Pollution and penalties

Publication Date15 Aug 2002
AuthorAnthony Ogus,Carolyn Abbot
Anthony Ogus and Carolyn Abbot
This paper investigates the economic implications of applying different
sanctions, notably criminal penalties, the suspension or revocation of
licences and administrative fines to environmental regulatory contraven-
tions. Using familiar economics of law enforcement models, we predict
that the almost exclusive reliance by British environment agencies on
criminal justice sanctions leads to under-deterrence. We argue that the
agencies should be given powers to levy administrative financial charges
from offenders without the procedures and onus of proof with which the
criminal process protects defendants, but which also inhibits prosecution.
The German system of Ordnungswidrigkeit provides an excellent model
for this purpose.
The nature of regulatory penalties and appropriate enforcement policies might
appear to be very familiar issues, particularly in the context of environmental
protection, and they have received much
discussion in
the law and economics
literature (e.g. Heyes, 2000). Nevertheless developments are occurring which
suggest good reasons for looking at these matters afresh.
While governments and environmental lawyers have reiterated traditional
concerns that the enforcement of command-and-control regulatory systems is
insufficiently effective (e.g. Bugler, 1972; House of Commons Select Committee
An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional
Design, Volume 20, pages 493-516.
Copyright © 2002 by Elsevier Science Ltd.
AH rights of reproduction in any form reserved.
ISBN: 0-7623-0888-5
on the Environment, Transport and the Regions, 1999-2000, 34 I-II) they
have also explored and encouraged regimes which, because they focus on
management structures, incentive devices and forms of self-regulation, seem no
longer to rely on conventional sanctions and therefore orthodox deterrence
theory (Gunningham et al., 1998; Balch, 1980). Central to this paper is a third
area of debate. In the United Kingdom, the imposition of penal sanctions has
historically been reserved for the ordinary courts and always subject to the
normal processes of criminal justice. Elsewhere in the common law world,
particularly in the USA and Australia (Australian Law Reform Commission
2000) there has been a growing tendency to grant powers to the public
enforcement agencies to impose "civil" or "administrative" penalties, and
without the procedures and protection of the criminal law. However, to the best
of our knowledge, there has been little attempt to rationalise the use of these
powers, nor to relate them to more traditional deterrence theory.
Our main purpose in this paper is to explore the deterrence dimension to
the use of administrative penalties. ~ We do so within the context of U.K.
environmental regulation policy 2 by contrasting current reliance on the crim-
inal justice system with what might be achieved by greater use of administrative
penalties. To complete the picture, we also consider other sanctions - notably
the revocation and suspension of licences. We begin with a description of the
enforcement powers and practices of the Environment Agency of England
and Wales. Drawing on the law and economics literature, there follows an
evaluation of the current reliance on the criminal justice system and of the use
of the sanction of suspension or revocation of a licence. We then turn to
alternative enforcement strategies, in particular the use of administrative
One feature of most modem systems of pollution control is that the regulatory
authority has strong powers of enforcement. Whilst the Environment Agency,
in many instances, adopts a co-operative approach to enforcement, using
persuasion, warnings and other informal, non-statutory measures to ensure
compliance, it has recourse to a number of formal mechanisms which vary from
function to function. These powers of enforcement fall into two broad
categories. The first covers what are termed, administrative enforcement

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