Risk-based regulation and charging for local authorities

Sweeping changes to the way local authorities regulate industrial pollution have been proposed, with fees and inspection frequencies to be set in accordance with an assessment of site risks and the operators' performance. 1 Meanwhile, the Environment Agency has confirmed plans to publish scores from its own operator and pollution risk appraisal (OPRA) scheme.

OPRA was developed by the former HM pollution inspectorate with a view to assigning regulatory effort according to a site's environmental risk and to the operator's ability to manage it. Inspection frequencies and the levels of fees and charges would be set according to these OPRA scores.

The Environment Agency is now implementing OPRA for use in both the integrated pollution control regime (ENDS Report 271, pp 32-33 ) and waste management licensing (ENDS Report 305, p 46 ).

The new report, for the Department of the Environment, Transport and the Regions (DETR), proposes that a modified form of OPRA should be applied to the local air pollution control (LAPC) regime. But it proposes a scheme that is more systematic than that used by the Agency, and with less scope for subjective judgements. The report was prepared by consultants Risk and Policy Analysts (RPA).

The proposed system involves appraisals of both site risks and operators' performance. The first component is an "environment impact appraisal" - a "crude" categorisation of operations as having a low, medium or high risk to the environment. This would be based on DETR statistical information such as the amount of enforcement action taken on processes of a particular type.

Service stations would be seen as low risk, non-ferrous metals processes would be medium, and incineration processes high risk. A similar approach was adopted in the Agency's OPRA scheme for waste sites, in which inert landfills are seen as inherently less risky than "special waste" sites.

In the appraisal, account would be taken of an operator's progress with upgrading the process towards the "best available techniques not entailing excessive cost" required in the authorisation. A ranking ranging from "upgrading not complete" to "exceeds BATNEEC" is proposed.

Inspectors would also consider the sensitivity of receptors in the surrounding area, to be categorised into three groups according to the proximity of schools, residential areas and conservation areas. An operation would also be considered more risky if it was in a relevant air quality management area.

The second component would be an "operator performance appraisal". This would measure the operator's performance in areas such as monitoring, maintenance and record keeping, with scores awarded on the basis of whether an operator is undertaking proper monitoring, whether there is a maintenance programme that is being adhered to and whether proper documentation is available on site.

Consideration would also be given to an operator's regulatory compliance - with complaints scoring 5 points per incident, enforcement notices scoring 15 and prohibition 20.

Finally, the management, training and responsibility of the operator would be assessed on criteria such as specific responsibilities being assigned to individual staff, documented staff training records and an appropriate management system.

RPA says the risk appraisal should take only 15 minutes to complete. The overall score would be used to place an operation into one of three categories specifying the amount of regulatory effort deemed necessary. A low-risk site would need 50% less effort than a medium site - which would be subject to the current average effort. A high-risk sites would attract 50% more attention.

LAPC charges could then be levied on the same basis. On current figures, a low-risk site would pay £398 subsistence charge instead of £796, while a high-risk site would pay £1,194.

RPA acknowledges that a risk-based system of regulation involves compromises, with an "element of rough justice" for some companies. But it will "provide clear potential advantages", the consultants say, such as increased transparency and consistency of regulation, better value for money, improved targeting of regulatory resources and an incentive to improve performance.

The proposed methodology has been tested on only three "fictional" processes, and will need considerable practical evaluation across the full range of processes and on "good" and "poor" performers, the report says. The DETR is now consulting on the recommendations prior to a practical trial early next year.

Meanwhile, the Agency is pressing ahead with the implementation of OPRA for IPC sites. All sites in England and Wales had received an OPRA assessment by June this year - but the results remain confidential for the time being.

Agency policy adviser Charlie Corbishley said that OPRA scores will eventually be published and will be used to set inspection frequencies. A year of practical application was required to ensure the validity and consistency of the data.

The Agency intends to make OPRA scores public from April 2002, when a revised set of scores will have been assigned. It is possible that this may be done through the Agency's internet-based pollution inventory or its annual "spotlight on business environmental performance", Mr Corbishley added.

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