Notice & Comment

A Playbook on How to Achieve Compliance With Environmental Regulations, by Seema Kakade

*This is the fifth post on a symposium on Cynthia Giles’ “Next Generation Compliance: Environmental Regulation for the Modern Era.” For other posts in the series, click here.

Next Generation Compliance by Cynthia Giles is a must read for anyone interested in how environmental regulations actually work (or don’t work). Giles’ book is dedicated to identifying a myth that exists in environmental regulation. The myth is two-part, (a) that regulated entities (e.g. corporations) will largely comply with environmental regulations, and (b) in the rare instances when regulated entities don’t comply, government enforcement officials can and will come down hard on the noncompliance. Failing to acknowledge this two-part myth, Giles says, means that environmental regulations cannot achieve the public health and natural resource benefits that the regulation contemplates in the first place. Giles’ solution is to change the way government agencies think about and write environmental regulations. In essence, Giles’ book is the “playbook” for how to write effective environmental regulations of the future.

Giles’ book begins by describing the multiple areas of environmental regulation in the United States where there is serious and rampant noncompliance. The United States Environmental Protection Agency (EPA) has found that over 70 percent of coal-fired power plants have had noncompliance problems with the Clean Air Act. The EPA has also sued almost every major city owned sewage in the United States for non-compliance with the Clean Water Act. Further, the EPA has had to bring numerous criminal cases against renewable fuel producers that have outright defrauded the market trading system by including fake renewable fuel credits. In addition, there are many areas of environmental regulation where there is not even enough information to determine the extent and seriousness of noncompliance.

Next, Giles points out that government regulation writers cannot rely on after-the-fact enforcement to punish violators of environmental regulations. The universe of regulated entities to check is simply too numerous. Several hazardous waste generators for example, have never even been inspected for compliance. In other situations, pollution sources are located in remote areas (e.g., oil and gas sites), or worse, the pollution source itself moves (e.g., cars) making inspection very difficult. Moreover, much after-the- fact enforcement takes a very long time. The government collects information from alleged violators, the alleged violators put up defenses, lengthy negotiations for settlement often ensue, legal appeals take place. The end result is that enforcement simply takes too long to be meaningful in deterring future violations of environmental regulations. And enforcement officials are in a never-ending cycle of dealing with violations.

What is so terrific about Giles’ book is that it offers a concrete way for agencies to consider compliance and enforcement in regulatory process. In particular, Giles argues for active consideration of compliance (or better yet, noncompliance) at the design phase of a regulation. First and foremost, federal inter-agency guidance should change its current direction to regulation writers that they should assume full compliance when drafting regulations. Such assumptions put regulatory writers behind the curve in thinking about how to design regulations with compliance and enforcement in mind. Instead, a more proactive approach would allow regulation writers to consider including continuous monitoring and reporting from regulated entities so that agency officials could get information in real-time. A more proactive approach would also allow regulation writers to consider ways that third party auditing requirements could help check for noncompliance. A more proactive approach would also allow regulation writers to consider making regulated entities compliance data online, for the public to see. Giles’ book offers many ways to incorporate compliance and enforcement considerations into regulatory design.

Moreover, Giles’ book offers ways for regulation writers to deal with anticipated noncompliance. Regulations can build contingent situations into the regulation, writing that “if X happens, then the standard for compliance changes to Y.” Regulations can also require that regulated entities make conservative assumptions about operations where there is missing data, in order to ensure operations stay above the compliance metrics. Regulations can also place burdens of proof on regulated entities instead of government agencies. In essence, regulation writers can build in mechanisms to ensure that the benefits of a regulation can still come to fruition even when there is noncompliance.

Most importantly, Giles’ book applies lessons learned from the two-part myth to future climate regulation. As she rightly points out, new regulation on sectors such as power generation, biofuels, and oil/gas are going to be essential. Yet, such new regulation must also be smart regulation that is long-lasting and works on the ground. Giles offers specific recommendations for regulation writers for these climate-sensitive sectors in areas of monitoring, reporting, data substitution, and real time verification of credits. We cannot afford to simply assume compliance in these climate sectors, but rather need to assume noncompliance.

In conclusion, this is an excellent book for anyone who is concerned not just about environmental regulation, but effective environmental regulation. It demonstrates Giles’ deep experience with compliance and enforcement. The book is of tremendous value for government officials whether at local, state, or federal levels. The book is also of significant value to foreign governments that often have excellent environmental laws and regulations on the books, but don’t know how to improve compliance and enforcement on the ground. Lastly, environmental activists will benefit from the book since it provides new ways of thinking about how to effectively advocate for changes to regulations. In short, Giles’ book is terrific, real, practical, and no-nonsense advice on environmental regulation.

Seema Kakade is a Professor of Law and Director of the Environmental Law Clinic at the University of Maryland Francis King Carey School of Law.

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