Environmental Risk Management

  • Simon Upton
Environment

I am pleased to welcome you to what I'm sure will be a practical and informative three days.

The Hazardous Substances and New Organisms Act, 1996, is the final piece in the jigsaw that makes up New Zealand's overhauled and comprehensive environmental management system. It forms a package, in conjunction with the Resource Management Act, Biosecurity Act and Agricultural Compounds and Veterinary Medicines Act, that brings the national environment management system into the 1990s.

Previous statutes covering hazardous substances or new organisms were inadequate to deal with public concerns. Collectively, they contained both large overlaps and serious gaps.

I hardly need to tell you that the introduction of new organisms and the importation of hazardous substances is full of opportunities as well as risks. Genetic manipulation, for example, is predicted to be an essential aid in keeping the New Zealand economy, which earns much of its living from biological production, competitive ? not only because of real gains to be made in agriculture, forestry, horticulture and so on, but because of the potential for solutions to some pest and weed problems.

New Zealanders will want to import organisms and substances to improve their products or to reduce pests, but I scarcely need to say that our short history bellows to us from the hilltops that we've made spectacular errors in the past.

This Act will go a long way to ensure that New Zealand can enjoy the benefits with more confidence and it will enable us to avoid repeating some of our worst mistakes.

If it is successful, it will be something this generation can justifiably be proud of.

In passing the Act, the Parliament intended to do several things:

take explicit account of the environment in managing hazardous substances,

update the decision-making processes and criteria for introducing new organisms to New Zealand's island ecology,

provide the legislative tools for the community to control genetic manipulation.
It also set up the Environmental Risk Management Authority with an explicit requirement to take risk management decisions about the introduction of new organisms and the control of hazardous substances in as rigorous, transparent, and efficient a way as possible. Importantly, it took risk management decisions visibly out of the reach of politicians.

The Government is serious about getting risk management right. The first period of implementing the HSNO Act has involved openly dealing with attitudes to risk and learning to codify these factors to meet the Act's requirements for open and transparent procedures. For ERMA it means developing a set of protocols and procedures that will lead to doing this in practice at a day to day level for hazardous substances and new organisms.

Inherent in the Act, and so in the operation of the Environmental Risk Management Authority, is the recognition that a key element is that of balancing risks, costs and benefits. The Act provides two levels of machinery to do this.

It explicitly provides a regulatory toolbox containing both thresholds for substances' hazards or types of manipulation below which the Act does not apply and sets of "default" controls for hazardous substances.

These concepts are realistic and sensible approaches generally not found in older New Zealand systems but which are increasingly features of internationally agreed best practice. They represent a conscious and unapologetic decision to get past the "all chemicals are bad" or "all manipulation of organisms is dangerous" syndromes. After all, the manipulation of organisms has been going on formally since the publication in 1865 of Gregor Mendel's paper "Versuche über Pflanzen-Hybriden", (Experiments in Plant Hybridization) and probably informally long before that. What's more, chemical substances, some quite dangerous but nonetheless well managed, are so central to our everyday lives that the society of the late 20th century, as we know it, would be impossible without them.

The Act also requires a decision-making methodology, which has to be consistently applied as the Authority makes its determinations. Parliament envisaged a rigorous and consistent approach to ensure that the authority's determinations would be authoritative.

There has been a surprising degree of agreement about the ingredients of the required rigorous and consistent approach. As a result, the Government has approved the methodology.

I remarked in earlier forums that the Act makes fairly heroic claims about our ability to debate complex issues. You are all familiar with some of the thorny issues:

how does ERMA deal with uncertain and contested information - in which the hazardous substances and new organisms area is rich, if only because of the continued evolution of science?

how does ERMA take into account decisions made in other jurisdictions?

how does ERMA weigh up risks, costs and benefits when these things are not and cannot be measured in the same units?
In the past these dilemmas have been buried deeply in procedure and not in any sense debated transparently. All this is, of course, has stirred up the very real attitudes to risk that we all carry about with us ? and which by their very nature are not static. Making these things transparent in an agreed and practicable way is something which will represent a continuing challenge.

This means that a continued and constructive dialogue between the ERMA and the HSNO Act's users is absolutely essential if the Act is to work as intended. Much of this meeting is about filling in and getting right the detail that must go behind such agreed principles. In short, it is about making risk management work and work well.

So, that's the "Government's Intention" in passing the Act.

I see from the programme I'm meant to talk about the lessons that can be learned for the HSNO Act from experiences under the RMA. This is a curious assignment, because it's hard to imagine two Acts that could take a more fundamentally different approach. The RMA is highly devolved. Decisions are taken at local or regional level. There are no national standards (yet) and, apart from the generic requirement of section 32, the Act promotes no consistent methodology.

The HSNO Act, on the other hand, adopts a highly centralised decision-making approach. There will be a raft of national standards and regulations and the Act prescribes methodology for decision making.

The difference, I hasten to add, is the result of a conscious decision. This is a technically complex area and so, given our size, it's imperative that we concentrate the small pool of technically competent people to produce the best decisions. The Act stipulates that the 'Minister shall ensure that the membership [of ERMA] includes a balanced mix of knowledge and experience in the matters likely to come before the authority'. We simply couldn't manage that at a regional or local level.

The Act centralises geographically - if you're going to release a new animal or hazardous substances into the country, economy and society the risks are the same wherever you do it. A new organism can rarely be contained within the borders of one territorial authority. The sort of things addressed by the HSNO legislation are national risks and the responses will apply irrespective of location.

So, in a sense, gathering lessons for the HSNO Act from the RMA is like taking lessons for your piano technique from the rugby field.

There is, however, an exception to the HSNO Act's centralisation. That is the area of enforcement (Section 97). During the legislation's formation it was decided not to create a new, over-arching inspectorate. People, in responding to the policy proposals, and to the Select Committee on the Bill, did not want yet another group of inspectors to deal with. As a result, the existing agencies dealing with hazardous substances and new organisms will remain: occupational safety within the Department of Labour, land transport, police, civil aviation and maritime authorities, territorial authorities and Ministry of Health. However, those agencies will be subject to the ERMA looking over their shoulder to make sure the job is done properly.

But, as the Act draws together once distinct disciplines, it will demand new flexibility. People will have to think about related areas, and will increasingly need to be multi-skilled if enforcement is not to remain disjointed or inefficient.

During this lengthy and, at times, exhausting overhaul of environmental legislation we have learned that changing laws is the easy part - changing the mindsets and attitudes of those working with the legislation is the real task. It has become abundantly clear from our experience of the Resource Management Act that legal changes can take you so far but the ultimate success of the Act rests on all the players. This conference is about getting the practice of the Act understood at the beginning.

ERMA will decide whether or not to approve a substance or new organism, and that approval will often have conditions attached. The successful implementation of the decisions on the ground, however, will require good working relationships between the ERMA and a host of organisations - local government, MAF, MfE, Occupational Health and Safety, the police, Crown Research Institutes and, of course, the applicants.

This meeting over the next three days must not be a one way street - a briefing to a passive audience. It is a key part in the process of designing and tuning up the systems and practices necessary to make the Hazardous Substances and New Organisms Act work well. That is, the systems and processes employed by both ERMA and yourselves (as users of the Act).

The HSNO legislation will stand or fall on the initiative, professional skills and mental flexibility displayed by all of you.

There are some other lessons to be learnt from the RMA experience:

The government has a responsibility to fund the transition between the old and new regimes adequately so that the decision making authority is equipped to carry its functions in an efficient and effective way. As I've acknowledged before, this is one area, where, due to the fiscal constraints of the time, we were unable to get the RMA off to the optimal start.

It is uncertain just what the necessary level of funding for ERMA will be, but my firm intention is to ensure that it does have the appropriate resourcing.

It's critical, at the start, that people have good information, understand how the Act operates and are comfortable with the transfer of hazardous substances from the old world to the new. There is still a large number of people out there, who will be affected by the new legislation, who don't yet know that it exists. It is in everyone's interest that industry associations and individuals who are informed, as well as ERMA, pass the message on.

As they have under the RMA, applicants under the HSNO regime will, for the first time, be asked to meet a large part of the cost of processing their applications. Here lurks the spectre of compliance costs, and this Government's tolerance of unnecessarily high compliance costs is approaching zero.

Let me be frank; HSNO will impose new costs. It is a more comprehensive and demanding piece of legislation. More information will be required and the hidden costs will be significant. The community, through its elected representatives has plumbed for better and closer management of the risks in this area, and somebody has to pay for it.

I don't apologise for cost recovery, though some of its implications will have to be carefully considered. For example, we do not want to create disincentives for scientific experimentation for which no individual is willing to bear the cost, but for which there may be a substantial public good.

Equally the Government will not tolerate a bureaucratic leviathan. The ERMA process itself is intended to be streamlined and, I'm pleased to say, its management is attuned to finding the least cost solutions within the confines of the legislation.

I want to be blunt about some of the other risks we face in implementation - to pick over the bones of contention at the outset. And I trust these will be discussed over the next few days:

Many people are concerned about the length of time being taken to complete the regulations on hazardous substances. These regulations, which will set the thresholds for application and provide a tool box for controlling hazardous substances, are critically important and their absence, possibly till just before the Act commences will make it difficult for users. Even the people at ERMA are taking time to come to grips with the new legislation. It will be doubly difficult for industry and other users.

This raises the issue of whether there will be sufficient time for industry and users to come to grips with all the information and its implications once its been laid out on the table. We can't judge that. It's really up to industry, and I can't stress this too strongly, to come back to us and be clear and realistic about the time they need to make sure that they can operate effectively under the Act. If that means we have to stretch out the overall timetables, particularly for hazardous substances, then that's what we'll have to do.

However, the first hurdle is to get the Act started for new organisms and even there getting the regulations in place has been a challenge. All the policy material is ready but we may not be able to get the formal regulations in place by the target date of 1 July. How early it is in July will come down to whether or not the Government waives the '28 day rule'.

The first months will be tough. ERMA will do all it can, but the bedding in the Act will also require a little self-help from industry. We will all need to help each other.

Many people are concerned about just how many substances or new organisms will require applications. The 'grouping' of applications for hazardous substances will lessen repetition. The definition of a hazardous substance is important here because it allows for a single ?HSNO Act? substance to encompass a multitude of different products. It does this by qualifying the definition as follows: "[hazardous substances] may include a range of percentages of the elements or compounds making up the substance."

In other words, a person may group their products to make them one substance for the purpose of approval under the Act. This ability to group is in the hands of the person applying ? i.e. groups can, at the choice of the applicant be very broad or very narrow. Reason needs to prevail, however, in such a grouping as a single approval implies a single set of controls. For example, grouping highly toxic or deadly poisons with relatively less toxic substances would most likely have all controlled as the most hazardous case.

There is a worry that the Act does not differentiate between low and high hazard hazardous substances applications. The ERMA has little flexibility in how it deals with low hazard applications. Even minor applications above the threshold will have to be notified in newspapers in every major centre. At the bottom end, small scale businesses using low hazard hazardous substances will have to go through a similar number of hoops as big business with high risk substances. However, in reality large quantities of even low hazard hazardous substances can cause problems as serious as a small quantity of high hazard hazardous substance.

We will have to keep a close eye on how this works out in practice.

Similarly, what is a Genetically Modified Organism? We don't want our best scientists spending half their time having to fill out application forms. Although a GMO is defined by regulation, people will argue about the thresholds. The New Organisms side offers a little more flexibility, and ERMA does not expect to see more applications than under the previous system. With the low risk regulations some applicants will have the ability to set up their own bio-safety committee to do certain approvals 'in house', in consultation with ERMA.

As a general rule, I expect ERMA to be sensible. The HSNO legislation is not about devising a confidence course for scientists and businessmen to negotiate.

You can be sure in an Act this size that legislative wrinkles will appear. It is the Government's intention to move swiftly to iron these out. Already one has been found. In section 28 it says in part: ? every person intending to import or manufacture a hazardous substance ? shall apply to the authority.? Regrettably, the literal legal interpretation of this is not what either the Government in introducing the legislation, or (I think I can relay this with some certainty) Parliament intended. It was always the intention, based in large measure on your responses to the original policy proposals, that approvals for hazardous substances should be obtained once. The approval is intended to stand until the substance is reassessed, irrespective of the source of that substance, provided that it really is the same substance. The Government is moving to correct that matter and I am hopeful that this will be done before the Act is in force for hazardous substances.

Industry is always worried about protecting commercially sensitive information. In this case, it is perhaps more a perception than reality. Let me say here, that the Act is more protective of information that previous regime. In the past, government agencies made up their own minds in responding to official information requests, with no obligation to consult the original suppliers of that information. For the HSNO legislation, the Select Committee inserted an extra loop which means that in any circumstance where commercially sensitive information has been supplied to ERMA, and it has been requested under the OIA, the Act requires that the original supplier must be consulted.

I'm sure many of you will have other concerns about the new legislation and I expect these will be raised over the next few days.

The changes will require time, effort and expense to settle down - all of which industry can little afford - but, it will be worth it if we secure a more consistent approach to risk which avoids ad hoc, politically-driven judgements that may have no foundation in good science.