Risk-based regulation: planning for compliance

The Environment Agency is pressing ahead with hundreds of in-depth industrial site audits in its bid to roll out "compliance assessment plans", the final step in its modernising regulation agenda. James Richens takes a look at how the system is working in practice and its potential to expose some embarrassing shortcomings in site management

Compliance assessment planning is the final piece of the Agency's modernising regulation jigsaw (see figure).

Until now, risk-based regulation has had a limited effect on the number of inspections sites receive because guidance on inspection rates was decided centrally. This makes the Agency's claim that risk-based regulation is "paying off for both business and the environment" seem premature (ENDS Report 355, pp 25-28 ).

However, the Agency is in the forefront of introducing risk-based regulatory tools. The regulator was praised in last year's Hampton review of inspection and enforcement (ENDS Report 363, p 4 ).

But the pressure on regulators to ensure that their activities are proportionate and risk-based shows no sign of abating. The Legislative and Regulatory Reform Bill, currently before the House of Commons, is set to give statutory force to a revised regulators' compliance code. The draft code requires all regulators to use risk assessment to programme inspection activity (see p 4 ).

Compliance assessment plans (CAPs) specify the amount of regulatory activity a site should receive to ensure compliance. The plans link into the operator and pollution risk appraisal (OPRA) scheme, introduced several years ago, as a tool to assess pollution hazards at industrial sites and the ability of operators to manage environmental risks (ENDS Report 360, p 40 ).

Other pieces of the jigsaw include sector plans, the first of which were published in association with industry late last year. The plans identify a sector's most significant impacts and set long-term improvement objectives and performance indicators (ENDS Report 370, p 12 ).

The Agency also reports business performance, including data on releases from the pollution inventory, pollution incidents and OPRA scores in its annual Spotlight report (ENDS Report 367, pp 5-6 ).

Planning for compliance

CAPs are being rolled out through a programme of in-depth audits of sites regulated under integrated pollution prevention and control (IPPC) that began last spring. Waste management sites are being audited this year.

The Agency has developed generic CAP templates for 14 sectors. These are very general and only contain information on the broad objectives for the sector. In the chemicals sector, these include: "ensure operators implement environmental management systems", "obtain accurate data on type and quantity of emissions" and "review EP OPRA score with particular attention to operator performance."

After auditing a site, inspectors populate the templates with more detailed information on site objectives, local environmental pressures and information on previous performance to produce a site-specific CAP.

The template provides categories for compliance activities, into which resources should be divided. These include: audits, site inspections or part audits, check monitoring, review of reports and monitoring data, and review of procedure.

Each template contains a number of generic tasks such as "assess operator's arrangements for self-monitoring". The inspector can include additional tasks and then assign an amount of effort to each one.

Peter Miles, CAP manager, explains that inspectors can vary the amount of effort between compliance activities to reflect the needs of a specific site: "A site with clear systems in place and a good enforcement record may need fewer additional inspections. Inspectors could rely on the company's systems and reviews of monitoring data, saving resources for less well-run sites."

The introduction of CAPs also marks a further shift in emphasis from more frequent inspections to fewer, but more in-depth audits. The Agency says that risk-based regulation is contributing to the decline in inspections which, for instance, have fallen by half since 1997/98 for sites under IPC.

Chris Howes, the Agency's head of modern regulation, insisted that overall compliance effort would remain the same even if inspections fell further. Resources would be shifted onto other areas, such as tackling fly-tipping.

Slow start

But the Agency's programme to audit sites and introduce CAPs appears to be behind schedule.

It had intended to conduct an ambitious 380 audits of sites in 2005/06, starting with the sites with the poorest OPRA scores. A quarter of inspectors' time was allocated to the work (ENDS Report 365, pp 5-6 ).

However, by March only 27 in-depth audits had been completed (see table), although a further 180 sites have had some audit activity.

"We haven't done as well as we expected to", Mr Howes admits, although he says he isn't too surprised the targets were missed. This is because of the Agency's 'learn-by-doing' approach to introducing CAPs, Mr Howes explains. "You either spend all of your time perfecting a model or trial it in the real world, which is what we did."

The slow progress is also partly due to a lack of training and guidance to inspectors on how to complete audits, an omission the Agency is now addressing, Mr Howes adds.

In addition, Peter Miles suggests that much of the time earmarked for inspectors to spend on audit activity may have been spent on ensuring operators were making progress with improvement programmes issued with the site's IPPC permit.

Tick-box regulation

Some inspectors are concerned that CAPs might lead to inspectors' jobs being downgraded through the introduction of prescriptive approaches to regulation, according to Graham Macro, branch president of union Prospect.

"CAPs shouldn't give inspectors more boxes to tick than space to write", says Mr Macro. "CAPs are no substitute for well-qualified, professional inspectors."

However, this is not a foregone conclusion: "CAPs could be a useful tool if implemented correctly," he adds.

Mr Macro says that the lack of guidance on CAPs had left some inspectors confused. The implementation was "rushed" and "not well thought out" resulting in delay, he says. There had also been grumbles from the cement sector that the audits are just another piece of unnecessary bureaucracy.

In contrast, some inspectors see much more promise in the CAP process, once it has had time to bed down. In particular, the shift to more in-depth audits seems to be more suitable for issues that need to be addressed at sites.

Gareth Lewis, an inspector of 14 years' experience, says that in the early days of IPC, when environmental management was in its infancy, frequent site inspections were an effective way of regulating sites. Now, environmental management is much more mature. Many sites have systems in place to ensure compliance. In-depth audits are a good way of ensuring these systems deliver the results, he explains.

In addition, CAPs would also make the Agency's records of how a site has been regulated more transparent, Mr Lewis says.

"Some companies have welcomed the experience and found it very useful," Mr Lewis says. "While verifiers assess a management system against a standard such as ISO14001, inspectors bring a better understanding of how a management system should apply to a specific industrial process."

One exception is food and drink manufacturers, which are new to environmental regulation. In Mr Lewis's opinion, performance at these sites is reminiscent of what it was like in the early 1990s in other sectors (ENDS Report 353, pp 25-28 ).

CAPs in action

Uncertainty among inspectors over how to conduct audits has led to considerable variation in approaches to audits and CAPs. For instance, Alcoa's aluminium works near Swansea has a detailed audit report, but no site-specific CAP. Onyx's incinerators in Portsmouth and Marchwood have specific CAPs, but the audit reports lack discussion of performance at the sites.

However, thorough audits and site-specific CAPs have been produced for other sites, including:

  • Georgia Pacific: The paper mill in Maesteg, south Wales, makes tissue paper from a mixture of virgin pulp and recycled paper. It came under IPPC in November 2001. The company was handed a lengthy improvement programme that focused on water use and effluent discharges. The site was given a "poor" EP OPRA rating (ENDS Report 359, p 7 ).

    The most recent EP OPRA data for 2004 show the mill's score has improved to a "good" B rating.

    The Agency completed a two-day audit last September and produced a detailed report and CAP. The site has been allocated 19 days of compliance activity for 2006/07, almost half of which will be taken up with on-site audits and inspections.

    The CAP identifies local drivers for improvement. In the past, fish deaths in the river Llynfi have been caused by low water flow, high water temperature and high ammonia levels. The mill takes its water supply from the river and discharges into it.

    The site has already made progress in reducing water consumption by implementing "best available techniques" (BAT). The CAP says that a key objective this year is to reduce the temperature of its discharge so that the requirements of the freshwater fish Directive are met at least 90% of the time. Next year the target is 97%.

    The audit report also reveals that the Agency is putting pressure on Georgia Pacific to reconsider its use of sodium hypochlorite as a bleaching agent. The company is aware that the chemical is not BAT, but is adamant that there is no alternative.

  • Grampian Country Foods: The Agency has also audited two chicken processing sites in 2005, operated by Grampian Country Foods at Sandycroft and Llangefni, both in Wales. The sites fell under IPPC in August 2004.

    Both sites have an average C rating under EP OPRA and the Agency has allocated 11 days of compliance activity for each.

    The main issue at both sites is odour and a lack of environmental management systems, according to the audit report.

    At Sandycroft, inspectors witnessed a strong odour during the audit. Shortly afterwards, the site received two complaints about odour off-site. The report says that the operator is planning to fit a covered effluent treatment tank to reduce complaints.

    At Llangefni, Grampian submitted an impact assessment identifying several causes of odour including poor housekeeping. The report says the company failed to identify the scald tank as an important source of odour. The operator has made a verbal commitment to investigate fitting odour abatement on the process.

    The audits at both sites also revealed a number of examples of non-compliance. At Sandycroft for instance, recent improvements have been made to improve bunding of oil tanks. But embarrassingly, inspectors found a sign warning of the maximum fill level had fallen from the wall and was face down on the ground.

    Inspectors also spoke to the employee responsible for the effluent treatment plant. He said that he relied on "years of experience" to determine whether the effluent would be in compliance with trade effluent consent limits. There were no written procedures for monitoring.

  • Alcoa: The major issues at Alcoa's aluminium works are breaches of limits on releases and noise, according to an Agency audit conducted in August 2005.

    The report says the site has had problems meeting limits on BOD and COD in discharges for some time. The Agency says it was "disappointing" that despite these problems, Alcoa still has no formal maintenance programme for wastewater interceptors.

    Lack of maintenance was the cause of past exceedances of SO2 from the plant scrubber. The report notes that Alcoa has not considered other improvements to the scrubber and should do so.

    On noise, the Agency says that there has been a "significant departure" - one year in fact - from a permit condition requiring improvements to reduce complaints. The Agency warns that it will take enforcement action if Alcoa does not deliver this spring.

    Alcoa has carried out a noise monitoring exercise involving the complete shutdown and restart of the plant to identify sources of noise, but has yet to analyse the data and agree improvements.

    The site's management has also failed to deliver a number of other improvements despite a formal management process. In particular, the Agency says that disposal of drums is a "significant problem" that personnel are either not aware of or inadequately motivated to deal with.

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