«FaOM SAWDUST TO TOXIC BLOBS AConsideration of Sanctioning Strategies to Combat Pollution in Canada STUDIES IN REGULATION AND COMPLIANCE Canada.~ ...»
Under this proposed fining model, first advanced by Coffee,219 a convicted corporation for which a heavy penalty was in order would be required to authorize and issue shares to a crime victim compensation fund of a market value equal to that of a cash fine. This fund could then liquidate the securities at will, avoiding for the corporation those liquidity and allied problems involved with a direct cash fine.
Imprisonment has been rarely used as a penalty for corporate officials, but it too has problems associated with it. The identification and proof of guilt of the corporate officials who were "really" responsible for any given act of misconduct deserving imprisonment may be a formidable task. It has been suggested that some corporations have even designated certain junior members of management as "vice presidents responsible for going to jail" in order to protect senior officials from such an unpleasant fate. 22o (3) Deterring Polluters. So what about the deterrence of the four groups of players believed to be largely responsible for most of these behaviours? Of these groups, most of what has been said so far in this chapter applies with the greatest force to the corporate and small business groups. Important differences exist, of course, in the type and magnitude of the behaviours sought to be deterred among the two groups, and in the anticipated responses to various forms of deterrence. Thus, small businesses are probably less likely to be as susceptible to the deterrent impact of publicity than major corporations, but will be much more sensitive to the threat of financial penalties. There is also the possibility that breaches of environmental regulations may be more readily detectable, and sanctioned, among small businesses than major corporations. This latter possibility is of some consequence when discussing the direction and focus of specific enforcement activities by regulatory agencies. Such activities may all too readily follow the "line of least resistance" by pursuing easier and less dangerous prey, rather than tackling "big corporate game". More will be said about this issue shortly.
In regard to the other two groups of players, somewhat different deterrent possibilities may exist. Public agencies are likely to be sensitive in some ways to publicity, but its impact may only be felt indirectly, as through the ballot box at election time, or in government decisions made about appointments to boards of management, rather than through damage to an agency's image and reputation.
Financial penalties are also less likely to be effective deterrents since most public agencies are not profit-making ventures but service delivery bodies financed from the public purse. Enforcement dilemmas also exist in this area, since in many cases the agency regulated may also be the immediate regulator.
The fourth and final group to be considered are criminal organizations who may engage in highly damaging but profitable polluting behaviours as part of a network of illicit activities, or in the guise of a legitimate business. For this group only a credible threat of detection, conviction and severe sanction is likely to iGfluence polluting behaviour. Just how credible this threat is for a criminal organization, or for each of the other groups, depends upon the enforcement activities of those responsible for administering environmental regulations. These activities are the subject of the next chapter.
The Status of Enforcement in Canada: A l\linisterial Confession A good law, however, is not itself enough. It must be enforced ruthlessly if need be. Accordingly, the new Environmental Protection Act will be accompanied by a plan to reverse the country's appalling record of enforcement and compliance. 221 These strong words were used recently by the federal Minister of the Environment to describe the current status of federal enforcement activity in the environmental arena in Canada. The Minister went on to provide a unique catalogue of some of the major enforcement deficiencies known to his officials. 222 Speaking first of the use of Section 33 of the Fisheries Act, the main federal pollution law protecting the nation's water resources, the Minister said that it was rarely used and, in many cases, was found to be unusable. 223 "Indeed", noted the Minister, "in some provinces, my department knows of not a single conviction since the law was passed in 1868." 224 Turning to specific examples of failures to sanction serious occurrences of pollution, the Minister admitted that during the past decade not a single prosecution had been brought by Environment Canada against those responsible for discharging, on a daily basis, tons of toxic chemicals into the St. Lawrence River. Further, between January 1980 and September 1984, "140 spills of fuel oil, crude oil and diesel fuel were known to have occurred into the water or onto the ice of the Northwest Territories, the most fragile environment in the entire country.,,225 During that period only three charges were laid under Section 33 of the Fishedes Act relating to these spills.
Even when prosecutions had been brought and convictions obtained, said the Minister, the penalties imposed by the courts had been derisory. For instance, in the spring of 1986 a forest company in British Columbia was convicted under the Fisheries Act of spilling a highly toxic chemical into the water. The company pleaded guilty and paid a fine of $4,000 - "loose change for most forest companies.,,226 The Minister compared such penalties with those routinely levied under the Combines Investigation Act of the Department of Consumer and Corporate Affairs. These penalties included a $25,000 fine for a retail book chain that gave misleading price comparisons; a $6,000 fine for misleading advertising about commemorative coins; and a $10,000 fine against a company, together with a fine of $4,500 against one of its executives, for promoting a bust development cream without proper tests. 227 The Minister's speech has been referred to at some length because it affords one of the most immediate, graphic and frank political admissions of the perceived results of environmental regulation modelled largely on compliance. strategies and a conciliatory style of enforcement. Further evidence supportive of this ministerial appraisal can be obtained from more neutral sources. Nemetz,228 in particular, provides a penetrating review of the sparse information available in Canada about the use of sanctioning strategies. 229 It is a review that confirms the impression conveyed in Chapter 2 that prosecution is frequently considered the weapon of last
resort, to be used when negotiation fails. But as Nemetz comments:
One of the principal drawbacks of negotiation is the temptation for polluters to delay compliance when governments appear unwilling or unable to exercise their coercive powers. A recent multidisciplinary study undertaken for the Economic Council of Canada on the use of environmental regulation has provided documentation where excessive reliance on negotiation for compliance appears to have compromised the goal of acceptable environmental quality.23o Thompson,231 who supervised the Economic Council of Canada study referred to
by Nemetz, offers the following perceptive observations on the enforcement problem:
Normally if you tweak the law you expect to be prosecuted and punished.
That is the paradigm of the command/penalty model of regUlation. We have seen how remotely this paradigm applies to environmental regulation.
Despite the explicit offences of the federal Fisheries Act and of provincial pollution control statutes, and despite the fact that pollution standards have been persistently violated, there have been almost no prosecutions of pulp and paper mills in Canada (with the exception of British Columbia). Despite the fact that Ontario has struggled for more than a decade to apply stricter controls to sulphur oxide emissions at INCO's Sudbury plant, the company has seldom been prosecuted. Instead, the Canadian system of environmental regulation employs negotiating and bargaining to gain compliance. The role of enforcement in such a system is difficult to define. 232
Implementing Administrative Change
It has been suggested in Chapter 2 that presented with facts like these, and with burgeoning public demands to stop being tolerant towards polluters, the nation's politicians are beginning to define a more obvious and assertive role for sanctioning strategies and a penal style of enforcement of environmental regulations. The federal Minister of the Environment, apart from his release of the draft of the proposed Environmental Protection Act, has yet to reveal details of the enforcement plans envisaged for implementing this new policy at the federal level. The Province of Ontario, however, has moved beyond the planning stage and has introduced a number of measures designed to increase the credibility of the deterrent threat implied by the adoption of this new regulation.
A special investigation unit, (hereinafter SIU), has been formed within OMOE to investigate environmental offences and assist with their prosecution. 233 The unit, the first of its kind in Canada, is clearly distinguished in its structure and membership from the OMOE units and offkials who have ongoing roles in applying traditional compliance strategies to secure regulatory goals. Many of the staff of SIU are former police officers with extensive experience as criminal investigators. They are complemented by other officers with scientific and allied backgrounds.
The OMOE initiative in forming SIU is part of the Ontario government's announced commitment to a more aggressive and sustained pollution control policy.
But it is a policy which, if it is to have any chance of making an impact on polluting behaviours, will almost certainly need more than the SIU and a new set of tough environmental laws. The adoption of a "no more Mr. Nice Guy,,234 policy, as it has been termed by one commentator, brings with it a fresh set of problems that need to be considered.
The Problem of Nullification
As Coffee has observed, "few phenomenons are better established and more easily observed in the administration of the criminal law than the nullification of severe penalties.,,235 This statement is certainly true of the administration of the law, both criminal and non-criminal, concerned with regulating the environment. The penalties that have been available, even without recent amendments like those effected in Ontario, have been quite severe. 236 In addition, regulatory agencies have often possessed the weapon of plant closure as an ultimate deterrent to a polluting industry.237 Yet, as has been amply demonstrated in the past, penalties like these have not been applied even when convictions have been obtained. 238 In what promises to be a new and tougher regulatory era for polluters are the factors that produced this nullification problem no longer in existence? The answer
is an obvious no, for the following reasons:
Government ResolYe. Take first the situation of governments. 239 The health of (1) the economy still continues to depend upon the contributions made by business and industry, including many large corporations responsible for polluting behaviours. These corporations will still retain substantial power and influence over governments of all political persuasions, particularly in those parts of the country dependent upon a single industry for employment and prosperity. Also, in the branch plant climate referred to earlier in this paper, a Canadian component of a larger multinational corporation, if threatened with sanctioning strategies to make it comply with environmental regulations, may threaten in return to close down and move elsewhere to a more favourable business location. 24o A threat like this usually cannot be lightly dismissed by a government. The result may be a "face-saving" compromise to avoid any rigorous prosecution and penalties..
conduct inquiries and obtain evidence for the purpose of initiating a prosecution. With the already-noted exception of the SIU in Ontario, these staffs will almost certainly possess little training or expertise in 'Jel [Mming criminal investigations, or in testifying in court. These investigatit'.ls can also be extremely complex, intensive and expensive, as comparable e.lperience in the United States suggests. 243 In addition, few of the existing officials working in environmental regulatory roles relish this type of enforcement activity, as a number of studies illustrates. 244 Attitudes of Staff. Hawkins,245 in by far the most complete and informative (3) ethnography of the environmental regulatory process conducted to date, examined the administration of water pollution laws in several English jurisdictions. He found that the most crucial problem of enforcement for regulatory agencies and their field staffs was "ambivalence" since "their authority is not secured on a perceived moral and political consensus about the ills they seek to control."246 Pollution control officials, unlike the public police who possess a relatively firm moral mandate, find it difficult to portray themselves as protecting the public against the types of threat associated with "sinister figures on the fringes of moral order.... notwithstanding the missionary zeal of some proponents of regulatory reform in the U.S.A."247 In their daily work routines Hawkins found that regulatory agency field staff displayed remarkable patience and tolerance with their "client population".
Compliance strategies were adopted wherever possible, and prosecution was seen as something that was reserved only as a possibility for massive pollutions, or where there was willful, persistent or highly negligent rule breaking. 248 Field staff wanted to get their jobs done efficiently through the maintenance of good conciliatory relationships with the dischargers (of pollutants) with whom they were in regular contact.