Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Supplementary Memorandum by the Environment Agency (EA 62(c))

1.  INTRODUCTION

  The Environment Agency appeared before the Environment Sub-committee on 18 January 2000 and was asked to provide a further memorandum on the integration of environmental legislation. The Agency is also providing the Committee with supplementary information on some other areas covered during the oral evidence session, which may help the Committee with its final report.

2.  INTEGRATION OF ENVIRONMENTAL LEGISLATION

Integration

  The Agency inherited legislation for all its functions when it was established in April 1966 by the Environment Act 1995. Although the 1995 Act did provide some additional general powers and duties for the Agency, most of the existing legislation was transferred with only minimal consequential amendments. It was recognised at the time that the inherited functional legislation would need amendment in the light of experience of the integrated operation of the Agency.

  The additional duties placed on the Environment Agency under the Environment Act required three major new areas of policy delivery that were not explicitly required by its predecessors. These are:

    —  to make a contribution to Sustainable Development;

    —  to form opinions on the state of the environment;

    —  to take account of costs and benefits in its decisions.

  These were the first "new duties" to be faced by the Agency and in the next five years of its existence it will have had to deal with nearly 50 more new duties as shown in Annex 1. The prospect of this trend continuing, and even increasing, seems likely and will add to the wealth and complexity of existing environmental legislation.

  The first level of possible legislative reform requires the identification and amendment of all the areas of administrative machinery contained in the inherited and subsequent legislation. This legislation was essential when the legislation was being administered by the various separate predecessor organisations, but now means that the Agency has administrative requirements, which are duplicated and contain differences, which are historical or could be aligned. Unnecessary differences add complexity for the Agency and those it regulates, reduces efficiency and results in extra costs of administration, computer systems and training, which must fall on the public or private purse.

  For example, most of the inherited legislation requires the Agency to maintain a public register for the particular regime and all the provisions impose somewhat different requirements—the Agency only needs one set of provisions about maintaining a public register or, if differences are still required, these would be better imposed in secondary legislation. Again it ought to be possible to have one framework licensing system rather than different systems for each functional area. These legislative barriers to efficiency and effectiveness are the subject of the Department of the Environment, Transport and Regions' (DETR) Review of Legislation discussed below.

  The second level of possible reform would be a far reaching review of environmental law looking at the different approaches and philosophies of existing legislation and examining different methods and tools for achieving environmental change. An example of this would be to allow the Agency to regulate industries in a more flexible way on a sector or cross sector basis or companies on a company wide basis instead of or in addition to the existing site-specific basis. The review should utilise the experience of industry, academia, relevant professions, the Royal Commission on Environmental Pollution and Non-Government Organisations (NGOs) as well as the experience of the Environment Agency and Scottish Environment Protection Agency (SEPA) and Government. Comparative law studies of the legislation of other Member States and countries would be useful. Since much environmental legislation is derived from the EU it would be valuable to utilise bodies such as IMPEL where the Agency plays a leading role.

Regulatory Reform Bill

  Whilst primary legislation would be required for many amendments at present, the Agency also looks forward to the possibility of simplifying its legislation using the provisions of the Regulatory Reform Bill that is due to come before this session of Parliament. If passed, this Bill will enable enactments, which impose unnecessary burdens on Government or bodies such as the Agency to be amended by order. This power is not available under existing legislation.

Gaps in Legislation

  Environmental Law, like many other areas of law consists of various measures which have been taken in order to deal with particular problems at various points in time. This has been the approach both in the European Union where much of the present environmental law originates and in the UK. Whilst there has been some consolidation, notably water law in 1991, much of the legislation is somewhat patchy in impact and would benefit from review.

  This can be illustrated by reference to environmental law and agriculture (see Annex 2). Agriculture has a considerable environmental impact. In 1998, there were 2,050 reportable water pollution incidents in England and Wales attributed to farming, representing about 10 per cent of all pollution incidents. In addition there is widespread diffuse pollution from agriculture to both ground and surface waters. Excluding wastes that are directly deposited to land by farm animals, about 60 million tonnes of livestock manure and slurries are spread on agricultural land each year in England and Wales. A further five million tonnes of industrial wastes and sewage sludge are also spread on agricultural land. Within the UK, agricultural activities are estimated to emit about 225,000 tonnes of ammonia, representing a substantial percentage of total emissions of this pollutant. Modern agriculture makes use of a wide range of chemicals, which require controls on their use and disposal.

  It should be noted that this patchy legislative provision leaves unsatisfactory gaps in the Agency's ability to regulate environmental emissions from agriculture. For example:

  There is no primary regulation to deal with emissions of phosphorus loss from agriculture or to deal with land management practices that cause severe soil erosion and may lead to flooding, sediment pollution and impacts on fisheries. Intensive pig and poultry units are included in Integrated Pollution Prevention and Control (IPPC) regulation, whereas intensive dairy units that also have high risks of pollution and are the major contributors to adverse impacts on the environment are currently excluded from regulation. Also, there is currently no control over the handling of manure exported from a farm by a third party.

  In addition, there are at least seven separate charging schemes applying to activities that could be carried out on a farm, and whilst in practice it is unlikely that these will all apply to most farms, other ways of collecting revenue could avoid the need for the Agency to collect small sums from individual farmers. For example, where appropriate, a small element of a pesticides tax could be used to raise revenue to cover these costs relieving the Agency of a considerable administrative burden and enabling it to reduce costs or devote more of the resources raised to environmental protection.

IPPC and Waste Licensing

  The Agency mentioned to the Committee the possibility of using the IPPC regime for the management of all waste management sites rather than developing yet another regime for landfill sites. The detail of the regime has yet to be worked up but it would cover those landfills and other waste management facilities already subject to IPPC and, on a simplified basis, all the smaller waste facilities, which are currently regulated under a different regime. This would simplify the waste regimes and provide more integrated regulation with consequential benefits for those being regulated, the Agency and the public. Considerable potential cost savings in taking this approach have been identified by the Agency. It could also provide a further benefit of simplifying the implementation of new directives such as the forthcoming Landfill Directive by avoiding the creation of a further separate licensing system.

3.  DETR REVIEW OF LEGISLATION

  The impetus for this Review came from the Royal Commission on Environmental Pollution, which promoted an integrated approach to environmental protection. The Review's terms of reference were deliberately written by the DETR to exclude differences in the philosophical approaches to regulating different media. It is focussed on rationalising regulatory mechanisms and similar existing regimes—ie the more "nuts and bolts" side. It was about removing any significant legislative, administrative or managerial barriers to integration within the Agency (and SEPA). Administrative and managerial barriers were particularly important in the short term, as they were easier to affect than primary legislation. Analysis of the various economic instruments and incentive charging regimes were excluded as both were considered to be major subjects in their own right.

Agency contributions to the DETR's Review of Legislation

  The Agency has contributed the following papers to the legislative review:

    —  Better Regulation to Protect the Environment (Oct 99). The Agency Board Paper setting out priorities and principles for environment protection.

    —  Agency Paper on a model Regulatory Regime (Oct 98). An outline of the Agency's view of what regulatory regimes should look like against which the review of legislation can take place so as to achieve the model regime.

    —  Agency Paper on Opportunities and Barriers (Oct 98). Proposals for new or amending legislation to address problems and provide solutions to various aspects of environmental regulation. For example, it provided an outline for a system of environmental licensing that recognises the wide variation in the scale and potential environmental impact of licensable activities by the use of licences minor and major tailored to the activity.

    —  Contribution to DETR Paper on Charges harmonisation (Oct 98). A paper proposing ways to harmonise the widely different charging schemes for environmental licence application and subsistence.

    —  Public registers (Oct 98). A paper offering the reasons for and advantages to be gained by changes to legislation to improve and simplify the provision of information by the Agency and SEPA.

    —  Comparison of IPC and Radioactive Substances regimes. A paper comparing the similarities and difference between the two regimes.

  In addition the Agency made presentations at a seminar with DETR Directors in September 1999 at which the Agency promoted the following:

    —  The Agency's key principles and priorities for their work on environmental regulation over the next few years.

    —  The Agency's work on a licensing structure featuring three tiers (lower, middle and top) each with differing requirements of industry in proportion to environmental risk.

    —  The Agency's proposals re operators carrying out more self-monitoring of discharges with an accompanying move to the use of EMS and EMAS audit reports.

    —  The Agency's views re moving industry away from paying for regulation to paying for their impact on the environment on a fully costed basis, which would act as a driver to make them more efficient.

  The Agency also outlined work already instigated on integrated/common approaches to their work in areas such as enforcement and prosecution, extended public consultation for selected licence applications and emissions reporting. Plans for further integrated approaches included the issuing of unified site licences, a pilot scheme to test out modifications to regulatory practice at sites with accredited environmental management systems and electronic dissemination of technical and internal guidance.

  Potential future development areas are being considered with respect to: licensing, public participation in decision making, voluntary agreements, incentive charging and public registers.

Legislative Review Steering Committee

  The Agency is committed to support the work of the steering committee and in particular has agreed to:

    —  Develop business impact statements identifying the costs/benefits of legislative changes to bring about integration and improvement of environmental legislation.

    —  Identify opportunities for incremental improvements to legislative that will remove barriers to integration.

    —  Develop a generic list of terms for the different legislative regimes to provide common language and definitions across all regimes.

    —  Support work on further developments to the Agency's three tier licensing system proposals.

    —  To work with the Department to examine the role of public registers and public involvement in decision making in the light of Aarhuus.

4.  INTEGRATED POLLUTION CONTROL (IPC) UNIT CHARGING RATE (£1,215)

  An analysis of the IPC Inspector Unit Charging Rate is presented in Annex 3.

  Details are also published in the Environment Agency's leaflet "Fees and Charges—Integrated Pollution Control 1999-2000", which is freely available from Agency offices (copy enclosed).

  The following key points are particularly relevant to the issues raised during the Inquiry:

    —  The Environment Agency is required by Treasury's Fees and Charges Guide, and its own Financial Memorandum, to recover all relevant costs associated with the licensing and regulations of IPC and Radioactive substances (RAS) sites. Indeed this requirement applies to all the Agency's charging schemes.

    —  The "inspector day rate" (the term commonly applied to the IPC unit charge rate) is a misnomer and is not a simple day rate which can be compared with commercial consultancy day rates. It is instead a basis used for recovering all the relevant costs attributable to the licensing and regulation of an IPC (or RAS) site. The technical support work required to determine the licence, the development and promulgation of technical guidance, practical development of new regulatory regimes, policy development and relevant R&D accounts for approximately two-thirds of the costs included in the "inspector day rate" of charge. These elements might be charged separately, but instead are factored into total costs and recovered via the inspector day rate and a component charge.

    —  It should also be noted that the remaining one third of the cost, ie that of directly employing front line staff is not the rate actually paid to an inspector. It is the full cost of an inspector spread over the average time an inspector spends on individual applications and authorisations, which are approximately 60 per cent of his time. The remaining 40 per cent is spent on essential work to support individual authorisations, such as policy development, work planning and R&D, which must also be recovered from individual customers within the charge-out rate.

    —  The Agency's charging rate of £1,215 has been compared unfavourably with that of both SEPA (£600) and Health and Safety Executive (HSE) (£750). However, it should be noted that both SEPA's and HSE's level of grant subsidy from Government is much higher that the Agency's (64 per cent and 84 per cent respectively compared with the Agency's 20 per cent in total and 44 per cent on Environmental Protection (EP) functions). This invalidates any like for like comparison of unit charge rates. A crude analysis taking such factors as grant subsidy into account does however indicate that the charges are similar. A detailed comparison of charges is underway.

    —  The Agency has already undertaken a major rationalisation of its organisation and continues to be committed to an efficiency programme which continues to deliver £12 million savings year on year (ie every year a further £12m). Charge payers receive a share of the benefit as an offset against annual charge increases.

    —  The Agency's accounts are subject to the regular scrutiny of commercial external auditors (currently PricewaterhouseCoopers) appointed by the DETR.

  The Committee has also received comments concerning the value for money for Agency charges. For example at its site visit to Avonmouth, Rhodia may have given the Committee the impression that all they get for the charges of £130,000 pa is a site visit from an inspector once every two months, whereas the actual breakdown of the Agency charges is approximately as follows:
IPC licence annual subsistence charge   £58,000
IPC licence variations  £10,000
Discharge Consents  £14,000
Landfill site licence  £9,000
Compliance Monitoring charges  £30,000
Water Abstraction charges  £9,000
Total£130,000


  The total charge for this very complex site constitutes only about 2 per cent of the company's turnover and it is important to recognise that these payments:

    —  provide Rhodia with a licence to operate

    —  allow Rhodia legally to discharge strictly controlled amounts of pollutant to water, air and landfill

    —  allow Rhodia to take strictly controlled quantities of water from the environment

    —  allow Rhodia to revise its processes and vary its discharges

    —provide the company with analytical information about the quality and quantity of its discharges;

    —ensure the company and its UK competitiors have a more or less level playing field from an environmental point of view;

    —provide Rhodia with an environmental improvement plan which may also enhance their operating effectiveness; and

    —give Rhodia access to expert environmental advice.

  The IPC subsistence and variation charges specifically provide for some twenty inspections per year plus six meetings with senior management. Officer time is also accounted for in office time analysing monitoring reports and preparing variation conditions.

  The Agency uses a lower rate for the Control of Major Accident Hazards (COMAH) (the same as HSE's) so that it does not duplicate the recovery of central costs already achieved through IPC charges.

5.  MATRIX STRUCTURE

  The potential organisational structure for multi-functional organisations like the Agency has two extremes. These are central functional control, which allows for a high degree of consistency but no integration, and local control, which leads to integration but little functional consistency.

  Neither extreme would be appropriate for the Agency.

  The Agency is required by the government to "adopt, across all its functions, an integrated approach to environmental protection and enhancement" and must not ignore its customers' reasonable wish for national consistency and equitable treatment.

  The matrix is a way of developing and operating nationally consistent policies with a high degree of local delegation and integration. This is achieved by involving members of regional teams, who are accountable to their Regional Director, but also advise the functional Head Office policy team, in the development of policy and monitoring of operations.

  This ensures that policy developed by the Head Office team has the benefit of practical, local, advice from the Regional teams.

  The Head of Policy who chairs meetings of the regional and Head Office policy groups, is also able to monitor and to quality assure the implementation locally of agreed national policy through the matrix.

  The matrix works in an overall organisational context which also includes the financial and non-financial schemes of delegation, core values such as teamwork and customer focus, and customer facing groups for different industry and agriculture sectors.

6.  POLICY GUIDANCE

  The Committee asked the Agency whether it operated to draft policy guidance which is different to its published policies.

  There are some areas of guidance, such as legal notes for inspectors to make sure they comply with the law, which are not placed in the public domain. We would find it helpful however if the Committee could identify the particular areas where it had heard that two sets of guidance or policy, in draft or elsewhere, existed within the Agency so that we can provide a fuller explanation if required.

7.  DEVELOPMENT IN FLOOD PLAINS

  The Agency expressed the view to the Committee that its flood plain maps should be in the public domain and that it was seeking advice from leading Counsel to see if these maps could be accessible to the general public by typing their postcode on to the Internet.

  The Agency has now received the advice that it is legally permissible for the public to access the flood maps in this way and it will now be making arrangements to place the maps on the Internet.

  The Agency hopes the Committee will support the Agency in this action.

Ed Gallagher,

Chief Executive

February 2000


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2000
Prepared 18 May 2000