So, who’s minding the store?

Frank Brandauer

I came up in a time when an “engaged and fair” regulator was viewed (if not begrudgingly) by industry as a necessary and valued partner. Their actions kept the playing field level, provided a measure of protection and helped industry keep its risks in focus. Whatever the relationship, regulators were seen as a real and significant force both in terms of actions and outcomes.

Nowadays there seems to be a never ending list of government branches and agencies that are unable to effectively regulate. And their failures have had profound and wide-ranging impacts on our society. From the financial sector (Enron, the mortgage collapse, AIG and Madoff) to Consumer Product Safety (imports from China, contaminated meats and vegetables) and most recently oil and gas exploration (BP and natural gas fracking), enforcement does not  appear to be what it once was.

Clearly there has been a shift away from strong and aggressive regulation toward a belief in the power of corporate governance, transparency and market forces. In light of recent events, I wonder if we can afford the costs when these other approaches fail?

We are in the midst of a great social experiment, be it planned or not. My brother-in-law says that “no one ever goes to jail,” and other than a few executions in China (in extreme cases), it seems that individuals are not being held accountable for their mistakes. Thus said, I believe (and truly hope) CEO’s around the world are taking a second look at their EHS risks and efforts after seeing how their colleagues at BP have fared in recent weeks.

From the perspective of an EHS manager, the questions I think are most interesting are:

  • Does reduced regulatory oversight or effectiveness actually increase or decrease industry’s EHS risk and associated costs?
  • Is the amount of EHS citations still an effective EHS metric?
  • Are market forces and NGO’s an effective substitution for regulation?
  • Have you talked with your management today, and if so what did you say? If not, why not?

 

About Frank Brandauer

Frank Brandauer is the Vice President of Regulatory Affairs at Therapak Corp. and a former member of the NAEM Board of Directors.

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2 Comments
  1. Stephen Evanoff

    July 1, 2010

    Frank:

    You raise an issue that has been the subject of many papers and a few books: the evolution of environmental regulatory framework and the balance-of-power between government, industry and NGOs. The best book I’ve read on this topic, which covers the 1960s – 2000, is Dan Fiorino’s, “The New Environmental Regulation.” Unfortunately, the events of the past decade make this book seem woefully out of date.

    My opinion is that the system worked best during the first Bush administration and the early Clinton years when we had balance between government-industry-NGOs. During that time frame, we had regulators with credible, diligent oversight and enforcement functions; large, global businesses that were committed to go beyond compliance; and NGOs that acted as a catalyst to move the process forward. We even had an EPA Administrator under President George HW Bush, William Reilly, who had previously run an NGO.

    I submit that it is in everyone’s interest to restore this balance.

  2. Tom Robinson

    July 9, 2010

    Excellent prospective by Frank, he is well experienced and thoughtful as usual.

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