Accord Australasia Limited and Director, Chemicals Notification and Assessment Scheme
[2014] AATA 504
[2014] AATA 504
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/2752
Re
Accord Australasia Limited
APPLICANT
And
Director, Chemicals Notification and Assessment Scheme
RESPONDENT
DECISION
Tribunal Deputy President RP Handley
Professor Graham Johnston, MemberDate 24 July 2014 Place Sydney (1) The Tribunal varies the decision under review by removing the additional conditions as to amount per annum per introducer imposed by the Respondent in respect of chemicals 1 to 4, but otherwise affirms the decision.
(2) The Tribunal recommends that NICNAS carries out further analysis and assessment of all the chemicals using an IMAP-like process, consulting other relevant regulatory bodies such as the TGA and taking into account Dr Drew’s analysis.
.....................[sgd]...................................................
Deputy President RP Handley
CATCHWORDS
Imposition of conditions of use - Whether Respondent has power to impose condition of use -Whether reasonable for the Respondent to find that, when used in cosmetics, these chemicals may pose an unreasonable risk to health, safety and the environment - Chemicals pose an unacceptable risk to human health and/or the environment - Appropriate to limit the use of the chemicals to concentrations known to be safe - Setting of volume limits not justified - Definitive data required to justify the application of specific conditions - Decision under review varied - Additional conditions removed - Further assessment of the chemicals recommended
LEGISLATION
Acts Interpretation Act 1901 (Cth)
Administrative Appeals Tribunal Act 1975, s 43(1)(b)
Industrial Chemicals (Notification and Assessment) Act 1989 (Cth), ss 3, 13, 15AA(2), 15AA(3), 15AA(7), 102
Industrial Chemicals (Notification and Assessment) Amendment (Cosmetics) Bill 2007
Industrial Chemicals (Notification and Assessment) Amendment (Inventory) Bill 2011Therapeutic Goods Act 1989 (Cth)
CASES
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27
Re Issam Wahib Hindi v Minister for Immigration and Ethnic Affairs [1988] FCA 346
SECONDARY MATERIALS
Therapeutic Goods (Excluded Goods) Order No 1 of 2011
REASONS FOR DECISION
Deputy President RP Handley
Professor Graham Johnston, Member24 July 2014
Accord Australasia Limited (Accord, the Applicant) has applied to the Tribunal for the review of a decision made by the Director, Chemicals Notification and Assessment Scheme (NICNAS) to impose conditions on the use of 11 chemicals at the time of their listing in the Australian Inventory of Chemical Substances (the Inventory).
BACKGROUND
In 2007, the Federal Government transferred responsibility for the regulation of chemicals used as ingredients in cosmetic products from the Therapeutic Goods Administration (TGA) to NICNAS. NICNAS is responsible for maintaining the Inventory under the Industrial Chemicals (Notification and Assessment) Act 1989 (Cth) (the ICNA Act). The Inventory lists industrial chemicals which are authorised for use, subject to any prescribed conditions. Under the ICNA Act, a person must not introduce (meaning import into or manufacture in Australia) a new industrial chemical, unless that chemical is listed in the Inventory and used within the prescribed conditions of use. The chemicals may, however, be used pursuant to the Therapeutic Goods Act 1989 (Cth) (TG Act), under which the TGA retains responsibility for regulating any chemicals used in ‘therapeutic goods’ (as defined in the TG Act).
Where chemicals are not already listed in the Inventory, their use is prohibited, except pursuant to a number of exemptions under the Act, or where NICNAS has issued a permit or certificate. As a result of the transfer in regulatory power, for those chemicals previously regulated by the TGA and not listed in the Inventory, users are required to notify NICNAS of their proposed use. NICNAS will then conduct an assessment of the chemical prior to issuing a permit.
On 7 February 2012, the Respondent published in the Chemical Gazette a list of 25 chemicals (including the 11 chemicals the subject of these proceedings) he proposed to list in the Inventory, and invited comments by 6 March 2012. NICNAS received eight responses but all except one adopted as their response a general letter prepared by Accord. NICNAS invited those who responded to a meeting on 4 April 2012 for a discussion of the proposal. Representatives of five companies and a representative of Accord attended. Following the meeting, NICNAS invited the attendees to provide further data about the volume and concentration in which the chemicals are used by 20 April 2012.
After this process had concluded, the Respondent decided to list 18 substances in the Inventory and imposed conditions of use on each. Notice of this decision was published in the Chemical Gazette on 5 June 2012.
Central to the Respondent’s decision to impose conditions on the use of the chemicals was the potential risk to human health and the environment. The Respondent stated in the decision, as published in the Chemical Gazette on 5 June 2012:
… that “some of the chemicals possessed certain properties that may pose a risk to human health and/or the environment when used outside of the proposed conditions of use”. This observation was informed by the application of a hazard screening process involving Quantitative Structure Activity Relationship (QSAR) modelling and a review of key literature, along with modelling of the likely volumes of these chemicals when used in formulated cosmetic products in Australia.
The Respondent found that the submissions provided after the proposal to list the chemicals was published on 7 February 2012, did not provide sufficient information to justify departure from the original position that the substances may pose a risk when used beyond the proposed conditions of use.
Accord is the national industry association for the Australasian hygiene, cosmetic and specialty products industry. Those products include cosmetics, fragrances, sunscreens, soaps, detergents, cleaning agents, personal care products, adhesives and sealants. Accord is funded by subscriptions from Industry participants and acts as an advocate for the Industry.
On 2 July 2012, Accord applied to the Tribunal for a review of the decision to impose conditions with respect to 11 of 18 substances. These substances, and the respective conditions imposed by the Respondent, are reflected in the table below. The conditions underlined are those to be which Accord objects. Some of these conditions differ from those proposed in the Notice published on 7 February 2012.
Chemical
Conditions of Use Decided
1. 1. Diethylamino Hydroxybenzoyl Hexyl Benzoate (Uvinul A Plus) [302776-68-7]
For Cosmetic Use Only. Not to be introduced in an amount exceeding one tonne per annum per introducer. The concentration is not to exceed 10%.
2. Neopentyl Glycol Diethylhexanoate [28510-23-8]
For Cosmetic Use Only. Not to be introduced in an amount exceeding one tonne per annum per introducer. The concentration of this ingredient in the final product should be 5% or less. It should not be used in topical preparations intended for the eye.
3. Propylene Glycol Myristyl Ether Acetate [135326-54-4]
For Cosmetic Use Only. Not to be introduced in an amount exceeding one tonne per annum per introducer.
4. Trihydroxypalmitamido Hydroxypropyl Myristyl Ether [131276-37-4]
For Cosmetic Use Only. Not to be introduced in an amount exceeding 100 kg per annum per introducer. For dermal use only. The concentration is not to exceed 0.02% and is not to be used in topical products intended for use in the eye.
5. Bertholletia Excelsea Extract [160965-04-8]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.013% or less.
6. Potentilla Erecta Root Extract [90083-09-3]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.04% or less.
7. Aspalathus Linearis Extract [776295-36-4]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.01% or less.
8. Boswellia Serrata Extract [97952-72-2]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.3% or less.
2. 9. Poria Cocos Sclerotium Extract (TGA name: Poria Cocao) [168456-53-9]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.2% or less.
3. 10. Scutellaria Baicalensis Extract/Root Extract [94279-99-9]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.5% or less.
4. 11. Cetearyl Octanoate [90411-68-0]
For Cosmetic Use Only. The concentration is not to exceed 5%.
In the notification of the decision in the Gazette on 5 June 2012, the Respondent stated that he regarded the first four chemicals as potentially posing an unacceptable risk to the environment. Relying in part upon aquatic toxicity data, the Respondent found that the conditions would limit the quantity of the substances that would be released into the environment to below the level that the Respondent determined could cause harm to the environment.
With respect to the next six chemicals (5 to 10), the Respondent identified them as having the potential to cause oestrogen receptor binding and endocrine disruption. This potential, he found, “leads to uncertainty about the likely impact on human health and the environment if the use of these chemicals is to become more widespread in cosmetic products”. With respect to the final chemical (11), Cetearyl Octanoate, the Respondent emphasised that there were concerns that the chemical would metabolise into a hazardous substance, and thereby pose a risk to human health.
LEGISLATION AND ISSUES
Pursuant to s 102 of the Industrial Chemicals (Notification and Assessment) Act 1989 (the ICNA Act), the Tribunal has power to review final decisions made by the Respondent under s 15AA(7) (see below).
The first issue for the Tribunal – a preliminary issue raised by Accord – is whether the Respondent has power to impose conditions of use.
The listing of chemicals on the Inventory is governed by the ICNA Act. The objects of the Act are set out in s 3:
Objects of Act
The objects of this Act are to provide for:
(a) a national system of notification and assessment of industrial chemicals for the purposes of:
(i) aiding in the protection of the Australian people and the environment by finding out the risks to occupational health and safety, to public health and to the environment that could be associated with the importation, manufacture or use of the chemicals; and
(ii) providing information, and making recommendations, about the chemicals to Commonwealth, State and Territory bodies with responsibilities for the regulation of industrial chemicals; and
(iii) giving effect to Australia's obligations under international agreements relating to the regulation of chemicals; and
(iv) collecting statistics in relation to the chemicals;
being a system under which information about the properties and effects of the chemicals is obtained from importers and manufacturers of the chemicals; and
(b) national standards for cosmetics imported into, or manufactured in, Australia and the enforcement of those standards.
Section 11 requires the Respondent to keep an Australian Inventory of Chemical Substances, the content of which is set out in s 12. Section 13 states:
Conditions of use etc. of, and other information about, chemicals
(1) The Director may include in the Inventory the following particulars in respect of a chemical included in the Inventory:
(a) particulars of any condition of use to which the importation or manufacture of the chemical is subject;
(b) particulars of any other condition to which the importation or manufacture of the chemical is subject;
(c) any particulars about the assessment of the chemical under Division 3 of Part 3;
(d) any other particulars in respect of the chemical that are prescribed by regulations for the purposes of this section.
Note 1: For example, the Director may include particulars recommending the secondary notification of a chemical in particular circumstances.
Note 2: The Director is required to give notice in the Chemical Gazette if the Director proposes to include particulars in the Inventory (see section 13A).
Note 3: A person who breaches a condition on the importation or manufacture of a chemical in the Inventory might commit an offence (see section 15A).
(2) The Director may:
(a) include particulars at the time a chemical is included in the Inventory or at a later time; and
(b) vary particulars already included in the Inventory in respect of a chemical; and
(c) remove particulars already included in the Inventory in respect of a chemical.
Note: The Director is required to give notice in the Chemical Gazette if the Director proposes to include or vary particulars in the Inventory (see section 13A).
Section 15AA applies in respect of the listing of chemicals that were previously regulated and currently in use in Australia. As the 11 chemicals were previously regulated under the TG Act, s 15AA applies.
Section 15AA details the procedure that must be followed prior to listing previously regulated chemicals in the Inventory. In this case, notice having been given in accordance with s 15AA(5), and after allowing for submissions on its proposal for listing the chemicals, the Respondent purported to impose conditions of use under s 15AA(7) of the ICNA Act. Section 15AA(7) provides relevantly:
(7) Once the 28 days mentioned in paragraph (5)(g) have passed, the Director must, having regard to any statements received, make a final decision:
(a) to include or not to include the chemical in the Inventory; and
(b) if the Director decides to include the chemical in the Inventory--to include or not to include specified particulars in respect of the chemical.
The Tribunal must decide whether the Respondent has the power under s 15AA(7) to impose the conditions of use listed in the Table above. An important question is whether the power to include specified particulars is confined by s 15AA(2). Section 15AA(2) deals with the providing of particulars in a proposal to list chemicals in the Inventory as opposed to the actual decision to list the chemicals. It provides relevantly:
(2) The Director may include in a proposal the following particulars in respect of a chemical proposed to be included in the Inventory:
(a) particulars of any condition of use to which the importation or manufacture of the chemical is subject;
(b) particulars of any other condition to which the importation or manufacture of the chemical is subject;
(c) any other particulars in respect of the chemical that are prescribed by regulations for the purposes of this paragraph.
If the Tribunal is satisfied that the Respondent has power to impose the conditions, the Tribunal must decide whether the Respondent’s decision to impose the conditions on the use of the 11 chemicals was the correct or preferable decision. While Accord accepts that it was correct for the Respondent to note that the 11 chemicals were “for cosmetic use only”, it seeks the review of the further conditions detailed in the above table.
There is limited guidance in the Act as to the imposition of conditions of use. However, s 15AA(3) states that:
In making a proposal, the Director must consider whether the use of the chemical poses an unreasonable risk to occupational health and safety, public health or the environment.
It should be noted that the Respondent is not required to make a determination of risk in respect of the use of a chemical; rather what is required is that the Respondent must consider whether the chemical poses an unreasonable risk.
Accord submits that 10 of the substances are unlikely to pose an unreasonable risk to human health and the environment when used without the conditions of use. With respect to the final chemical, Cetearyl Octanoate, Accord submits that there is insufficient information to determine whether the substance poses a risk to public health. Accord does not object to the inclusion of the words “For Cosmetic Use Only” with respect to each of the chemicals. Nor does Accord object to that part of the conditions carried over from regulation by the TGA. It is only the additional conditions that are underlined in the above table to which Accord objects. On the other hand, the Respondent submits that all 11 chemicals may pose an unreasonable risk to public health or to the environment.
In the case of chemical 11, Accord contends that this should be referred to the Advisory Committee on Chemical Scheduling (ACCS) for further assessment. The ACCS is established under the TG Act. Part of its role is to provide the Department of Health and Ageing with advice on the risks to public health and safety posed by chemicals. With a view to this expertise, Accord submits that chemical 11, identified by the Respondent as potentially posing an unreasonable risk to human health rather than the environment, should be referred to the ACCS.
DOES THE DIRECTOR HAVE POWER TO IMPOSE CONDITIONS?
Accord’s Submissions
The Applicant submits that the Respondent has no power to impose conditions beyond those contemplated by s 15AA(2) of the ICNA Act. In other words, the Respondent is only empowered to impose conditions which are already in place under the Chemicals Scheduling System established under the TG Act. The TGA is the regulatory body responsible for the regulation of therapeutic products. Until 27 September 2011, this included cosmetic and personal care products. On that day, as a result of an amendment to the ICNA Act, responsibility for the regulation of chemicals used in those products passed to NICNAS.
Mr Bannan, for the Applicant, said that the result of the amendments is that a product containing a particular chemical used in a therapeutic good may be regulated under the TG Act, but may also be regulated under the ICNA Act if the same chemical is used in a cosmetic or personal care product. For example, a product which is sold primarily as a sunscreen with a sun protection factor (SPF) of 15 or more is a therapeutic good and regulated under the TG Act, while a product which is primarily a moisturiser but has a secondary role as a sunscreen with a SPF of between 4 and 15 is regulated under the ICNA Act. The relevant SPF levels are the result of the Therapeutic Goods (Excluded Goods) Order No 1 of 2011 (which replaced the Therapeutic Goods (Excluded Goods) Order No 1 of 2008.) Whether a product is treated as a therapeutic good or excluded as a cosmetic or personal care product will often depend on the claims made by the manufacturer for the product. If the manufacturer were to claim that a toothpaste cured gingivitis, it would be treated as a therapeutic good because it cures or alleviates a disease, whereas if the manufacturer claimed solely that the toothpaste cleans teeth, the industrial chemical involved would be regulated under the ICNA Act.
Under the TGA regime, the 11 chemicals at issue in these proceedings were included in the Australian Register of Therapeutic Goods. In addition to the Register, the TGA maintained a document entitled ‘Substances that may be used in listed medicines in Australia’ which set out conditions for the use of chemicals included in the Register. Conditions were imposed on five of the 11 chemicals.
The conditions imposed by the Respondent in his decision dated 5 June 2012 are more restrictive than those imposed on the chemicals under the TGA regime. Indeed, only five of the chemicals were subject to conditions under that regime. The Applicant contends that if new conditions are to be imposed, it should only be on the basis of rigorous analysis (Accord claims that NICNAS’s analysis was manifestly inadequate in this case).
The Applicant submits that the Respondent is only empowered to impose conditions already in place under the TGA regime. These conditions were imposed with the benefit of the expertise and resources available under the TGA regime. The Applicant argues that resources available under the TGA regime are superior to those available under the NICNAS regime. The Applicant has no difficulty with the conditions imposed by the TGA: it is the additional conditions imposed by the Respondent which are its concern.
The Applicant submits that while s 15AA(2) provides for the imposition of particulars, it is only of particulars to which a chemical “is subject”, meaning that the particulars already exist. The Applicant points to this being consistent with the statement in the Explanatory Memorandum for the amending legislation, the Industrial Chemicals (Notification and Assessment) Amendment (Inventory) Bill 2011 (the 2011 Bill) (at p 4) which refers to including conditions that applied to the chemical when it was previously regulated under another scheme.
With regard to s 15AA(3), Mr Bannan said this requirement for the Respondent to consider whether the chemical poses an unreasonable risk to occupational health and safety, public health or the environment, is in the context of deciding to extend the application of existing conditions under the prior regulatory regime, for example under the TG Act. It does not expand the power to impose conditions.
With regard to s 15AA(7), the Applicant submits that the use of the word ‘specified’ in relation to particulars has the effect of referring back to the previous subsections and the reference to the particulars specified in s 15AA(2). In any event, s 15AA(7) is a mechanical provision which deals with the procedure that must be followed in making a final decision. The Applicant again cites the Explanatory Memorandum for the 2011 Bill which, in relation to s 15AA generally, refers to an intention of avoiding reassessment of the chemicals and annotating the Inventory with pre-existing controls on the chemical. The Second Reading Speech for the 2011 Bill (Hansard, House of Representatives, 6 July 2011 at p 7722) makes a similar point.
Mr Bannan submitted that the s 15AA process is an expedited process to facilitate the transfer of responsibility from the TGA to NICNAS and does not contemplate the imposition of additional conditions. The s 13 process is a different process permitting variation of the conditions once a more thorough assessment has been undertaken.
The Respondent’s Submissions
The Respondent notes that an important feature of the ICNA Act is that it requires consideration of the environmental risks of a chemical, whereas, in the case of the TG Act, no such consideration is required. The Respondent says that the consequence of acceptance of the Applicant’s submissions is that the Respondent would have no power under s 15AA to impose conditions to mitigate environmental risks at the time of listing. In effect, NICNAS would be merely a ‘rubber stamp’ and not a true regulator. The Respondent says this cannot have been Parliament’s intention in establishing NICNAS as a regulatory scheme.
The Respondent drew the Tribunal’s attention to the Explanatory Memorandum for the Industrial Chemicals (Notification and Assessment) Amendment (Cosmetics) Bill 2007 (the 2007 Bill), which states at 3 that if cosmetic products :
… continue to be regulated by the TGA as therapeutic goods, no environmental assessment is undertaken. By contrast, NICNAS undertakes an environmental assessment of chemicals in cosmetic products.
Mr Dillon, for the Respondent, noted that the powers of the Respondent under s 13(2) include power “to include particulars at the time a chemical is included in the Inventory or at a later time”. He argued that if the Applicant’s submissions are accepted, there would also be a contradiction in that the Respondent would be able to impose such conditions pursuant to the power in s 13 immediately after listing a chemical in the Inventory, thereby circumventing the implied restriction suggested by the Applicant. The Respondent submits that such an outcome would be irrational, requiring a separate process in order to impose further conditions, for example to protect against unreasonable risks to the environment.
The Respondent notes, citing Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at 46, that the task of statutory construction must begin with a consideration of the text of the legislation as:
… the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
The Respondent contends that the purpose of s 15AA(2) and the mischief it is seeking to remedy can be identified by reference to s 15AA(3) which requires the Respondent, in making a proposal to include a chemical in the Inventory, to “consider whether the use of the chemical poses an unreasonable risk to occupational health and safety, public health or the environment”. The Respondent submits that the purpose of the imposition of conditions is to ameliorate these risks when listing a chemical in the Inventory.
With regard to the Applicant’s submission that the words “is subject” in s 15AA(2) limit the particulars included in the proposal to those that already exist, the Respondent contends that such a submission is misguided. A chemical the responsibility for whose regulation was transferred to NICNAS following the passage of the 2011 Bill would no longer be subject to conditions imposed under the TG Act. Section 15AA (and s 13) should be interpreted to mean the particulars of any condition of use to which the chemical is subject upon listing. For s 15AA(3) to have any work to do, the Director must be able to impose conditions relevant to mitigating unreasonable risks to occupational health and safety, public health or the environment.
With regard to s 15AA(7), the Respondent submits that, on its face, the text (which is consistent with the wording of s 13(1)) contains no indication of any limitation on the specified particulars that may be included.
The Respondent submits that the meaning of the provisions is clear from the text. However, if reference is made to extrinsic materials, namely the Explanatory Memorandum for the 2011 Bill, there is nothing to indicate that the power to list with conditions is limited.
The Tribunal’s Consideration
The Tribunal raised with the parties a situation that could exist where responsibility for the regulation of a chemical has been transferred from the TGA to NICNAS, but there is a period prior to entry of the chemical in the Inventory when there is no specific approval in place for the chemical. In this instance, approval (a permit) for the importation or manufacture of the chemical would, unless excluded, have to be sought individually from NICNAS by the importer or manufacturer, and the conditions that previously applied under the TG Act regime would not apply.
In this instance, if the Applicant’s submission is to be accepted, and the reference in s 15AA(2)(a) and (b) to any condition of use to which the importation or manufacture of the chemical “is subject” is to be read as a reference only to conditions imposed under the previous regulatory regime, the words “is subject” would need to be read as including conditions to which the chemical was previously subject, unless only conditions currently in place under individual arrangements with manufacturers or importers are to be included. The alternative proposed by the Respondent is that the words “is subject” are to be read as including conditions proposed to apply under the NICNAS regime for the future.
In our view, there is no limitation on the power to impose conditions as contended by the Applicant. We adopt the position argued by the Respondent. We are not satisfied that the plain text of s 15AA read in context indicates a limitation on the power to impose conditions to only those conditions that apply currently or were in place under the previous regulatory regime. The objects of the ICNA Act stated in s 3(a) contemplate a national system that aids “in the protection of the Australian people and the environment”, and s 15AA(3) directs the Respondent to “consider whether the use of the chemical poses an unreasonable risk to occupational health and safety, public health or the environment”. To prevent the Respondent from imposing conditions to address such risks would be contrary to the purpose of the legislation, inconsistent with the approach required by s 15AA of Acts Interpretation Act 1901 (Cth) (the AI Act 1901) and, more specifically, inconsistent with the power to impose conditions provided by s 13. For the Respondent to have to enter into a separate s 13 process, after including the chemical in the Inventory, in order to address a potential unreasonable risk to the environment is unwieldy and does not make sense in the context of the legislation as a whole.
If it be thought necessary to refer to extrinsic material to confirm the meaning of the provisions (s 15AB(1) of the AI Act), we note that the Explanatory Memorandum for the 2007 Bill states:
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 certain persons proposing to introduce industrial chemicals.
Similarly, the Second Reading Speech for the 2011 Bill refers to the ICNA Act having:
… established a national system for the notification and assessment of industrial chemicals used in Australia to aid in the protection of human health and safety and the environment.
This supports the interpretation adopted by the Tribunal. The protection of the environment is a concern of the ICNA Act and therefore, of NICNAS’ role as regulator. Furthermore, neither the Explanatory Memorandum nor the Second Reading Speech states that the Inventory must only be annotated with previous conditions.
SHOULD CONDITIONS HAVE BEEN IMPOSED?
Three witnesses gave evidence for the purpose of addressing whether conditions should have been imposed: Ms Capanna and two expert witnesses.
Ms Bronwyn Capanna
Ms Capanna, the Executive Director of Accord, prepared statements for these proceedings dated 11 September 2013 and 5 May 2014 and gave evidence at the hearing. Ms Capanna has a Bachelor of Pharmacy from the University of Queensland, a Certificate and Advanced Certificate in Association Management from Monash University’s Mt Eliza Business School, and has completed a course in Basic and Applied Pharmacokinetics at the University of Sydney.
Ms Capanna said she understood her role was to give evidence about the regulatory system of which she has considerable experience. She is currently a member of the Advisory Committee on Chemical Scheduling (ACCS), established under s 52C of the TG Act (as a successor to the National Drugs and Poisons Scheduling Committee, of which she was also a member), which provides advice to the Secretary-General of the Department of Health who makes decisions on the scheduling of chemicals. Ms Capanna said:
The ACCS is part of a national system of chemical control and management of public health and safety. This is achieved by applying access restrictions on chemicals where there is a potential risk to public health and safety.
She is also a member of the Agricultural Pesticides and Veterinary Medicines Authority (APVMA)’s Advisory Board, which advises the Chief Executive Officer of the APVMA.
Ms Capanna indicated that referral of a chemical to ACCS by NICNAS would mean that there would be a thorough assessment to determine whether the chemical posed an unacceptable risk to public health. ACCS employs and consults a wide range of experts, including those with extensive public health and risk management experience. However, she acknowledged that the scheduling of chemicals is concerned with public health and safety and not specifically the environment. NICNAS would therefore have no reason to refer a chemical to the ACCS for assessment of its environmental effect.
Ms Capanna agreed that the conditions imposed on the 11 chemicals are consistent with the concentrations used in the Industry. However, there would be companies affected if these conditions were imposed and some have indicated that they would stop supplying the chemicals to Australia. Accord canvassed its members early in 2014 and 85 active members responded. Of these, 28 companies stated that they were not directly affected by the conditions imposed and nine companies stated that they used at least one of the chemicals in issue at a level below that stipulated by NICNAS. She said the conditions imposed in respect of chemicals 1 to 4 go beyond previously imposed conditions, and the conditions imposed in respect of the remaining chemicals go beyond any conditions previously applied by the TGA.
Ms Capanna said that Accord’s membership is very concerned about the proper working of the regulatory system and has recommended that there be a scientific assessment undertaken by NICNAS in respect of chemicals proposed for listing in the Inventory.
Discussion of the Expert Evidence
The Tribunal was presented with a substantial amount of complex scientific evidence. This included expert evidence provided for the Applicant by Dr Roger Drew, Principal Consultant of ToxConsult Pty Ltd, a toxicology consulting firm, who prepared statements dated 11 September 2009 and 6 May 2014. Expert evidence was provided for the Respondent by Dr Matthew Gredley, the Principal Scientist for the Targeted Assessment Programme (part of NICNAS), who prepared a statement dated 26 November 2013. Dr Drew and Dr Gredley gave evidence concurrently at the hearing. Dr Gredley was also cross-examined separately about NICNAS’s assessment of each of the 11 chemicals.
The chemicals under consideration have been used in cosmetics under the TGA regime for many years without any reports of significant adverse effects to human health. Upon transfer of regulatory responsibility to NICNAS, consideration had to be given to the possible effects of these chemicals on the environment.
In recent years, there has been increasing attention paid to the environmental effects of chemicals and to what have become known as endocrine disruptors. At certain doses these chemicals can interfere with the endocrine system in mammals causing a variety of developmental disorders. This is an evolving field that is of considerable concern to European and North American regulators, and to NICNAS.
NICNAS screened the chemicals under consideration as possible endocrine disruptors by computational modelling using quantitative structure activity relationship software programs (QSAR) looking for similarities in chemical structure with known chemicals that interact with the oestrogen receptor. Having done so, NICNAS concluded that chemicals 5 to 10 have the potential to bind to the oestrogen receptor and that further testing was warranted if it was to determine that these chemicals did not pose an unreasonable risk to the environment as possible endocrine disruptors.
Dr Drew and Dr Gredley were asked to meet before giving evidence to identify areas of agreement and disagreement and to prepare a bullet point list. That list, of matters on which they agreed, follows, and is shown in ‘bold’. The experts said they do not disagree on any issues although they have “slight differences of opinion” on certain issues. The comments set out below in square brackets below are made by the Tribunal and are derived from the further oral explanation given by the experts.
·The documentation and detailed analysis of each chemical is poor and not transparent and can be improved. (‘Poor and transparent’ may be discussed further)
[In other words, it is difficult to work out how the decision was reached.]
·Assessment framework is appropriate for an industry regulatory person but is not clear for the general public.
[The experts agreed that the framework needs clarification and that the guidance information provided by NICNAS to the Industry about the NICNAS regulatory system is inadequate and needs to catch up with the emerging science.]
·Methodology currently described in guidance documents is an appropriate screening process (see below for endocrine disruption guidance required to address industry concerns).
·Endocrine disruption is a mechanism and not a hazard. The hazard being reproductive and/or developmental effects. These are included in current data requirements for full chemical assessment.
[The hazard to reproduction or development is the toxic effect from the endocrine disruption.]
·There is a need to specify the appropriate tiered steps that industry may use to identify an endocrine disruption hazard and its potency.
·For chemicals 5-10 the quantitative RQ was undertaken and shown not to be of concern but this was not communicated.
[RQ – the Risk Quotient – is calculated by dividing the predicted environmental concentration by the predicted no effect concentration. An RQ of greater that 1 is a flag for further analysis. The level of the threshold dose is still a question of scientific debate. Even a very small dose can cause an endocrine effect in some organisms.]
·For chemicals 1-4 modelling to end-of-pipe is an appropriate tool. We are not sufficiently expert to state whether Simple Treat and/or STPWIN is the most appropriate model to use.
[The fate of the chemicals in the environment can be modelled to an ‘end of pipe’ concentration on discharge from a sewerage treatment plant. Simple Treat and STPWIN are computer models used to estimate the volume of chemicals that are discharged out of the ‘end of the pipe’ of a particular effluent treatment plant.]
·Good science recognises that if a compound fails the screening assessment then environmental fate modelling is appropriate.
[Fate modelling provides an estimate of concentration in a wider area over a period of time.]
·Inclusion of fate modelling of chemicals 1-4 still results in RQs of between 1-5 which suggests further potential unreasonable risk, and that further refinement of the risk should be undertaken.
[The experts agreed that although there are deficiencies in the Simple Treat model, the results of the modelling are sufficient to flag the need for further analysis. Dr Drew said that a further risk assessment is required before listing on the Inventory, although he acknowledged that the current regulatory regime does not allow for this.]
·For chemical 11 the hazard of the metabolite is sufficiently well defined (ie foetal malformation) that it warrants much more in depth assessment of risk.
[Chemical 11 is an ester that can be metabolised to 2-ethylhexanoic acid. Several other chemicals, including chemical 2, can be metabolised to this acid. There are genuine health concerns about this metabolite and the experts agreed that there is good evidence to demonstrate the risk associated with the use of this chemical. The condition limiting the concentration of this chemical to 0.5% or less was determined from animal studies, but a risk assessment has not yet been undertaken. Accord believes that Chemical 11 should be referred to the Australian Chemical Scheduling System (ACSS) for advice.]
Dr Drew and Dr Gredley agreed that the concentration levels permitted by the conditions are not risk-based: rather, they are based on current usage in the Industry together with an assessment that the concentration stipulated is too low to pose a risk.
Dr Gredley explained that in the case of the 11 chemicals which are the subject of these proceedings, there are currently no permits or certificates in place permitting use of the chemicals in cosmetic products. However, use of non-hazardous chemicals (those which have no intrinsic ability to cause harm) may, in some cases, be covered by exemptions under the ICNA Act involving self-reporting by introducers to NICNAS, with NICNAS being empowered to undertake an audit of a business to monitor compliance with the ICNA Act where it is deemed necessary (s 86). Dr Gredley said it is always open to an introducer to apply to NICNAS for a permit for the use of a chemical as a ‘new chemical’ (Division 1C of the ICNA Act) which would require the proponent to submit supporting documentation to justify use of the chemical. Similarly, if an introducer wishes to use a higher concentration of a chemical than that permitted by conditions listed for the chemical in the Inventory, it would be open to the introducer to apply to NICNAS for approval of that use.
Dr Gredley was cross-examined about each of the 11 chemicals, in particular as to NICNAS’s assessment of risk. He acknowledged that where the RQ for a chemical is more than 1, further study is required in order to make a full determination of risk. However, he said this is not NICNAS’s role. Its role is to assess assessment whether a chemical poses an unreasonable risk. He indicated that NICNAS takes a cautious approach where, for example, it is not known whether there is a risk to the environment if chemicals are used beyond present concentrations.
DISCUSSION
There is a lack of definitive data about the use of the 11 chemicals in cosmetics and of their wider use under different regulatory regimes. Industry is protective of its commercial and intellectual property and appears reluctant to provide data that may be of use to regulatory authorities unless compelled to do so. Nevertheless, it is generally acknowledged that they are concerned about the safety of their products and often self-regulate.
In the present case, Industry was given the opportunity to have input into the regulation of these chemicals and to provide data on the volume of their products and the concentration of the chemicals in these products. Only limited data was made available in eight statements with respect to the then 17 chemicals under consideration when the chemicals were listed in the Chemical Gazette of 7 February 2012 and in further information sought by NICNAS from the submitters of these statements on a confidential basis. The Respondent made his decision to list the chemicals with conditions of use based on this limited additional information. This is the decision under appeal to the Tribunal. It appears to us that some cosmetic industry suppliers missed a significant opportunity to provide relevant information in this case.
The cosmetics industry has used the chemicals in issue without significant health problems for many years. The chemical extracts are found naturally in the environment and thus considered safe. However, the same could be said for herbal medicines some of which have not been shown to be safe in their concentrated form. As Paracelsus said “the dose makes the poison” - a basic principle of toxicology. Harvesting chemicals in an extract of a plant significantly increases the concentration/dose of such chemicals in a preparation.
THE TRIBUNAL’S CONCLUSION
The Tribunal considers that it was reasonable for the Respondent to find that, when used in cosmetics, these chemicals may pose an unreasonable risk to health, safety and the environment (s 15AA(3) of the ICNA Act) and to adopt a cautious approach until further evidence is forthcoming to satisfy the Respondent that there is not a reasonable risk associated with the chemicals.
As noted above, the Respondent is not required to make a determination of risk in respect of the use of a chemical, or to undertake a full analysis and assessment of that risk, as suggested by Accord. Rather the Respondent is required to consider whether the chemical poses an unreasonable risk and to give this question “proper, genuine and realistic consideration” (ReIssam Wahib Hindi v Minister for Immigration and Ethnic Affairs [1988] FCA 346, at [33-36]).
Turning to the evidence, the Tribunal finds, relying on the agreed evidence of the two experts, that the 11 chemicals may pose an unreasonable risk to human health and/or the environment. The experts agreed that the inclusion of fate modelling of chemicals 1 to 4 still results in RQs of between 1 and 5 which suggests further potential unreasonable risk. With respect to chemicals 5 to 10, as noted above at paragraph 51, the environmental effect of endocrine disruptors is an evolving field of considerable concern to European and North American regulators. Accord argued that although the Department of Environment identified the potential for endocrine disruption, the Department concluded that the chemicals did not give rise to any unreasonable risk, due to the ubiquity of the chemicals in the environment.
The Tribunal notes Mr Bannan’s criticism of the arbitrary nature of the conditions and his contention that the conditions imposed lack proper justification and are ineffective in mitigating the concerns identified. He said that NICNAS has no control over the number of ‘introducers’ who include particular chemicals in their products, both cosmetic and therapeutic, and contended that the concentration limit is wholly ineffective to mitigate any unreasonable risk to the environment.
Notwithstanding these criticisms, in the circumstances, and bearing in mind the objects of the Act, which include the protection of the Australian people and environment from risks that could be associated with the use of chemicals, the Tribunal finds that a cautious approach is prudent and, in our view, correct. While acknowledging Mr Bannan’s point that if the chemicals are also ‘introduced’ under the TGA regime, NICNAS will have no idea of whether and to what extent its thresholds on the concentration and volume of chemicals used might be exceeded, the Tribunal considers it was appropriate for the Respondent to limit the use of the chemicals to concentrations that are known to be safe based on current usage in cosmetics.
The Tribunal notes the apparent lack of co-ordination between the different regulatory regimes (NICNAS, the TGA, the Australian Pesticides and Veterinary Medicine Authority, and Food Standards Australia New Zealand) in addressing the risks posed by particular chemicals. However, it is clear that as far as NICNAS is concerned, its role is limited to ‘industrial chemicals’ used in cosmetic products and does not extend beyond this.
Thus, the Tribunal considers that the Respondent was correct in putting limits on the concentration of the chemicals under consideration in cosmetics regulated by NICNAS. These concentration limits were set at levels sufficiently above current usage to be considered safe.
Nevertheless, the Tribunal considered the setting of volume limits per annum per introducer was not justified given the lack of data provided by industry and the use of the chemicals under consideration in products other than cosmetics regulated by NICNAS which would mean that the volume limits would be unlikely to be an effective means to address the risk posed by the Chemicals.
Accordingly the Tribunal removes the volume limits but otherwise affirms the other conditions of use set out in the table below.
INCI name/AAN
Conditions of Use Decided
69. 1. Diethylamino Hydroxybenzoyl Hexyl
70. Benzoate (Uvinul A Plus) [302776-68-7]
For Cosmetic Use Only. The concentration is not to exceed 10%.
2. Neopentyl Glycol Diethylhexanoate [28510-23-8]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 5% or less. It should not be used in topical preparations intended for the eye.
3. Propylene Glycol Myristyl Ether Acetate [135326-54-4]
For Cosmetic Use Only.
4. Trihydroxypalmitamido Hydroxypropyl Myristyl Ether [131276-37-4]
For Cosmetic Use Only. For dermal use only. The concentration is not to exceed 0.02% and is not to be used in topical products intended for use in the eye.
5. Bertholletia Excelsea Extract [160965-04-8]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.013% or less.
6. Potentilla Erecta Root Extract [90083-09-3]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.04% or less.
7. Aspalathus Linearis Extract [776295-36-4]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.01% or less.
8. Boswellia Serrata Extract [97952-72-2]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.3% or less.
9. Poria Cocos Sclerotium Extract (TGA name: Poria cocao) [168456-53-9]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.2% or less.
10. Scutellaria Baicalensis Extract/Root
Extract [94279-99-9]
For Cosmetic Use Only. The concentration of this ingredient in the final product should be 0.5% or less.
11. Cetearyl Octanoate [90411-68-0]
For Cosmetic Use Only. The concentration is not to exceed 5%.
In the Tribunal’s view, which accords with that of the experts, more definitive data is needed to justify the application of appropriate specific conditions. Once listed in the Inventory under the conditions of use and concentration limits set out above, the chemicals should be subjected to a process similar to that currently being trialled by NICNAS under the Inventory Multi-tiered Assessment Prioritisation (IMAP) initiative for the rapid assessment of existing chemicals of concern.
The Tribunal recommends that Chemical 11 Cetaryl Octanoate be referred to the Australian Chemical Scheduling System (ACSS) along with other chemicals that can be metabolised to 2-ethylhexanoic acid.
Under s 13 of the ICNA Act, the Respondent may amend the conditions of use if further evidence regarding toxicity (or lack thereof) becomes available. If any introducer wishes to use the chemicals in concentrations beyond the conditions of use, they may have recourse to the new industrial chemical framework in Part 3 of the ICNA Act, which requires a full scientific analysis to determine risk.
OUTCOME
The Tribunal considers that the correct or preferable decision in this case is to vary the decision under review by removing additional conditions imposed by the Respondent in respect of chemicals 1 to 4 but otherwise to affirm the decision. Where the Tribunal varies a decision pursuant to s 43(1)(b) of the Administrative Appeals Tribunal Act 1975, there is no specific power to make directions or recommendations. Nevertheless, we note the undertaking offered by the Respondent (transcript 26 June 2014, p 195):
The undertaking is that first that it [the Respondent] would do a voluntary call for further toxicology information generally. You know, it would be an open call for information to see if there is any more information out there that can inform these questions. There may be. It may be that it wasn’t provided to NICNAS previously. [Second] That information would be put through an IMAP process, the tier 2 process, which is where IMAP has got to. [Third] If warranted, the Director would then go through the section 13 process which involves a further round of consultation about what the conditions ought to be.
And in those circumstances, it would also give an undertaking to refer chemical 11 to the Secretary of Health to be dealt with as a distinct issue.
As Mr Dillon pointed out, this undertaking addresses the warning flags that arose during the screening process but commits to further analysis and assessment. Mr Dillon said the third step would involve a proposal for the variation of the conditions, to be published in the Chemical Gazette, followed by a full consultation process.
The Tribunal recommends that NICNAS carries out further assessment of all the chemicals using an IMAP-like process, consulting other relevant regulatory bodies such as the TGA, and taking into account Dr Drew’s analysis.
DECISION
(1) The Tribunal varies the decision under review by removing the additional conditions as to amount per annum per introducer imposed by the Respondent in respect of chemicals 1 to 4, but otherwise affirms the decision.
(2) The Tribunal recommends that NICNAS carries out further analysis and assessment of all the chemicals using an IMAP like process, consulting other relevant regulatory bodies such as the TGA and taking into account Dr Drew’s analysis.
I certify that the preceding 76 (seventy-six) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley, Professor Graham Johnston, Member. ........................................................................
Associate
Dated 24 July 2014
Dates of hearing 23-26 June 2014 Date final submissions received 26 June 2014 Counsel for the Applicant C Bannan Solicitors for the Applicant A Little, TressCox Lawyers Counsel for the Respondent A Dillon Solicitors for the Respondent Australian Government Solicitor
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