How Not to Incorporate Voluntary Standards into Smart Regulation: ISO 14001 and Ontario's Environmental Penalties Regulations

Abstract

In June, 2007 the province of Ontario, Canada, released environmental penalties (EPs) regulations. EPs (or administrative penalties, as they are called in the US) are the environmental equivalent of speeding tickets for facilities that violate pollution laws. They are found in numerous jurisdictions and are widely understood as part of a move toward smart regulation. The Ontario regulations offer reduced EPs to facilities with an environmental management system (EMS) that meets the requirements of ISO 14001 or the chemical industry's Responsible Care initiative. We argue that non-governmental, consensus-based standards such as ISO 14001 can and should play a constructive role in smart regulation and the pursuit of sustainability, but that the Ontario government's attempt to incorporate them into its EPs regulations was anything but smart. We present six tips for how to incorporate voluntary standards into official regulation. First, don't reinvent the wheel. If a standard exists that fulfills the objectives of a proposed regulation, and the standard was developed by a recognized standards body through a multi-stakeholder consensus process, regulators should incorporate the standard into the regulatory scheme as far as possible and appropriate, rather than drafting a new standard from scratch. Second, avoid unexplained discrepancies between the regulation and the standard. Third, if an existing widely accepted standard does not, on its own, meet all the public policy goals of the proposed regulation, indicate clearly how the standard is deficient and what more is required to meet public policy objectives. Fourth, should consult relevant standards development committees when developing regulations. Fifth, take advantage of ongoing opportunities to participate in the work of relevant standards development committees, to keep abreast of developments and influence the content of standards. Finally, and this is the biggest challenge, both regulators and standards development bodies should address the special characteristics and challenges of small businesses.

Keywords: ISO 14001, environmental management systems, environmental penalties, administrative penalties, standards, smart regulation, reflexive regulation.

JEL Classification: K20, K23, K32