Enforcing Regulatory Schemes
By
David C. Elliott
1997
Contents
Introduction
Ancient traditions
A transformation in enforcement policies
Why enforcement policies have changed
Range of compliance mechanisms
Monitoring regulatory outcomes
Summing Up
Enforcing Regulatory Schemes
Introduction
[This one-of-a-series of commentaries on Regulatory Reformation review schemes for
enforcing regulations.]
Regulation today is pervasive. Hardly any activity is untouched by government
regulation.
Governments throughout Canada face a regulatory challenge. Poor regulatory practices
cause public cynicism, fail to meet policy objectives, result in non-compliance, impose
unnecessary bureaucratic requirements, and impose unnecessary costs for both the
regulated and the regulator.
Good regulations takes time, though, and usually some form of consultation aimed at
reaching consensus. All three of these elements are in short supply. As a 1992 Canadian
House of Commons Finance Committee describe it, regulation is not necessarily bad, but
too often we have bad regulation.
In this series of commentaries on Regulatory Reformation, "regulation" is used in the
broad sense of a law directing or prohibiting conduct or action whether the law be in the
form of an Act, regulation, bylaw, or rule.
Other commentaries in the Regulatory Reformation series are

Designing Effective Regulations

Assessing the Need for Regulation

Preparing Drafting Instructions for Legislation
The commentaries are available, free of charge, from:
David C Elliott
Legislative Drafting Services
Email: words@davidelliott.ca
Ancient traditions
The earliest written law from England contained penalties for anti-social behaviour. The
sixth-century laws of King Ethelberht prescribed:
33. For seizing a man by the hair, 50 sceattas shall be paid as compensation.
34. If a bone is laid bare, 3 shillings shall be paid as compensation.
35. If a bone is damaged, 4 shillings shall be paid as compensation.
36. If the outer covering of the skull is broken, 10 shillings shall be paid as compensation.
37. If both are broken, 20 shillings shall be paid as compensation.
Our modern-day equivalent has seen the intervention of the state:
Any person who contravenes a provision of this Act is guilty of an offence and liable to a
fine of not more than $5000.
A transformation in enforcement policies
Regulatory schemes have tended to evolve from exact prescriptions of behaviour, a
contravention of which made the transgressor liable to a fine, to

a more open ended prescription of rules enforced by government appointed
inspectors,

enforcement schemes which look to methods of rewarding or providing incentives
for compliance, and

self regulation with sectorally administered enforcement and privatization of
inspectorate functions.
Some legislation now makes it easy to admit guilt, and pay a fine or correct the error
through a ticketing process.
Why enforcement policies have changed
Enforcement schemes have changed from pure prosecution to various models of positive
compliance for many reasons:

pure policing and prosecution is costly, time consuming, and often ineffective;
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
older enforcement methods treat a symptom but not the underlying problem;

enforcement relies on government employees and not on the buy-in of effective
standards by those affected by them;

some precise regulations quickly become out-dated as technologies and practices
change and lack of enforcement causes disrespect for the rules;

penalties are applied only if an inspector discovers the contravention. Even with
good resources and unscheduled inspections, contravention's are not all caught.
The quasi-criminal nature of some enforcement processes makes success difficult,
developing a built-in incentive to cover up contraventions;

regulations tend to be devised without adequate involvement of those affected by
them. The regulations often do not grow out of an awareness of industry or its
problems, but from a conceptual diagnosis of problems by others outside the
industry;

even if industry is consulted, there is often no role for members of the industry to
participate in developing or updating regulations. If participation is invited,
industry representatives are often constrained by the lack of definition of their role
and mystified by the process of regulation-making;

the role of inspectors is often ambiguous. Because of the nature of many
regulations, inspectors tend to encounter trivial breaches. Inspectors may ignore
these breaches or nitpick. The difficulty of having penalties effectively imposed
for serious breaches encourages inspectors to use warnings, suggestions and
discussion to achieve good practices rather than to prosecute. These ancillary
processes of "enforcement" were not reflected in the old enforcement model;

the old enforcement model removes responsibility for compliance and
interpretation from the owners, managers, and those directly affected by the
regulation. The inspector is required to identify a standard and to suggest what
must be done to comply with it;

when penalties are invoked, the old model assumes that policing is essential and
that an inspector knows best. This assumption is challenged by modern thinking;

even when the old model of regulation is changed, there is often inadequate
training and information available to equip inspectors for their new role;

fixed penalties become out-dated and are often seen as little more than a licence
fee for the contravention, if the regulation is enforced at all.
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Range of compliance mechanisms
The newer concept of enforcing regulations is reflected in the terminology – compliance
rather than enforcement.
The modern approach often involves those affected by the regulatory scheme helping to
design it. This involvement often results in higher compliance rates because:

the standards are known and understood,

the technical quality of the regulation is usually better because of the participation
of those to be regulated,

those to be regulated may undertake some self-regulation,

compliance incentives are industry-specific and so likely to be more effective, and

systems of regular review and revision can keep the regulation up-to-date.
Modern regulatory schemes typically offer a phased approach to ensuring efficient,
effective, and fair compliance. Those involved in creating regulatory compliance schemes
should consider the following:

strong promotional, informational, educational, and advisory support for the
regulatory scheme
[Those who are well-intentioned need only good information to comply with the
law. Often good information is the best and least expensive compliance
mechanism.]

advisory warnings
[General or specific notices sent out to the regulated sector warn them of actual or
potential contravention’s.]

mediation and facilitation
[If the issue in dispute is between two or more persons, some form of facilitated
or mediated discussion may resolve the issue. For example, employment
standards officers are given a strong settlement-oriented mandate to resolve
disputes between employees and their employers.]

notices
[Typically, the notice directs that improvements or corrections be made within a
specified time in order to avoid sanctions. The notice may be no more than a
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warning or it may have consequences for non-compliance. See also
corrective/remedial orders below.]

publication of notices
[Sometimes public pressure can be effective. The regulatory scheme may
authorize publication of real or potential contraventions of the regulation.
Publicity could be used at various points on the continuum of compliance
mechanisms.]

compliance agreements
[If a problem is identified and recognized, negotiation can result in an agreement
to correct the problem by taking specific action within a specified time. Failure to
follow the compliance agreement may be a contravention of the regulation.
Financial incentives for compliance and disincentives for non-compliance may
also be part of the agreement.]

ticketing and voluntary payment
[The concept of giving a violation ticket with an option for voluntary payment of
the fine is now used for many federal, provincial and bylaw offences.]

corrective/remedial orders
[These orders direct that some action be taken or stopped. They may or may not
demand some form of compensation be paid.]

self-activating arbitration processes
[A form of compulsory and binding arbitration can be imposed through a
regulatory scheme if a dispute involves two or more people, and no government
intervention is necessary (e.g. Through an inspector's remedial/corrective order).
This is a well established response in labour relations statutes but its use is
growing in other areas with the emergence of modern Arbitration Acts.]

creation of statutory claims for compensation
[Examples of statutory claims for compensation in the courts or through specially
created tribunals include workers' compensation claims, employment standards
claims, claims resulting from contraventions of human rights and landlord and
tenant legislation, and compensation for victims of crime.]
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
creation of offences, linked with additional remedies
[In addition to other compliance strategies, regulatory schemes usually include
provision for prosecution. Sometimes the court is provided with additional
powers, not only to impose a fine but also to remedy the underlying problem (e.g.,
order payment of wages or correcting contraventions of an Act).
Offences may also be designed to go behind the corporate entity and make
directors and senior officers of the corporation personally liable for corporate
offences.]

prohibition / stop work orders
[As the gravity of the contravention increases, so does the significance of orders
that can be issued, usually with court review or other form of appeal.]

seizure of equipment or product
[After seizure, the law may provide for the equipment or product to be destroyed,
returned, or otherwise used, once it is no longer needed for evidentiary purposes.]

court orders
[These are often made available through an expedited process and provide for
injunctive or directory orders.]

probation/trusteeship
[When assets may disappear, probationary or trusteeship orders can protect the
assets for creditors or others entitled to compensation.]

limitation, suspension, revocation of licences
[Licensing systems are an effective means of controlling conduct. They can be
used to improve conduct (through conditions attached to the licence) or permit a
swift response to bad practice through suspension or revocation of licences.]

imprisonment
[Imprisonment is used these days in legislation as an indication of the seriousness
with which the offence is regarded by society.]
Those designing regulatory scheme should work out a compliance strategy in the context
of an approach that

uses low cost, least adversarial, and voluntary mechanisms first.
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
uses adjudicative processes as a last resort, and

allows options to loop back to low cost, least adversarial and voluntary
mechanisms at appropriate points in the process.
Processes for review and appeal are built into these compliance mechanisms as required.
The more intrusive the compliance mechanism, the greater the need for a fair process as a
check on abuse or misuse of executive power.
Monitoring regulatory outcomes
Over-control and under-control of regulatory schemes are both problems. Over-control
wastes resources and frustrates he regulated. Under-control results in failed and
unenforced regulation.
Regulatory schemes should provide some form of monitoring of desired outcomes from
the regulation. Without monitoring, review, and audit, it is difficult or impossible to
discover if regulatory schemes are doing what they are supposed to do or whether there is
too much or too little control.
At a minimum, there is need for program reports and periodic auditing of regulatory
schemes. The opportunity for input by those affected by the regulated could be
advantageous, and the role of Legislative Assembly committees could be enhanced with
this kind of responsibility.
Summing Up
Modern compliance techniques in regulatory schemes emphasize voluntary compliance,
incentives for compliance, a graduated approach to enforcement, and monitoring
schemes.
An overall Government regulatory compliance strategy to ensure use of the most
efficient, effective and fair means of enforcing regulations would be worthwhile.
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