Command and control regulation

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Command and Control (CAC) regulation finds common usage in academic literature and beyond. The relationship between CAC and environmental policy is considered in this article, an area that demonstrates the application of this type of regulation. However, CAC is not limited to the environmental sector and encompasses a variety of different fields.

Contents

Definition

Command and Control (CAC) Regulation can be defined as “the direct regulation of an industry or activity by legislation that states what is permitted and what is illegal”. [1] This approach differs from other regulatory techniques, e.g. the use of economic incentives, which frequently includes the use of taxes and subsidies as incentives for compliance. [2] The ‘command’ is the presentation of quality standards/targets by a government authority that must be complied with. The ‘control’ part signifies the negative sanctions that may result from non-compliance e.g. prosecution. [2] [3]

CAC encompasses a variety of methods. Influencing behaviour through: laws, incentives, threats, contracts and agreements. In CAC, there is a perception of a problem and the solution for its control is developed and subsequently implemented. [4]

In the case of environmental policy and regulation, the CAC approach strongly relies on the use of standards to ensure the improvements in the quality of the environment. The CAC approach uses three main types of standards. These are ambient standards, emission standards, and technology standards. Although these standards can be used individually, it is also possible to use the standards in combination. In fact, in most pollution control programs, it is the case where there is a combination of standards being implemented. [5]

Although environmental policy has a long history, a proliferation of policy making in this area occurred in the 1970s and continued to today. The CAC approach dominated policy in industrial nations during this decade because the general focus was on that of remedial policies rather than more comprehensive prevention techniques. [6] Whilst many view CAC negatively, direct regulatory control is still used in many countries' environmental policy. [6]

Enforcement and compliance

To deliver its objectives, direct regulation must ensure the highest level of compliance possible. This can be achieved through appropriate implementation and enforcement. Non-compliance to CAC regulation presents a serious challenge to its effectiveness [3] The manner in which CAC is enforced differs between countries. For example, in the US, some regulators who are tasked with implementing CAC techniques are given rule-making powers. Whereas in the UK, regulatory standards are more commonly set by departments of government. This is achieved through both primary and secondary legislation which is subsequently exacted by regulatory bureaucracies. [2] Regulation differs within countries as well, in the UK the current regulatory sanctioning system possesses variations between powers and practices among regulators. [7] Enforcement of CAC often involves the use of uniform sanctions, this can result in small businesses feeling the burdens of regulation more severely than companies of a larger size. [7]

Strengths and weaknesses of approach

A CAC approach in policy is used for several reasons. It has been proposed that by imposing fixed standards with the force of law behind them, CAC can respond more quickly to activities which do not abide by the set standards. [2] It also has benefits politically as the regulator (often the government) is seen to be acting swiftly and decisively. [2]

It is far from a problem free form of regulation; the 1980s in particular saw CAC subject to widespread criticism. A good number of the critics tend to favour market-based strategies and are often dubious of the merits of governmental regulatory approaches [2]

Some issues highlighted include: [2]

Critics of CAC often point to incentive-based regulation as an alternative with terms used such as smart regulation, management-based regulation, responsive regulation and meta-regulation. Possible benefits of this approach may include cheaper administration costs and a reduction in the risk of regulatory capture. However the view that incentive-based regulation is radically different from CAC has been scrutinised. [8] The advantages can be exaggerated, a complex system of rules is often necessary to allow an effective system, this can cause many incentive-based schemes to appear to replicate some of the characteristics of CAC. Inspection and enforcement may also be essential to prevent evasion of liability, again resembling CAC and possibly removing the posited benefits in terms of cost. [2] While practices may be changed at a superficial level through the use of CAC, it may not be able to achieve the changes of behaviour necessary for more sustainable environmental practices. [9] There are some commentators on the topic who prefer to use ‘direct regulatory instrument’ instead of ‘command and control’ instrument because of the negative connotations surrounding the term. [10]

Efficiency

Much of the literature on regulatory instruments considers efficiency in terms of monetary costs. CAC has been labelled by many critics as ‘inefficient’ as a system that spends resources but generates little revenue. [11] The cost of compliance is perceived to be high, which can result in costs that are higher than the sanctions for non-compliance. A summary of 10 studies demonstrated significant differences in cost between CAC and least cost alternatives. [12] Empirical data suggests that CAC regulations, especially government subsidies in agriculture, [13] often fuel environmental damage, deforestation and overfishing in particular. [14] [15]

Some have moved to defend certain aspects of a CAC approach, arguing against the commonly held belief that these regimes are inherently inefficient. [16] Economics incentives are frequently referred to as a considerably more efficient approach to regulation. The most commonly used incentives in this method relate to tax. The administrative costs of tax collection can be understated. Advocates of incentives have been accused of making simplifying assumptions and not fully taking into account the costs of administrating tax systems. [16] [17] In some circumstances, CAC regulation can end up being a less costly option. Whilst economic instruments may act to reduce compliance costs, in certain cases their total costs may actually be higher, This may stem from the high level of monitoring that is required to make an incentivised method viable and successful. [16]

Environmental regulation

Application

The use of Command and Control in regulation involves the government or similar body to “command” the reduction of pollution (e.g. setting emissions levels) levels and to “control” the manner in which it is achieved (e.g. by installing pollution-control technologies). It has been argued that CAC has the potential to be effective under certain conditions. Often its effectiveness can be determined by whether the problem has a diffuse or a point source. A CAC approach is relatively compatible with point source and regulation of these can often achieve success. On the other hand, CAC struggles to appropriately tackle issues that have a diffuse, non-point source. [18] Evans [19] draws on the following example: “it is relatively easy to regulate the emissions from 10 large coal burning power stations in a single country, but far less easy to monitor the emissions caused by millions of motorists or the effluent discharges from tens of thousands of farms across the world.”

In Environmental Policy, CAC is characterised by 3 different types of standards, the use of the standards is determined by various factors, including the nature of the environmental problem and the administrative capacities of the governing body: [17]

It has been suggested that if compliance reaches appropriate levels, there may be a good degree of certainty of environmental results. [20] CAC regulation has the potential to lead to a more rapid resolution of certain environmental policy objectives. [2] It may also provide clarity to those that are subject to the regulation. There may be a clearer understanding of what is required and how to meet those requirements. [9] It has been argued that the use of the CAC approach to solve environmental problems can result in unexpected consequences if the application is conducted uncritically. [4] Much of environmental policy to date has been associated with the term Disjointed Incrementalism. This term was coined by Lindblom [21] and describes the small and often unplanned changes that have occurred in the field of environmental regulation. These changes in regulation often address small-scale problems with laws tuned towards the particular area of concern. This approach is criticised on the grounds that it does not take into account the wider causes of environmental issues.

International environmental agreements

Montreal Protocol

The 1987 Montreal Protocol is commonly cited as a CAC success story at international level. The aim of the agreement was to limit the release of Chlorofluorocarbons into the atmosphere and subsequently halt the depletion of Ozone (O3) in the stratosphere.

There were a number of factors that contributed to Montreal’s success, these included: [22] [23]

  • The problem and solution were both clearly defined and supported by industry (albeit not initially)
  • The Ozone hole was easily measurable
  • There was an effective scientific lobbying alliance that played a key role in convincing the US Government and the commercial sector (in particular DuPont, then one of the largest manufacturers of CFCs)

Defining this agreement as a CAC approach is slightly problematic as the agreement does not directly instruct states how to meet their targets. However, the aim of the Montreal Protocol has been to eliminate the source of CFC emissions, as a result the only really feasible way for a state to achieve this would be through a ban on substances related to Ozone depletion. Montreal is considered by some to be a 'special case' of a successful CAC approach. [19]

Climate change

The traditional model of command and control typically involved areas of environmental concern being dealt with by national governments. In recent decades, transboundary environmental problems have risen in prominence. This shift has exposed many of the limitations of a command and control approach when it is applied to a larger and more complex arena. [19] Climate change is often used to exemplify the perceived failings of this regulatory approach. Climate change is good example of a concern that is complex, full of uncertainties and difficult for many people to understand. [24] This may help explain the apparent incompatibility of climate change and a CAC approach. Mitigating climate change requires action of a much more proactive nature than traditional CAC models are able to deliver. One reason for the lack of compatibility with many international environmental agreements is the manner in which the international community is organised. International law cannot be implemented in the same way as law at national level. [25] The CAC approach relies heavily on prohibiting certain activities and then enforcing the prohibition through sanctions, which makes scaling it up to the international level problematic. Without a strong international enforcement body it is unlikely that CAC will be an effective tool for dealing with most transboundary environmental issues, climate change included. [24]

Future of command and control regulation in environmental policy

The international nature of many contemporary environmental issues makes CAC regulatory approaches difficult. Since the 1970s enthusiasm for the implementation of economic incentives for regulation has been on the increase. This is due, in part, to the disenchantment with command and control. [26] The shift away from CAC does not seem to be slowing, the increased participation of a variety of actors may be the answer. The role of environmental NGOs in policy making has changed drastically in recent decades. Their numbers and the influence they exert over national governments and negotiations at international level has risen. [27] The involvement of NGOs has assisted the development of international policy in a number of ways. A great deal of environmental policy has been influenced by research collected by these organisations. They also act as whistleblowers, updating the regulators of progress and compliance. A blend of different approaches, involving a range of actors and regulatory types may be the best answer. However, it is likely that many governments will persist with CAC because of the political benefits and the fact that it is not always as inflexible and inefficient as many economists would suggest. [27]

Related Research Articles

<span class="mw-page-title-main">Environmental law</span> Branch of law concerning the natural environment

Environmental laws are laws that protect the environment. Environmental law is the collection of laws, regulations, agreements and common law that governs how humans interact with their environment. This includes environmental regulations; laws governing management of natural resources, such as forests, minerals, or fisheries; and related topics such as environmental impact assessments. Environmental law is seen as the body of laws concerned with the protection of living things from the harm that human activity may immediately or eventually cause to them or their species, either directly or to the media and the habits on which they depend.

<span class="mw-page-title-main">Emissions trading</span> Market-based approach used to control pollution

Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants. The concept is also known as cap and trade (CAT) or emissions trading scheme (ETS). One prominent example is carbon emission trading for CO2 and other greenhouse gases which is a tool for climate change mitigation. Other schemes include sulfur dioxide and other pollutants.

Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For example:

<span class="mw-page-title-main">Enforcement</span> Process of ensuring compliance with laws, regulations, rules, standards, or social norms

Enforcement is the proper execution of the process of ensuring compliance with laws, regulations, rules, standards, and social norms.

In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Compliance has traditionally been explained by reference to the deterrence theory, according to which punishing a behavior will decrease the violations both by the wrongdoer and by others. This view has been supported by economic theory, which has framed punishment in terms of costs and has explained compliance in terms of a cost-benefit equilibrium. However, psychological research on motivation provides an alternative view: granting rewards or imposing fines for a certain behavior is a form of extrinsic motivation that weakens intrinsic motivation and ultimately undermines compliance.

Regulatory economics is the application of law by government or regulatory agencies for various economics-related purposes, including remedying market failure, protecting the environment and economic management.

A regulatory agency or independent agency is a government authority that is responsible for exercising autonomous dominion over some area of human activity in a licensing and regulating capacity.

Compliance costs are all expenses that a company uses up to adhere to government regulations. Compliance costs incorporate salaries of employees in compliance, time and funds spend on announcing, new system necessitated to meet retention, and so on. Compliance costs happen to be as results of local, national or even international regulation. Global firms operating all over the world with varying new regulations in each country tend to face significantly larger compliance costs than those functionating solely in one region. Example – people registered for value added tax have to keep records of all tax to simplify the completion of returns. They need to employ someone skilled in this domain, which is regarded as compliance cost.
Compliance cost mostly includes following:

<span class="mw-page-title-main">Environmental policy</span> Government efforts protecting the natural environment

Environmental policy is the commitment of an organization or government to the laws, regulations, and other policy mechanisms concerning environmental issues. These issues generally include air and water pollution, waste management, ecosystem management, maintenance of biodiversity, the management of natural resources, wildlife and endangered species. For example, concerning environmental policy, the implementation of an eco-energy-oriented policy at a global level to address the issues of global warming and climate changes could be addressed. Policies concerning energy or regulation of toxic substances including pesticides and many types of industrial waste are part of the topic of environmental policy. This policy can be deliberately taken to influence human activities and thereby prevent undesirable effects on the biophysical environment and natural resources, as well as to make sure that changes in the environment do not have unacceptable effects on humans.

<span class="mw-page-title-main">Environmental crime</span> Illegal act which directly harms the environment

Environmental crime is an illegal act which directly harms the environment. These illegal activities involve the environment, wildlife, biodiversity and natural resources. International bodies such as, G7, Interpol, European Union, United Nations Environment Programme, United Nations Interregional Crime and Justice Research Institute, have recognised the following environmental crimes:

Industry self-regulation is the process whereby members of an industry, trade or sector of the economy monitor their own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third party entity or governmental regulator monitor and enforce those standards. Self-regulation may ease compliance and ownership of standards, but it can also give rise to conflicts of interest. If any organization, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within their own group, it may be in their interest in the short run to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing and correcting them. An exception occurs when the ethical breach is already known by the public. In that case, it could be in the group's interest to end the ethical problem to which the public has knowledge, but keep remaining breaches hidden. Another exception would occur in industry sectors with varied membership, such as international brands together with small and medium size companies where the brand owners would have an interest to protect the joint sector reputation by issuing together self-regulation so as to avoid smaller companies with less resources causing damage out of ignorance. Similarly, the reliability of a professional group such as lawyers and journalists could make ethical rules work satisfactorily as a self-regulation if they were a pre-condition for adherence of new members.

Health law is a field of law that encompasses federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the health care industry and its patients, and delivery of health care services, with an emphasis on operations, regulatory and transactional issues.

In environmental law and policy, market-based instruments (MBIs) are policy instruments that use markets, price, and other economic variables to provide incentives for polluters to reduce or eliminate negative environmental externalities. MBIs seek to address the market failure of externalities by incorporating the external cost of production or consumption activities through taxes or charges on processes or products, or by creating property rights and facilitating the establishment of a proxy market for the use of environmental services. Market-based instruments are also referred to as economic instruments, price-based instruments, new environmental policy instruments (NEPIs) or new instruments of environmental policy.

<span class="mw-page-title-main">Moral suasion</span>

Moral suasion is an appeal to morality, in order to influence or change behavior. A famous example is the attempt by William Lloyd Garrison and his American Anti-Slavery Society to end slavery in the United States by using moral suasion. In economics, moral suasion is more specifically defined as "the attempt to coerce private economic activity via governmental exhortation in directions not already defined or dictated by existing statute law." The "moral" aspect comes from the pressure for "moral responsibility" to operate in a way that is consistent with furthering the good of the economy. Moral suasion in this narrower sense is also sometimes known as jawboning. In rhetoric, moral suasion is closely aligned with Aristotle's concept of pathos, which is one of the three modes of persuasion and describes an appeal to the moral principles of the audience.

Regulatory risk differentiation is the process used by a regulatory authority to systemically treat entities differently based on the regulator's assessment of the risks of the entity's non-compliance.

<span class="mw-page-title-main">Nonpoint source water pollution regulations in the United States</span>

Nonpoint source (NPS) water pollution regulations are environmental regulations that restrict or limit water pollution from diffuse or nonpoint effluent sources such as polluted runoff from agricultural areas in a river catchments or wind-borne debris blowing out to sea. In the United States, governments have taken a number of legal and regulatory approaches to controlling NPS effluent. Nonpoint water pollution sources include, for example, leakage from underground storage tanks, storm water runoff, atmospheric deposition of contaminants, and golf course, agricultural, and forestry runoff.

<span class="mw-page-title-main">United States regulation of point source water pollution</span> Overview of the regulation of point source water pollution in the United States of America

Point source water pollution comes from discrete conveyances and alters the chemical, biological, and physical characteristics of water. In the United States, it is largely regulated by the Clean Water Act (CWA). Among other things, the Act requires dischargers to obtain a National Pollutant Discharge Elimination System (NPDES) permit to legally discharge pollutants into a water body. However, point source pollution remains an issue in some water bodies, due to some limitations of the Act. Consequently, other regulatory approaches have emerged, such as water quality trading and voluntary community-level efforts.

There are benefits to leaving environmental regulation both to the federal government to the states.For example, wildlife conservation is much more of a concern for Alaska than for New York. New York, however, has much bigger air and light pollution issues than Alaska.

The Financial Sector Legislative Reforms Commission (FSLRC) is a body set up by the Government of India, Ministry of Finance, on 24 March 2011, to review and rewrite the legal-institutional architecture of the Indian financial sector. This Commission is chaired by a former Judge of the Supreme Court of India, Justice B. N. Srikrishna and has an eclectic mix of expert members drawn from the fields of finance, economics, public administration, law etc.

References

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  3. 1 2 Abbot, C. (2009) The Regulatory Enforcement and Sanctions ACT 2008. Environmental Law Review 38
  4. 1 2 Holling, C., Meffe, G. (1996) Command and Control and the Pathology of Natural Resource Management. "Conservation Biology. 10: 2. pp. 328-337."
  5. ↑ Field, Barry; Field, Martha (2017). Environmental economics: An introduction. New York, NY: McGraw-Hill Education.
  6. 1 2 Bocher, M. (2011) A theorectical framework for explaining the choice of instruments in environmental policy. "Forest Policy and Economics'. Elsevier
  7. 1 2 Macrory, R. (2006) Regulatory Justice: Making Sanctions Effective. Final Report
  8. ↑ FC Simon (2017). Meta-regulation in practice: Beyond normative views of morality and rationality. Routledge
  9. 1 2 Gunningham, N., Grabosky, P. (1998) Smart Regulation: Designing Environmental Policy. USA: Oxford University Press.
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  12. ↑ Tietenberg, Tom (1991) Economic Instruments for Environmental Regulation. "In: Helm, D., Pearce, D. (ed.) Economic Policy towards the Environment. Oxford: Oxford University Press."
  13. ↑ "Government Subsidies for Agriculture May Exacerbate Deforestation, says new UN report". Sustainable Development Goals. United Nations. 3 September 2015. Retrieved 17 August 2020.
  14. ↑ Khalilian, Setareh; Froese, Rainer; Proelss, Alexander; Requate, Till (1 November 2010). "Designed for failure: A critique of the Common Fisheries Policy of the European Union". Marine Policy. 34 (6): 1178–1182. doi:10.1016/j.marpol.2010.04.001.
  15. ↑ Lagares, Encarnación Cordón; Ordaz, Félix García (1 December 2014). "Fisheries structural policy in the European Union: A critical analysis of a subsidised sector". Ocean & Coastal Management. 102: 200–211. doi:10.1016/j.ocecoaman.2014.10.001.
  16. 1 2 3 Cole, D., Grossman, P. (2002) Toward a total-cost approach to environmental instrument choice. 20. pp. 223-241.
  17. 1 2 Ogus, A. (2004) Comparing Regulatory Systems: Institutions, processes and legal forms in industrialised countries. In: Cook, P., Kirkpatrick, C. Minogue, M., Parker, D. (Eds.) UK: Edward Elgar Publishing Ltd.
  18. ↑ Landy, M. Rubin, C. (2001) Civic Environmentalism: A new approach to Policy. Washington DC: George Marshall Institute
  19. 1 2 3 Evans, J. (2012) Environmental Governance. Elsevier.
  20. ↑ Latin, H. (1985) Ideal versus Real Regulatory efficiency: implementation of uniform standards and “fine-tuning” regulatory reforms. Stanford Law Review. 37. 1267-1332.
  21. ↑ Lindblom, C. (1979) Still muddling, not yet through. Public Administration Review. 517-526.
  22. ↑ Speth, J., Haas, P. (2006) Global Environmental Governance. USA: Island Press.
  23. ↑ Falkner, R (2005) The Business of Ozone Layer Protection: Corporate Power in Regime Evolution. In: Levy, D., Newell, P. (2005) The Business of Global Environmental Governance. pp. 169-196. Cambridge Mass & London: MIT Press.
  24. 1 2 Downie, D. (2005) Global environmental policy: governance through regimes. In: Axelrod, R., Downie, D., Vig, N. (Eds.) The Global Environment: Institutions, Law and Policy. 2nd ed. Washington DC: CQ pass. pp. 64-82.
  25. ↑ Hunter, D., Salzman, J., Zaelke, D. (2002) International Environmental Law and Policy. New York: Foundation Press
  26. ↑ Harrington, W., Morgenstern, R. (2004) Economic Instruments versus Command and Control. Resources. pp. 13-17.
  27. 1 2 McCormick, J. (1999) The Role of Environmental NGOs in International Regimes. In: Vig, N., Axelrod, R. (Eds.) The Global Environment: Institutions, Laws and Policy. UK: Earthscan.
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