Rules need resources

There’s a role for the glare of publicity and the goad of taxation, but does protecting the environment depend in the end on regulation with well-funded teeth? Pamela Castle of CMS Cameron McKenna makes the case.

It takes a mix of carrots and sticks. Without societal pressure - both incentives and disincentives - few people think commerce and industry will modify their behaviour for the benefit of the environment. The question is how best to apply the pressure.

Economic instruments are one route, providing the carrot of incentives and the stick of taxes. Another pressure is public exposure of a company’s performance - inclusion in the Environment Agency’s ‘Hall of Shame’, freedom of access to environmental information, and stakeholder demand for information in company reports.

However, many commentators, especially environmental lawyers, maintain that it is environmental regulation that forms the bedrock of environmental protection. In their view, other methods are slow to take effect and open to obfuscation, while taxes carry their own problems: they need to be swingeingly large to change behaviour, they are inequitable when they penalise the less well off, and they can be anti-competitive, especially in international terms - hence the government’s backtracking on the fuel escalator and the climate change levy. The conundrum of competitiveness goes to the heart of the principle of sustainable development: unless countries all work to the same agenda of prioritising environmental protection, the drive to maximise economic growth will dominate.

Lawyers would generally hold that environmental regulation is more equitable and directly effective, defining clear rules and using procedures set against standards and policies determined by government. They claim that it is less likely to be anti-competitive internationally if regulation implements international convention and laws, as is often now the case. And they would argue that the strict liability system of environmental offences in the UK - giving little or no weight to arguments by the defendant that the polluting incident was a mistake or accident - provides a clear and transparent system for controlling and changing behaviour for the benefit of environmental protection.

The problem with this view is that the enforcement of environmental regulation is dependent upon the effectiveness of the relevant regulatory authority. This in turn is subject to many debilitating pressures - from government policy, lack of resources, a wide range of responsibilities leading to lack of focus, and an inherited culture of encouraging and educating their "customers" (the view still seems to prevail that a prosecution indicates the breakdown of the relationship with the polluter).

Resources are an enormous problem for the regulators, and especially for the Environment Agency. Bringing prosecutions is very costly. Since environmental offences in the UK are also criminal ones, successful prosecution involves collating enough technical evidence to prove the case "beyond reasonable doubt". Inevitably, the Environment Agency will exercise discretion and apply cost-benefit analysis to any potential court action. The Agency’s enforcement code reflects this.

To date, the Agency’s task has not been aided by the attitude of the courts. Public concern has been aroused over the level of fines for polluting incidents, which are generally low but lack consistency. The government has now referred the sentencing of certain environmental offences to the Sentencing Advisory Panel, which has embarked upon a public consultation process. The panel appears to favour the Court of Appeal issuing guidelines relating to a specific number of environmental offences. This support will certainly make the Environment Agency more confident about bringing cases. The question of resources still remains a problem, however - the fines collected by the courts go to the Treasury and not to the regulator.

Instruments for environmental protection are subject to political will and public acceptability. A policy mixture is probably necessary, but with environmental law and regulation at its heart. What is clear is that we need to match measures to stop unacceptable behaviour (such as environmental regulation) with other steps to encourage good behaviour (such as subsidies for pollution-abatement equipment, and integration of approved forms of transport). Only with a true ‘carrot and stick’ approach will our environment be protected and given its rightful place within the principle of sustainable development.

Pamela Castle is environment partner at CMS Cameron McKenna.

17 October 2001

Pamela Castle