12 May 2016

New national regulation for industrial chemicals

by Claire Smith, Katrina Hogan

The Federal Government is proposing a national standard to harmonise environmental risk assessment of industrial chemicals throughout Australia to better protect the environment.

The Australian Department of the Environment has released a discussion paper on a new National Industrial Chemicals Notification and Assessment Scheme (NICNAS). This is a response to the Productivity Commission's research report which "highlighted that management of environmental risks from industrial chemicals across jurisdictions was fragmented and inefficient, and less effective than other chemical risk management regimes".

The scheme provides for a harmonised assessment of industrial chemicals in Australia based on the chemical's level of concern to the environment: "high concern", "moderate hazards" and "low hazard" chemicals. The chemicals will then be further categorised into 1 of 8 schedules based on publicly available criteria and given a number of outcome based risk management measures proportionate to the level of risk. For example, an outcome based measure may read "do not dispose of the chemical to sewers in concentrations greater than [x units]".

The Ministers of each State and Territory met and agreed to progress reforms relating to the creation of a standard-setting body to make nationally consistent environmental decisions in line with recommendations in the 2008 Productivity Commission Research Report on Chemicals and Plastics Regulation. A Decision Regulation Impact Statement (RIS) was released in June 2015 which posed three options for the implementation of the National Standard:

  • Option 1: a non-statutory approach;
  • Option 2: a co-operative approach between State and Commonwealth; and
  • Option 3: a system fully implemented by the Commonwealth, including new national legislation and a new regulator.

National Standard

The Government has not officially settled on an option, however the RIS recommended option 2 as the least costly option to achieve the described objectives, and therefore the preferred option.

Under this option a National Standard would be established under new Commonwealth legislation to assist in national consistency, with States and Territories automatically adopting and implementing decisions under their legislation for matters which they are responsible. The Commonwealth legislation would likely outline the roles and responsibilities of the decision-maker (proposed to be the Commonwealth Minister for the Environment) and the composition of the advisory body involved in making recommendations as part of the assessment process (ie. industry representatives, experts etc.).

In line with the current responsibilities of States and Territories for environmental risk management, each jurisdiction would then adopt and enforce scheduling decisions in accordance with their legislative frameworks.

State and Territory Governments may choose to implement the National Standard in a number of ways, including the introduction of new licensing regimes, or amending existing licensing conditions to take the National Standard into account. 

Once the scheme is in force you will be able to assess the chemicals your business uses against a computerised database. If your chemical is not listed, you can use the computerised database to look up the risk management measures of chemicals with a similar chemical structure, use the NICNAS decision making matrix to identify the concern category applicable to your chemical, or submit your chemical to NICNAS for assessment.

What's next?

In late 2016 the National Standard will be reconsidered by the Australian Government and State and Territory Environment Ministers (pending election decisions and whether the Government is in caretaker mode). The current proposal is for Commonwealth legislation to be enacted in 2017 followed by State and Territory implementation. The National Standard is intended to be in full operation in all jurisdictions by 2018.

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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.