Inspection

Tools of supervision are used to gather the information necessary for a regulator to determine and influence instances of non-compliance by the regulated. Their primary objective is to obtain from the regulated this decisive information, but sometimes, as in the educational model, they attempt to marry supervisory and corrective approaches into a more fecund and holistic tool.

Ambient Inspections

Ambient inspections refer to an inspection strategy by the regulator that uses a wider net to capture more likely points of non-compliance. Perfect observation of all the regulate4d individual agents would be prohibitively expensive for any regulator. Ambient inspections, if employed with appropriate strategic coordinates, allows for more cost effective inspections that will still alert the regulator to probable points of violation.

Franckx, Laurent, "The use of ambient inspections in environmental monitoring and enforcement when the inspection agency cannot commit itself to announced inspection probabilities," Journal of Environmental Economics and Management, 43(1) January 2002, 71-92

The author considers a game between two firms and an inspection agency, which can inspect ambient pollution levels before inspecting individual firms, but without committing itself to announced inspection probabilities. He analyzes the variables in the relative values of the environmental cost of non-compliance and the cost of inspecting firms. This leads him to a range of equilibria: the most “relevant” of which suggests that the higher the fine for non-compliance and the lower the environmental cost of non-compliance by the firms, the more likely that expected costs for the inspection agency will be lower with ambient inspection.

Filtered Enforcement

Though identified independently in the literature, this tool is a version of ambient inspections: a wide-net monitoring process creates a noisy signal from the regulated’s performance. Only if that signal exceeds a pre-designed trigger is a more focused monitoring process initiated. Again, such an approach avoids the prohibitive cost of maintaining detailed monitoring of all the regulated.

Heyes, Anthony, "A theory of filtered enforcement," Journal of Environmental Economics and Management, 43(1) January 2002, 34-46

The author demonstrates that the structure as well as the calibration of regulatory enforcement regimes matter in efforts to forecast compliance. The structure of enforcement being considered is that of “filtered” or two-staged regulatory regimes. Under such a structure an initial filter inspection looks for levels of non-compliance above a certain point that would then trigger the more rigorous invasive audit, the results of which could carry the consequence of regulatory penalty. Heyes finds that, counter intuitively, the tightening of the trigger – i.e., making more rigorous the standards for instigating a potentially penalty-inducing audit – does not necessarily increase compliance or reduce emissions. On the contrary, if the penalty is not adequately steep, such a structure of enforcement can increase the utility of non-compliance for serious violators. He also argues that improvement in audit-triggering monitoring technology has a qualitatively ambiguous impact on aggregate emissions, and increases the profitability of at least one class of non-compliant firms.

Educational Models

This tool involves the setting of aspirational standards to encourage progress toward best practices. By creating a context of trust, educational models encourage the regulated to report their mistakes so that those mistakes can provide a context for learning and improvement. The emphasis is on a continual assessment of, and encouragement to, progress toward standards, rather than an uncompromising insistence upon relentless compliance. By using voluntarily reported mistakes, the educational model seeks to create an atmosphere of mutual learning and continued improvement out of circumstances that could produce a culture of denial and evasion in a low-tolerance punitive model of regulation.

There are two distinct challenges to educational models. First is the challenge of creating the necessary trust among the regulated so that they will feel safe to report their mistakes, and so enabling the system to implement its learning processes, and create its educational benefits. The second challenge is ensuring that the genuinely incompetent or chronically negligent are not enabled in committing public harm by a regulatory atmosphere that is inappropriately forgiving and encouraging. It is suggested that these dangers can be mitigated by a marriage of educational and punitive approaches, providing the system is rigorous and consistent, and the two approaches are employed by clearly separated bodies. This solution, of course, has its own challenges.

Davies, A.C.L., "Mixed signals: Using educational and punitive approaches to regulate the medical profession," Public Law, Winter 2002, 703-723

The author examines the tensions in a system of medical profession regulation that combines punitive and education approaches. Ideally, the former approach would punish incompetent physicians for their mistakes, while helping to improve the performance of competent physicians with benefit of their having reported their mistakes. The key dilemma is how to encourage the latter to report their potentially educational mistakes, if the reporting of mistakes might open them to punishment. Or, as the author puts it somewhat mischievously: how to avoid confusing the mistakes of the competent with those of the incompetent. Davies argues that the two approaches can be mixed into a successful model if four principles are adhered to: First, the overall flavour of the regulatory regime should be educational. Second, punishable errors must be clearly defined. Third, the two approaches should be applied by separate agencies. Fourth, the system must be rigorous, effective and consistent so that reporters can understand and rely upon it.

Multi-Inspectorate Inspections

This tool involves cooperative inspection practices collaboratively undertaken by a range of inspectorates. There are two forms to such practices. The first form is that of formal cooperation between inspectorates, where each equally owns the inspection. This form entails new specific manuals and procedures to which everyone involved in the inspection process subscribes. In such a case, all partners sign the final report.

Secondly, there is an informal cooperation, entailing a hosted, multi-inspectorate approach, where one inspectorate carries out its usual inspection while inviting collaboration from other inspectorates. In such a case, all partners operate by the host’s inspection procedures, and the final report acknowledges the contribution of the visiting inspectorates though the host authorizes it.

Such practices provide more comprehensive inspections on the one hand, but also more precisely tailored inspections on the other hand. Multi-inspectorate approaches are also perceived as providing beneficial learning opportunities for the inspectorates, from the close working with their partners. The advantages and benefits of multi-inspection though can be lost when inspectorates are operating with conflicting or even incommensurable analytic models.

Mordaunt, Enid, "The emergence of multi-inspectorate inspections: ‘Going it alone is not an option’," Public Administration, 78(4) 2000, 751-769

The author draws on data from inspectorates of several social institutions and fields – prisons, probation, education and social services – to offer a typology of inspections. Classified by inspection focus, five basic types emerge: single institutional, multi-service, thematic, survey and monitoring review. These are elaborated with a range of characteristics. Out of the resulting variants, Mordaunt focuses on the multi-inspectorate approach. This is seen to offer a significant development in inspection practice that will expand and develop in the future. The examination of this approach’s operational examples make it clear that inspectorates are affecting the working practices of each other as they use multi-inspectorate approaches as exercises in benchmarking.