances creating an uneven playing field)
• enforceability (any amendment must be legally enforceable)
• practicality (an amendment must not impose excessive costs, either on laboratories operating under section 33 or on ERMA in terms of its administration of the Act).

Please let us know if your particular issue is not covered by our list, or if you disagree with our suggested evaluation criteria. We now turn to examine each of the section 33 issues in more detail.

3.3.1 The section 33 prohibition on sale is too restrictive given current practices in research and development, and teaching

Institutions have pointed out that this provision (section 33(d)) poses problems for certain research establishments where substances being used for research and development may need to be transferred from one lab to another in a different department, with transfer payments being made in line with internal accounting procedures. The clause also fails to recognise that some institutions develop substances that are to be used by other organisations for their research. While technically still research and development on a small scale, the resulting substance is destined to be sold on, in some cases, to companies overseas.

Our preliminary view is that section 33 laboratories should be able to freely sell substances to other section 33 laboratories in New Zealand. By limiting sales to laboratories operating under section 33, we can be certain that substances are only being used for the purposes of research and development or teaching. We can also be certain that HSNO controls manage any unapproved substances, as only the exempt laboratory regulations assign controls to unapproved substances.

Once substances are exported, however, there is no way of knowing or enforcing whether substances are being used for research and development or teaching only. Consequently, we think there should be a system to allow ERMA to authorise a one-off export or a series of exports. To gain an authorisation, the laboratory would have to convince ERMA that any export would solely be for the purpose of research and development or teaching. We foresee that amendments along these lines may require laboratories invoking section 33 to introduce more stringent record keeping and tracking systems for the substances they import, produce and sell so that the small scale and research and development provisions of section 33 could be monitored.

Note that from an equity point of view, approved hazardous substances or any product made from a hazardous substance should be manufactured under the full provisions of the Act if not being used in a section 33 laboratory for the purposes of research and development or teaching.

3.3.2 The current definition of 'research and development' needs to be modified

Some researchers have suggested that the definition of 'research and development' needs to be clarified so that an investigation into the properties of a substance, the analysis of materials using analytical standards, and a clinical trial are all explicitly deemed research and development activities. We have also been informed that the definition of 'research and development' is not as clear as it could be.

The Act defines 'research and development' as "systematic investigation or experimentation activities that involve innovation or technology transfer for the purpose of gaining knowledge about the properties or uses of that substance". From a clarity standpoint, we understand that the meaning of the phrase "that involve innovation or technology transfer" is unclear for many researchers. Our view is that this phrase reinforces the fact that research and development in HSNO terms is not just about completely new ideas but is also about developing existing technologies.

In the case of an investigation into the properties of a substance, as long as this is done in a systematic manner, the current definition of research and development seems sufficient.

Regarding the analysis of materials, there is a question around whether the current definition of research and development precludes the use of approved or unapproved substances as analytical standards under section 33. While analytical standards are used in systematic experimentation for the purpose of gaining knowledge about, for example, a new substance (ie, an innovative substance), the standards themselves are not the focus of the research and development. This may mean that the section 33 exemption from the need to obtain an approval cannot be applied.

Our view, however, is that section 33 can be applied. When carrying out "systematic investigation or experimentation activities", a range of reagents that are hazardous substances will be required to carry out the research where the focus is on gaining knowledge about the properties or uses of a substance that would otherwise need an HSNO approval. The clause in the definition of research and development, "for the purpose of gaining knowledge about the properties or uses of that substance", makes it clear that the purpose of research and development must be substance based but does not limit the applicability of section 33 only to the substance being researched.

Section 33 is not applicable to finished dose products to be used in clinical trials, even though clinical trials are, without doubt, a form of research and development that may involve hazardous substances. While medical ingredients that are hazardous substances are regulated by the HSNO Act [See regulation 5 of the Hazardous Substances (Minimum Degrees of Hazard) Regulations 2001 for how the HSNO interfaces with the Medicines Act.] and could be made under section 33, the Medicines Act rather than the HSNO Act regulates the production and use (including clinical trials) of all human medicines. Organisations wishing to manufacture products for clinical trial should have manufacturing facilities that are licensed under the Medicines Act. If an ingredient of the medicine for clinical trial is hazardous, there is no reason why such a facility could not also invoke the section 33 HSNO exemption. An approval under the Medicines Act will still be required to conduct any clinic trial.

The Ministry's preliminary view is therefore that the current definition of 'research and development' is sufficient and does not need amendment.

3.3.3 The current definition of 'laboratory' needs to be modified to include those on ships and other water craft used in research

The Act defines laboratory as "a vehicle, room, building, or any other structure set aside and equipped for scientific experiments or research, for teaching science, or for the development of chemical or medicinal products". While it does not specifically mention ship or water craft, a ship's laboratory would be covered by "any other structure" as long as it was "set aside and equipped" for the listed purposes.

Our preliminary view is therefore that there is no need to amend the definition in the manner that has been suggested. (Note that the HSNO Act does not apply beyond New Zealand's 12-mile territorial limit in any event.)

3.3.4 Section 33 should be amended to allow the use of declined hazardous substances

While section 33 rules out the manufacture and use of any hazardous substance for which an HSNO approval has been declined, it is possible to use these substances as analytical standards on a case-by-case basis under a containment approval (see sections 30-32 of the Act).

Our preliminary view is that the use of declined substances in laboratories is already adequately provided for and there is no need to amend section 33 of the HSNO Act in this regard.