Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS (PROHIBITED EXPORTS) AMENDMENT REGULATIONS 2005 (NO. 5) (SLI NO 299 OF 2005)

EXPLANATORY STATEMENT

 

Select Legislative Instrument 2005 No. 299

 

Issued by the Authority of the Minister for Justice and Customs

Customs Act 1901

Customs (Prohibited Exports) Amendment Regulations 2005 (No. 5)

 

Subsection 270(1) of the Customs Act 1901 (the Act) provides in part that the Governor‑General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any other business relating to the Customs.

 

Section 112 of the Act provides in part that the Governor-General may, by regulation, prohibit the exportation of goods from Australia and that the power may be exercised by prohibiting the exportation of goods absolutely or by prohibiting the exportation of goods unless specified conditions or restrictions are complied with.

 

The Customs (Prohibited Exports) Regulations 1958 (the Principal Regulations) control the exportation of the goods specified in the various regulations and the Schedules to the Principal Regulations.    

 

The purpose of the amending Regulations is to introduce new export restrictions on high activity radioactive sources, and to make minor administrative amendments to the headings to regulation 9 and Schedule 7 to the Principal Regulations.

 

Radioactive sources consist of radioactive material that is sealed in a capsule or closely bonded in a solid form. Radioactive sources are used for a range of industrial, medical and research purposes. 

 

The amending Regulations insert a new regulation to prohibit the exportation of high activity radioactive sources specified in a new Schedule 7A unless the Minister for Health and Ageing (the Minister) or an authorised person has granted a permission in writing to do so.  The new export restrictions give effect to Australia’s recent commitment to implement controls in accordance with the Code of Conduct on the Safety and Security of Radioactive Sources (the Code of Conduct) issued by the International Atomic Energy Agency.

  

Existing regulation 9 of the Principal Regulations prohibits the export of fissionable material listed in Schedule 7 without prior written permission. In particular, Schedule 7 lists plutonium-239 but excludes plutonium with an isotopic concentration of plutonium‑238 exceeding 80%, plutonium-239 used in quantities of 1 gram or less as a sensing component in instruments and plutonium-239 contained in medicinals. Currently, plutonium-238 and plutonium-239 that exist in the form of radioactive sources in Australia generally fall within these exclusions.

 

New Schedule 7A lists plutonium-238 and plutonium-239 in the form of high activity radioactive sources as radioactive sources subject to the new export restrictions. New Schedule 7A also lists a number of other high activity radioactive sources subject to the new export restrictions.

 

In addition, the amending Regulations:

       allow the Minister to authorise in writing the Chief Executive Officer of the Australian Radiation Protection and Nuclear Safety Agency (the CEO of ARPANSA) and APS employees assisting the CEO of ARPANSA to give permission under one or more of these regulations. It is intended that the Minister would authorise only a small number of senior APS employees for the purposes of this regulation;

       require the Minister or authorised person to take into account Australia’s relations with other countries and Australia’s international obligations when deciding whether to give a permission. For example, under the Code of Conduct, Australia is obliged to notify the importing State in relation to any exportation of a high activity radioactive source it intends to authorise;

       allow a permission to state conditions and restrictions, the quantity of goods that may be exported and the circumstances in which they may be exported; and

       allow the Minister to revoke or modify a permission in certain circumstances. A decision to not grant, to revoke or to modify a permission is a decision reviewable under the Administrative Decisions (Judicial Review) Act 1975.

 

Further, the amending Regulations amends:

        the heading to regulation 9 of the Principal Regulations to distinguish the goods controlled under regulation 9 and radioactive sources that are controlled under new Schedule 7A; and

        the heading to Schedule 7 to the Principal Regulations to update the reference to the Minister.

 

A Regulation Impact Statement has been prepared in relation to the amending Regulations and is set out in the Attachment.

 

The amending Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The amending Regulations commenced on 31 December 2005.

 

0518336A

 

Authority: Subsection 270(1) of the Customs Act 1901


                                                ATTACHMENT

Regulation Impact Statement

Customs (Prohibited Exports) Regulations 1958

Radioactive Source Export Control

Background

Radioactive sources:  definition, uses and existing control

In Australia, radioactive material exists in a number of physical and chemical forms, but is generally used in solid form.  In order to reduce the possibility of unintended radioactive contamination by unsealed radioactive material, radioactive material is typically produced as a solid and encapsulated in a stainless steel capsule. This capsule is commonly referred to as a ‘radioactive source’. 

 

The United Nations organisation responsible for promoting the safe and secure use of radioactive sources, the International Atomic Energy Agency (IAEA), divides radioactive sources into a hierarchy of five categories according to the level of danger that they represent to human health. International guidance produced by the IAEA and being implemented by approximately 78 Member States proposes that States control the export of at least Category 1 and 2 radioactive sources.  These categories are described as follows:

 

Category 1 radioactive sources have a very high radiation output – these are typically used to sterilise medical and blood products or treat cancers externally.

 

Category 2 radioactive sources are large radioactive sources typically used for internal cancer treatment, industrial radiography (checking welds in industry) and scientific instrument calibrations.

 

The acquisition, use, storage and disposal of Category 1 and 2 radioactive sources is regulated under radiation safety legislation in each jurisdiction.

 

The import of Category 1 or 2 radioactive sources is prohibited under the Customs (Prohibited Imports) Regulations 1956 without the prior written permission of the Minister for Health and Ageing or their authorised delegate.  The Australian Radiation Protection and Nuclear Safety Agency administers the import control on a day-to-day basis.

Radioactive sources:  manufacture and export

Australia imports Category 1 and 2 radioactive sources from overseas manufacturers principally in Canada, the United Kingdom and the United States of America.  In instances involving Category 1 and 2 radioactive sources that have a longer half-life, overseas manufacturers have generally agreed, as a condition of sale, to accept the return of a source at the request of the purchaser.

 

At present, Australian jurisdictions (radiation regulators) do not collect details about the export of Category 1 and 2 radioactive sources.  However, each jurisdiction requires a person wishing to transfer a radioactive source to notify the radiation regulator.  Inventories of Category 1 and 2 radioactive sources vary between jurisdictions, however, broadly speaking, jurisdictions on the Australian east coast (Queensland, New South Wales and Victoria) and the Commonwealth have significantly more Category 1 and 2 sources than the other jurisdictions (principally because these jurisdictions each operate multiple large blood and product irradiators).  Of the remaining jurisdictions, South Australia and Western Australia have the next comparable ‘sized’ inventories (but both significantly less than those of the east coast and the Commonwealth) and the Australian Capital Territory, the Northern Territory and Tasmania have the next comparable ‘sized’ inventories (which are very small).

 

Of the east coast States, inventories size is ranked in the order of Queensland, New South Wales and Victoria.

 

It is also important to note that many Category 2 radioactive sources are not exported as they have short half-lives, for example 90 days.

 

Based on records of the number of Category 1 and 2 radioactive sources transferred in New South Wales and the approximate number of Category 1 and 2 radioactive sources in each jurisdiction’s inventory, it is estimated that between 20 and 25 Category 1 and 2 radioactive sources (in total) are exported each calendar year.

 

Problems

In order to avoid incidences involving the misuse of radioactive sources, Australian and overseas radiation regulators verify the identity of the user or potential user of a source, require the user to keep the source secure and undertake routine inventory accounting.  These requirements do not routinely apply when a source is exported from Australia.  In these circumstances, it is possible that in the course of being exported, a source may be acquired unlawfully by a person with malicious intent.

 

The radioactive material in a Category 1 and 2 radioactive source could cause significant physical, economic and social harm if used in a malicious way, for example, in detonated as part of a Radiological Dispersal Device (RDD) (also know as a ‘dirty bomb’).

 

The most relevant related example is an accident which occurred in 1986 in Goiania, Brazil, which was a city of about one million people. A Category 1 teletherapy source previously used to treat cancer was abandoned and ended up in a scrap metal yard.  The radioactive source was cut open by scrap metal dealers and about ten percent of the radioactive contents of the source were dispersed within a populated area over a period of weeks through both human and natural means such as rainwater runoff. 

 

The effects were significant:

 

It is estimated that a similar amount of radioactivity, area of spread and exposure to the population would occur following the use of such a source in an RDD device. Although the time period for the development of this exposure scenario is far greater than for a RDD, it is estimated the result could be similar, particularly in relation to the economic costs.

 

Modelling for the lesser Category 2 radioactive sources also shows potential for a large amount of damage, particularly if the radioactive source is manipulated (by grinding or dissolving in acid/alkali) to ensure ease of spread and contamination.

Desired Objectives

To ensure that Category 1 and 2 radioactive sources are exported to persons lawfully entitled to receive them for legitimate purposes.

Possible Options

1.      Maintain the status quo.

2.      Self-regulation.

3.      Specific regulation.

 

Impact Analysis

The principal stakeholders in the problem, defined above, are potential exporters of Category 1 and 2 radioactive sources.  Potential exporters are likely to fall into three groups:  businesses that use Category 1 and 2 radioactive sources in their business activities (for example businesses using blood irradiators), business with specialist expertise in exporting radioactive sources on behalf of business that use such sources, government and private research businesses that use Category 1 and 2 radioactive sources as part of their research activities.  Based on available information, it estimated that the three groups total between 70-80 entities.  Given the long half-life of the nuclides likely to be exported, it is likely that individual entities using Category 1 or 2 radioactive sources would only export a source on an irregular basis.  For example, sterilisation plants using Cobalt 60 may only export spent sources every 8-10 years.

 

Government is also a stakeholder in the problem in terms of the administrative cost of administering the existing regulatory requirement that the radiation regulator be notified of the transfer (domestic or internationally).

 

Finally, the general community is also a stakeholder in the problem, given a most likely desire to minimise the risk of a radioactive source being acquired unlawfully in the course of export and being put to a malicious use.

 

 

Status Quo

This approach is, in effect, to do nothing and allow the continued export of Category 1 and 2 radioactive sources without any steps being taken to minimise the risk of misuse or diversion.

Compliance costs

The radiation control legislation in Australian jurisdictions requires a person wishing to transfer a source to notify the relevant radiation regulator.  Persons must also comply with the Australian Code of Practice on the Safety Transport of Radioactive Substances.  Otherwise, there is no industry or governmental framework governing the export of radioactive sources.

Administrative costs

The cost of a person wishing to export a Category 1 or 2 radioactive source, in the status quo, is principally made up of:

·        the cost of shipment (radioactive material requires special handling and packaging in accordance with the Code of Practice); and

·        customs agent fees.

Security consequences and community costs

The status quo is unlikely to be able to deter, detect or defeat attempts to unlawfully acquire Category 1 and 2 radioactive sources during export. As such, there are potentially serious consequences for people, property and the environment in the event of a malevolent use of a radioactive source under the status quo regulatory arrangements.

The Goiania incident can be used to estimate the economic and social consequences of the misuse of a single radioactive source.

International standing and consistency

Member States working with the IAEA have developed an international framework for the safety and security of radioactive sources.  This is the Code of Conduct on the Safety and Security of Radioactive Sources (2004).  The Code of Conduct requires the implementation of export controls on at least Category 1 and 2 radioactive sources.  In response to an IAEA general conference resolution in 2003, 78 Member States, including Australia, have written to the Director General of the IAEA indicating an intention to works towards implementing the guidance in the Code of Conduct.  The G8 supports the Code of Conduct and its Members are working towards its implementation within the next 12 months.  The Code of Conduct will provide the basis for a comprehensive international framework for the control of radioactive sources.  Australian Governments have agreed to implement the Code of Conduct as a matter of priority.

The original impetus for the Code of Conduct, when negotiations began in 1998, was safety.  Following the terrorist attacks of September 2001, security became a greater consideration in negotiations.  These considerations were based on factors such as illicit trafficking, the need for security based import and export controls and the necessity for improvements in physical protection of radioactive sources to address new threats.

The status quo will not allow Australian Governments to meet requirements in the Code of Conduct and thereby participate in the broader international security environment.  This raises the prospect of Australia becoming a ‘weakest link’ in the regional and international security environment.

Benefits

1.                  Persons wishing to export Category 1 and 2 radioactive sources are familiar with existing transfer related requirements under existing radiation protection legislation.

2.                  The status quo will not require significant modification to existing plant, business practices and regulatory approach.

3.                  The status quo allows persons exporting Category 1 and 2 radioactive sources to do at minimum cost and with the least regulatory burden.

 

Self-regulation

Industry self–regulation describes a regulatory system whereby it is industry participants who primarily determine the type of actions or procedures that constitute appropriate conduct.

Compliance costs

Under most self-regulatory regimes, compliance costs are likely to be reduced compared with having to operate under a specific regulatory regime for radioactive sources by firms developing a least-cost compliance approach.

However, in this instance, it is likely that any reduction in compliance cost could be offset, in part or in whole, by the need for firms to negotiate (risk of diversion and security) arrangements with the import authority in the importing State for the export of the Category 1 or 2 radioactive sources and to complete those arrangements to the satisfaction of the import authority in each instance when a radioactive source is exported.

Administration costs

Enforcement of non-Government security standards will be through industry or firm level sanctions and private legal proceedings seeking damages and other remedies in the event that firms do not take appropriate steps to ensure the secure export of Category 1 and 2 radioactive sources.

 

Self-regulation may involve transitionary administrative costs to Australian Governments such as amending laws and administrative practices to accommodate the self-regulation approach.

Security consequences and community costs

It is expected that the risk of a radioactive source being acquired for malevolent use would be higher under a self-regulation model than under a fully regulated one.  This lack of co‑ordinated control could be detrimental to the public, property and environment in the event of an incident involving the malevolent use of a radioactive source.  Further details of the costs of a potential incident are included in the section above discussing the Goiania incident.

There is also a concern that export security outcomes will not be supported because of the existence of information asymmetries in a self-regulatory environment.  Several types of industry with different sized firms use Category 1 and 2 radioactive sources.  As such, there may be a lack of homogeneity across the ‘entire industry’ and this could lead to a lack of a consistent approach thereby reducing the effectiveness of the export control and creating confusion and uncertainty in firms.  As a result, the public expectations are unlikely to be met with self-regulation.  Self-regulation would not satisfy those concerns that security concerns had been adequately addressed by ‘industry’.

An export control standard would need to be set by industry in a self-regulation model.  The setting of these standards could be affected by commercial interests and could be subject to change without a rigorous process.  This could result in Australia becoming a ‘weakest link’ for acquisition of radioactive sources for malevolent use.

These factors combined, lead to a conclusion that the export of radioactive sources is likely to be compromised under self-regulation thus resulting in an unpredictable cost to government and the public, and the potential for an increased number and severity of incidents involving the malevolent use of radioactive sources.

International standing and consistency

An outline of information and issues related to international standing and consistency is provided above.

Self-regulation will not allow Australian Governments to meet the requirements in the Code of Conduct and thereby participate in the broader international security environment.  This raises the prospect of Australia becoming a ‘weakest link’ in the regional and international security environment.

Benefits

For many firms, self-regulation would mean that they would have, and would also exercise, the opportunity to reduce their expenditure on activities related to the export of Category 1 and 2 radioactive sources.

Government agencies administering border monitoring and export controls would have the opportunity to reduce their expenditure on activities related to the export of Category 1 and 2 radioactive sources.

 

Specific regulation

The third option involves the amendment of the Customs (Prohibited Exports) Regulations 1958 to require a person wishing to export a Category 1 or 2 radioactive source to obtain the prior written permission of the Minister for Health and Ageing or their duly authorised officer.

Compliance costs

A person wishing to export a Category 1 or 2 radioactive source will need to complete an application form seeking permission to export the source and submit it to the Commonwealth radiation regulator (as the agency with the staff duly authorised by the Minister).  The application form will seek export related information, for example details of the customs agent, nature of the source to be exported, intended recipient, licensing details for both the applicant and the recipient and the port of export.  Given that the export is one aspect of a commercial transaction, it is expected that the applicant would have at hand all the information required by the form other than the licensing details of the intended recipient, which it could obtain from the recipient.

The cost of completing the application form is calculated at $45 based on a time of 30 minutes taken to complete the application and to answer any enquiries from the regulator and a salary cost of $90/hr (including oncost).  As previously indicated, based on the available information, it is estimated that between 20-25 Category 1 and 2 radioactive sources will be exported each year.  It is possible that between 20-25 separate entities may each apply to export a single Category 1 or 2 radioactive source.  If an entity wished to export more than one source in a year, it could apply for permission to allow all exports of that type of source for a twelve month period. It should also be noted that businesses less experienced in export may utilise the services of a business with specialist expertise in exporting radioactive sources to facilitate the export.  If this were the case, it is expected that the cost of completing the application form would be reduced given the business’s accumulated knowledge and know-how in relation to the form.  

 

As with the self-regulation model, businesses would incur a small cost in familiarising themselves with the new export approval process including the application form.  It is unlikely that the new export control will be so complex that staff of businesses would require specialised training.

 

Administration costs

The cost of administering the specific regulations would be incurred by the radiation regulator.  An estimated cost of assessing the application for permission is calculated at $45 based on 20 minutes to review the application and 10 minutes clarifying it with applicant at a salary cost of $90/hr (including oncost).

 

It is expected that the government agency administering the specific regulations would incur a small cost in preparing and publishing guidance to potential exporters on the operation of the new export control.

Dynamic costs

Specific regulations would restrict the opportunity available to firms to reduce their expenditure through adopting the most advantageous and cost effective procedures.

Security benefits

It is expected that the risk of a radioactive source being acquired for malevolent use would be significantly reduced under a specific regulations model than under the status quo or the self-regulation model, principally because exports would be subject to continuous oversight/monitoring by Australian and foreign Government agencies involved in international transfers.  This co‑ordinated control would reduce the risk of detriment to the public, property and environment in the event of an incident involving the malevolent use of a radioactive source.

These factors combined, lead to a conclusion that the export of radioactive sources is significantly less likely to be compromised under the specific regulations model thus resulting in more predictable costs to government and the public, and a reduction in the likelihood of incidents involving the malevolent use of radioactive sources.

International standing and consistency

An outline of information and issues related to international standing and consistency is provided above.

The specific regulations model will allow the Australian Government to meet the requirements of the Code of Conduct and thereby participate in the broader international security environment.  The specific regulations model reduces the prospect of Australia becoming a ‘weakest link’ in the regional and international security environment.

Consultation

A sample of businesses in each of the groups identified as stakeholders were consulted in relation to the problem.  Users of radioactive sources recognised the need to ensure that sources being exported did not fall into the hands of criminals or terrorist.  However, the group emphasised that any solution to the problem should add as little burden to business as possible.  Businesses with specialist expertise in shipping radioactive sources expressed similar views to the ‘users’ group about the potential misuse of the sources.  One business in fact indicated that it had, as a standard practice, undertaken licensing checks with the Australian radiation regulator and the regulator in the importing country before agreeing to ship a source.  Businesses in this group expected that either the self-regulation or specific regulations model would impose some moderate additional burden on business, however, this additional burden was justified.  Radiation regulators expressed a view that exports remained the uncontrolled link from the time a source left a domestic regulator’s jurisdiction to the time it was received in the jurisdiction of the importing country’s radiation regulator.  One regulator recalled an example where several sources intended to be exported had left its jurisdiction but had subsequently been found, approximately 6 weeks later, in temporary storage ‘airside’ at an airport without its existence having been notified to the relevant local radiation regulator.

Conclusions

The status quo does not resolve the problem.  The self-regulation model may reduce the risk of a radiological incident to some degree, however, this reduction is undermined by the degree of uncertainty in uniform application and the driver of commercial interest.  The specific regulations model is the only option that resolves the problem.  It also provides the greatest reduction in the risk of a Category 1 or 2 radioactive source being unlawfully acquired by a person for a malicious purposes.  The specific regulations model requires the exporter and the administrative agency to incur a small cost (particularly in comparison to the initial cost of the source ($10,000-30,000).

 

Implementation and Review

It is proposed that the specific regulations model be implemented by the making of regulations to amend the Customs (Prohibited Exports) Regulations 1958 to insert a prohibition on the export of Category 1 and 2 radioactive sources without the prior written permission of the Minister for Health and Ageing or their authorised officer. The regulations would allow the Minister or the authorised officer to assess an application for permission in accordance with Australia’s international obligations. 

 

ARPANSA has already written to known exporters and radiation regulators informing them of the possibility of a new export control and seeking contact details of other potential exporters.  It has also given a presentation covering the topic at the annual conference of the peak industry body, the Australian Radiation Protection Society.  ARPANSA will follow-up this activity with a series of advertisements in a nationally circulating daily newspaper.

 

The effectiveness of the proposal will be gauged principally by (a) potential exporter awareness of the new export control and (b) the number of sources passing the Collector (customs barrier) without the appropriate permission.


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