Closing in on a National Standard for the Environmental Risks of Industrial Chemicals

23 Dec 2020
The Industrial Chemicals Environment Management (Register) Bill 2020 promises to establish a national register that simplifies the risks and controls around industrial chemicals.

Industrial chemicals that are manufactured or used in Australia have historically be subject to inconsistent management requirements. The Industrial Chemicals Environment Management (Register) Bill 2020 (Cth) (ICEMR) will seek to introduce a single public register that details how industrial chemicals should be managed. Businesses should follow the ICEMR closely because, once established, scheduling decisions can be made with respect to industrial chemicals that may ultimately require business compliance. While adapting to the new scheme may require up-front costs to a business, the single national register is intended to lead to significant reductions in compliance costs in the long term.

What are the proposed changes under the ICEMR?

The environmental risk of an industrial chemical is determined by a scientific risk assessment through the Australian Industrial Chemical Introduction Scheme (AICIS). That assessment includes recommendations about how that industrial chemical should be managed to protect the environment and human health generally. Currently, there is no consistent mechanism that ensures that these recommendations are implemented in respect of each industrial chemical.

To remedy this, the establishment of a National Standard of Environmental Risk Management of Industrial Chemicals (National Standard). The National Standard is intended to provide a consistent, nation-wide approach to regulating the risks of industrial chemicals. The National Standard is to be formulated by a proposed legislative scheme with three components: the ICEMR, the Industrial Chemicals Environmental Management (Register) Principles 2020 (the ICEMR Principles) and the Industrial Chemicals Environmental Management (Register) Instrument 2020 (the ICEM Register).

The Federal Minister for Environment, Sussan Ley, has this month introduced the ICEMR which, if passed, will create a single public register that will record decisions made about the proper management of industrial chemicals. The ICEMR empowers the Minister to make the ICEMR Principles, a legislative instrument that sets out the criteria used to assign an industrial chemical to a schedule group. The scheduling group that a chemical falls under is determined by both its inherent characteristics and its proposed use. Notably, some persons may be requested to provide confidential information to the Minister to inform a scheduling decision.

The Minister will then be able to make scheduling decisions around how the chemical is used, handled or discarded. The ICEMR provides that all scheduling decisions relating to industrial chemicals must be recorded in the ICEM Register. Crucially, the scheduling decisions in the register are not immediately enforceable. The Register is effectively a single repository of information that legislators and businesses can base their decisions on. Any scheduling decisions recorded on the Register will only take effect through separate legislation. The Commonwealth and States and Territories can choose to adopt part or all of the Register into their jurisdictions. Nonetheless, the ICEMR, and more broadly its steps towards standardising the regulation of industrial chemicals nationwide, is intended to give effect to the intergovernmental scheme agreed to in principle in 2017. Thus, it is likely the States and Territories will adopt significant portions of the scheduling decisions in the Register.

How will this impact the industrial chemicals industry?

The ICEMR will impact any company that manufactures, imports, or deals with industrial chemicals. The costs of adapting to the new controls established under the ICEMR will vary. Ultimately, companies will need to be aware of any management measures which apply to relevant industrial chemicals that form part of their business and roll out relevant training initiatives and policy changes needed to embrace the new controls under the ICEMR. In the long term, the ICEMR is likely to improve the consistency of management measures around industrial chemicals and, accordingly, reduce the complexity and cost of compliance for businesses.

Notably, the ICEMR is outcome-based. That is, it does not prescribe how a chemical's required environmental outcome must be achieved. Rather, it offers industry flexibility in ascertaining what actions to meet the target are most pertinent. Companies will be encouraged to innovate to find the most effective way of meeting the ICEMR's scheduling decisions that are legislated into law. Meanwhile, businesses can use the ICEMR's consistency and transparency to forecast legislative changes in their jurisdiction or to inform the viability of using a new industrial chemical before needing to apply for the often lengthy process of a risk assessment.

The ICEMR must still be passed by the Federal Parliament and will likely not take effect until some point in 2021. For further details of the ICEMR please feel free to contact one of the authors.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.