Assignment Questions - Environmental, Business and Economic
Boludo
QUESTION6.pdf
Environmental regulation What is environmental regulation, why is it needed, how is it formulated? How is it enforced, and what are its limitations?
Key concepts
▪ Sources of law
▪ Theory and practice of
environmental regulation
▪ Role of regulators
▪ Enforcement principles
Why does this matter?
If we consider environmental problems
to essentially be ‘commons’ problems,
regulation is one means of ensuring that
individuals’ or organisations’ activities
do not overexploit our shared
resources.
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Market-based instruments
Carrot
Regulatory instruments
Stick
Persuasive instruments
Sermon
1. Environmental regulation: Theory & practice
Why is environmental regulation needed?
Recall the “tragedy of the Commons” (Hardin, 1976 & Hardin, 1986)
Central regulation provides a possible solution.
The Commons At carrying capacity
(sustainable use)
10 cows
Carrying capacity exceeded (depleted resources)
10+ cows
Hard and soft law
Hard law
• Formal conventions such as treaties and statutes, protocols and other written agreements or obligations between states
• E.g. UN Framework Convention on Climate Change 1992; Montreal Protocol on Substances that Deplete the Ozone Layer 1987
Soft law
• Non-binding but ‘influences and encourages’
• Includes opinions, statements, resolutions and declarations
• E.g.; Universal Declaration of Human Rights 1948; Declaration of the UN Conference on Environment and Development 1992
International Law
Multilateral environmental agreement Legally-binding agreement among three or more nations.
European Law
National (UK) Law
Framework Conventions An intergovernmental document intended as legally binding.
Civil Regulates disputes between private parties
Criminal Wrong against society, cases brought in the name of the crown
Regulation Binding, must be applied in its entirety across the EU.
Directive Binding goal that all EU countries must achieve. However, individual countries decide how to achieve goal & devise laws to implement.
Decisions Binding on those to whom it is addressed (e.g. an EU country or an individual company).
Sources of UK law
Legislation can change case law
Common law Judge-declared law, based
on customs and legal precedents developed over
hundreds of years.
Legislation Law that is created by a legislature, e.g. Acts of
Parliament.
Case law cannot change legislation
Legislation is produced by a political process.
Because legislators can recognize potential threats, they can legislate to avert harm before it occurs.
Legislation can ensure that the law keeps pace with a rapidly changing society and emerging environmental issues.
Hasnas, J., 2009. Two Theories of Environmental Regulation. Social Philosophy and Policy, 26(2), pp.95-129.
Legislative restriction of access as a form of environmental regulation
Case study: WEEE Directive European Community Waste Electrical and Electronic Equipment Directive
European Law in 2003, transposed into UK law in 2006, active 2007. Revised WEEE Directive became effective 2014.
Set collection, recycling and recovery targets for all types of electrical goods.
Requires companies establish an infrastructure for collecting WEEE.
The Restriction of Hazardous Substances Directive also put restrictions on European manufacturers re. materials in new electronic equipment.
In UK, small producers of WEEE register directly with EA, larger producers with a compliance scheme, which should be EA approved.
Compliance scheme handles collection and recycling of WEEE, assists with recording, reporting.
Recycling activities often take place on unfortified ground where harmful substances released during dismantling are directly discharged to the soil … Insulating foam from dismantled refrigerators … or old car tyres are often used as the main fuels for the fires, contributing to acute chemical hazards and long-term contamination …
Schluep, M., Terekhova, T., Manhart, A., Müller, E., Rochat, D. and Osibanjo, O., 2012, September. Where are WEEE in Africa?. In Electronics Goes Green 2012+(EGG), 2012 (pp. 1- 6). IEEE.
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What problems does the WEEE case illustrate with legislative approach?
…many of the problems encountered by law enforcement bodies are associated with insufficient financial means and human resources. The resulting loopholes create enough leeway for criminal operators to circumvent control, and in case of detection, to get away with minimum penalties.
Mohanty, S., Vermeersch, E., Hintsa, J., Di Cortemi-glia, V.L. and Liddane, M., 2015. Weaknesses in European e-waste management. Operational Excellence and Supply Chains, p.535.
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What problems does the WEEE case illustrate with legislative approach?
1. Nature is self- regulating and complex; we cannot influence the laws of nature.
2. Many environmental problems are invisible.
3. Many environmental problems are marked by uncertainties.
4. Nature cannot itself act legally and does not itself have a voice in decision-making.
5. Many environmental goods and services are public goods in the economic sense.
6. Environmental values and harms are difficult to price correctly in decision-making.
7. Cumulative effects / ‘the small decisions paradox’.
8. Many environmental problems cross economic and social sectors both in causes and effects.
9. The most serious environmental problems cross administrative borders.
10. Many environmental effects are long term.
11. Corruption – ‘trees have no money’.
12. Plurality of values and complexity in decision-making.
Bugge, H., 2013. Twelve fundamental
challenges in environmental law. In Voigt, C. (ed.) Rule of Law for Nature: New Dimensions and Ideas in
Environmental Law. Cambridge University Press. Online via Birkbeck Library.
Common law privatization as a form of environmental regulation
Common law is produced by a trial-and-error.
Common law can be viewed as responses to the types of activities that bring human beings into conflict.
Rules do not evolve until the problem is acute enough to cause conflicts.
Common law could act as ‘invisible hand’: privatizes commons not by erecting fences around resources, but by aligning the incentives of individuals with the resources’ preservation.
Common law evolves in ways designed to reduce conflicts, not to effect ‘perfect’ justice.
Hasnas, J., 2009. Two Theories of Environmental Regulation. Social Philosophy and Policy, 26(2), pp.95-129.
Has Common law evolved to protect the polluted?
Is there a means for the polluted to recover compensation from the polluter in the event of damage to property/personal injury due to the release of a pollutant?
Rylands v Fletcher: Rylands employed contractors to build a reservoir, but had no active role in its construction. When the contractors discovered old coal shafts improperly filled, they chose to continue work rather than properly blocking them up. On 11 December 1860, shortly after being filled for the first time, Rylands' reservoir burst and flooded a neighbouring mine, run by Fletcher.
Is Rylands liable for the damage caused?
Has Common law evolved to protect the polluted?
Rule in Rylands v Fletcher: "the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape".
Strict liability: regardless of whether the occupier (who collected the ‘mischievous’ thing which escaped) is at fault, he/she will be liable to the claimant who suffered personal injury or damage to property.
Has Common law evolved to protect the polluted?
Cambridge Water v Eastern Counties Leather Company: In 1976, Cambridge Water purchased a borehole outside Sawston to deal with rising demand. In 1980, a European Directive was issued requiring establishment of standards on the presence of perchloroethene (PCE) in water. Sawston borehole was contaminated with PCE from a tannery owned by Eastern Counties Leather.
Prior to 1980, there was no knowledge that PCE could cause harm. Should Eastern Counties Leather be held liable?
Has Common law evolved to protect the polluted?
Case eventually went to the House of Lords, where a decision was read by Lord Goff on 9 December 1993.
Based on the original decision in Rylands, Goff argued that it had always been intended for foreseeability of harm to be a factor. In the original judgment in Rylands, the judge had stated that it covered “anything likely to do mischief if it escapes”.
Why does this matter?
How are challenges of environmental law related to foreseeability (or lack thereof)?
1. Nature is self- regulating and complex; we cannot influence the laws of nature.
2. Many environmental problems are invisible.
3. Many environmental problems are marked by uncertainties.
4. Nature cannot itself act legally and does not itself have a voice in decision- making.
5. Many environmental goods and services are public goods in the economic sense.
6. Environmental values and harms are difficult to price correctly in decision-making.
7. Cumulative effects / ‘the small decisions paradox’.
8. Many environmental problems cross economic and social sectors both in causes and effects.
9. The most serious environmental problems cross administrative borders.
10. Many environmental effects are long term.
11. Corruption – ‘trees have no money’.
12. Plurality of values and complexity in decision- making.
Bugge, H., 2013. Twelve fundamental
challenges in environmental law. In Voigt, C. (ed.) Rule of Law for Nature: New Dimensions and Ideas in
Environmental Law. Cambridge University Press. Online via Birkbeck Library.
Case study: The Montreal Protocol
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“Perhaps the single most successful international agreement to date has been the Montreal Protocol
Former United Nations Secretary-General Kofi Annan (2003)
Scientific background
Rowland-Molina hypothesis (1974) was strongly disputed by representatives of aerosol and halocarbon industries.
DuPont, amongst others, commissioned academic studies aimed at discrediting it.
1976: U.S. National Academy of Sciences confirmed the scientific credibility of the ozone depletion hypothesis
1989: Greenpeace climbers hang a blue ribbon first prize for ozone destruction by Dupont Delaware.
International context
USA took measures to reduce CFC emissions c. 1977, and tried to move other countries to similar measures.
Only Norway, Sweden, Canada and Australia followed.
By end of 1970s in Europe, only Denmark & the Netherlands came out in favour of banning CFCs in aerosols. Germany, Great Britain & France opposed a ban.
By 1980, EC agreed to some reduction, but USA felt this was insufficient.
Negotiations in Vienna led to Framework Convention that obligated the parties to take ‘appropriate measures to protect the ozone layer’, but these remained unspecified.
Goal of a Protocol by 1987.
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1985: NASA image reveals scale of ozone hole
October 1986: leading producer of CFCs , Du Pont, comes out in favour of worldwide production limits.
Montreal negotiations
‘Toronto Group’ (includes USA, Canada, Scandinavian countries) wants 95% reduction in CFC emissions.
EC wants a freeze on production facilities (offer scope for industry to grow, as facilities are not at capacity).
USSR and Japan want no regulations of any kind.
Developing countries have little interest in issue, but their CFC use was predicted to be increasing.
Within EC, standoff between GB (greatest production capacity) and Germany (domestic green politics).
Agreements reached:
Freeze on production totals in 1990, 20% reduction by 1994 and further reduction by 1999 for a 50% overall, relative to 1986.
Ban on moving production into and on importing from non- signatory countries;
Signatories to represent 2/3 of global consumption in 1986: agreement becomes legally binding only when EC, Japan & USA ratify.
Weighting system for emissions (flexibility re. where to cutback)
Fund to assist developing country with compliance.
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Models predict recovery of ozone layer ~2040 This is because the concentration of chlorine and other ozone-depleting substances in the stratosphere will not return to pre-1980 levels until the middle of this century.
Limitations of regulatory tools?
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▪ Difficult to apply to larger, more complex environmental problems (e.g. climate change)
▪ Scaling-up to international level problematic (e.g. WEEE).
▪ Rules may have to be complex to account for heterogeneity of industries (e.g. CFC weighting system).
▪ Actors may not be incentivised to act quickly or innovate (what’s added advantage to going beyond compliance?).
▪ Actors may be incentivised to find loopholes/cheat (e.g. VW emissions scandal).
Summary
Two theories of environmental regulation: legislative restriction of access and common law privatisation.
Theoretically, legislation can avert harm and ensure that the law keeps pace with a rapidly changing society and emerging environmental issues.
In practice, legislation is often reactive, and realisation of benefits can be hampered by imperfect knowledge and special interests.
But, when legislation works, it carries the certainty that goals will be achieved. But it can also incentivise actors to find loopholes.
Common law has embedded foreseeability as a criterion for liability, with implications for environmental issues.
Break 15 mins
2. Compliance and enforcement: UK context
Legislative approach, i.e. ‘command and control’
Stipulates detailed rules and requirements to achieve environmental protection Failure to comply → fines & other sanctions
Instruments
▪ Non-transferable emissions licences
▪ Input controls
▪ Output ceilings
▪ Technology controls (use a particular method or standard)
▪ Locational controls (relating to the admissible location of activities)
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The principal environmental regimes 1. Environmental Permitting Regime
(EPR), combining the pollution prevention and control (PPC) regime and waste management licensing and industrial emissions
2. Water 3. Waste 4. Contaminated land 5. Conservation of nature, wildlife and
habitats 6. Environmental impact assessments
(EIAs)
Regulators
Environment Agency
Major industry and waste
Contaminated land
Water quality and resources
Fisheries
Conservation and ecology
Flooding
Local Authorities
Land use planning
Local air quality strategies
Noise and statutory nuisance (e.g.
dust and odour)
Environmental health
Contaminated land
Tree preservation orders
Natural Resources Wales
Similar responsibilities to EA
Scottish Environment Protection
Agency (SEPA)
All pollution prevention and control
(No local authority powers under
PPC in Scotland)
Flood defence limited to issuing
flood warnings
No fisheries involvement
Natural England
Conservation of wildlife and
geology in England, including Sites
of Special Scientific Interest (SSSIs).
Enforcement powers to prevent
damage to habitats.
Environmental Permitting (England and Wales) Regulations (2010)
Covers pollution prevention and control, industrial emissions & water discharge.
System under which anyone wishing to carry out regulated activities must apply for a permit.
Carrying out regulated activities without a permit, keeping false records, etc. is punishable by a fine or imprisonment.
Administered by Environmental Agency & Natural Resources Wales.
Enforcement tools
Injunctions ▪ An order of a court directing an individual or company to either:
1. Stop a particular activity (a prohibitory injunction) or
2. Carry out a particular activity (a mandatory injunction).
▪ Failure to comply is treated as a contempt of court.
▪ Punishable by an unlimited fine and/or up to two years’ imprisonment.
Notices ▪ A regulator's written notice requiring action.
Powers ▪ EA has power to carry out remedial works and recover the cost.
▪ Or can accept an enforcement undertaking from individual/company in breach of law (formal, voluntary offer).
Criminal sanctions ▪ Financial penalties, caution, prosecution.
“The compliance and enforcement position explains how Natural England help people comply with the laws we are responsible for enforcing
https://www.gov.uk/guidance/e nforcement-laws-advice-on- protecting-the-natural- environment-in- england#natural-englands- compliance-and-enforcement- position
Enforcement outcomes
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To stop offending
To restore and/or
remediate
To bring under
regulatory control
To punish and/or deter
To stop offending
• Stop Notice
• Suspension notice
• Groundwater prohibition notice
• Anti-pollution works notice
• Injunctions
To restore and/or remediate
• Enforcement notice
• Notice to remove waste,
• Anti-pollution works notice.
• Remedial work Enforcement undertaking
To bring under regulatory control
• Enforcement notice
• Suspension notice
• Anti-pollution works notice
• Revocation of environmental permit
• Variation of permit conditions.
To punish and/or deter
• Criminal sanctions
• Monetary penalties
Liable party Class A liability group
• Those who caused or knowingly permitted the contamination
• Aware of the presence of the contamination.
• Has the ability to prevent or remove it.
• Remediation can be required for contamination that existed before regime came into force.
Owner/occupier liability Class B liability group
• If no liable party can be found liability passes to the Class B liability group.
• Owners and/or occupiers of the land regardless of whether they were responsible for the contamination or aware of its existence.
Previous owner/occupier liability
• Previous owners or occupiers who caused contamination remain liable after the sale of the land.
• However, an owner/occupier who is not a polluter will no longer be liable when they cease ownership /occupation.
Macrory penalty principles
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A sanction should:
▪ Aim to change the behaviour of the offender
▪ Aim to eliminate any financial gain from non- compliance
▪ Consider what is appropriate for particular offender & regulatory issue
▪ Be proportionate to the nature of the offence and the harm caused
▪ Aim to restore the harm caused by regulatory non- compliance
▪ Aim to deter future non-compliance
Macrory, Richard B. Regulation, enforcement and governance in environmental law. Bloomsbury Publishing, 2014.
Mitigating factors
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▪ Offender is cooperative, voluntarily or self-reporting.
▪ Personal circumstances (e.g. illness).
▪ First offence.
▪ Juvenile offender.
Deterrent effect
▪ Prosecutions may be appropriate minor non-compliances where they lead to a greater level of overall deterrence.
Aggravating factors
▪ Offence committed deliberately or with gross negligence.
▪ Offence could have been prevented but was not.
▪ Offence results in or have potential to lead to serious environmental/human impacts.
▪ Offense interferes with regulator’s operations (e.g. obstructing staff, providing false information).
▪ Offence motivated by financial gain.
▪ Previous sanctions have failed to encourage change.
▪ Offender has a poor attitude/is uncooperative.
Macrory regulator characteristics
Regulators should:
▪ Publish an enforcement policy
▪ Measure outcomes not just outputs
▪ Justify their choice of enforcement actions year on year to stakeholders, Ministers and Parliament
▪ Follow-up enforcement actions where appropriate.
▪ Enforce in a transparent manner
▪ Be transparent in the way in which they apply and determine administrative penalties
▪ Avoid perverse incentives that might influence the choice of sanctioning response (e.g. salary bonuses)
Macrory, Richard B. Regulation, enforcement and governance in environmental law. Bloomsbury Publishing, 2014.
“ Command-and-control is comforting to politicians and people: governments know what they are asking for, people know what they are getting, companies know what they are supposed to deliver; the only people who do not like it are economists.
The Economist, September 2, 1989
A total of 91% … of respondents believed that regulation alone will not protect the environment. This belief appeared to result from recognition that no regulatory system can provide for full environmental protection …
Petts, J., 2000. The regulator— regulated relationship and environmental protection: perceptions in small and medium- sized enterprises. Environment and Planning C: Government and Policy, 18(2), pp.191-206.
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Operation Durable
Right: Leachate from a pile of waste stored at Avonmouth (Source: EA).
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Discussion questions
1. Briefly outline the facts of the case.
2. Who was impacted or harmed by the conduct requiring
enforcement? Think outside the box here…
3. What were the applicable laws and regulations?
4. Could the situation have been prevented and, if so, how?
5. What was the outcome of enforcement and was it effective?
Why or Why not?
6. Was the enforcement fair to the affected parties?
7. What could be done to improve the outcome, prevent the
need for future enforcement action, etc.?
Summary
Actors comply with legislation by following the stipulated rules for regulated activities (e.g. waste processing, car standards.)
Substantial monitoring & enforcement required in order to ensure penalties are applied where necessary.
Macrory penalty principles: Proportionality and consistency in the application of the law and in securing compliance
Command and control approaches theoretically have the benefit of transparency and predictability for actors – organisations know the rules and what is expected of them.
However, Petts (2000) found that majority of SMEs felt legislation was too complex, and not enforced evenly.
