Command and control regulation

Command and Control Regulation

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

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”. 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. 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.

CAC encompasses and variety of methods. Influencing behaviour through: laws, incentives, threats, contracts and agreements. There is a perception of a problem and the solution for it’s control is developed and subsequently implemented.

Although environmental policy making has a long history, a profileration of policy making in this area occured 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.. Whilst many view CAC negatively, direct regulatory control is still used in many countries environmental policy.

Enforcement and Compliance

To deliver it’s obejctives, 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 (Abbot 2009) . The manner in which CAC is enforced differs between countries. For example, in the USA, 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.

Strengths and Weaknesses of approach

CAC is appealing in several ways. 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. It also has benefits politically as the regulator (often the government) is seen to be acting swiftly and decisively.

Far from being a problem free form of regulation, the 1980s in particular saw CAC being 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 ,ref name="Baldwin"/>

Some issues highlighted include:

• Capture: The concern here is that the relationship between regulators and the regulated may lead to the interests of the public being neglected. In this situation it is possible for the relationship to become too close, leading to capture. This may result in the regulator protecting the interests of the regulated.

• Legalism: Command and control has been accused of stifling competition and enterprise. It has been posited that this is an inevitable consequence of the inflexible and complicated rules that can be created by the approach. Over-regulation can result, which in turn can lead to ‘over-inclusive’ regulation.

• Standard-setting: Selecting the appropriate standards when implementing a CAC regime is crucial if the regulation is to avoid causing detriment to those that it regulates. This is a challenging obstacle to overcome as the amount of information required can be severe.

• Enforcement: This constitutes a very significant dilemma for a CAC regulatory approach. One of the key issues is the expense of enforcement, especially when a complex system of rules has been developed. There are also problems of scope.

Critics of CAC often point to incentive based regulation as an alternative. 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 to CAC has been scrutinised. 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 (Baldwin et al. 1999).

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.

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 (Sinclair 2002). The cost of compliance is perceived to be high, which can result in the costs that are higher then the sanctions for non-compliance. A summary of 10 studies demonstrated significant differences in cost between CAC and least cost alternatives.

Some have moved defend certain aspects of a CAC approach, arguing against the commonly held belief that these regimes are inherently inefficient (Cole and Grossman 2002). 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 (Opus 1994; Cole and Grossman 2002) 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 succesful (Cole and Grossman 2002).

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. The issue here is 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 be effective. On the other hand, CAC struggles to appropriately tackle issues that have a diffuse, non-point source (Landy and Rubin 2001). Evans (2012) 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 environmental problem and the administrative capacities of the governing body:

• Environmental Standards. (Richardson et al) These are centrally driven standards. A legally enforceable numerical limit is often used to determine the 'standard', but the term can be used more broadly, describing more general rules about acceptability.

• Target Standards. (Richardson et al) The condition of the environment into which the pollutant enters is central to these standards. It can be subdivided into ambient and receptor standards. Ambient standards set the targets that apply to the regulators and policy makers. Whereas Receptor standards apply to the regulated and state that a specified maximum level is not exceeded..

• Performance Standards. (Ogus 2004) These determine what releases of a pollutant into the environment is acceptable.

It has been suggested that if compliance reach appropriate levels, there may be a good degree of certainty of environmental results (Latin 1985) CAC regulation has the potential to lead to a more rapid resolution of certain environmental policy objectives (Baldwin and Cave 1999). 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 (Gunningham and Grabosky 1998).

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 (Holling and Meffe 1996). Much of environmental policy to date has been associated with the term Disjointed Incrementalism. This term was coined by Lindblom (1979) and describes the small and often unplanned changes that have occurred in the field of environmental regulation. Theses changes in regulation often address small-scale problem 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 are several factors that contributed to Montreal’s success (Speth and Haas 2006; Falkner 2005):

• 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 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.

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 (Evans 2012).

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 (Downie 2005). This may go someway in explaining 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 if the manner in which the international community is organised. International law does cannot be implemented in the same way as law at national level (Hunter et al 2002). Given that the a CAC approach relies heavily on prohibiting certain activities and then enforcing it through sanctions makes the scaling-up to 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 (Downie 2005)

The future CAC in environmental policy

The international nature of many contemporary environmental issues makes CAC regulatory approaches difficult. Since the 1970s enthusiasm for the implementation economic incentives for regulation has been on the increase. This is due, in part, to the disenchantment with command and control (Harrington and Morgenstern 2004). The shift away from CAC does not seem to be slowing, the increased particpation of a variety of actors may be the answer. The role of environmental NGOs in policy making as changed dratsically in recent decades. Their numbers and the influence they exert over over national governments and neogtiations at interntianal level has risen.(McCormick 1999) 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 organistaions. They also act as whistleblowers, updating the regulators of progress and compliance. (McCormick 1999)