SUMMARY

  In general, CIA has good working relationships with the Environment Agency, but improvements are needed at the strategic level.

  The structure of the Agency has not yet bedded down in an efficient way and steps need to be taken to provide clear communication routes for the major regulated sectors.

  We believe that there is scope for improvement in the Agency's methods of operation, including early consultation on new initiatives and co-operation with other agencies.

  The new Pollution Inventory offers the prospect of providing high quality information on the environmental performance of the regulated industries.

  Our Members want to see the Agency adopt a transparent and proportionate approach to charging, and pay due regard to operating efficiently to minimise the charges.

  We recognise the Agency's desire, partly under political pressure, to demonstrate that it is a tough regulator, but there are dangers that, if clumsily handled, this could prejudice constructive relationships with operators.

RELATIONSHIPS

  CIA office staff and member companies have dealings with the Agency on a range of activities, including IPC, water protection and waste management, but the key activity is IPC, soon to become IPPC.

  Day to day working relationships between CIA and the Agency at executive level are good on the whole although from time to time specific issues have created tension. It is recognised that better liaison is needed at the strategic level.

  Relationships between individual member companies and their inspectors vary from very good to very poor. There is some inconsistency in the quality and experience of inspectors and in their approach to implementing regulations in the field. This is not helped when, for whatever reasons, local inspectors are frequently changed. In specific cases, lack of knowledge and understanding by the local inspector of the operator's particular type of business can put strains on the relationship.

  We believe that successful operation of the IPC regime requires an open constructive dialogue between the regulators and the operators.

STRUCTURE OF THE EA

  In contrast to the position on health and safety, where we have just seen the 25th anniversary of the Health and Safety at Work Act, the regulatory framework on environmental protection is still evolving and the Environment Agency was formed just over three years ago.

  The EA was established in April 1996 from the former HMIP, NRA and WRAs. There was (and still is) widespread business support for a single environmental regulator, but it was recognised that it would be a major challenge to combine the former bodies, which were very different in size, expertise and culture. The consolidation process has been difficult, and is not yet fully complete, but throughout the process the EA succeeded to a large extent in keeping its front-line dealings with our members on an even keel.

  In general, we would observe that the Agency is still struggling to reconcile and fulfil effectively its roles as regulator, provider of flood defence, conservator and educator. A recent CBI survey of its member companies highlighted a lack of "functional integration" within the Agency, that is, the different parts of the structure are not seen as working effectively together. We would not disagree with this and would add that the existing complex structure makes it difficult to know who to talk to in the central functions on a particular issue and, perhaps more important, who can speak with authority for the Agency.

  For operational activities, the Agency is organised on a regional/area basis, with boundaries defined largely by water catchment areas. This approach is entirely logical but we would observe that there are major differences between the various functions that the Agency discharges (IPC, water quality, waste management, flood defence, etc) and that a "one size fits all" approach to structuring the activities is not calculated to yield optimum results. As an example of this we have argued strongly, with only partial success, that operational activities on IPC/IPPC require highly trained and experienced inspectors and that the functions of authorisation and enforcement should be combined.

  Many of our member companies deal with the Agency on IPC, water quality and waste. Their comments to CIA suggest that there are still problems in dealing efficiently with the Agency on water quality and, even more so, on waste, where difficulties are caused by the separation of licensing and enforcement and the overlapping of responsibilities for the regulation of trans-frontier shipments of waste. An added difficulty in waste is that some of the differences in approach which existed between the former WRAs are still apparent within the Agency's regions and areas.

  For policy activities, the Agency has a confusing mix of HQ policy units, national services and national centres which we believe is not conducive to effectiveness, and which some of our members see as unstable. We understand that steps are being taken to provide a measure of co-ordination and a "first stop shop" for major regulated sectors such as the chemical industry, and we welcome this very much.

  We are concerned that too much effort is being spent on policy, strategy and organisational development at the expense of basic issues. For example, the recent issue of expired time-limited waste management licences should never have been allowed to develop.

METHODS OF OPERATION

  One factor that needs to be borne in mind in relation to the Agency's methods of operation is that much of the responsibility for environmental policy development and adoption rests with the DETR.

  We believe there is scope for improvement in the Agency's methods of operation, particularly in having early consultations with industry on new initiatives and in informing process operators of new demands being placed on them. Our general experience is that, when the Agency takes action without prior consultation, it results in the operator taking an adversarial rather than a co-operative approach.

  There is a need for better co-ordination and communication between the national units and Regional/Area personnel. There have been occasions where inspectors in the field have not been properly briefed on a decision made at national level. We are also concerned about the practice of guidance being developed in different regions on the same issues, which leads to inconsistency in timing and application and lack of central agreement on approach.

  One of the strengths of IPC was its implementation by well qualified and experienced inspectors. We have argued for the continuation of this and the need for authorisations and inspections to be carried out by inspectors with a high level of expertise and experience. We are concerned that the stock of highly motivated and experienced professionals in the Agency appears to be being eroded by factors which include poor pay and prospects.

  Our members value the risk-based and goals-based approaches to regulation adopted by the HSC/E and we welcome moves by the Agency to determine how much of this approach can be applied to environmental protection. Our members have concerns about the application of "scoring" systems. While we recognise the need for the Agency to employ systems for targeting and assessment, we are wary of over-simplified systems which may not be able to accommodate the complexity of many operations. Similarly, a "check-list" approach gives easily reported performance data, but does not necessarily result in improved environmental performance.

  We are aware of a number of difficulties experienced in the nuclear sector. These involve delays in the process of issuing authorisations or variations under the Radioactive Substances Act, as well as legal justification requirements, which have led to business uncertainty and delays in new plants.

  We believe that there is a great deal of scope for improved working arrangements between the Agency, SEPA and HSE to ensure efficient use of resources and minimise the burden on operators. The UK implementation of the EU Directives on COMAH and IPPC presents opportunities for:

—  rationalisation of the data required from operators on Safety Reports and IPPC Authorisations.

—  acceptance of the work done on authorisations and inspections by other regulators.

—  co-ordination of inspections.

  We also see scope for better co-ordination between the Agency and Local Authorities to ensure consistency of approach.

  A further dimension is the extent to which the implementation of environmental management systems within industry could reduce the requirement for traditional inspection by the Agency.

  The CBI Survey referred to above provided some interesting comments on the perceived differences between the Agency and SEPA. In general, SEPA was seen as more constructive and pragmatic, and more disposed to take the costs and benefits of an action into account.

ACHIEVEMENTS

  We believe that the principal function of the Agency is to achieve and demonstrate improvements in environmental performance by the sectors it regulates.

  There is limited good quality information available to demonstrate how performance has changed over time. One of the Agency's predecessor bodies, the HMIP, attempted to do this by introducing the CRI, but this had several major faults and provided a limited amount of meaningful information. The Agency recently launched its Pollution Inventory (PI) which has a sounder basis than the CRI and offers the prospect of becoming a very useful source of information for the Agency, the regulated industries and other stakeholders.

  The information that is available for emissions of individual pollutants generally shows that significant reductions have been achieved during the 1990s.

  CIA and, we believe, the Agency are keen to ensure that it is generally recognised that the PI does not include all significant sources of pollution and that the PI data have to be seen in context.

  To maintain and improve environmental performance requires an effective partnership between the Agency and the regulated industries, and a combination of approaches. For the chemical sector, we see the industry's Responsible Care programme for continual performance improvement as playing a vital part alongside regulation in securing reductions in emissions and waste.

CHARGING

  The Agency has various charging schemes, usually based on cost-recovery; the most important of these for the chemical industry is the scheme for charging for IPC authorisation and enforcement.

  After a great deal of initial argument and discussion, the IPC charging scheme has settled down into a regime that is just about tolerated by our members. Over the last two years, however, increases of ca 15 per cent per year have been imposed which caused widespread anger and raised some fundamental questions that need to be addressed, principally relating to what costs can legitimately be included in cost-recovery charging.

  At the launch of the Agency, and subsequently, the Chief Executive made much of the fact that the head office share of total costs would be kept very low, ca 5 per cent. However, IPC charging is based on a daily rate for an Inspector in which the direct costs represent under 40 per cent of the total, the remainder being split between national/regional/area support services (45 per cent) and head office (15 per cent). To our members, who are under constant competitive pressure to reduce costs and increase efficiency, this kind of cost build up raises questions about management and control within the Agency. The latest proposals for a 20 per cent increase in charges to reflect the additional work required under IPPC have added to our concerns about cost recovery and the efficiency of the Agency. We believe that such an increase goes well beyond what would reasonably be expected from an efficient, cost recovery regime and that the Agency is in danger of losing credibility with the operators by such action. Much greater transparency is required in the Agency's calculations for charging rates to demonstrate that operators are being treated fairly.

  The imposition of charges goes hand in hand with an expectation that the Agency will operate to high levels of efficiency in their dealings with operators. Our members are not prepared to pay for the inefficiencies of the regulators. There is an obligation on the Agency to be prepared to demonstrate that it is acting prudently and efficiently in its management and operation of authorisation, inspection and monitoring activities. For example, we recognise the opportunity for the Agency to make efficiencies from avoiding duplication of common requirements of COMAH and IPC (IPPC). We would also wish the Agency to demonstrate that the procedures for hiring consultants are effective and ensure value for money.

ENFORCEMENT

  Our members can support an approach to environmental regulation enforcement which targets bad actors and comes down heavily on unacceptable performance.

  However, we have major concerns about the Agency's recently-adopted aim (partly self-adopted, partly pushed by the Environment Minister) to demonstrate that it is a tough regulator. If clumsily handled—and we believe the Agency has been clumsy in some of the things it has done in recent months—this can prejudice the constructive relationships with operators that are essential for performance improvement. We regarded some of the Agency's high profile activities in the early months of this year, and, in particular, the "Hall of Shame" press release, as unfair and they were in danger of causing unhelpful reactions by our members. We believe it is essential that any action taken by the Agency to demonstrate its toughness is proportionate to the situation, and that high profile activities are based on accurate information and an even-handed approach. For example, we believe the Agency should report success stories and give credit to good performers as well as publicise prosecutions, fines and poor performance. The Agency did this to good effect at the launch of the Pollution Inventory and we would like to see more of it.

October 1999