Compliance, Enforcement and Innovation

1
Compliance, Enforcement and Innovation

• Neil Gunningham,
• Professor, Regulatory Institutions Network and
• School of Resources, Environment and Society
• Australian National University

2
The Regulatory Challenge

• to induce compliance
• ease of enforcement
• promoting innovation

3
The shifting regulatory landscape

• The contracting state
• Increasing power and sophistication of NGOs
• Increasing interest of commercial third parties
  in environmental issues
• The changing roles of business

4
Regulating Large Point Sources Beyond
Traditional Licencing

• Load based licencing and other MBIs
• Environment Improvement Plans (facilitative
  regulation)
• Regulatory Flexibility
• Operator and Pollution Risk Assessment (OPRA)
• Enforceable undertakings

5
The license model

• Views businesses as constrained by a
  multi-faceted licence to operate
• Corporate behaviour explained by interactions
  between regulatory, social and economic licences
• - Efficiency and effectiveness of technology
  based command and control
• - The importance of Social Licence underpinned
  by Informational regulation, and empowering
  NGOs and communities

6
The role of Meta Regulation

• Recognises the limitations of the state to deal
  with complex environmental issues
• Focus on procedures rather than prescribing
  behaviour
• State shifts to meta-regulation and meta-risk
  management
• - Government monitoring of self-monitoring,
  or the regulation of self-regulation
• - To monitor and seek to re-make the risk
  management systems of regulatees
• Enforcement means refusing accreditation

7
The future?

• Corporate shaming (informational regulation)
• Economic instruments and market signals (Load
  Based Licenses)
• Processes and systems locking in continuous
  improvement (Meta Regulation, EIPs , Regulatory
  Flexibility)
• Harnessing second and third parties as surrogate
  enforcers
• The role of Government- steering not rowing?
• Traditional enforcement

8
The Challenge of SMEs

• Lack of resources
• lack of awareness and expertise
• lack of receptivity to environment issues
• sheer numbers of such enterprises
• limited inspection resources makes conventional
  enforcement impractical

9
Overcoming limited regulatory resources

• actively encourage duty holders to regulate
  themselves,
• give them a positive incentive to do so.

10
Self-audit and self-management

• Agency requests the firm to conduct and return
  self-assessment check lists
• threats to inspect combined with self-audit
  program as alternative to inspection achieved far
  higher response rate
• key is maintaining a credible threat of
  enforcement (spot checks, and occasional
  inspections, blitz and bluff)

11
Thinking Laterally

• Buyer Supplier Relationships
• -Powerful source of leverage over SMEs
• The Role of Surrogate Regulators- Vehicle
  Repair Workshops

12
Conclusions

• Focus on win-win solutions with short term
  pay-offs
• persuade SMEs to do more for themselves via
  self-inspection, self-audits
• provide incentives for all the above
• Exploit greatest sources of leverage
• provide a credible underpinning of direct
  regulation

13
Regulating Diffuse Source Pollution

• Farm management practices ( eg environmental farm
  plans, BMPs, EMS, Codes of Practice)
• Landscape changes (fencing, buffer strips,
  re-vegetation, riparian zones a, contour
  landscaping, soil modification etc)
• Land Use Changes (planning law etc)

14
Which compliance mechanism?

• Voluntarism
• Positive incentives- financial subsidy, cost
  sharing programs, or auctioned grants
• Negative incentives (eg cross-compliance)
• Mandatory changes (eg buffer zones)

15
A phased approach?

• The need for trade offs effectiveness,
  efficiency, equity and political acceptability
• Phase 1 positive incentives (process standards,
  landscape changes) and planning controls
• Phase 2 negative incentives and regulation
• - environmental general duty to the land,
• enforced through mandatory self-auditing and
  random third party audits)
• mandatory specification standards (eg buffer
  zones)
• levy or sliding charge re adoption of env farm
  plan

16
Enforceable Undertakings
Administrative Notices
Penalty notice
Warnings and negotiated outcomes
Advice and Information
17
Incapacitation
Fines and other punitive action
High Court
Fine and other punitive action
Lower Court
)