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Paper 7: Criteria and Processes for Various Approvals

Managing Food Safety and Suitability in New Zealand
DOMESTIC FOOD REVIEW

June 2005

1 Introduction

This is Paper 7 in a Review of government involvement in the domestic food sector.

The Review is a significant long-term project that is likely to run over at least five years. Its purpose is to create a food regulatory programme, across all sectors of New Zealand’s domestic food industry, that promotes and delivers safe and suitable food in New Zealand.

This is only the second time in the last 30 years that the government’s role in the New Zealand domestic food sector has been critically examined at official level. The last review was in the late 1980s, and led to the Food Amendment Act 1996 and eventually the establishment of the New Zealand Food Safety Authority (NZFSA).

This Paper examines the need for the regulator to grant various approvals. For the purposes of this Paper, the term ‘approve’:

• incorporates, for example, ‘recognise’, ‘accredit’, ‘list’, ‘register’ and ‘license’

• may apply to any part of the food production-to-consumption continuum in New Zealand, including, but not limited to, compounds, documents, equipment, persons, premises and systems.

This Paper:

• proposes that approvals should only be mandatory when particular criteria are met

• discusses the legislative and administrative processes that should be put in place to establish approvals

• outlines how the proposed criteria and principles could be applied to laboratories.

The first set of Papers in this first series, published in 2004, were:

• Paper 1: Context

• Paper 2: Regulatory roles, responsibilities and structures

• Paper 3: Food Control Plans

• Paper 4: Implementation of Food Control Plans

• Paper 5: Principles and proposed mechanisms for cost recovery.

The second set of Papers, published in 2005, are:

• Paper 6: Compliance and Sanctions: Criteria and tools for the future

• Paper 7: Criteria and processes for various approvals

After public consultation on all the Papers, NZFSA will analyse submissions and provide policy advice to the Government.

Submissions are sought from interested people and organisations and will be accepted in any format. The closing date for submissions is 30^th August 2005

Submissions should be sent to:

Submissions – Domestic Food Review

c/o Policy Group

New Zealand Food Safety Authority

PO Box 2835

WELLINGTON

Fax: (04) 463 2501

Email: dfrsubmissions@nzfsa.govt.nz

The paper will be available on the NZFSA website (www.nzfsa.govt.nz/policy-law/projects/domestic-food-review/index.htm). Following analysis of submissions, a summary of issues raised will be made available on the website.

All submissions are subject to the Official Information Act 1982, which specifies that information is to be available unless there are grounds for withholding it. If you wish your submission or any part of it to be withheld, please indicate the grounds in the Official Information Act that apply. NZFSA will take your request into account when determining whether or not to release information. Please note that any decision by NZFSA to withhold information is reviewable by the Ombudsman.

2 Executive Summary

This Paper examines the need for legislation to enable the regulator to approve compounds, documents, equipment, persons, premises and systems used in connection with the production and processing of food in New Zealand.

This Paper concludes that an approvals system is justified within certain constraints (outlined below).

The objective for an approvals system is ‘to enhance the safety and suitability of food in New Zealand while encouraging innovation, diversity and competition’.

The regulator should have the legal backing to require approval of compounds, documents, equipment, persons, premises and/or systems:

• when justified according to specified criteria, including that the approval addresses an identified food safety or suitability risk and builds credibility and confidence in the food supply

• using administrative tools that ensure the approval system is efficient and can be clearly understood.

This Paper does not cover the approval processes for proposed Food Control Plans and external verifiers of those Plans, as these were addressed in Paper 4: Implementation of Food Control Plans.

The rules and procedures for an approval system should enable approvals to be:

• time-bound

• subject to conditions

• surrendered, suspended or withdrawn when appropriate

• subject to cost-recovery

• subject to review and appeal.

Approval systems should be published (via a website), and enable the clear identification of what items have been approved by the regulator.

Application of the proposed criteria and the approval processes to existing approvals should enable duplication to be removed from the current approval systems.

This paper outlines how the proposed criteria and principles could be applied to laboratories.

3 Purpose of the Paper

The regulator (primarily NZFSA) currently issues approvals for various aspects of food production and processing in New Zealand, but these requirements are characterised by a lack of legislative coherence and consistency.

The following is the objective for a regulatory approval system: ‘to enhance the safety and suitability of food in New Zealand while encouraging innovation, diversity and competition’.

The purpose of this paper is to establish whether an approvals system is justified as part of New Zealand’s food safety system and, if so, to:

• identify the criteria that would be used to ensure that any required approvals are justified

• establish a framework for the legislative and administrative processes for such a system.

As the criteria and processes identified in this paper are applied over time, a consistent and harmonised approvals system across food legislation will emerge. This should result in the eventual removal of any unnecessary duplication and thus improved regulatory efficiency across the food legislation system.

It is also proposed that the regulator will review all existing approvals against the criteria of any new approvals system. This would ensure that duplication is removed and that, as far as possible, there is one system and a single point of entry for approvals. It is acknowledged that in practice this ideal may not be reached in the short to medium term, and some existing anomalies may remain until relevant legislative changes are developed and implemented.

As a case study, this paper also proposes how the new criteria and principles could be applied to laboratories.

4 Scope

4.1 Inclusions

This Paper extends to the criteria and processes needed to administer the regulator’s approvals. ‘Approve’ is used generically to incorporate, for example, ‘recognise’, ‘accredit’, ‘list’, ‘register’ and ‘license’. Under the regulatory systems currently administered by NZFSA (and the associated Acts, regulations and standards) approvals have been required for:

a. compounds such as cleaning chemicals used by food processors, or agricultural compounds and veterinary medicines

b. documents such as laboratory methods and Codes of Practice

c. equipment such as dishwashers, chopping boards and food packaging

d. persons such as laboratory signatories, trainers and certified suppliers of game

e. premises such as dairy factories, stores and laboratories

f. systems such as identification systems.

4.2 Exclusions

This Paper does not discuss the processes for registering proposed Food Control Plans, nor the recognition of persons or agencies who might evaluate or verify Food Control Plans. These matters were covered in Paper 4: Implementation of Food Control Plans.

It does not cover requirements for export approvals. Further consideration will be needed on whether it is possible to better harmonise the approval systems for domestic and exported foods.

It does not cover any matters associated with government staff, such as appointments, statutory powers or delegations.

5 Background

This Paper arises from the need to extend consideration of the ideas and concepts in Paper 4 (which dealt primarily with proposals around Food Control Plans) to a broader range of ‘approvals’. For example, the issue of whether approvals should focus on laboratory personnel, laboratory methodologies or accreditation of laboratories themselves needs to be reviewed, and a consistent approach for the future decided upon.

It is recognised that a consistent approach to approvals is not currently applied. The types of approval and the justification for them is currently inconsistent. There is also a measure of unnecessary and inefficient duplication in databases and administrative systems. As a result, and by way of example, some food businesses have aspects of their business approved by different groups within NZFSA, each with different requirements.

It is expected that the new approval process will bring together the best of the existing systems, remove unnecessary elements and, for some businesses, should appear similar to what already applies.

6 Are Approvals Necessary?

An ‘approval’ is recognition by the regulator that the relevant compound, document, equipment, person, premises or system has met all regulatory requirements at the time of the approval.

The primary objective of approvals on safety and/or suitability grounds is to ensure that substances do not contaminate or generate unacceptable residues in food. Associated objectives, such as to meet international requirements and support biosecurity, animal safety and welfare, and disease control; may also need to be considered, depending on the relevant point in the production to consumption continuum.

Many reasons are put forward for using approvals as the preferred regulatory intervention to achieve those objectives. These can be summarised as follows:

• Unique methodologies: It may be most efficient for the regulator to set an acceptable methodology or methodologies where there are a limited number of ways of doing a specific task.

• Standard methodologies: Setting approved methods in law can create confidence about food safety among third parties.

• Costs: It may be expedient to ensure that businesses do not individually have to assess products and service providers to ensure that standards are met – for example, approving a model of dishwasher for particular uses, rather than assessing every dishwasher individually on site.

These points, though not exhaustive, provide compelling justification in principle to enable approvals in the future domestic food regulatory regime.

However, there may be negative aspects of an approvals process. For example, an approval can lead to a false sense of security. An approval is not a product endorsement. The benefits of approvals are also at least partly offset by costs, including:

• the direct costs of compliance

• potential constraints on commercial activity

• the administrative costs of developing and maintaining approvals.

Approvals can be viewed as interventions by the regulator that focus on inputs. Thus an approval imputes a status or condition at a particular time or at a stage or point in production or processing.

An alternative approach is for the regulator to focus instead on outcomes, by requiring that an appropriate standard is met and then verifying compliance with the standard. In some areas this second approach provides operators more choice in how to achieve the required standard, and is often more efficient because it may promote greater innovation, competition and product differentiation. For example, there are no New Zealand regulator approvals of packaging for animal products, but operators are required to use only packaging that meets the relevant United States or Australian standards.

Some approvals have already ceased where they have not been targeted to deliver the intended outcome. For example, some premises’ approvals have been replaced by process plan approvals because the risk-management concern was about processes, not bricks and mortar. The need to rationalise approval systems along these lines is recognised.

Approvals Criteria and Process Principle 1:

The regulator should have the legal authority to require approvals of certain compounds, documents, equipment, persons, premises and systems: • when justified according to specified criteria, including that the approval addresses an identified food safety or suitability risk and builds credibility and confidence in the food supply • using administrative tools that ensure the approvals system is efficient and can be clearly understood.

In addition to removing existing duplication, it is also necessary to ensure that unnecessary duplication of approval systems is avoided in the future. The aim is both to consolidate existing systems and to prevent the development or implementation of new systems that overlap unnecessarily or are inconsistent with existing ones.

Approvals Criteria and Process Principle 2:

The regulator should avoid unnecessary duplication of approval systems.

7 Criteria for Approvals

This section presents general criteria that are proposed to govern all approvals and the approval system of compounds, documents, equipment, people, premises and systems. The Appendix contains specific information on laboratories.

Proposed Criterion 1: The approval provides or improves credibility of and confidence in the food supply because one or more of the following apply:

a. The approval covers matters that relate directly to food safety and suitability, and thus relates materially to whether the resulting products are fit for their intended purpose.

b. Any applicable technical standards and performance criteria can be consistently met by the approved things or persons if installed, operated and maintained properly (i.e. without continuing direct oversight from the regulator).

c. The approval contributes to the relevant process checks (testing or analysis, for example) being more comparable, reliable and defensible (i.e. able to withstand technical scrutiny and challenge) than otherwise.

d. The approval contributes materially to ensuring that persons performing critical activities are competent.

e. The approval contributes to industry standardisation that materially enhances food safety and suitability.

f. The approval is consistent with applicable domestic and/or international standards.

g. Performance against the relevant approval standard is a platform for fostering continuous improvement.

Proposed Criterion 2: The approval improves efficiency because one or more of the following apply:

a. The relevant approval will be applied widely, so it will save compliance costs by reducing the need for multiple approvals under multiple regulatory regimes (i.e. the system provides a one-stop shop).

b. Consistency or standardisation will be increased across industry sectors.

Proposed Criterion 3: The approval is clear and delivers transparency because one or more of the following apply:

a. It ensures system accountability.

b. It aids clarity of requirements, standards and criteria and thereby improves industry understanding.

The Appendix contains specific information on laboratories.

8 Legislative Processes for Approvals

8.1 Processes for approvals

The basic framework for the approvals procedure is expected to include the following:

• An application is made in the appropriate form (or the approval is initiated by the regulator).

• Additional information may be sought and will need to be provided within a specified time.

• Approvals are time-bound. In determining how long an approval will be valid, the regulator will consider the rate of industry and technical change, and the relevant food safety and suitability risks. It may sometimes be necessary to determine what magnitude of change is acceptable before a new approval is needed.

• Approvals may be subject to conditions.

• There will be provision for usual administrative components such as approval, surrender, suspension, withdrawal, review and appeal.

• Fees will recover costs of processing an application, but where an approval requires a unique assessment a separate fee (likely based on an hourly rate) may apply.

It is also intended that a generic appeal and review process will be available where an approval is declined.¹ The key elements of such a system would be:

• The review is undertaken by the Director-General or by a delegated person who was not involved in the original decision.

• The application for a review must be in writing, state the grounds for the review, and be lodged within a specific time period.

• The review must be concluded within a specific time period, and the applicant will be notified in writing of the outcome and the reasons for the decision.

• If additional information is requested from the applicant, reasonable time taken to respond is not included in the time allowed for completion of the review.

• The original decision remains in force unless and until it is altered or ruled invalid.

• The decision of the review is final, unless determined otherwise by a court of law.

Primary legislation (i.e., Acts, not regulations) will provide the principles and mechanisms for cost recovery. Regulations will detail who will pay, what mechanisms of cost recovery will be employed, and the level of any fees, charges or levies.

It is not likely that approvals granted to food businesses will be subject to a specified verification process as part of the approval itself. Rather, approvals would be reviewed during other verification – for example, when a premises with a proposed Food Control Plan is being verified.

Approvals Criteria and Process Principle 3:

Approvals should be time-bound; may be subject to conditions; may be surrendered, suspended or withdrawn with proper cause; will be subject to cost-recovery; and decisions may be subject to review and appeal.

8.2 Publication of Approvals

It is intended that the regulator will publicise approvals. It is proposed this would be through a web-based ‘public approvals register’ that complies with the Privacy Act 1993. The purposes of the register would be specified in the legislation, along the lines of the following:

a. To enable food businesses and members of the public to know what approvals have been issued.

b. As appropriate, to enable food businesses and members of the public to know how to contact the persons to whom an approval has been issued.

c. To enable the Director-General to ensure that all domestically traded foods are safe and suitable, and in particular to manage any emergency situation.

d. To facilitate the compliance, audit and other supporting and administrative functions of the regulator under the legislation.

As a web-based register, this would allow ease of reference for most businesses. In addition, the public approvals register would be open for public inspection, without fee, during business hours. It is expected that the public approvals register would contain sufficient details to clearly identify what has been approved, along with the name, contact details, and physical location of the relevant business.

Approvals Criteria and Process Principle 4:

Regulator approval systems should be published (via a website) and enable the clear identification of what items have been approved by the regulator.

9 Conclusion

This paper discusses the approvals systems for compounds, documents, equipment, persons, premises and systems that might be a feature of the New Zealand food regulatory programme.

It questions the need for approvals, discusses criteria that might in future ensure consistency around systems and proposes legislative processes for approvals.

The paper sets out four principles covering these aspects. Comments are particularly invited on the criteria and principles as well as aspects of an approvals system generally.

10 Appendix: Proposed Treatment of Laboratories

This appendix describes the various laboratory testing regimes across the food sector, analyses the differences among the regimes, and proposes a more consistent and harmonised approach for the future, based on the principles and criteria set out in this paper.

A.1 Background on laboratories

Laboratories conduct a wide range of testing activities across the food sector, and vary in size and composition. Most laboratories are situated on a permanent site, but others are mobile (‘suitcase laboratories’) or share space with unrelated activities.

Laboratories’ testing activities produce data on physical, chemical and/or microbiological parameters. These are evidence that enables judgements to be made about the fitness for purpose of the relevant material or product, and also about the performance and effectiveness of the respective regulatory regime.

A key function of the regulator is to ensure that laboratories are suitable for their intended function and that individuals who work in them are competent to perform specified tasks or undertake specified activities. Currently the New Zealand Food Safety Authority (NZFSA) works toward this result by setting regulations or standards for the recognition of laboratories under regulatory regimes based on four separate Acts: the Food Act 1981, the Animal Products Act 1999, the Dairy Industry Act 1952, and the Agricultural Compounds and Veterinary Medicines Act 1997.

The following discusses the variety of approaches to laboratory recognition under these four regimes.

The Food Act 1981

There is no legislated laboratory recognition system under the Food Act. It does provide for appointing analysts and for prescribing test methods under the Act or regulations, and prescribes how official sampling is to occur. Institute of Environmental Science and Research Ltd (ESR) is the main service provider of laboratory testing for official purposes. It is accredited by International Accreditation New Zealand (IANZ) to ISO 17025 for food product testing and ISO 15189 for clinical specimen testing.

Imported consignments of high-risk foods are routinely subject to analysis prior to release. Sampling is conducted by officers appointed under the Food Act to ensure integrity. ESR provides most of the laboratory testing, with some provided by third-party laboratories accredited to ISO 17025 for the relevant analysis. Approval criteria are method-specific, meaning that certain laboratories are approved only to perform certain analyses using prescribed methods.

The Animal Products Act 1999

Laboratory Approval Scheme

The Laboratory Approval Scheme (LAS), previously known as MILAB, is provided for under the Animal Products Act 1999. The scheme specifies performance standards and other requirements for laboratories that perform microbiological, chemical and other specified laboratory testing. The main components of LAS include:

• periodic assessment of laboratories’ compliance with ISO 17025 by IANZ

• an Inter-Laboratory Comparison Programme that enables ‘like’ laboratories to compare their performance

• training and recognition of sample collectors

• accreditation of persons to perform specific tests.

Fish and Shellfish

Laboratory requirements for seafood analysis are expected to come under LAS in late 2005. This is important in terms of European Union market access, and also demonstrates that LAS is adaptable to other sectors.

The Dairy Industry Act 1952

Dairy Standards set out requirements for registration and performance-based assessment of laboratories (which includes a requirement to maintain ISO 17025 accreditation), as well as specifying requirements and procedures for the approval of test methods.

In order to be registered by NZFSA Dairy, laboratories must be regularly assessed against those Standards by an accreditation body.

The frequency of assessments for accreditation purposes is based on the laboratory’s overall performance as determined by criteria in a NZFSA Dairy Standard. The accreditation body recommends the frequency of assessment to NZFSA Dairy.

NZFSA Dairy maintains registers of both approved dairy test methods and registered dairy laboratories.

Additionally, the NZFSA Compliance and Investigation Group carries out systems audits of the dairy laboratory regulatory programme.

The Agricultural Compounds and Veterinary Medicines Act 1997

The Agricultural Compounds and Veterinary Medicines (ACVM) group in NZFSA processes applications for registration of agricultural compounds and veterinary medicines. Applications are almost always supported by analytical data. Such data is preferably obtained from laboratories that are accredited to meet the Organisation for Economic Co-operation and Development (OECD) Principles for Good Laboratory Practice (GLP), or that operate under comparable quality systems.

A.2 Consistencies and differences

ISO17025 accreditation

NZFSA considers that ISO 17025 contains the vital elements to provide confidence that laboratories are operating appropriately. The export food laboratory recognition programmes require IANZ accreditation of laboratories to ISO 17025. All laboratories conducting testing as part of a condition for export of other animal products destined for the European market should become LAS-approved and thus ISO 17025-accredited. ISO 17025 accreditation is also a feature of NZFSA’s approval of laboratories for animal and dairy products and for the listeria monitoring programme for defined fish products.

Approval of laboratory and persons within the laboratory

A key point of difference within the (primary) food production sector is that some regulatory requirements apply to the person performing the laboratory test or the sampler, while others apply more generally to the laboratory itself. The different approaches are based on sector-specific historical reasons.

Sampling and test methods

If there is a need to specify sampling and test methods, it is important that the regulator has a means to do so. Currently, sampling requirements vary from highly prescriptive and detailed arrangements to no specifications at all (due to the simplicity of the sample collection). Sampling requirements need to be programme-specific, but there needs to be a basis for selecting a particular sampling regime. In addition, in some programmes it may be appropriate to specify competency requirements for the sampler.

The approval of laboratory test methods is variable across the food sector. A level of flexibility is required when developing a framework within which test methods can be approved. All export sector programmes and some domestic programmes have requirements for test methods. Where laboratory methods are part of agreed market access arrangements, the method requirements can be highly specific. In other cases, laboratories set their own methods provided they meet certain standards, such as a requirement to be IANZ-accredited according to NZFSA specifications or separately approved by the Director-General.

Consultation forums

Industry consultation forums are a feature of all laboratory regulations in the export food sector, and in many instances play a vital role in the development of standards and regulations. All current forums comprise key technical and industry representatives, but the configuration of these representatives varies across the sectors, ranging from an expert panel (animal products) and technical committee (dairy products), to a more formalised council (seafood). NZFSA recognises the need for consultation forums into the future, and acknowledges that more than one approach may be needed to deal with the wide variety of activities and issues that will need industry consultation.

NZFSA to assess overall systems’ compliance and suitability

The NZFSA Compliance and Investigation Group assesses overall systems’ compliance and suitability. While the regulator has a responsibility to ensure that laboratories perform in accordance with accreditation criteria, the Compliance and Investigation Group will not be used for this audit role.

Inter-Laboratory Comparison Programme

The Inter-Laboratory Comparison Programme (ILCP) provides participants with a valuable quality assurance mechanism that enables ‘like’ laboratories to compare performance by examining method accuracy. For some analytes or microbes an ILCP is not currently available and other methods of assessing proficiency should be evaluated.

A.3 Proposals

NZFSA considers that the integration of laboratories into a harmonised approvals system will be founded on the following key elements.

ISO17025 accreditation

1. It is proposed that accreditation be according to a relevant international standard (currently ISO 17025).

Approval of testing facility and persons within the laboratory

2. It is proposed that the regulator will determine whether to recognise the laboratory as an approved agency, or to recognise specific approved persons within the laboratory, or both.

3. It is proposed that NZFSA should list approved laboratories in a public register. This could contain test methods and ‘key technical persons’, as might be required for some sectors. In addition, IANZ maintains a public register of accredited laboratories.

Consultation forums

4. It is proposed that the regulator will continue to recognise the value of having consultation forums appropriate to the circumstances.

NZFSA to assess overall systems’ compliance and suitability

5. It is proposed that the auditing activities of the NZFSA Compliance and Investigation Group will continue to be used to assess overall systems’ compliance and suitability.

Inter-Laboratory Comparison Programme

6. It is proposed that participation in the Inter-Laboratory Comparison Programme be promoted where the Inter-Laboratory Comparison Programme is available.

¹ The appeal and review process set out in the Animal Products Act 1999 provides an example of the process that is proposed for the future (see http://www.nzfsa.govt.nz/animalproducts/legislation/apa/apa.pdf ).