An agency divided: Does the EAs “future model” put profit over environmental protections?

It has been an unsettling couple of weeks for the Environment Agency (EA). On 10th January the Guardian reported that it had viewed a leaked briefing document issued to EA staff in November, advising them that there is leadership support for “no response to unfunded low- and no-impact environmental incidents”(see our blog post on the issue here.

The revelation was met with fierce criticism, particularly from environmental campaigners who are of the view that the EA is simply not doing enough to combat water pollution. The Guardian article also confirmed what many in the industry have long suspected, that the EA are concentrating their efforts on regulated facilities because the regulation of operators (and indeed, the enforcement against them) provides a greater opportunity for the EA to recoup its costs. This position naturally raises questions over the fairness of the EA’s regulatory approach.

An agency divided

On 18th January, the EA’s Chief Executive, Sir James Bevan, gave a speech at Westminster Energy, Environment & Transport Forum Conference on future environmental standards on the EA’s ‘new model’ for regulation. The speech, titled ‘Think differently, speak softly and carry an even bigger stick’, set out Sir James’ vision for how the EA should regulate in the future. The speech presented an opportunity for Sir James to clarify issues surrounding the EA’s regulatory approach and, more specifically, the basis on which it decides which incidents ought to be prioritised. The speech contained some encouraging points, in particular the remark that “the default approach would be the carrot of advice and guidance to help operators comply before any resort to the stick of enforcement.”

However, rather disappointingly, Sir James appeared to confirm that it is also the EA’s intention to increase the income stream from the businesses it regulates. Despite the presentation of the EA as an effective, efficient and well-oiled machine, there are indications that the truth is quite the opposite. Two days after the speech, the Guardian published another article based on information it had received from three whistle-blowers from within the EA. That article revealed that there is mounting frustration and discontent amongst some EA staff who strongly disagree with the direction the EA is taking. They expressed their concern that the EA had become a “toothless” regulator.

It would appear that the EA is fragmented, and the values expressed by those at the top, have little support from officers on the ground who carry out regulation. This is a problem. We have previously addressed the disconnect between Sir James’ vision of the EA as a fair and proportionate regulator and the heavy-handed regulation we often see in practice. This schism has not been resolved and, in fact, seems to be becoming even more pronounced, to the extent that whistle-blowers are airing their discontent through the media. It is a worrying state of affairs, one which raises the question of how the EA can possibly hope to regulate with any consistency and authority when these divisions exist. The lack of a united front within the EA further undermines the confidence of those it regulates, who will be asking why there is such discontent in its ranks.

Charge led regulation

In our blog post of 11th January, we expressed our concern that the EA is unfairly focusing the majority its regulatory effort on permitted sites in an effort to recoup its regulatory costs. In our view, this approach threatens the creation of a level playing field and undermines the EA’s claim that it adopts a risk-based approach in its response to incidents. That view has been further consolidated by Sir James Bevan’s speech, which confirmed that the “future model” he would like to see would “make regulated industries pay the full cost of their regulation” and that there was “a strong case for increases” in that income stream.

On the surface, this may not seem like a particularly controversial strategy, however, the leaked briefing document subject to the Guardian article of 10th January indicated that the EA had instructed its officers that low impact pollution incidents should not be responded to unless they were caused by a regulated facility. An inference may be drawn from this, namely, that the EA should focus its attention on regulated sites because it is able to charge these operators for any regulation it carries out. Enforcement policy is not dictated by the amount of risk posed by the operations undertaken or the potential seriousness of a pollution incident but is almost entirely informed by what action best serves the EA’s coffers.

This was confirmed by the EA whistle-blowers who told the Guardian that there had been “a drive to make the agency almost entirely self-sufficient” and that “work which does not generate any income for the agency…has been deprioritised” in favour of pursuing charged regulation which “filled the gap left by dwindling government grants.”

This approach has, rightly, left some operators feeling as though they are being unfairly targeted. Those operators running permitted sites generally have every intention of complying with the law. They know that their sites will be subject to regular visits by the EA to check their compliance with their permit, that any non-compliances will be recorded and, if the issue is not rectified, they will potentially face enforcement action. A large number of serious waste crime and pollution incidents are caused by rogue operators who are not regulated by the EA. The EA’s “future model” does not appear to take account of this. It means that a regulated operator may find itself subject to enforcement action for relatively small breaches of a permit whilst a non-permitted site down the road is allowed to carry on its activities without any intervention.

The absurdity of this is self-evident. In adopting this approach, the EA is arguably giving waste criminals, who will exploit this weakness, the green light to continue offending. One of the whistle-blowers interviewed by the Guardian indicated that this issue was a source of considerable discontent among EA staff who feel that “those who adhere to the legislation are paying significant sums, whilst those that choose to ignore the legislation escape any charge or meaningful punishment.” The inevitable result of this is the erosion of trust between the EA and those it regulates. The EA’s “future model” is not only predicated on an increased focus on regulated operators, but it also proposes to increase the fees paid by those operators to facilitate this.

The right regulation

Sir James concluded his speech with the remark that ‘the right regulation is not deregulation.’ There are few who would argue against this view. Yet the impression given about the direction which the EA is taking, is that it is only interested in regulating permitted sites. The effect of this is that some waste criminals are not receiving the attention they deserve and are, to some degree, subject to deregulation. It is also evident that there is some dissonance between Sir James and regulatory officers as to what constitutes the ‘right regulation.’ Sir James has spoken about the importance of “working with rather than against those…[it]regulates”, stating that this is “when the EA works at its best.” Comments made by the EA whistle-blowers, however, indicate that those officers working on the ground have a different interpretation.

The Guardian article quotes one officer as stating, “we’re told, largely through the permitting process to give business the benefit of the doubt, rather than the environment.” Another stated that officers are “actively encouraged not to take enforcement action, and asked to find another solution.” Those officers commenting in the article are unhappy because they are “unable to get out into the field to do the jobs they were hired to do.” There is a balance to be struck. The EA should, where possible, be working with those it regulates to rectify non-compliances without resorting to enforcement. This is a sensible and cost-effective approach. However, where issues cannot be resolved through guidance and advice, or where an operator is repeatedly making the same mistakes, enforcement should be considered. Working with operators or giving them the “benefit of the doubt” should not be seen as a flawed approach.

We have previously observed that all too often the approach taken by the EA is heavy-handed and regulation for regulation’s sake (see our blog from August 2020 on the subject here. We have dealt with numerous cases where EA officers have issued enforcement notices which do not resolve the issues complained of or where best available techniques and operations which achieve outcomes have been deemed non-compliant because they are outside a particular area’s expertise and experience. The confusion surrounding alternative measures under fire prevention plans is a prime example of this. It would appear that Sir James and the officers on the ground are at cross-purposes, with the latter seeing their role primarily as an enforcement one.

If the EA is to deliver consistent and proportionate regulation which is business friendly, this culture has to change. As matters stand, Sir James’ vision of an EA which works with operators, not against them, is threatened by regulatory officers who feel that this strategy is at odds with their role.

Use of resources

That government funding for the EA’s environmental protection work has significantly reduced when compared with previous years, is not in dispute. However, there is some question over whether the EA is making the best use of the resources that it does have. The whistle-blowers from the EA expressed their frustration at the way in which the money accrued through subsistence fees is being used. The Guardian article indicated that funds are being diverted from frontline regulation and is instead being used for other purposes, for instance, to “fill newly created management roles that have no impact on frontline duties.” If this is the case, there is an argument that before seeking to increase subsistence fees, the EA ought to carry out a thorough review to ensure that resources are directed where they are most needed.

Improving communication

Much of the concern surrounding the EA’s regulatory direction could arguably be resolved if it was more transparent and communication within and without the body was significantly improved. Firstly, those at the top of the EA’s management structure must ensure that its employees fully understand the purpose of regulation and that enforcement is a last resort within its regulatory framework. Working with the businesses it regulates does not weaken the EA’s regulatory approach or render it inefficient.

Secondly, the EA must clarify its position in relation to charge-led regulation. As matters stand, it appears that the EA is focusing its attention on regulated operators as a means of generating funds when it should be addressing those who cause the most damage to the environment. This perception has the potential to damage the relationship between the EA and those it regulates. An explanation is even more pressing in light of Sir James’ revelation that the EA is seeking to increase subsistence fees.

Finally and most importantly, the EA must resolve the divisions within its ranks. Whilst it is beset by internal discord, it cannot be the robust and unified regulator it needs to be to tackle waste crime. Its attempts to paper over the cracks is failing. Every exposé is detrimental to its image in a time when the public needs to have confidence in the EA more than ever.