Environment Regulation Research Paper

‘Regulation’ means the setting of specific rules for specific purposes mostly involving administrative agencies in the implementation of the rule. Their form can be laws or sublegal rules. This distinguishes regulation from more fundamental constitutional norms, but also from basic rules of civil law. With the opening up of civil law for more specific political purposes such as consumer and environmental protection, and, more generally, with the growing understanding of any law as an instrument of organizing society, civil law instruments can also be regarded as regulation. Regulation is distinct from decision-making in individual cases, in that the former consists of rules addressing many cases and takes the form of an ordinance or otherwise, while the latter typically results in administrative acts and contracts. In a broad sense, however, regulation is understood to mean the whole setting of state intervention into the market by means of the introduction of goal-oriented law, the setting up of related administrative agencies, and the application of the law in individual cases.

In many states a pattern of ER has evolved consisting of (a) laws protecting specific media, such as flora and fauna, the atmosphere, water, and the soil against various kinds of dangerous activities (media-related laws); (b) laws concentrating on specific dangerous activities and directing them to respect the various media mentioned above, such as the marketing and use of toxic substances, the disposal of waste, the application of risky technologies (such as genetic engineering, nuclear power), etc. (activity-related laws); and (c) laws on instruments applicable for various activities and media, such as land-use planning, environmental impact assessment, access to environmental information, environmental liability, etc. (horizontal or instrument-related laws). Laws organizing the utilization of natural resources, such as laws on land-use planning, minerals exploitation, fishery, agriculture, and forestry, can also be regarded as ER to the extent that they are concerned with environmental issues. A recent trend in many countries is to assemble ER in comprehensive codes. France, the Netherlands, and Sweden have successfully completed such an exercise.

2. Legal Perceptions Of The Environment

The type of ER a society chooses depends on how it perceives the environment (Winter 2000). The relationship between nature and the law varies both with the historical development of societies and with the current geographic situation in any given society. In subsistent economies nature is regarded as a powerful ‘fate’ or agent to which people must defer. The law (e.g., guild rules) impedes individual initiative and thus indirectly prevents overexploitation of the environment. In the industrializing world nature is seen as a resource which can be exploited in order to raise living standards. The law is preoccupied mainly with releasing and assisting individualistic economic energy and inventiveness. In a way it is also environmental law, but in the sense not of protecting but of utilizing nature. In wealthy societies nature is thought of as the environment of the individual, which must be protected in order to secure healthy physical conditions. ER is mainly a child of this kind of society. In today’s globalized world a new common perception has not yet emerged. The developing countries still picture nature as an exploitable resource whilst the developed countries, carrying the environment concept to the global level, would like to have the third world’s nature preserved as their carbon sink, gene bank, etc.— in other words, as their environment. Ongoing international discourses tend to foster the vision of nature as a global biosphere. The interacting physical and biological processes of this biosphere have developed mechanisms of negative loops which can absorb many disturbing events. Humanity is, however, about to instigate more and more positive loops which may endanger the livability of the earth. Therefore, today’s ER has, by content as well as level, increasingly become globalized itself.

3. Difficulties And Responses

One major difficulty ER must cope with is uncertainty. Often it is scientifically unresolved whether suspected environmental damage does or will exist and, if so, whether it was or will be caused by a certain human undertaking. For instance, for a long time it was unclear if acid rain damage to forests was in fact caused by sulfur dioxide emissions. Today it is uncertain whether the global warming caused by ‘greenhouse gases’ will persist or be reversed by counter-effects, such as cooling effects brought about by the vegetation growth promoted by increased carbon dioxide emissions. In former times when ER was a matter of police power (i.e., restraint, governmental control of society) a determined and immediate danger of damage was required for ER to come into effect. Often, the damage did materialize and ER could only look for repair and compensation.

Today in many countries ER follows the precaution principle, which requires that preventive safeguards shall be applied even in situations where there is a risk, but no certainty, of damage. Also, a primary concession for a risky undertaking may more easily be modified or revoked if better knowledge reveals formerly unknown risks.

Another difficulty to cope with is that ER often involves economic loss, e.g., when an emission standard requires the installation of costly technology. From a long-term perspective environmental benefit will often prove to be economically rewarding (new markets for integrated technology and products, avoidance of disasters, etc.). But individual actors facing regulation normally have to incur adaptation costs. Legal cultures differ as to how they take such costs into consideration. The Anglo-American legal culture is more prepared to balance ecological gain against economic costs. ER is then inappropriate, if the costs outweigh the benefits (cost–benefit analysis, CBA). By contrast, continental European culture somewhat one-sidedly looks at the ecological risks, thereby revealing a basic skepticism against unrestricted relativization of environmental goods. Best available techniques (BAT) are demanded notwithstanding the cost, except if they are obviously extreme. Both of these approaches meet with difficulties: CBA, by monetarizing intangible ecological goods, may distort a fair balance, whereas BAT, by suppressing cost considerations, may cause them to reenter on the political and implementation level where costs tend to be dramatized. The solution is probably to be found somewhere in between over-and underrationalization: depart from BAT, require to quantify excessive cost–benefit ratios, but allow this only to the extent that the related goods have a market value.

A third difficulty is the frequent divergence between scientific and everyday life experience. As demonstrated by the controversy over genetic engineering, the scientific community and the general public often mistrust each other’s perception of risks. This tension influences ER on all levels including legislation, sublegal standard-setting, and decision-making in individual cases. Legal cultures differ as to whether they are more scientifically or politically oriented in this respect. For instance, sublegal rule-making for environmental standard-setting in the USA is wide open for public participation, whilst the EC tends to rely on committees of experts (the so-called ‘comitology’). More systematic approaches suggest an iterative procedure: first an open scoping of the valuation framework and necessary research; second, the elaboration of scientifically grounded draft standards; third, exposure of the drafts to public scrutiny; fourth, possibly a loop back to the scientific body; fifth, the taking of the decision by the responsible body (SRU 1996). Individual licensing of dangerous installations, on the other hand, is open to public participation both in the USA and the EC member states. In relation to large industrial or infrastructure projects, public inquiries have often been conducted in a hostile atmosphere far from the ideal of rational deliberation some scholars propose. In North America, mediation techniques have been used frequently, and successfully, to resolve such hostilities. By contrast, in Europe mediation is much less frequent and has seldom been successful. This difference is not easy to explain. Perhaps in Europe decision-makers are less used to open discussion, and perhaps the public is also less inclined to strike deals on environmental issues.

4. Regulatory And Economic Instruments

ER has frequently employed what are known as ‘regulatory’ or ‘command and control’ instruments, i.e., precise standards (environmental quality goals, emission limits, product quality standards, etc.), licencing requirements, monitoring obligations both of the industry and the administration, powers to order adjustment measures, etc. Economists have criticized this kind of instrument as inefficient. Instead they propose so-called ‘economic’ instruments, especially pollution charges and tradable pollution rights. They say that regulatory instruments disregard the different pollution abatement costs of the parties concerned, and thus require a great deal of money to be spent on costly technology with marginal protection effect. Economic tools are more efficient as they allow the entrepreneur to decide whether to pay and pollute or to invest and not to pay. A closer look at the enforcement level in the command and control framework, however, reveals that administrative agencies proceed with some flexibility when requiring abatement investments. Also, strict and equally applicable standards provide the enforcement agency with a most valuable bargaining position (Gawel and LubbeWolff 2000, p. 65). Another criticism is that regulatory tools need more administrative personnel than other instruments. Again, a closer look shows that economic instruments must also be monitored closely in order to work effectively. Inversely, economic instruments do not work when it comes to preventing serious accidents or abating ‘hot spots’ of pollution. The parties concerned adopt a trading approach, in which they expect something in return for any concessions. This atmosphere may cause all concerned to lose sight of the material problem. This is why many countries have been reluctant to move from command and control to economic measures when it comes to ER.

However, under specifiable conditions economic instruments may indeed be more effective, or at least more efficient, than command and control. For instance, the Californian Acid Rain Program fixed the maximally tolerated emission quantity of sulfur dioxide, allocated pollution rights, and allowed intrafirm and, later, inter-firm trading of these rights. The scheme was deemed successful (Sorrell and Skea 1999, p. 43). Whether it was more effective than a regulatory option would have been is impossible to say, but it was probably more efficient. In more abstract terms emissions trading may work when the target can be agreed upon, the polluting substances are singular, and the number of polluters limited. As to polluter charges, the German ‘ecotax’ on energy consumption can serve as an example. The tax must be borne by every consumer, but it is collected by the energy utilities. The aim of reducing energy consumption could hardly be reached by command and control measures. This shows in more abstract terms that the charge does work if an unlimited number of persons need to be addressed, and if there is no ‘hot spot’ situation.

5. Regulatory Measures And Self-Control

Besides reacting to the heteronomy innate in ER, the actor may also protect the environment by autonomous self-control. Autonomy can be founded on the moral beliefs of individual actors or organizations, as well as on social norms developed out of social interaction or association. Professional organizations and standardization bodies have learned to consider environmental effects when designing product or production standards. Many large companies have introduced self-binding rules (e.g., the Responsible Care declarations of the European chemical industry) which are intended to guide their personnel and at the same time inform the public. Many have also established environmental management apparatuses and schemes. In addition, the market mechanism has shown some capacity to make an autonomous push towards environmental protection. For instance, companies may develop environmentally adapted products in anticipation of future consumer preferences. The line between the market and the political sphere is blurred when consumers participate in boycott action, such as that taken against the Shell oil company in the Brent Spar case, where Shell had planned to dump an old oil platform in the North Sea but was prevented from doing so by public action.

These various phenomena of autonomy of the individual, company, association, or market mechanism are explained in various ways. One strand of theory suggests some innate force of self-organization or autopoiesis of social systems (Teubner 1996). Another points to the fact that self-regulation which is effective and not mere paperwork is normally incited, structured, and supervised by heteronomous ER. Indeed, the internal environmental management schemes in place in many companies were instigated (but not imposed) and framed by voluntary auditing laws such as the Auditing Regulation of the EC. Voluntary commitments incurred by a company or group, or association of companies, are often triggered and guided by the threat that otherwise the government might issue a binding regulation or order. Sometimes they are framed as a contract providing for the monitoring of effects and for sanctions in case of noncompliance (for a legal framework for voluntary covenants see the draft German Environmental Code (articles 35–39) Ministry for the Environment 1998). Therefore, in a practical perspective, self-regulation as an instrumental solution must always be tuned with a binding framework of ER.

6. Legal Protection

Regulation normally constitutes a two-tiered relationship between the addressees and the government. In rule of law systems judicial review of this relationship is provided. Depending on the system, legal recourse may be granted against regulation in the form of individual administrative acts, as well as sublegal acts and even laws. In ER there are addressees who by implication have the right of appeal, and the situation with this kind of regulation is further complicated because it is characterized by a three-tiered relationship involving third parties (neighbors, etc.). These also ask for legal protection against environmental risk. Civil law remedies directed at the polluter, such as injunctive reliefs and tort or strict liability, come alongside public law remedies directed at the administrative organs, such as the action for quashing an administrative act (e.g., a construction authorization for a dangerous installation), or for issuing an administrative act (e.g., an order to prohibit the marketing of a toxic substance).

These remedies are, however, confronted with the problem typical of ER that often the environmental damage reaches beyond the individual sphere of the affected third party (consider the destruction of a biotope on propertied land implicating the extinction of a species), or that the third party is only indirectly or morally affected (contamination by pesticides of groundwater which may be used for drinking water purposes, destruction of a forest resort frequented by birdwatchers) (Prieur 1996, p. 842). Legal systems differ in the extent they open their legal remedies up to those ‘trans-individual’ interests. This may be done by allowing other agents than the individual to defend the related collective interest, and by extending the scope of legal arguments to collective concerns. In the realm of liability Brazilian law, for instance, allows for an action called ‘civil-public’ which can be filed by the public prosecutor as well as by environmental associations for restoration of or compensation for ecological damage (Leme Machado 1998, p. 290). As to third party appeal against the administrative authorization of dangerous activities, French and English law, for instance, only require the plaintiff to show to be affected in a factual interest (Winter 1996, p. 129), whereas according to the narrower German concept the plaintiff must show that a subjective right or at least an interest individually protected by law was violated (Kloepfer 1998, p. 510). US law takes a middle position by requiring that (a) the plaintiff’s factual interest is affected and (b) this interest lies within the zone of interests protected or regulated by the relevant law (Findley and Farber 1999, p. 78). The overall European trend points in the same direction.

Legal systems differ also with regard to the density of judicial review of administrative action. Some reduce court review to errors in law (USA, UK, France) whilst others extend it to errors in fact (Germany). Case law has, however, more and more blurred this line. The overall practice has become to reduce or extend court checking, depending on whether the previous administrative proceeding was court-like or not, if the matter involved complex technical, prognostic or evaluative questions or not, etc. (Findley and Farber 1999, p. 120, Kloepfer 1998, p. 532).

7. Transnationalization Of ER

ER has been transnationalized step by step. There are three main ways in which this has happened. The first may be called the ‘market trajectory.’ It is put in force by national regulation of product quality (e.g., threshold values for exhaust from cars or for pesticide residues in food). This constitutes an import restriction for foreign products and at the same time a competitive disadvantage for the internal export industry. This again creates an incentive for both the ER and the foreign state to strive for the harmonization of product standards. As a first step a regime (i.e., rules and institutions) is created which checks whether the distortion of trade implied in the national ER can be justified by the public interest in the envisaged environmental protection measure (so-called ‘negative integration’). An example for this is Articles 28–30, Treaty of the European Community (ECT) in combination with judicial review under Article 226 ECT of national ER by the European Court of Justice (ECJ). As a second step the regime issues product standards of its own (‘positive integration’). The competence basis for this in the EC is Articles 95, 175 ECT (Kramer 2000).

The second development pattern may be termed a ‘relocation trajectory.’ It sets off with national regulation of production processes (e.g., emission standards for installations). Such regulation will already have been undermined, in its implementation or even in its design phase, because the industry concerned, envisaging cost differentials, threatens to move to low-standard countries. This leads the ER state to push for an international regime. As the avoidance of environmental investment is not regarded as ‘commercial dumping,’ those regimes normally practice ‘positive integration.’ Depending on the sophistication of the regime the joint criteria are framed only in broad language or in the form of precise standards. In the EC the pertinent competence basis is Article 175, ECT.

The third pattern, which may be termed a ‘commons trajectory,’ starts with situations where adequate ER is absent. This leads to an overexploitation of environmental resources (e.g., destruction of tropical forests), or overutilization of the environment as a medium for residues (e.g., destruction of the ozone layer, climate change). Not only the inactive home country but also foreign countries suffer from such environmental damage because it transcends state borders. This triggers their interest in creating international regimes for the protection of transnational environmental ‘goods.’ Some of these goods (the high seas outside sovereign rights, the ozone layer, the climate) are legally understood as international common heritage, others (tropical forests, genetic re- sources) as sovereign rights of the host states but of common concern.

As to the organizational capacity of the international environmental regimes (Young 1994, p. 140), the basic pattern is the founding agreement, a secretariat and the conference of the contracting parties (COP), whose conclusions are not directly binding but need to be ratified. Sometimes technical committees are set up which accelerate the production of strategies, standards, and implementation measures. More advanced regimes have introduced simplified procedures of adopting binding conclusions (e.g., the opting out procedure). In the long run the international regimes, because of their diversity and number (there are about 250 international environmental protection agreements—some of which form a joint regime), need to be restructured in order to enlarge membership, remove overlapping competences, and improve decision-making and implementation effectiveness. This is even more urgent in order to build worldwide ‘positive integration’ capacity alongside the worldwide ‘negative integration’ established by international regimes such as the WTO (Esty 1994).

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