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COMAH and Gas Transportation Charging Review Groups

Minutes of the Joint Meeting held on 30 October 2008

Present:

P Baker, Chairman, HSE

Industry Members Competent Authority Members
I McPherson UKPIA S Chatfield HSE
D Montgomery   CIA M Reyland HSE
D Leech CBA  S Welsh HSE
T Smith Explosives Industry Group (CBI) I Garden EA
    J Pownall HSE (Secretary)

Welcome and introductions

The Chairman welcomed everyone to the meeting. He explained that the agenda covered the standard business items and the proposed 2009/10 hourly rates. Although this was not a formal consultation on the proposed rates the views of industry were important and would be conveyed to the HSE Board and to Ministers. To facilitate this it was intended to submit the proposed rates to members by 7 November with a request that all comments be received by 21 November so they could be included in HSE Board paper on cost recovery for discussion at its meeting on 17 December.

Apologies received from: B Murray, Independent Pipelines Ltd; C Clarke, Wales & West Utilities; K H M Bray, Tank Storage Association; P McNulty, T&G; J Duckworth, National Grid; J Burns, SEPA; W Thornton SEPA; J Ford, SEPA; and B Davis EA for whom Mr Garden was deputising. 

Minutes of the CCRG and GCRG Meetings held on 10 October 2007 and 5 March 2008

The minutes had been previously agreed and published on HSE’s website.

Matters arising

There were a number of actions on HSE, to amend/clarify certain items in the cost recovery guides, in the 5 March CCRG/GCRG minutes. Members agreed to consider the action as cleared.

2007/08 Outturns

These were in the standard format agreed some time ago.

  1. HSE: he COMAH outturn confirmed that the hourly rate of £117 was low and should have been £123, resulting in an under-recovery of £240k. EA: The outturn met the target at £117. CIA (DM) congratulated EA on achieving their projection.
  2. SEPA: The outturn from SEPA was not available. HSE would arrange for it to be sent to members as soon as it was available.
  3. GSMR: The outturn showed that the rate of £115 should have been £126 resulting in an under-recovery of £42k.

CBI (TS) and CBA (DL) both suggested that HSE appeared to be delivering more hours under the COMAH regime that industry expected and that Kevin Allars had suggested in 2007 that as the number of staff was limited so the number of hours would also be limited. The Chairman replied that the outturn of cost-recoverable hours reflected the effort required by HSE to inspect major hazard sites and respond to incidents (including Buncefield) and was proportionate to the hazard and risk profile of sites and performance of duty holders.  .

Proposed rates for 2008/9

Mr Reyland explained that this year there were a number of variables and current unknowns e.g. level of pay rise, number of hours, next year’s budgets. The figures he was about to propose were provisional and had to be cleared through HSE’s Senior Management Team (SMT), the HSE Board and Ministers, taking account of members’ views. HSE had arranged for Internal Audit (IA) to look over the calculations and methodology. The indicative rates were:

  1. HSE GSMR Rate: The proposed hourly rate was £155. The increase was due to the inclusion of science costs for the first time.
  2. HSE COMAH Rate: The proposed hourly rate was £160, a 3% increase including £30/hour for anticipated science spend.
  3. EA Rate: The proposed EA hourly rate was £124, a 3.3–3.6% increase. These were provisional figures as EA were discussing a new pay structure and were carrying out an IT review. Noted.
  4. SEPA Rate: The proposed SEPA hourly rate would be notified to members as soon as it was available. Noted. Action Jean Pownall.

The HSE rates were noted. Once the HSE figures were verified, HSE would write out to members with the final proposal and cost breakdown. The increase in science is the predominant cause of the increase in HSE rates. The underlying figures have gone down e.g. accommodation costs. CBI (DM) said that she appreciated that, but members would see the costs going up. UKPIA (IM) asked that we include an identification of the elements that go to make up the cost, perhaps by adding extra rows. 

HSE would get the verified rates to members by 7 November. The Chairman asked members to consult their industry members and return any comments on the proposed rates to HSE by 21 November.

CIA (DM) asked if there had been a lot of RSP work carried out so far this year. The Chairman said that the current estimate for the year was 2,000 hours out of 44,000 COMAH hours, and that next year (2009/10) would probably prove to be 2,000 of 45,000 hours. CIA (DM) would try and get some feedback from members.

Science

The Chairman asked Dr Welsh to update members on the science plans.

Dr Welsh explained that all science bids continue to be subject to a rigorous challenge process. His role is to manage the Major Hazard (MH) share of HSE Science budget. The continuing, and constant delivery of Land Use Planning (LUP) work uses the major proportion of the science budget and is not cost recoverable. He forecasted that COMAH science is more periodic with a peak of activity over the next two years for essential work for the COMAH Remodelling programme.

Subject to more detailed specification, the sole GSMR project will provide the technical basis for assessing the continued performance and integrity of polyethylene pipe distribution systems in the face of emerging concerns about construction practices. .

Science costs for 2008/09 were likely to be under-recovered. HSE had included £350k in the calculations for this year’s rate, but the actual spend was projected to be £750k.

The attachment to these minutes shows the list of projects for this year, and next. Once the work is contracted, the summary details are published on HSE’ web site under the Projects Directory.

CIA (DM) queried the inclusion of £150k for GHS classification given some beneficiaries of this work would be sites not currently subject to COMAH and that would hope to remain so. The Chairman replied that existing COMAH operators would also benefit in that their responsibilities in relation to hazardous substances would be contained, and some may avoid elevation to TT status. Benefits to non-COMAH operators could flow from many of the science projects and informed judgements had been made about the referability of all of the projects in calculating the hourly rate. 

CBI, EIG (TS) agreed that it was important to continue the project for quantification and control of hazards associated with the transport and bulk storage of fireworks, but thought it was too narrow in scope. TS expressed a keen interest for involvement and technical contribution throughout the course of this research. All agreed the value and the offer would be passed on to the relevant inspectors overseeing both research projects. 
Action Dr Welsh.

UKPIA (IM) asked what the product of projects was. Dr Welsh explained that, except in rare cases, all results were published in a Research Report, downloadable from HSE web site. The relevant HSE specialists take the results forward, initially in presentations to key stakeholders/ groups, followed by guidance, which in some cases is prepared and published jointly with industry. The Chairman said that HSE would continue to use for a as CDOIF to promulgate the outcome of research and often the outcomes were translated into guidance for industry and regulators. The Chairman invited members to suggest other mechanisms that could be used to communicated more widely the outcomes of research.

CIA (DM) said that the 09/10 rate for science was more than double that in the current year. DM wanted to know if there were any discussions with industry about similar work being conducted by industry or other institutions. Dr Welsh replied that it is only possible to check work in the public domain, so HSE cannot always be sure that work is not being duplicated, but at each stage of a very rigorous commissioning process there is plenty of opportunity to test the novelty of the work. Major Hazards science process is broadly: science need identified by HSE’s discipline specialist inspectors who are often leading experts in their field; their case is subject to further senior management review and challenge before possible approval by the Director of HID as part of the Science Plan. This is subject to further review and challenge by HSE’s Chief Scientist Directorate, which amongst other things require specific assurance that new work is not a repeat or duplicate of similar work. .

CIA (DW) asked that HSE make sure they share the proposed projects early with  industry as they are doing a lot of work on for example, ageing plant.

The Chairman discussed the governance arrangements in HSE of science and explained that the Science Subgroup of the HSE Senior Management Team is chaired by Patrick McDonald (Chief Scientist) and includes and 3 independent members to oversee the delivery of science including budgets. The Chair also explained how the management of science in HID had been reorganised with Susan Mackenzie (Head of HID Specialised Industries) having oversight.

CBI EIG (TS) asked what percentage of the work (and costs) for Control of Hazards Associated with the transport and bulk storage of Fireworks (CHAF2) fell outside COMAH, where transport is the driver for hazard classification not the COMAH eligibility.

Dr Welsh agreed, but his ‘non expert’ understanding was that the established, international test methods developed for transport, didn’t provide the complete picture of hazard potential. Past incidents, led to the CHAF 1 research, which confirmed the need for further work and together with the work on UN tests, should provide more clarity on hazard classification inter alia, not least to account for differing storage conditions, and significance to COMAH.

Alternative cost recovery methods

The Chairman reminded members of the commitment to industry and the Minister to look at developing a revised cost recovery scheme from 2010/11 to provide, amongst other things, better predictability for industry. A revised Offshore scheme based on banding similar installations had been developed and was under consideration by industry.

Progress with the onshore scheme had been delayed pending the outcome of work on the offshore scheme. A Project Initiation Document had now been prepared and some preliminary work carried out drawing on work offshore. Early indications were that the diversity of the chemicals industry would preclude banding to the extent proposed offshore. The project aimed to develop proposals/recommendations by spring/summer 2009.  Industry would be engaged in the meantime.

Any other business

No items.

Date of next meeting

The next meeting was scheduled for Thursday 29 October 2009 Rose Court.  


Updated 2009-01-05