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Cost recovery for COMAH Activities - A guide

Sixth Edition - April 2010

Contents

Part 1: Cost recovery arrangements

Introduction

This guide has been prepared for operators of COMAH installations and others interested in how the cost recovery scheme operates. It explains how the amounts recovered are calculated and gives an indication of the amount(s) an operator may have to pay. This edition shows the hourly fee for 2016/17 including cost recovery for 'conventional' health and safety work at some sites covered by the COMAH Regulations. It seeks to make clear the boundary between what is cost recoverable and what is not, and examples are given of the costs to operators associated with activities subject to cost recovery. A printed copy of the Guide can be obtained from the HID Cost recovery team.

1.1 Detailed guidance on the COMAH Regulations is given in 'A Guide to the Control of Major Accident Hazards Regulations 1999' (L111rev ISBN 0 7176 6175). To order a copy contact HSE Books.

1.2 The Control of Major Accident Hazards Regulations 1999 (COMAH) place duties on operators subject to the regulations to

In addition, operators of sites where the quantities of dangerous substances exceed the higher thresholds (top-tier establishments) must submit safety reports, provide information to the public and prepare and test emergency plans.

1.3 COMAH also places duties on the Competent Authority (CA) to

1.4 The Health and Safety at Work etc Act 1974 S. 43 (2) provides for ministers to set fees by regulations. Using this provision Regulation 22 of COMAH (see Part 2 ) provides for operators to pay a fee to the CA for the work it carries out under COMAH. The COMAH Regulations were amended by the Health and Safety (Fees) Regulations 2008 and the COMAH (Amendment) Regulations 2008 to provide for cost recovery for conventional health and safety work at some COMAH Sites.

1.5 The system of cost recovery is based on the amount of resource used by the CA in performing its COMAH and, for HSE, other relevant regulatory functions in relation to any particular establishment, i.e. the cost recovery rate is calculated by reference to time expended carrying out its functions with regard to that establishment on any given occasion or occasions and includes all relevant costs. The costs are calculated in accordance with "Treasury guidance in Managing Public Money".

Details of these costs are given at paragraph 1.40.

What is cost recoverable?

1.6 EA, HSE and SEPA are required by Government to recover the costs of the regulatory activities that fall to the CA as a result of the COMAH regulatory regime. Costs have been recovered (since 1999) under the COMAH cost recovery scheme for:

This includes work associated with other relevant statutory provisions when judging compliance with COMAH Regulation 4.

HSE recovers costs for work at COMAH establishments according to the criteria below:

Lower Tier establishments

No change i.e. costs will be recovered for:

Top Tier establishments

For all Top Tier establishments costs will be recovered for:

Additionally, for those top tier establishments that meet the criteria below (para 1.7), costs will also be recovered for:

Criteria for extension of cost recovery at Top Tier establishments

1.7 Cost recovery will be extended:

Table 1 SIC Codes for which cost recovery will be made for all RSPs

SIC 2003 Code SIC 2007 Code Description
11.1* 06.** Extraction of crude petroleum and natural gas - borehole sites for the extraction of gas and oil.
11.2* 09.10 Support activities for petroleum and natural gas extraction
15.91 11.01 Distilling, rectifying and blending of spirits.
23.2* 19.2* Manufacture of refined petroleum products. All premises dealing with the refining of mineral oil and other treatment of petroleum products
24.** series 20.** series Manufacture of chemicals and chemical products. Includes gases, dyes and pigments, basic chemicals (organic and inorganic), fertilisers, plastics and synthetic rubbers in primary forms, paints and varnishes, soap and detergents, explosives, glues, essential oils, man-made fibres.
21.** Manufacture of basic pharmaceutical products and pharmaceutical preparations
40.2* 35.2* Manufacture of gas; distribution of gaseous fuels through mains
51.5* 46.7* Wholesale of solid, liquid and gaseous fuels and related products; wholesale of chemical products; wholesale of waste and scrap
63.1* 52.1* Warehousing and storage. Includes general warehouses, refrigerated warehouses, storage tanks etc.
90.00 38.22 Sewage and Waste Disposal (Disposal of Hazardous Waste)

Note - the asterisks in table 1 indicates any digit

The flowchart below illustrates the application of cost recovery to COMAH establishments.

COMAH Establishment Flowchart

Note: Examples 5 and 6 at paragraph 1.21 also illustrate when cost recovery for all RSP work at top tier sites operates.

Contractors

1.8 Irrespective of whether HSE activity at an establishment relates to work carried out by employees or contractors, costs are recovered according to the criteria in paragraphs 1.6 - 1.7 above.

Costs are recovered from the operator when it is necessary to go offsite as part of an investigation into an incident or complaint involving a contractor on a COMAH site. For example, an inspector might need to go to a contractor’s head office to carry out interviews or collect information about operating systems that relate to an incident. However if these enquiries lead on to further enquiries about other health and safety issues, not related to the responsibilities of the COMAH site operator, e.g. the health and safety management of the contractors themselves and compliance with their duties, the further costs incurred would not be recoverable from the operator.

1.9 Where a COMAH establishment is also regulated under IPC or PPC, specific aspects of the establishment which relate directly to major accidents to the environment and their prevention and mitigation are normally regulated by EA and SEPA under COMAH. Other environmental aspects of the establishment are normally regulated under IPC or PPC. Relevant activity costs will be recovered under one of these schemes.

Cost recoverable activities

1.10 Cost recovery covers the following functions (Part 3 sets out examples of these activities in greater detail):

Additionally, for those Top Tier sites that meet the criteria in paragraph 1.7

Examination of safety reports

1.11 It is expected that this work will mostly be undertaken by considering information provided in the report and may not involve site visits. However, visits may be paid in some circumstances, e.g. as part of the pre-receipt discussions for 5-year revisions of safety reports, where inspectors are unfamiliar with the site, particularly the process or surrounding environment or where it is essential to directly view the establishment to undertake the examination of the report. Site visits are also made where the examination of a safety report leads the CA to believe that the measures taken by the operator for the prevention and mitigation of major accidents may be seriously deficient and costs will be recovered under the category of inspection.

1.12 Assessments are planned and scheduled within the CA's annual work plans dependent on the date upon which the safety report is submitted. The amount of time spent on the examination of individual reports is based upon the nature of the hazards present, the complexity of the industrial process involved at the establishment and the manner in which this information is presented in the report together with the CA's current knowledge of both the establishment and the measures employed to prevent a major accident or to limit its consequences. Examples of the costs involved for a complete assessment of some typical safety reports are shown in Part 3. Similarly the length of time taken to assess a revised safety report will be dependent on the extent of changes in the report.

1.13 In order to determine whether the operator has made the necessary demonstration the CA may request further information to be provided and recover the costs for the assessment of this additional information.

1.14 If operators can demonstrate that particular dangerous substances present at their establishment cannot give rise to a major accident then they can apply to the CA to limit the information to be included in a safety report. Considering applications for limitation of information are undertaken at the initial stage of the assessment of the safety report and the CA recovers costs for its work in considering such applications.

Inspection

1.15 The CA recovers costs for work associated with inspection. This encompasses all work aimed at checking compliance with the duties placed on an operator under COMAH, for example, whether:

1.16 Inspections of establishments following the assessment of a safety report to determine if the measures taken are seriously deficient are included under this provision. Costs associated with prohibition under regulation 18 will be identified separately (see para 1.30).

1.17 The CA establishes a programme of inspections for all establishments. In the case of top-tier sites, this comprises at least one on-site inspection every 12 months or inspections at other intervals based on a systematic appraisal of the major accident hazards of the particular establishment. The nature and frequency of inspections at top-tier establishments are determined by an intervention plan drawn up for each establishment and including issues arising from the examination of the safety report. Inspections are carried out to explore issues and areas of concern highlighted by that examination and to verify that control measures described in the report operate in accordance with the report.

1.18 For all establishments, the level of inspection activity is proportionate to the risks and targeted to key areas of concern. In practice, the nature and extent of inspection undertaken by the CA is dependent upon the nature of the hazards present, the complexity of the operation and the CA's assessment of the competence of the operator in ensuring that all the relevant duties under COMAH have been met.

1.19 Most inspections are planned in advance and pre-notification given to the operator. However, occasionally, some inspections may be undertaken without prior notice where a spot-check is deemed appropriate and provision of advanced warning would be counter productive to checking compliance with COMAH.

1.20 Also included in the costs is time spent on:

Follow up:

1.21 The following examples may help to clarify when costs will be recovered. These are included for illustrative purposes only and the application of recovering costs will be dependent upon the individual circumstances of each inspection. The costs of preparing for a visit (e.g. reading relevant site documentation prior to the visit, looking at previous inspection reports, preparing an inspection plan, etc.) and reporting on findings (e.g. time spent liaising with other inspectors involved in the visit to reach conclusions about findings, writing a report and recording the inspection on internal databases, preparing the letter to the site, etc.) will be recovered.

Examples for Lower Tier Establishments

Example 1:

For lower-tier establishments, checking the existence of a Major Accident Prevention Policy, (MAPP) and the implementation of any aspect of it would constitute an inspection under COMAH and would be cost recoverable.

Example 2:

At a mixed products warehouse which is a lower-tier establishment, costs will be recovered for the time spent on for example, examining the MAPP, the proper separation and containment of dangerous substances and on site emergency procedures.

To the extent that issues related to the Health and Safety at Work Act or other Relevant Statutory Provisions (RSPs) are relevant for compliance with COMAH Regulation 4, costs will also be recovered for time spent on these issues. This could include, for example, use of fork lift trucks, site transportation.

Inspecting more general Health and Safety at Work Act issues or compliance with specific regulations other than COMAH is not subject to cost recovery from 6 April 2008

Example 3:

At a plant manufacturing domestic cleaning products there are tanks containing substances which bring the establishment within the scope of the COMAH Regulations as a lower tier site. These substances and the way they are used constitute an environmental but not a health and safety hazard. HSE will recover costs for work in relation to COMAH, including all work relevant for compliance with COMAH Regulation 4. Inspecting more general Health and Safety at Work Act issues or compliance with specific regulations other than COMAH is not subject to cost recovery from 6 April 2008. Examples for Top Tier Establishments

Example 4:

For all top-tier establishments, any check made to determine whether the information in the safety report accurately reflects the conditions on site will fall within the cost recovery scheme as this is one of the specified purposes of inspection under Regulation 19(2) (c).

Example 5:

At a top tier whisky distillery, handling highly flammable liquids is integral to the manufacturing process. The SIC Code for this activity is listed in Table 1 in this guidance. Consequently, costs are recovered for all HSE regulatory activity (both COMAH and RSPs).

Example 6:

A steelworks is a top tier establishment due to the storage / use of gases. The SIC code for this establishment does not appear in Table 1 in this guidance. Use of the dangerous substances that give the establishment its top tier status is ancillary to the main activity.

Costs will be recovered for work relating to COMAH, including all issues relevant for compliance with COMAH Regulation 4. Inspecting more general Health and Safety at Work etc, Act issues or compliance with specific health and safety regulations other than COMAH is not subject to cost recovery after 6 April 2008.

Advice during inspection

1.22 Providing advice and guidance relating to compliance is a normal part of the dialogue between an operator and the CA during any inspection visit, and is an integral part of the process of inspection. Time spent on providing such advice will be included in the time recorded for the inspection visit and the CA will recover costs for this.

Investigation

1.23 The CA is under a duty to investigate all major accidents. Other serious incidents which could have resulted in a major accident and complaints are also likely to be investigated. For other less serious events, the CA assesses, on a case-by- case basis, the significance of the circumstances in relation to compliance with COMAH before deciding to investigate.

1.24 Most incidents and accidents do not result in a major accident but such incidents and accidents often arise from a failure to provide or maintain effective control measures required under COMAH. The investigation of such events provides the CA with information about compliance, frequently highlighting necessary improvements in control measures needed to be taken by the operator. Consequently, this work will be cost recoverable. Similarly, the CA will treat seriously, and recover the costs of, the investigation of complaints made to it relating to compliance with COMAH.

1.25 Investigative work will be reactive in nature and cannot be pre-planned. It is therefore difficult to give an estimate of a typical cost. However, some examples of potential costs are given in Part 3.

1.26 During the initial stages of an investigation it may not always be possible to immediately determine whether the event relates to COMAH. In many cases, some preliminary inquiries into the facts and circumstances will be needed to determine the application of COMAH. The operator will be informed by the CA investigating inspector as soon as it becomes evident that the investigation is relevant to COMAH or is otherwise subject to cost recovery.

Enforcement

1.27 Subject to the exclusions outlined in paragraphs 1.35 - 1.37 below, costs connected with enforcement activities are recovered from operators. The costs incurred by the CA in connection with inspectors exercising powers under Section 20 of HSWA to enforce the COMAH regulations, including the power to make such examination and investigation (other than investigations of major accidents which are dealt with under regulation 19) as necessary, are recovered from the operator. Where the CA takes formal enforcement action - serving an Improvement or Prohibition Notice - the associated costs are cost recoverable.

1.28 Where a possible offence comes to the attention of the CA, any activities carried out to enable the CA to decide whether to prosecute and in preparing a summons or, in Scotland, preparing a report for the Procurator Fiscal is cost recoverable. These activities may include consideration of facts or gathering evidence or taking statements and other legal work. Where costs have been recovered as a result of these activities the CA will not also seek to recover them as legal costs.

Domino Effect - Provision of information to other establishments

1.29 The CA recovers costs from operators for work in the designation of groups of establishments where the likelihood or consequences of a major accident may be increased because of the location and proximity of other establishments in the group and the dangerous substances present there. For top-tier establishments, this is undertaken as part of the assessment of the safety report. For lower-tier sites this work is done following notification under Regulation 6 and costs will be recovered separately.

Prohibition of use

1.301.30 The Competent Authority must prohibit the operation of an establishment or installation, or any part of it, if it identifies a serious deficiency in the measures taken to prevent a major accident and the costs of this work are recovered from the operator. Where a serious deficiency is suspected, the CA does not prohibit solely on the basis of documentary evidence in the safety report. The operator is contacted and the situation assessed, usually by a site visit.

1.31 Prohibition action may arise as a result of:

Additionally, the CA may prohibit the operation, or any part of it, if there has been a failure to submit the notification, safety report or other information required under COMAH.

1.32 The CA always holds discussions with operators before taking prohibition action.

Appeals against notices

1.33 Although the costs incurred by the CA in connection with the service of improvement or prohibition notices are recoverable including those cases where an appeal is successful, the costs incurred by the CA from the date on which the Employment Tribunal has received a notice of appeal are not recoverable.

Public Registers

1.34 The CA recovers from operators the costs of work undertaken following an application to have information excluded from the public register on the grounds that it is commercially or personally confidential.

Exclusions

1.35 Costs will not be recovered under the COMAH scheme for:

1.36 Costs will not be recovered under the COMAH cost recovery scheme for work in support of another regulatory regime subject to cost recovery - e.g. any work to assess suitability for an explosives storage licence where a licence fee is paid.

Provision of advice on compliance

1.37 The CA does not cost recover for advice given to operators on the general application of COMAH or for pre-submission advice relating to safety reports. This does not include pre-receipt activities for revisions of safety reports for which costs are recovered. Similarly advice given by HSE on the general application of RSPs is not subject to cost recovery.

1.38 The CA expects duty holders to have made best use of existing published guidance before requesting specific information or guidance from inspectors, but operators should feel free to contact the CA for advice on compliance. Dealing with requests for advice is assessed against other operational priorities.

Fees

1.39 The amount to be recovered is calculated on an 'actuals' basis. This is the recovery of the full costs of the time spent by the CA carrying out a relevant activity for a particular establishment on any particular occasion or occasions. This will include preparation time for an inspection / investigation and follow-up work following inspection / investigation, and any time spent by the CA visiting other sites such as the duty holder’s head office or the workplace of contractors.

1.40 With effect from the 6 April 2016 the hourly cost recovery rates for COMAH work are:

Third party involvement

1.41 In performing its functions under COMAH, HSE and / or EA or SEPA as appropriate, may need to contract elements of work to the Health and Safety Laboratory (which operates as an internal agency of HSE but with its own cost recovery rates) or to external third parties (e.g. commercial, technical and scientific consultancies). Such work may be contracted either to provide expertise not available within the CA or because the CA does not have the resources available at the time.

1.42 The CA Contractors must identify any potential conflict of interest and must provide a statement that no such conflict of interest exists before work begins. Normally, the CA seeks to check with the relevant operator that there are no commercial sensitivities in using a particular third party company on a particular issue or site. The CA seeks to find a replacement if such sensitivities exist but reserves the right to engage the relevant company where there are over-riding health and safety reasons.

1.43 Where, because of a major incident, it is necessary to engage HSL or a third party urgently, the CA will not be in a position to check with operators whether any commercial sensitivities exist.

1.44 Where work is contracted to a third party, the actual cost to the CA of the service will be recovered from the operator. This will be shown as a separate item on the invoice and the cost recovery rate may differ from the hourly rate. Contracts for work of this nature are let by open competition every three to five years. HSE and EA and SEPA have management arrangements to ensure that the quality and duration of the work of third parties is properly controlled and monitored.

Who is subject to cost recovery?

1.45 The amounts to be recovered fall to operators, that is, the person who is in control of the operation of an establishment or installation. A 'person' may mean an individual or corporate body. Where the establishment is to be constructed, persons who commission the design or construction of the establishment or installation fall within the definition of 'operator'.

Notification of fees

1.46 All COMAH operators currently known to the CA and new operators who notify under Regulation 6 will be advised of this guidance and subsequent revisions. Operators will be initially advised to access the Guide from HSE's website at:

A printed copy of this Guide will also be available on request.

Methodology used for calculating amounts payable

1.47 The cost of travelling to HSE or Agency Offices and to COMAH installations or other locations is included in the overhead element of cost recovery (para 3 below). The amount to be recovered is calculated on the basis of the time expended on that particular cost recoverable activity multiplied by the appropriate cost recovery rate (see para 1.40 above). Each member of the CA operates a work recording system to generate the information on the amount of time expended. Each member of the CA calculates and applies its own cost recovery rate. The amount to be recovered is calculated in accordance with HM Treasury's Guidance in “Managing Public Money” and includes the full cost of all the resources used in carrying out the cost recoverable work. These costs include:

1. Gross salaries of direct staff,

2. Gross salaries of Operational Management and Strategy,

3. General Administrative Expenditure,

4. Corporate services,

5. Capital costs,

6. Common good costs,

1.48 Some illustrative examples of possible recoverable costs are given in Part 3 for a range of COMAH establishments.

Administrative and financial arrangements

1.49 HSE is responsible for the administration of the cost recovery scheme on behalf of the CAs. It will issue invoices and receive payments for all cost recoverable activities irrespective of who carried out the work e.g. HSE, Agency or contractor.

HSE is responsible in the first instance, for debt recovery. Invoices identify:

1.50 Invoicing and debt recovery functions are carried out centrally; inspectors are not responsible for issuing invoices nor for any follow up actions relating to non-payment of invoices.

1.51 Invoicing of operators in respect of establishments/installations under their control will take place within thirty working days of the end of each financial quarter (the four financial quarters are April - June; July - September; October - December; and January - March).

1.52 Payment is due to HSE within thirty days of the date of invoice and HSE pursues outstanding debts, on behalf of the CA, in accordance with its own debt recovery procedures. Any queries relating to making a payment should be sent to the Finance Unit (see para 1.57 for contact details).

1.53 HSE prepares annual Memorandum Trading Accounts (MTAs) for its own COMAH cost recovery, which are subject to scrutiny by HSE's Internal Audit and also externally by the National Audit Office. A summary of the information will be published on HSE’s website in the autumn following each financial year (which ends on 31 March).

Procedure for handling queries and disputed invoices

1.54 In some cases it may not be possible to reach informal agreement and the CA has introduced a procedure for handling queries and disputed invoices. These are described fully in 'Procedure for Queries and Disputes for COMAH Cost Recovery'.

Procedure for resolving generic issues

1.55 Where matters of dispute arise on operational issues which have implications for the cost recovery regime as a whole, these are first considered by the COMAH Cost Recovery Review Group which has the overall responsibility to keep under review the effectiveness and operation of the COMAH cost recovery regime's financial and administrative arrangements. The membership of the Review Group comprises representatives from industry and trade associations as well as EA, HSE and SEPA officials.

1.56 If the matter cannot be resolved by the Review Group, it will be referred to senior officials in EA, HSE and SEPA.

Contacts for advice and guidance

for work undertaken by EA:

Environment Agency,
Rio House,
Waterside Drive,
Aztec West,
Almondbury,
Bristol.
BS32 4UD

for work undertaken by SEPA:

Scottish Environment Protection Agency,
Erskine Court,
The Castle Business Park,
Stirling.
FK9 4TR


1 The Relevant Statutory Provisions are defined in HSWA as including the provisions of Part I of the Act and any health and safety regulations

Updated 2016-04-06