Environment watchdog using sledgehammer to crack a nut
Businesspeople operating on an estimated 800 sites around the country have reason to worry.
They are faced with a requirement to lodge large amounts of money to cover the possible cost of remediation at sites which contain polluting material.
The sites include piggeries, waste sites, poultry farms, and pharmaceutical plants. Also covered are printers, cement producers, and waste-service providers. Employer bodies have expressed concern about what they regard as excessive requirements for financial provision to meet the possibility of an accident or leak at a site.
Their contention, in effect, is that a sledgehammer is being used to crack a nut. Firms are being required by the Environmental Protection Agency (EPA) to lodge millions of euro in bank accounts to meet the arguably remote possibility that their site could be hit by a serious accident. The total amount could reach €1.5bn, leaving a huge amount of capital being tied up, impacting on investment.
There is also annoyance over the lengthy delays in the system in cases where revisions to licences are sought due to changes in layout or expansions in activity. These have been caused by personnel shortages at the EPA, resulting in delays running into years in the handling of license applications.
The EPA did secure extra resources from the State, but these have been used up in handling issues around water-treatment plants. There are also real concerns that certain pharmaceutical plants could find themselves without the necessary licences in place to satisfy the requirements of the US Food and Drug Administration. This could put at risk expansion plans at such plants.
In a recent interview with Health & Safety Review, the EPA’s director general, Laura Burke, argued that the enhanced charges regime is justified by virtue of the ‘polluter pays’ principle.
The EPA points to the huge clean-up costs at sites such as that run by Irish Ispat (formerly Irish Steel) in Cobh.
In late 2013, the Irish Examiner reported that over €50m had been spent at the Ispat site in 2012 alone and that a total of €100m in clean-up costs at waste sites had been incurred.
According to Ms Burke, licenced businesses can take a lot of actions to reduce their charges which, she added, range from between €1,000 and €2,000 in the case of a piggery to €25,000 for a large chemical plant.
In the autumn, the EPA published a draft guidance on financial provision to meet the possibility of a costly environmental event at a licenced site. This is intended to cover the cost of remediation.
The agency has indicated that it will consider the following: The use of ‘on demand’ bonds; a large cash deposit, determined on a case-by-case basis; a charge in favour of the EPA on a bank account opened by the firm; a letter of credit; and a parent company guarantee.
Employers’ representative body Ibec has been pressing for the EPA to allow all licenced firms the option of taking out insurance. This option is not available to firms with certain Class A licences.
Ibec has warned that the regime is likely to prove very costly.
“Bonds, charges on accounts or property, and similar instruments can have strong, negative effects on a company’s cashflow,” the organisation said.
Concerns have also been expressed that some firms could be driven out of business as a result of the requirements. The EPA finds itself under fire from both sides, with some non-government organisations arguing that it has been too business-friendly.
Gerald O’Leary, director of enforcement at the EPA, insists that they are merely “trying to protect the interests of the State” in introducing the financial provisions, which go further than required by the relevant EU directive. “The EU standards are getting higher.”
He added that the option of allowing firms to take out insurance, thereby avoiding having to tie up large sums of money, is “not that attractive”.
“Will the insurer pay out if the insured firm is found to have committed a crime,”Mr O’Leary asks.
There is also a serious question as to whether money set aside for remediation could be grabbed in a receivership.
The EPA wants to ensure that the money is there to solve any remediation problem, though it is prepared to discuss further proposals regarding insurance. Mr O’Leary expresses surprise at concerns over continued bureaucratic delays, maintaining that Ibec has welcomed the clearing in the backlog.
“We have a legislative requirement to consider up to 16 different directives. In a lot of cases, there is insufficient detail supplied by firms in their applications. These have to be returned. We have to follow the statute.”
Some argue that the EPA could do better. Isme director Mark Fielding says: “It is a big issue for a small number of our members. The EPA is difficult to deal with. They try and bamboozle you with science. You have increases [in charges] year after year. They lack an understanding of business.”
The EPA wants to ensure the money is there to solve any remediation problem
