Heather S. Bowman is Senior Counsel in our
Washington D.C. office.
Richard Jay "Tad" Ferris is partner in our Washington D.C. office.
Patricia L. "Pat" Goughan is Of Counsel in our Washington D.C. office.
Hongjun Zhang, Ph.D. is a partner in our Beijing office.
On January 19, 2010, the Ministry of Environmental Protection (MEP) released the officially-promulgated version of its amended regulations for notification of new chemical substances in China (MEP Ministry Order No. 7 Regulations on the Management of New Chemical Substances Regulations, referred to in this article as "the Regulations"). The Regulations finalize MEP's proposed draft regulations, which were released for public comment in late May 2009 and which were the subject of our previous China and Environmental Alert, Alert to Industry: China Releases Draft of Amended New Chemical Notification Regulations (June 17, 2009). The Regulations will supersede the existing 2003 regulations with the same title and will be effective on October 15, 2010.
The Regulations make few substantive changes to the proposed or draft regulations issued in the Spring of 2009. The many language and organizational changes in the final text primarily serve to clarify the earlier draft. The basic regulatory scheme and classification structure was retained. The summary below highlights certain key features of the Regulations, including the streamlined filing requirements for new chemical substances being manufactured or imported in quantities below one tonne per year, as well as the quantity thresholds for additional data requirements for new chemical substances registered under the "regular" filing category. This alert also summarizes the annual reporting requirements for all registrations that are new to the Regulations, as well as certain other changes from the Regulations as they were proposed.
Companies manufacturing or exporting new chemical substances in or to China, or who wish to do so, should carefully review the Regulations to determine how they may affect the company's current or proposed operations. In particular, companies will want to evaluate their ability to use the new "simplified" notification procedures for quantities below one tonne and for substances being manufactured or imported for scientific research and development. An English translation of the Regulations is available on request.
As noted in our June 17, 2009 alert, the Guidelines on New Chemical Notification, which functioned as technical implementing measures for the prior version of the Regulations on the Management of New Chemical Substances, have not yet been revised. However, now that MEP has finalized the Regulations, it is expected that MEP will issue amended implementing guidelines sometime this summer, so that they are available in time for the October 15, 2010 entry into force of the Regulations. As a result, there are a number of details associated with the Regulations that may be confirmed in these revised guidelines.
Scope Of Regulations (Article 2)
The Regulations make three important interpretive points about their scope, the last two of which are new to the final text:
- While existing statutory and regulatory regimes for pharmaceuticals, agricultural chemicals, food and food additives, drugs and cosmetic products continue to apply to these products, the Regulations will apply to "raw materials and intermediates" used to produce these products. Accordingly, careful analysis will be required for these types of products, particularly for those being manufactured in China.
- The obligations imposed under the Regulations extend to new chemical substances being managed in bonded areas and export processing/manufacturing zones. Thus, new chemical substances being manufactured in or imported into these areas will be subject to registration.1
- Manufactured articles "designed to intentionally release" new chemical substances contained in the article during its use are subject to the Regulation. This provision potentially may extend new chemical substance registration requirements to a broad range of manufactured items.
Simplified Notification For Volumes Below One Tonne Per Year (Article 12)
The simplified notification for new chemical substances manufactured or imported at annual quantities of less than one tonne per year is one of the most notable features of the Regulations. It appears to be specifically designed to respond to industry requests for a form of Low Volume Exemption (LVE) that could be used for any new chemical substance. No substantive changes were made from the draft to the final version of this provision. Thus the documentation required under this filing category consists of the following: (1) the simplified filing form and (2) an eco-toxicology test. As required under both the former and the draft regulations, the eco-toxicology test must be performed in China (i.e., by an approved Chinese test lab) on a Chinese test species.
The simplified low-volume filing category should allow many notifications that must now proceed as full notifications (called "regular" filings under the Regulations) to proceed under a more streamlined process. Notably, the Regulations specify that the time for expert committee review of a complete simplified filing application is not to exceed 30 working days, excluding time required for submittal of any additional data requested (Article 24).
Other Simplified Notifications (Article 13)
The Regulations combine the four additional simplified filing categories into a separate article. However the conditions for these filings are essentially unchanged. Thus, the documentation required for these filings includes: (1) the Simplified Filing Form and (2) "documentation in proof of the corresponding circumstances" (i.e., conditions) of the filing category under which the application is made.
Although the Simplified Filing Form is not set out in the Regulations, it is one of the forms MEP is specifically directed to create (Article 51(2)). Substances notified by a simplified filing, including a low-volume filing, as well as those manufactured or imported under the scientific research filings category discussed in the next section, will not be entered on the Inventory of Existing Chemical Substances (Article 41). As under the current regulations, these registrations and authorizations will be specific to the registrant.
- Use as Intermediate And Export Only: New chemical substances that will be produced or imported into China solely for use as an intermediate or solely for export qualify for a simplified notification if the volume produced or imported is less than one tonne per year.
- Scientific Research: Two separate provisions are authorized for notifying new chemical substances for "scientific research." The first provision is a simplified filing for quantities greater than 0.1 tonne per year but less than one tonne per year. For the second provision, applicable to quantities of 0.1 tonne or less, see the next section.
- Technological R&D: The Regulations finalize the provision for a separate and simplified filing category for new chemical substances being introduced solely for technological R&D. They raise the annual quantity that is eligible for manufacture or import as technological R&D under the current regulations from 1,000 kilograms per year and valid for one year, to a quantity of less than 10 tonnes per year and valid for up to (but less than) two years. Additional management requirements for R&D substances are also specified (Article 34).
- Polymers: Simplified notification is also available for new chemical substances that form less than 2 percent of a polymer and for polymers of low concern.2
Small Volumes Subject To Filing Only (Articles 14, 22)
The Regulations incorporate the provision from the draft regulations that allowed manufacture or import of new chemical substances for "scientific research" based upon only the filing of a Scientific Research Record Sheet prior to manufacture or import. Although not set out in the regulations, this form will be separately developed by MEP (Article 51(3)).
This filing category can be used for quantities of up to 0.1 tonne per year of a new chemical substance to be manufactured or imported for scientific research. The Regulations stipulate that this filing category also can be used for import of "test samples of new chemical substances" being imported in order to allow for the conduct of eco-toxicological tests on Chinese test species in order to support a subsequent registration application. No quantity limit is specified for substances being imported for this purpose.
Regular Notification (Articles 10, 11)
New chemical substances to be manufactured or imported in an annual volume at or above one tonne per year are subject to the requirement for a Regular Notification (Article 10). The Regulations announce the principle that higher volumes will trigger greater requirements for test data. The quantities that will trigger the need for additional data, and for re-registration if the registered quantity is proposed to be exceeded, are 10 tonnes, 100 tonnes and 1000 tonnes, respectively (Article 11). As in the proposed regulations, the additional data requirements that will be specified at each level are not set out in the Regulations. It is expected that these data requirements will be articulated in the revised Guidelines (discussed in the introduction above), which are expected to be issued before the October 15, 2010 effective date of the Regulations.
Annual Reporting (Article 36)
Registrants under simplified filings approved "during the previous year" must report by "February 1 of each year" the actual annual production and import volumes for new chemical substances covered by the registration.
For new chemical substances classified as "hazardous" under a regular registration, the annual report must also contain information about the implementation of risk control measures, as well as about physical and environmental risks, exposure and release. For substances classified as hazardous substances for priority environmental management, this report also must contain information on production plans for the then current year and implementation of risk control measures.
Risk Classification Of New Chemical Substances
The Regulations retain with minor changes the risk classification structure of the proposal. The basic policy is one of risk classification and implementation of a system that will provide for "registration, tracking and control" of new chemical substances (Article 4). Substances being notified will be classified under a three-tiered, risk-based system. First, substances will be classified as either general chemical substances or hazardous (harmful) substances. Hazardous substances that are classified for persistence, bio-accumulation, or as a hazard to ecological or human physical health will then be separately classified as hazardous substances of priority environmental management (Article 3).
Risk classification and risk controls are a central aspect of the Regulations – from initial review of the substance through post-registration risk controls. Thus the focus is not merely on hazard but, rather, on resultant risk and whether appropriate risk controls are available. In reviewing applications for general registration, the expert review committee is to consider not only the hazard characteristics of the substance, but also the risks to human health and the environment and the "appropriateness of the measures for controlling the environmental risks of the chemical substance." The expert committee also makes a recommendation whether or not to allow registration (Article 13 (3)). MEP is to approve issuance of the registration if it determines that appropriate risk control measures are available and otherwise to deny it (Article 13(4)). All registration certificates issued for new chemical substances are to list not only the usage and quantity level and quantity of the substance registered but also its "management" (risk) classification. Certificates for a regular registration are to "clearly indicate the measures for controlling environmental risks and administration management requirements" (Article 25).
The Regulations also stipulate a number of obligations for filers both before and after registration. An applicant is to "truthfully submit all known information" regarding "hazardous characteristics and environmental risks (Article 17). Registrants are to communicate the approved risk classification and appropriate risk controls to downstream users and processers (Article 30). Both registrants and downstream processors are then expected to undertake one or more generic risk controls, as specified in the registration certificate, and to comply with existing regulations on Control Over Safety of Dangerous Chemicals (Article 31). In addition, registrants and downstream processors of chemicals classified for priority environmental management must undertake additional monitoring and management control measures during production, use and processing, transit and disposal (Article 32). In a provision new to the final text of the Regulations, registrants of any regular certificate are affirmatively prohibited from transferring the substance for use and processing to those who "do not have the capacity to take risk control measures" (Article 33).
Finally, a registrant must "immediately" submit information concerning any "additional" hazardous characteristic of the substance discovered after registration. MEP is then directed either to revise the registration certificate if MEP determines that the newly disclosed risks can be adequately controlled through risk control measures, or to revoke the registration certificate if MEP determines that appropriate risk controls are not available (Article 26).
Entry Of Registered Substances On The Inventory (Article 41, 42)
The Regulations now specify when chemical substances that have been approved for general registration will be entered on China's Inventory of Existing Chemical Substances. Entry onto the inventory can now occur five years after the date of first import or manufacture of these substances.3 However, in a provision that is new to the final Regulations, inclusion on the inventory will not happen automatically. Instead, registrants must submit a report six months in advance of the five year anniversary detailing "actual activities" with the substance, and the report must then be evaluated by an expert committee before a decision is made to enter the chemical on the inventory. No criteria for the evaluation of the report or the decision to list (or not list) are set out in the Regulations.
The Regulations finalize the proposal for a five-year review of existing substances, during which any new chemical substances found by MEP to have been lawfully produced or imported into China prior to October 15, 2003, are to be entered onto the inventory. This provision reflects the process that MEP established in MEP Announcement No. 12 (2007) to enable "grandfathering" of chemical substances produced or used in China prior to October 15, 2003 (the effective date of the original Regulations on the Environmental Management of New Chemical Substances). Of course, if new chemical substances uncovered during the review are found not to have been so manufactured or imported, MEP is directed to "assess penalties ... in accordance with the law" (Article 42).
Enforcement And Penalties
The Regulations underscore the essential obligation of compliance under the new chemicals registration regime, i.e., that producers and importers must make filings for new chemical substances and obtain the required registration certificate prior to production or import. The processing, import and manufacture of a new chemical substance not covered by an applicable registration or scientific research filing is prohibited (Article 5). The provisions for fines and penalties in Articles 35 and 36 of the Regulations now list numerous specific offenses for which MEP or the local environmental protection agency is to mandate correction, assess penalties, publically announce the violations and enter them into the record (Articles 43-46). Penalties range from 10,000 to 30,000 Yuan or, in the case of concealing relevant information or providing false information in an application, the penalty authorized is cancellation of the corresponding registration certificate. Parties filing new chemical substance registrations must not have a record of having received an administrative penalty over the three years preceding the registration filing for violation of the Regulations, or for violation of the previous (2003) regulations (Article 16). In other words, filers should make sure they have a "clean record" with the authorities for the three years preceding planned submission of a registration application to the authorities.
The finalization of the Regulations on the Management of New Chemical Substances represents an important step in the evolution of China's regulatory regime for new chemical substances. We look forward to assisting our clients in reviewing their impact on existing and proposed production plans and compliance schedules.
1. This is a departure from the existing implementation Guidelines, which essentially provide in Section 1.2 that new chemical substances manufactured or imported "within the confines of" bonded areas and processing/manufacturing trade zones within China are not subject to registration. The existing New Chemical Substance Notification Guidelines were published in December 2003 (as amended 2004) by the Chemical Registration Center of the then State Environmental Protection Agency.
2. The Regulations do not define "polymers of low concern." The existing definition of this term appears in section 7.2 of the existing Guidelines. See note 1, above.
3. The provision of the draft regulations providing for an "early application" for listing after three years does not appear in the final text.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.