exception to the rule: large asset owners and operating permits … · 2017. 10. 23. · 1...
TRANSCRIPT
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Exception to the Rule:
Large Asset Owners and Operating Permits
By
Anjum Mutakabbir, Allison Nelson, Chelsea Notte, Dan Ramroop
Simon Fraser University, School of Public Policy
May 20, 2016
Graduate students in the School of Public Policy prepared this report as part of
their course work for Policy 812 – Regulation-, under the supervision of their
professor, Nancy Olewiler. The course adheres to Simon Fraser University
standards for research ethics. The conclusions, findings, recommendations,
statistics and research contained within the report solely represent the work of
the student research team and do not necessarily represent the opinions or
position of BC Safety Authority or BC Safety Authority employees.
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Table of Contents
Table of Contents ............................................................................................................ 1 List of Tables ................................................................................................................... 3
Chapter 1. Introduction .............................................................................................. 4
Chapter 2. Context ..................................................................................................... 6 2.1. Regulation by the BC Safety Authority .................................................................... 6 2.2. Operating Permits ................................................................................................... 6 2.3. Current Compliance Techniques ............................................................................ 8
Chapter 3. Methodology ............................................................................................. 9 3.1. Literature Review and Jurisdictional Scan .............................................................. 9 3.2. Expert Interviews .................................................................................................... 9
Chapter 4. Literature Review ................................................................................... 10 4.1. Enforcement and Compliance Theory ................................................................... 10 4.2. Game Theory ....................................................................................................... 12 4.3. Choice Architecture Theory .................................................................................. 13 4.4. Common Regulatory Barriers ............................................................................... 14
Chapter 5. Jurisdictional Scan ................................................................................ 18 5.1. Ontario Electrical Safety Authority ........................................................................ 18 5.2. United States ........................................................................................................ 20 5.3. Compliance and Enforcement in South Australia .................................................. 22 5.4. Oil and Gas Regulation in British Columbia and Alberta ....................................... 23
Chapter 6. Interviews ............................................................................................... 26 6.1. Increased Enforcement ......................................................................................... 26 6.2. Better Education ................................................................................................... 27 6.3. Accidental or Intentional Non-Compliance ............................................................ 28 6.4. Use of Incentives .................................................................................................. 28 6.5. Data Sharing Between BC Hydro and the BCSA .................................................. 29 6.6. The Role of Insurance and Insurance Providers in Compliance ............................ 29 6.7. Peer Effects and Social Policing ........................................................................... 30
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Chapter 7. Considerations ....................................................................................... 31
Chapter 8. Policy Options and Analysis ................................................................. 32 8.1. Policy Option 1: Tying Permits to Insurance ......................................................... 32 8.2. Policy Option 2: Increase Enforcement ................................................................. 33 8.3. Policy Option 3: Incentives Programs .................................................................. 34 8.4. Policy Option 4: Education and Awareness .......................................................... 36 8.5. Policy Option 5: Data Collection and Reporting .................................................... 39
Chapter 9. Recommendations ................................................................................. 44 9.1. High Priority .......................................................................................................... 44 9.2. Middle Priority ....................................................................................................... 45 9.3. Low Priority ........................................................................................................... 45
References 46 Appendix 1. Sample Interview Questions (Group 1B: Exception to the Rule) ............. 51 Appendix B. Sample Interview Questions (Pertinent to both groups) .......................... 52
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List of Tables
Table 8-1 Volunteer Incentivised Program ..................................................................... 34
Table 8-2 Data Collection .............................................................................................. 40
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Chapter 1. Introduction
Of the large asset owners regulated by BCSA, perhaps as many as 15% of them
with high voltage electrical services do not have an operating permit. In other words, a
considerable number of commercial properties, plants and factories, mills, multi-story
buildings and schools, hospitals and municipal facilities do not have a permit allowing
them to operate electrical equipment and services. This may seem like a small
percentage; however, without a permit, asset owners are putting the safety of their
employees and the public at significant risk. Unpermitted electrical machines and
equipment are more likely to be under-maintained and are subsequently more likely to
malfunction. Due to the high voltage associated with these projects, potential
malfunctions of equipment can have a devastating effect on people and property. The
risks associated with equipment malfunctions and/or the unsafe use of electrical
equipment can range in severity from mild electric shocks to electric arcing, explosions
and fires. Reduction in these risks requires full compliance by an asset owner of high
voltage electrical services. We summarize our policy problem as the following:
Absence of operating permits can indicate heritage or under-maintained
infrastructure: moreover, unpermitted large assets pose a greater-than-average safety
risk and can pose substantial economic costs and risks to human health and safety,
including loss of life.
The following questions guide our research:
Why do some large asset owners fail to have operating permits?
Is this number is accurate?
What are/could be the barriers to compliance?
What are the available options to improve compliance, guided by BCSA objectives and evidence?
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The methodology section of this report describes how we address these
questions. We develop a series of policy options that will target non-compliant asset
owners in an attempt to reduce barriers to compliance. The policy options derive from a
literature review and jurisdictional scan and through a series of stakeholder interviews.
The resulting policy options include tying permitting with insurance, a Volunteer
Incentivized Program (VIP), increased enforcement, data collection and reporting, and
an awareness/education campaign. We analyze the policy options using criteria
identified by BCSA. These criteria include effectiveness in reaching the objective of
increased safety through better compliance, stakeholder acceptance, administrative
complexity, and the public reputation/confidence in the regulator. The report concludes
with a discussion of the implications of the analysis.
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Chapter 2. Context
2.1. Regulation by BC Safety Authority
BC Safety Authority (BCSA) is a non-profit organization that has the
responsibility in BC of over-seeing the safe installation and operation of technical
systems (BSCA, 2015a, p.1) in the province with the exception of some municipalities in
Metro Vancouver and Victoria. BCSA is responsible for administering the Safety
Standards Act and parts of the Railway Safety Act. Through the BC Safety Authority Act
and the Railway Safety Act, BCSA is responsible for regulating the following types of
equipment (BCSA, 2016b):
Electrical equipment and systems.
Boilers, pressure vessels and refrigeration systems.
Natural Gas and Propane appliances and systems, including hydrogen.
Elevating devices, such as elevators and escalators
Railways, including commuter rail
Passenger ropeways, such as aerial trams and ski lifts
Amusement devices
Complex and integrated technical systems involving several technologies
2.2. Operating Permits
Operating permits are required in BC for the operation or maintenance of specific
equipment included within the Safety Standards General Regulation. The permits can be
provided on an annual basis or temporarily in the case of construction (BCSA, 2015c,
p.13-4). The permit outlines the responsibilities of Field Safety Representative (FSR)
and their qualifications. To renew an operating permit, the asset owner must include a
declaration of compliance signed by the FSR from the original permit (BCSA, 2015c,
p.14)
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Operating permits are required because they ensure operation and maintenance
of the equipment by a qualified individual. As part of the permit, the Asset Owners are
legally obligated to ensure that their employees are industry certified to operate the
electrical equipment1 and ensure that the equipment is inspected for potential safety
risks (BCSA, 2015c, p.5-7). It is the role of BCSA certified FSR to ensure that owners
have the information necessary to train properly their employees about the risks of
operating the equipment and to inspect the electrical equipment (BCSA, 2015c, p.5-7).
The inspection of the electrical equipment allows BCSA to determine potential hazards
and address them collaboratively with the Asset Owner (BCSA, 2015c). Furthermore,
the operation permit provides the asset owner with access to
“BCSA certified field safety representatives2 who can provide them with technical guidance and direction, and can provide assistance for the development of a continuous preventative electrical safety program. The FSR named on the operating permit provides the owner with dedicated technical knowledge and is responsible for conducting regular inspections of electrical equipment at the facility. The FSR also provides advice and oversight of electrical work being performed for the facility owner.” (BCSA, 2015, p.4)
If an asset owner does not apply for a permit or is non-compliant, it is likely that
the asset owner lacks the technical knowledge to properly identify and manage safety
hazards (BCSA, 2015c, p.5). This can result in under-maintained equipment and lead to
the potential damage of the equipment with significant risk for the operators of the
machine and the public (BCSA, 2015c, p.8), especially for high voltage electrical
services. Asset owners of electrical systems with an electrical supply of over 250 kVA
(750 V) or a “building with this type of equipment or supply” (BCSA, 2016c) must have
an operating permit. Typically, this would refer to owners of commercial properties,
plants and factories, mills, multi-story buildings and schools, hospitals and municipal
facilities (BCSA, 2016d).
1 If an employee is not certified, it the responsibility of the owner to identify this to the Field Safety
Representative and to provide training to said employee (BCSA, 2015c, p.5-7). 2In the case of high voltage electrical services (over 750 V), the Field Safety Representative must
have a Class A Certificate of qualification (BCSA, 2015, p.9)
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2.3. Current Compliance Techniques
Currently, BCSA provides inspections for operating permits based on their
Resource Allocation Program (RAP). A BCSA Safety Officer will not inspect every permit
issued, instead inspections are prioritized based on a series of risk calculations. BCSA
“uses current and historical data, which is based on the scope and stage of work being
performed; equipment environment, and safety history” (BCSA, 2016e). The goal of RAP
is to ensure effective use of BCSA’s limited resources. According to the 2014 State of
Safety report, BCSA issued 92,609 new operating permits and conducted 34,208
physical assessments (BCSA, 2015b, p.2).
If an asset owner is found to be non-compliant (by either not having a permit or
not following the safety regulations properly), BCSA has the authority under the Safety
Standards Act to provide the non-compliant owner with a warning notice, a compliance
order, a monetary sanction, and/or a discipline order (BCSA, 2016f). According to the
2014 State of Safety Report, 55 warning notices, 31 Compliance orders and 5 monetary
sanctions (ranging from $750- $5,000) were issued by BCSA in the electrical services
sector (2015,p.120-122).
In addition to the use of traditional enforcement techniques, BCSA has hosted a
number of client education events to increase awareness of electrical services safety
standards amongst industry workers. These include “29 Electrical Tech Talks, two
Breakfast & Learn events, two Client Appreciation events and two Technology
Conferences in 2014, covering 13 topics and reaching 1188 stakeholders across BC,”
(2015, p.18).
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Chapter 3. Methodology
3.1. Literature Review and Jurisdictional Scan
We conducted a substantive literature review and jurisdictional scan to provide
the theoretical background necessary to determine the barriers and incentives to
compliance and to identify existing policy solutions. The literature review focused on
three important areas of theory that are most relevant to this project: 1) Enforcement and
Compliance Theory, 2) Game Theory and 3) Choice Architecture.
The jurisdictional scan identified policy approaches to non-compliance of
large asset owner with high voltage electrical services in similar jurisdictions in Canada
and abroad, such as Alberta, Ontario, the United States, and Australia. This was
important for the development and analysis of the policy options
3.2. Expert Interviews
To determine the barriers and incentives to compliance, as well as to inform
policy option development and analysis, we conducted six expert interviews with
stakeholders and included:
BC Hydro
BCSA Risk, Compliance & Policy leadership
BCSA Technical: Electrical Safety Officer and Educator
Compliant Operator of Assets with High Voltage
Province of BC – Building Safety Standards Branch policy team
The BC Safety Authority provided the contact information for the majority of these
stakeholders.
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Chapter 4. Literature Review
4.1. Enforcement and Compliance Theory
Regulation is successful insofar as the regulated entities are persuaded and able
to comply. Malcolm Sparrow (1994) noted over twenty years ago that traditional
enforcement and compliance mechanisms were under stress. In particular, he stated
that this was because “there are too many violators, too many laws to be enforced, and
not enough resources to get the job done,” (Sparrow, 1994: ix). Evidence and
experience across a myriad of regulated sectors of society shows that these challenges
persist. Reasons for non-compliance may vary, particularly where regulated entities are
not homogeneous. Freiberg (2010: 271-272) identifies the following as factors of non-
compliance:
Regulated entities may not understand what is required of them;
Regulation may be overly legalistic;
Regulation may conflict with market incentives or cultural practices;
Prior consultation with target groups may never have happened or may have been inadequate; or
There may be some aspect of the regulatory process that is procedurally unjust.
Assuring safety in potentially hazardous industries has been predicated on
achieving rule-compliance and, more recently, risk-management through making
rational, democratic, and analytical choices (Freiberg, 2010; Sparrow, 2000). Hopkins
(2011) describes these methods as being “coexisting and complementary, not
contradictory”. For these reasons, regulatory instrument and framework design must
carefully counterbalance attaining consistency and addressing the aforementioned non-
compliance factors, but also flexibility and innovation to improve performance criteria
(Carrigan & Harrington, 2015).
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Conversely to the indicators of non-compliance, Baldwin et al. (2012: 236-238)
draws on numerous enforcement and compliance theories to distill a list of compliance
inducing factors:
Knowledge of the rules
Costs and benefits of compliance
The extent to which a policy objective and its effects are acceptable to the target group
The target group’s respect for authority
Forms of social control
Risk of being reported or found out
Risk of inspection
Risk of detection
The anticipated “hit-rate” of inspections
Risk of sanctions imposed
Severity of sanctions
The first five factors on the list address the “spontaneous compliance”
dimensions, while the latter six relate to enforcement dimensions. None are mutually
exclusive and all may be affected by, or closely related to another factor. For example, a
target group’s respect for the regulators authority and its own implementation of internal
standards and values may be directly proportional to enforcement dimensions. For
example, the literature finds inspections and the threat of inspections to have beneficial
effects on compliance rates for an entire target group when there are punitive measures
imposed (Carrigan & Harrington, 2015; Earnhart, 2004; Lanoi et al., 1998; Laplante &
Rilstone, 1996). Additionally, factors such as “forced shut-downs, environmental
damage, criminal prosecution, corporate reputation, community pressure and customer
pressure” are stronger drivers of target group behaviour outcomes than financial
penalties alone (Carlough 2004: 2).
US Environmental Protection Agency (EPA) literature states: “Inspections remain
the backbone of agency compliance monitoring programs. Government officials make
independent judgments as to the compliance status of a facility. Even with widespread
requirements for self-monitoring, inspections play a major role in assuring quality and
lending credibility to self-monitoring programs” (Wasserman, 1984). Magat and Viscusi
(1990) note that imposed sanctions can be civil or criminal. Average fines levied by the
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EPA were $89,437 (in USD during the 1970s and 1980s), and violations could result in
one year of imprisonment for a first offense and two years in prison for a second case of
non-compliance (Magat & Viscusi, 1990). Thus, research has found that punishing
individuals as well as corporations for egregious offenses has worked well to induce
rule-compliant behaviour where there is no tolerance for adverse impacts on public
health and safety.
4.2. Game Theory
Inspection games are an applied subfield of game theory. Like most scenarios in
game theory, inspection games consist of two players with different incentives. A simple
inspection game that is relevant to the context of this paper would include a regulator
and an operator. Inspection games can be used to analyze the effectiveness of various
incentives in order to induce compliance (Nosenzo, et al., 2010).
Most compliance incentives can be categorized as either a bonus or a fine. In
inspection games, the regulator can choose to inspect or not, and an individual or
operator can choose to comply or not. The regulator can reward the operator that is
inspected and was found in compliance, or it can impose sanctions or fines on those
who are inspected and found to be noncompliant.
The results for these games reveal that fines for non-compliant behaviour
increase the equilibrium probability of compliance. However, an interesting finding shows
that bonuses for compliance actually reduce the equilibrium probability of compliant
behaviour. In other words, from the perspective of the operator, fines and bonuses make
non-compliance less attractive and push them towards compliance. For the regulator,
fines increase the expected benefit of inspections but bonuses decrease the benefit
because they are costly. The ability to impose fines allows the regulator to recuperate
some of the costs associated with inspection. If the regulator only employs bonuses,
then it will accrue costs associated with the bonus and the inspection. This decreases
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the incentive to use inspections compared to the game with fines, thus leading to the
result that bonuses can reduce compliance (Nosenzo, et al, 2010).
4.3. Choice Architecture Theory
In many cases, individuals do not make decisions based on well-reasoned
thought. The behavioural psychology and behavioural economics literature challenges
the notion of homo economicus. That literature argues that people often base their
decisions on “rapid, intuitive [thought] that is not associated with what we would
traditionally consider thinking (emphasis theirs)” (Thaler, et al., n.d., n.p.). In light of this
reliance on gut instinct in decision making, choice architecture attempts to design
decision points in such a way that people are nudged towards making choices which are
either of benefit to themselves, such as eating healthier, or of benefit to the community,
such as reducing energy consumption.
Designing a nudge takes knowledge regarding what an individual is inclined to do
and uses that information to help create good decision outcomes. Nudges help create
paths of least resistance to good decisions by establishing the desired outcome as the
default option (Thaler, et al., n.d., n.p). In addition, it is important to design decision
system that recognizes that people will make mistakes (Thaler, et al., n.d., n.p). An
example is checklists or automatic prompts that show where mistakes have been
made. Complicated decisions should be structured to promote good decisions. This
could be as simple as putting the desirable option first in a list that includes many other
options, or presenting information about various complicated options in an easy
digestible way (Thaler, et al., n.d., n.p.). Finally, the use of incentives is
important. Incentives must be salient to decision makers. For instance, in cases where
regulatees do not fully understand the benefits of permitting, some individuals might
avoid permitting to save the permitting cost. This suggests inadequate communication
by the regulator of the benefits of permitting. To correct this, the value of permitting
must be greater than the cost saved by not permitting to elicit the proper choice.
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Is choice architecture effective? Many critiques of choice architecture revolve
around moral arguments about governments’ use of libertarian paternalism (Kosters &
Heijden, 2015). Few systematic evaluations exist for nudge-based governmental
programs (Kosters & Heijden, 2015). Anecdotal evidence finds successes, e.g.,
increasing organ donation rates by establishing an opt-out system rather than an opt-in
one, and failures, e.g., monetarily rewarding people for activities they used to do
voluntarily decreases performance quality (Kosters & Heijden, 2015). Even rarer is direct
evaluative comparison of nudging with more traditional governance
strategies/instruments. As Kosters and Heijden (2015) point out, nudging strategies
often get added to existing governance strategies or instruments in order to revitalize
them, instead of replacing them. The result is that “it remains unclear whether nudging
has a comparative advantage over other governance strategies or instruments”
(p.285). Kosters and Heijden point out four questions to ask when undertaking a nudge
program, which can lead to improvements in regulatory performance (p. 285 –
286). First, what are the lessons learned? Second, even if the nudge is unsuccessful
has it provided information that can improve policies? Third, has the nudge resulted in
the collaboration of actors who ordinarily would not have collaborated? Finally, what
learnings arise about people’s behaviour in the event that a nudge fails?
4.4. Common Regulatory Barriers
Understanding compliance and non-compliance of regulated entities is a difficult
process. Failures to comply can be intentional or unintentional. In both of these cases,
there are often multiple barriers at play, which influence the regulated entity’s
behaviour. It is paramount that the regulating bodies have as robust a sense as possible
of the factors influencing non-compliance in order to understand how to improve the
regulatory environment to facilitate greater behavioural change on the part of the
regulated entities. This project draws heavily on the work of Kent Weaver (2014) to
identify potential barriers to compliance.
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The level of incentives influences behaviour. As Weaver (2014) points out, “high
rates of target compliance are unlikely where positive incentives and/or negative
sanctions are not sufficient or certain enough to ensure compliance” (p.246). An
example of a positive incentive is a rebate on renovations to make a house more energy
efficient. By contrast, an example of a negative sanction is something like a “sin tax” on
the purchase of cigarettes. In both these cases, rebates will not incentivize certain
renovations if they are not generous enough and the “sin tax” will not curtail the
purchase of cigarettes effectively if it is too low.
Monitoring is also an important component. If the regulated entity expects the
regulator is likely to monitor their activities, then they are more likely to be within the
bounds of the regulations. Weaver points out that “high rates of target compliance are
especially hard to achieve where compliance is difficult or costly to monitor” and that
“monitoring is likely to be especially problematic where the activities involved are illegal,
take place in private, or both” (Weaver, 2014. p.247). These are important
considerations for BCSA. While the organization wants to avoid “sticks” and work with
the entities it regulates, it might be difficult to push the 15% of those non-compliant large
asset owners into compliance without a full range of carrots and sticks. The policy
section assesses options that BCSA increases the number of enforcement officers it
employs and makes greater use of potential data sharing partnerships.
An important aspect of BCSA is its role in enforcing its regulations to preserve
public safety. However, enforcement itself could be a barrier. The experiences of front
line enforcement staff represent an important subset of data. Since BCSA has
jurisdiction over a large area of the province while maintaining a modest number of
safety officers it is important to understand what constraints these officers experience in
attempting to do their jobs. Important considerations are whether officers might overlook
certain infractions due to being overwhelmed, are available to perform investigation
requests, and have the right data to find sites for inspection.
Information cognition also might be a barrier. Regulated entities may not have
the information they need to comply, or know how to process that information. This
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affects their capacity and willingness to follow regulations (Weaver, 2014. p.247). For
instance, if upon the transfer of a property the new owner does not know that they need
to re-permit their asset or does not see the benefit of re-permitting, they are unlikely to
comply. It is important to identify which of these factors, if not both, is taking place.
Attitudes and beliefs also play an important role in compliance. Are, for example,
regulations in or out of step with the cultural practices that have developed around the
regulated entity or activity? For instance, it is common for tradespeople who receive
their Red Seal see this as a lifelong certification, and do not see the need to update their
skills. Thus, tradespeople could view a regulation for recertification onerous and
potentially paternalistic. Equity is another cultural value. Regulations perceived as
inequitable run a greater risk of non-compliance.
A community of regulated entities can have an impact on one another. Peer
effects can work both ways. An environment where the non-compliance of regulated
entities is widely known “signal[s] that non-complaisance is unlikely to be detected and
punished” (Weaver, 2014, p.247). This is problematic for BCSA as its ability to
undertake enforcement and inspections is limited by its small staff of safety officers and
its relatively large jurisdiction. However, peer effects can be beneficial when framing
non-compliance as being socially unacceptable (Weaver, 2014, p.247). Education that
attempts to inform potential non-compliant entities about the harms of their activities
could help in achieving a reformulation of attitudes regarding what is socially
unacceptable practice.
The availability of resources is an important consideration to whether a regulated
entity can comply. The cost of compliance might be too high for some regulated entities
to engage with the system (Weaver, 2014, p.249). Furthermore, an entity might be
constrained not just financially but also in terms of human capital. The proximity to
important regulatory locations (like permitting offices) can also affect the ability to be
compliant (Weaver, 2024, p.249).
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Whether there is an ongoing component to the regulation is also an important
consideration. Compliance based on an ongoing requirement, such as permitting,
presents a more complicated route to compliance than a single time requirement
(Weaver, 2014, p.250-251). This is an important consideration for BCSA. While this
project looks at attaining greater compliance of high voltage asset owners, these asset
owners face an ongoing requirement for compliance. More critically however, is that
these asset owners are likely to have many permits out, all expiring at variable
times. This further complicates the actions required to be compliant.
Finally, BCSA’s regulatory environment is highly heterogeneous, another
challenge to compliance. This is because different regulated entities might experience
different combinations of barriers than others. Some may have problems in information
cognition, while others do not have the capacity to achieve compliance. All of these
issues make it important that BCSA engage in effective data collection to see where
particular barriers exist and who is affected by them.
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Chapter 5. Jurisdictional Scan
5.1. Ontario Electrical Safety Authority
Ontario’s Electrical Safety Authority (ESA) is an administrative regulatory
authority mandated by the Government of Ontario pursuant to The Electricity Act and
The Safety and Consumer Statutes Administration Act. Their role is to enhance public
electrical safety by identifying and targeting leading causes of electrical safety risk;
ensuring compliance with regulations; promoting awareness, education and training; and
collaborating with stakeholders to improve the state of electrical safety in Ontario (ESA,
2016). ESA’s mandate guides all activities and objectives: “To promote and undertake
activities which enhance public electrical safety including training, inspection,
authorization, investigation, registration, enforcement, audit, and other regulatory and
non-regulatory public electric safety quality assurance services” (ESA Objects of
Corporation, 1999).
Operating permits for large asset owners come under ESA’s Continuous Safety
Services. OESC Rule 2-300 General Requirements for Maintenance and Operation
states: All operating electrical equipment shall be kept in safe and proper working
condition and defective equipment shall either be put in good order or permanently
disconnected. Asset owners demonstrate compliance and safety due diligence by
completing regular work records for electrical maintenance. ESA substantiates reporting
by regular safety audits and inspections (ESA, 2016). Moreover, there are rigorous
requirements for documentation and data-collection pursuant to OESC Rule 2-003
Record of Electrical Installation Work, which must be kept on site for regulator perusal at
all times.
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Compliance and enforcement comprise the majority of ESA activities. For
example, in fiscal year 2014, ESA:
Executed more than 425,000 wiring inspections;
Handled more than 490,000 customer service calls;
Licensed more than 19,000 organizations and people; and
Undertook hundreds of investigations, laid charges and undertook other disciplinary action (ESA, 2015).
ESA’s stated goal is to improve compliance without a parallel increase in
resource demand, or overburdening those already in compliance. They use a risk-based
management system to triage responses to complaints, and execute audits and
inspections (ESA, 2015). As per the Electrical Product Safety (Regulation 438/07) ESA
is also responsible for initially connecting all asset owners to the safety system. This
puts ESA in a unique position to be informed about the condition and status of large
electrical assets given their involvement at the time of first connection.
ESA is cognizant that the regulatory system itself can present barriers to
compliance (See Baldwin et. al., [2012] referred to in previous sections). Therefore, ESA
removes barriers by working with stakeholders to improve awareness of regulatory
obligations. Specifically, this was achieved by surveying and measuring rates of
awareness of obligations among key stakeholders, and developing targeted programs3
to improve awareness and understanding where it is most needed (ESA, 2015). This
permits ESA to allocate resources efficiently, maintain good relationships with compliant
stakeholders, and reach out to potentially non-compliant ones while offering them the
benefit of the doubt for first-time and low-risk offenders.
3 For example, ESA requires that all electrical distributors include a public safety measure in the annual Safety Scorecard report. The Public Awareness of Electrical Safety component is meant to “measure the level of awareness of key electrical safety precautions among the public within the electricity distributor’s service territory. It measures the degree of effectiveness for distributor’s activities on preventing electrical accidents,” (ESA, 2015, p.2).
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5.2. United States
Enforcing regulations regarding electrical hazards in the United States is under
the authority of the Occupational Safety and Health Administration (OSHA). OSHA’s
authority comes from the Occupational Safety and Health Act of 1970. Although this
program operates federally, state governments are encouraged to develop their own
“own job safety and health plans and permits state enforcement of OSHA standards if
the state has an approved plan,” (US Department of Labour, 2002). OSHA provides
these state-level organizations with 50% of the programs' operating costs. In order for
the state plan to be accepted, they must set standards and develop enforcement
programs deemed equivalent to the programs and policies provided by the OSHA.
OSHA has a number of programs meant to reduce the risks associated with electrical
hazards in the workplace. Next is a brief summary of the enforcement and compliance
programs used by OSHA.
OSHA has a consultation assistance program. This program is available to
employers with less than 250 employers at a fixed site who need assistance ensuring
workplace safety. This program is:
Primarily developed for… employers with more hazardous operations, the consultation service is delivered by state governments employing professional safety and health consultants. No penalties are proposed or citations issued for hazards identified by the consultant. The employer's only obligation is to correct all identified serious hazards within the agreed-upon correction time frame (US Department of Labour, 2002).
Only when serious and frequent hazards are identified in the same workplace will
any safety hazards be directly reported to OSHA enforcement team (US Department of
Labour, 2002).
This program also provides incentives for employers to partake in the program.
Some of these incentives include OSHA’s Safety and Health Achievement Recognition
Program (SHARP). Employers become eligible for SHARP if they: (1) Receive a
consultation visit from OSHA; (2) address all safety hazards; and (3) they develop their
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own health and safety program (US Department of Labour, 2002). Once accepted into
SHARP, the employers will be exempt from inspections for a period of 1 year. This is not
the case for inspections cited by a report or an incident.
OSHA also has a Voluntary Protection Program (VPP). The VPP is an incentive-
based program meant to encourage employers to develop their own health and safety
management team and to develop a cooperative relationship with OSHA. When an
employer applies to be a part of the VPP, OSHA conducts an onsite evaluation to ensure
compliance with the safety standards. OSHA then conducts regular evaluations of the
sites (US Department of Labour, 2002). The frequency of the evaluation depends on the
status of the employer in the VPP. There are three levels of employers in the VPP: Star,
Merit, and Demonstration. Evaluations occur on an annual basis for employers at the
Demonstration level, every 18 months for Merit employers and every 3-5 years for Star
employers (US Department of Labour, 2002). In February of each year, all employers
involved in the VPP program must send in their most recent safety evaluation report,
which includes the incidence and prevalence of injuries and illnesses at work (US
Department of Labour, 2002). The main logic behind this program is that:
Voluntary, cooperative partnerships with employers, employees, and unions can be a useful alternative to traditional enforcement and an effective way to reduce worker deaths, injuries, and illnesses. This is especially true when a partnership leads to the development and implementation of comprehensive workplace safety and health management system,” (US Department of Labour, 2002).
Another collaborative program implemented by OSHA is the Strategic
Partnership Program (OSPP). OSPP allows for collaboration between labour, unions,
management and government on a broader scale than is provided by the VPP program.
Rather than focusing on individual worksites, the OSPP entails relationships amongst
entire groups of employers and employees (US Department of Labour, 2002). There are
two types of OSPP: comprehensive and limited. Comprehensive refers to developing
safety management plans for partnering worksites. Limited focuses on eliminating
specific types of workplace hazards. Finally, the OSHA also offers occupational and
safety health training for employers and employees.
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5.3. Compliance and Enforcement in South Australia
In South Australia, the regulation of electrical services is under the authority of
the Office of the Technical Regulator (OTR), which is a government organization (South
Australian Government, 2016). The Electricity Act of 1996 and the Energy Products
(Safety and Efficiency) Act of 2000 provides its authority (Government of South
Australia, 2015b). South Australia does not use a permitting program; however, they
have developed programs designed to increase compliance to the electrical services
safety regulations (South Australian Government, 2016). Some of these programs
include (South Australian Government, 2015a):
“Roadshows, technical sessions and workshops”- these programs engage electricity workers and to ensure that the workers have access to updated information regarding regulation and any technical issues that are relevant to their industry. In the year 2014/15, the OTR conducted 76 presentations across Southern Australia with various industries (South Australian Department of State Development, 2015, p.1). Companies can request a presentation by the Technical Regulator for in-house training purposes (South Australian Department of State Development, 2015, p. 23).
The OTR publishes a newsletter every six months titled the “Regulation Roundup” that is distributed to all licensed electrical workers to help increase awareness regarding the OTR, as well as keep workers notified of any changes in regulations or standards. OTR provides both a hard copy and electronic format (South Australian Department of State Development, 2015, p. 24). This publication’s success: “the response from industry members who contact the Technical Regulator to discuss items addressed in the particular edition demonstrates that Regulation Roundup has become a valued source of information to the electrical industry, “(South Australian Department of State Development, 2015, p. 25).
The Government of South Australia also conducted a survey of the public to determine the public’s awareness of electrical safety hazards and the electrical safety regulations and codes (South Australian Department of State Development, 2015, p.25).
OTR targets all of these programs towards increasing awareness of its role and
any changes in its regulations and codes. OTR uses traditional forms of enforcement as
well, such as oral and written warnings, inspections, etc. For example, the Technical
Regulator conducts audits at least once a year to ensure that electricity entities are
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following the appropriate policies and standards (South Australian Department of State
Development, 2015, p.5). However, the inclusion of programs meant to engage the
regulated bodies ensures that the electricity workers remain aware of their
responsibilities and obligations.
In 2014/ 2015, OTR also ran a public awareness campaign. It delivered
brochures to all South Australian councils and had information online. OTR’s goal is its
“Be Energy Safe” campaign, provided in print and in other media, was to increase public
awareness regarding electrical safety, as well as increase awareness of its role and
responsibilities (South Australian Department of State Development, 2015, p. 36).
5.4. Oil and Gas Regulation in British Columbia and Alberta
Regulatory agencies responsible for overseeing all aspects of upstream
petroleum development employ risk-based regulation to respond to economic, social,
and environmental externalities. Both British Columbia and Alberta have independent,
single-window regulatory agencies responsible for overseeing oil and gas operations in
their respective provinces, including exploration, development, pipeline transportation,
and post-development reclamation. These agencies are the Oil and Gas Commission
(OGC) in BC and the Alberta Energy Regulator (AER).
Both the OGC and AER work closely with government ministries to harmonize
and enforce regulations for petroleum industry operators. Both regulators employ some
version of Metzenbaum and Vasisht’s (2015) definition of keys to regulatory excellence,
including: well developed mission statements and goals; adequate funding and
resources to achieve objectives; sufficient data to inform decision-making; and well-
trained, knowledgeable personnel who are able to make judgments according to key
criteria (Metzenbaum and Vasisht, 2015). These four components are critical to the AER
and OGC’s ability to affect outcomes in real-time.
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Current regulations that relate to compliance and enforcement include in BC a
new feature of the Pipeline Regulation (as of 2011) is that, in addition to utilizing Integrity
Management Programs to manage risk, operators are also required to implement
damage prevention programs. Both regulators utilize Integrity Management Programs as
to employ self-monitoring mechanisms to triage risk and identify priority levels to
inspections. The AER’s Compliance and Enforcement Program identifies the framework
to carry out coordinated risk-informed inspections and audit activities, known as the
“OSI” model (described below). BC’s bases its compliance and enforcement framework
on that of AER. Criteria considered when planning inspections and audits include:
Operator performance and compliance history
Sensitivity of areas where operations take place Inherent risk, and
Significance of regulatory requirements (AER, 2016a)
AER issued its newest iteration of the Integrated Compliance Assurance
Framework in February 2016. It continues to use the aforementioned criteria to calculate
operator risk in both provinces for many years. Over the years, the AER has noted that
regulatory requirements set in consultation and relationship with stakeholders have
significantly better compliance outcomes than those set in adversarial conditions (AER,
2016b). This is the case even where there are escalating penalties for non-compliance.
That all stakeholders have a better understanding of the costs and benefits (economic,
social, and environmental) of a policy is a significant benefit of consultation.
Nevertheless, a 2011 audit by the Forest Practices Board in BC criticized the model,
finding it deficient in the following ways:
The model does not distinguish between distinct activities with different risk sets [or compounding risk-factors]
The type and age of equipment does not appear to be factored fully into the model (this is one of the factors most commonly referred to as a risk driver in our discussions with staff).
It deals with sites mainly from the perspective of proximity to populations, and is not designed at a level of resolution to take into account environmental features in close proximity (Forestry Practices Board, 2011).
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New iterations of compliance and enforcement frameworks in both BC and AB
have been predicated upon addressing issues discovered by external audits. The
enforcement and compliance framework is similar in both provinces. The “deficiency
notice and corrections process” specifically enables industry operators to remediate
issues without immediately being found non-compliant (BC OGC, 2015a). This process
enables the OGC to gather significant volumes of data from monitoring, inspections
results, complaints, and self-reporting. Results are considered robust because industry
operators have less incentive to give false information or hide non-compliance.
Additionally, enforcement actions are the last resort after exhausting all other means in
the communication and remediation process.
Both provinces are increasingly moving to site-specific regulation in recognition
of the unique characteristics of individual operations. The AER predicts that site-specific
regulation will produce better conservation, public safety, and economic development
outcomes (AER, 2016c). Likewise, in BC, the process sets clear objectives, maintains
clear values, and obtains sufficient scientific data and evidence that to utilize, map, and
publicly share (BC OGC, 2015). The framework makes provisions for specific stated
outcomes and provides expectations for how industry operators can achieve them. For
these reasons, both BC and AB increasingly utilize performance-based regulations in
order to maximize innovation and voluntary operator cooperation.
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Chapter 6. Interviews
Interviews conducted with representatives from: Mott Electric, BC Hydro, the
Province of BC – Building Safety Standards Branch Policy Team, and BCSA Technical,
illustrated a number of key themes.
6.1. Increased Enforcement
Each interview participant noted that enforcement was vital to maintaining high
levels of compliance, as without enforcement, people will start to deviate. There was
significant agreement that BCSA does not engage in enough enforcement, and that
enforcement was essential to BCSA delivery of its mandate. They saw that in a lax
environment, where inspection appears to be infrequent, regulated parties would
naturally drift from compliance to non-compliance. The lack of enforcement has also
lead to some concerns from major stakeholders in the regulatory environment. For
example, some of the stakeholders felt that they were taking on responsibilities, which
they believed was beyond their regulatory scope. Furthermore, stakeholders view
inspections as a service that they pay for through permitting fees. There is concern from
organisations that the rate at which BSCA engages in requested inspections (about 8-
10% according to the stakeholders) is not adequate value as compared to the rate of
inspection offered by municipalities, such as Vancouver, and Surrey, which are near
100%.
Frontline personnel identified the need for increased enforcement resources as
well. The need for more officers and more time to do their jobs came up. This is
important not only with reference to inspections. Interviewees noted that having more
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time per individual would also allow enforcement agents to engage better in education, a
vital activity from their point of view.
6.2. Better Education
Education came up quite frequently in discussions. In fact, one stakeholder felt
that lack of education was the major barrier to compliance. This stakeholder felt that
some asset owners might not know that they require permitting because they do not fully
understand the criteria determining the requirement for permitting an asset. In other
words, they may understand some of the regulation but not all. This is a problem when
asset owners see they are outside of the need to regulate on one aspect, while not
knowing that they meet the criteria for permitting on another aspect. This participant
also felt that there has been insufficient communication to potentially affected parties of
changes in regulatory requirements.
Furthermore, participants often have misconceptions about the
permitting/enforcement process. As noted above, regulated parties often do not see the
monetary value of permitting versus the cost. As a result, they felt that there needed to
be better education on this aspect. In addition, regulated parties fear inspections
because of the potential for high associated costs. Regulated parties that have a
number of issues that need to upgraded or fixed think that if an inspector comes they will
need to fix every violation immediately. However, it was noted through the interviews
that enforcement agents will work with them in order to triage what needs to be done
immediately while working with them to determine what can be put off to a later date to
decrease the financial burden. BCSA needs to improve its communication of this
message with their clients through education programs.
As mentioned in the previous section, safety officers are key disseminators of
information to regulatory parties. Therefore, it was felt that the capacity for BCSA to
educated only increases with the number of safety officers available.
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While not discussed in detail, interviewees viewed the idea of using technology
and web-based means of distributing information positively. The use of technology would
free up time for safety officers who, instead of taking time to clear up confusion and
answering questions, could be performing higher priority enforcement duties. They
viewed the use of a phone “app” positively in being able to reduce the complexities
involved in applying for a permit.
6.3. Accidental or Intentional Non-Compliance
There was no consensus as to whether the lack of compliance by certain groups
was accidental or intentional. Some participants felt that the lack of education could lead
to accidental non-compliance. This could be the result of transfers in asset ownership
where the new owner does not know the permitting requirement. Additional accidental
non-compliance could be a result of having many different permits expiring at different
times and not having the human capital to manage that complexity. However, other
participants felt that non-compliance was intentional and a function of trying to reduce
costs.
As a note, it seems that because of BC Hydro’s requirement to have a permit in
place before they attach an asset owner to their electrical grid, non-compliance must
start either after expiry of the original permit, or upon the transfer of the asset to a new
owner.
6.4. Use of Incentives
The use of direct incentives appeared as a contested theme. Some participants
felt that incentives could be an effective way to promote compliance. However, other
participants suggested caution with the use of incentives. As an example, the use of
“good standing” regulations were seen as potentially problematic. Instead of reducing
inspections for those who have achieved good standing through being compliant in the
past, good standing should be maintained by having to go through a minimum number of
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inspections. The principle is that compliance will naturally drift to non-compliance when
regulated parties experience a lax inspection environment.
6.5. Data Sharing Between BC Hydro and BCSA
The idea of additional data sharing agreements between BC Hydro and
BCSA arose as a means for BSCA to track where large asset owners were located,
since BC Hydro data could indicate where such assets connect to the electrical
grid.4 However, some interviewees expressed concern about this idea primarily because
of administrative complexity and the lack of benefit to BC Hydro from sharing data with
BCSA.
6.6. The Role of Insurance and Insurance Providers in Compliance
Many participants felt that those non-compliant with BCSA’s electrical regulations
were often unaware that their insurance would be void in the event that something goes
wrong. They suggested that better education in this area could create stronger
incentives for compliance rather than risk being uninsured for an adverse event.
They also discussed the idea of making permitting a prerequisite to holding
insurance. Many participants viewed this option favorably. However, one participant
noted that there is no incentive for the insurance companies to agree to this requirement.
Insurance companies can refuse to pay for damages incurred by an insured party not in
compliance with permitting regulations that experiences damages due to unpermitted
equipment. In other words, there is a perverse benefit to non-compliance from the point
of view of the insurance industry.
4 BCSA and BC Hydro have a data sharing practice between Operations' departments.
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6.7. Peer Effects and Social Policing
Ideas related to peer effects and social policing were not a source of significant
discussion and there was some disagreement about their efficacy. One participant said
that they felt social policing was ineffective because individuals that were going to cheat
would do so regardless of what people say. However, when pushed to see if they
thought whether BCSA could do anything to make social policing more effective, they
suggested that an anonymous tip-line that was actively used for enforcement would be
beneficial. Another participant also suggested this idea.5
5 BCSA has a confidential public tip-line.
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Chapter 7. Considerations
We base our analysis of the policy options on a number of considerations
provided by BCSA at the beginning of the project. These considerations include:
1. Effectiveness - The degree to which the option affects the compliance rate of a large asset owner
2. Administrative Complexity- The degree to which the option implies substantive changes/challenges for current administrative organization and expertise
3. Stakeholder Acceptability- The degree to which the option exerts regulatory burden and/or is acceptable to stakeholders
4. Public Reputation/ Confidence in the Regulator- Degree to which the policy option will affect the reputation of BCSA
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Chapter 8. Policy Options and Analysis
8.1. Policy Option 1: Tying Permits to Insurance
The purpose of this policy option is to increase compliance by tying operating
permits to insurance, which would essentially make receiving an operating permit
mandatory. In other words, in order for an asset owner to acquire or renew their
insurance, they would first have to prove to the insurance agency that they have
received an operating permit from BCSA (or from one of the municipalities).
Most asset owners acquire insurance from private companies. However, the
insurance company does not require the owners to provide proof of operating permit
prior to insuring them. This gap between insurance and operating permits can be used to
incentivize owners to get permits for their large assets. This option has a large
catchment because most large asset owners end up getting insurance and this should
reduce the non-compliance rate significantly. It creates more data as insurance
companies will have a comprehensive list of all asset owners and when their permits
expire. From the perspective of BCSA, this potentially reduces the need for enforcement,
as any asset owner with insurance will have an operating permit. Insurance policies tend
to have annual renewals, and asset owners will now have to more aware of BCSA
requirements for permits because this information is tied to their ability to renew their
insurance.
However, this policy has some drawbacks. It is an administratively complex
option in terms of development and implementation. Insurance companies would have to
coordinate with BCSA to establish the validity of operating permits and maintain a
database that tracks the expiry of permits. This means there will be additional costs for
the insurance companies and could result in an increase in rates. The insurance
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companies do not have any business incentives to make permits a mandatory
prerequisite. Under the status quo, insurance companies can deny a claim filed by a
large asset owner if the insurance company determines that their permit is not valid. If
permits become mandatory, insurance companies might have to pay out more in claims.
This option also does not capture those owners who are not taking out insurance for
their large assets. Furthermore, it would require legislative changes in order to make
permits mandatory for insurance. Overall, this would require buy in from the insurance
companies and there does not seem to be enough incentive for them to do so. If
implemented, this option would drastically reduce the non-compliant numbers.
8.2. Policy Option 2: Increase Enforcement
This policy option would require BCSA to increase their enforcement action.
Essentially, BCSA would increase their rate of inspection of asset owners. This should
result in an increase in compliance because it creates a strong incentive for asset
owners to get the operating permit to avoid penalties. From the interviews conducted for
this report, many stakeholders have commented that BCSA should be increasing their
enforcement rates. This will improve the reputation of BCSA as an effective regulatory
body and demonstrate that they are meeting their mandate.
Interview subjects have said that they would prefer more inspections, as it would
indicate to them that it is worth paying for the operating permit. The low rate of
inspection is not enough to incentivize getting the operating permit. Evidence from the
literature review also revealed that the best way to increase compliance is to ensure that
there is a viable threat of enforcement. One interviewee said that without proper
enforcement, there will be a tendency to move away from compliance and BCSA will fail
to meet its mandate.
This option does require BCSA to devote significant additional resources towards
their enforcement department. BCSA will have to hire additional safety officers and
dedicate more human resource capacity in order to increase inspection numbers.
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Budget constraints might limit the actual amount of resources BCSA can dedicate to
greater enforcement, but in order for this option to be effective additional resources are
necessary. A potential way to reduce the impact on the budget could be to increase the
price of the permit.
8.3. Policy Option 3: Incentives Programs
We base this policy option on incentive programs developed in the US. The
Volunteer Incentivized Program (VIP) would be an extension of the existing Resource
Allocation Program, basing inspections on risk assessment and safety requirements. It
would differ in that it would have a social pressure and/or a business benefit aspect that
it is not included in the current RAP. The VIP would have three designated categories of
asset owners, which would be determined based on the history of non-compliance, size
and capacity of the asset and other risk management assessments.
Table 8-1 Volunteer Incentivised Program
Category Level of Compliance Inspection Rate
Bronze Lowest level of Compliance/ May be newly permitted
Inspections every 3-6 months
Silver Medium level of Compliance Inspections every 6-9 months
Gold Highest Level of Compliance Inspections every 12-15 months
Table 9-1 shows that a potential breakdown of the three categories and the
associated inspection rates. BCSA could update the relative ranking of the asset owners
on an annual basis and publish these rankings on its website. This would provide an
incentive for companies to work to improve their compliance rating on a yearly basis.
This policy option has multiple benefits. Firstly, it coincides with BCSA’s desires
to maintain positive relationships with their stakeholders. It provides a “carrot” for
companies to comply with operating permits, without requiring strict enforcement from
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BCSA. According to a report from the Fourth International Conference on Environmental
Compliance and Enforcement (Olman and Rimer, 1996, p.2), voluntary compliance is
driven by:
1. Public Opinion 2. Global Competitiveness 3. Enforcement 4. Self-motivation and Awareness 5. Requirements of Suppliers and Buyers
This program would drive compliance by positively affecting public opinion,
business competitiveness, and self-motivation and awareness. For example, by
becoming a part of the VIP, organizations would become more aware of their own
compliance status, which may motivate them to increase efforts to maintain compliance.
Furthermore, highly compliant organizations can state that they are “gold-standard
compliant.” This would have the benefit of making their organization seem more
attractive to the public, which would therefore increase their competitiveness.
Secondly, this policy option creates defined inspection expectations for asset
owners. The stakeholder interviews findings show that asset owners want to know how
many inspections they will be receiving with the purchase of their permit. With the VIP,
asset owners would know the amount of inspections they should expect throughout the
year based on their compliance categorization.
Finally, this program would not require significant resources, although the
implementation of this program may involve some administrative complexity as the
category standards would have to be developed and updated on an annual basis. There
may also need to be an increase in the number of inspectors depending on the
frequency of inspections required.
Despite the benefits of this program, the literature review revealed that there is
some disagreement over the effectiveness of incentive programs in maintaining
compliance. The study by Nosenzo et al (2010, p. 1) states, “perhaps paradoxically,
bonuses for compliant behavior reduce the equilibrium probability of compliant behavior.
Thus, according to standard game theoretical reasoning, fines, and not bonuses, should
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be used to encourage compliance in such settings”. An article in the Harvard Business
Review (Kohn, 1993) revealed that incentivized compliance programs tend to only
encourage temporary compliance and therefore do not necessarily result in a
sustainable change in behaviour. This evidence seems to suggest that this program may
not provide a long-term solution to the non-compliance issue for large asset owners with
electrical services.
Secondly, the results of our expert interviews seem to show that stakeholders
actually want to have inspections and would prefer that BCSA had a higher enforcement
rate. As noted above, many of the interviewees felt that they were not getting enough out
of BCSA’s permit to make it worth acquiring. Fewer inspections may not be the type of
incentive that non-compliant asset owners are looking for.
8.4. Policy Option 4: Education and Awareness
Results from our interviews, the literature, and the case studies show that
awareness of regulations and policy is related to positive compliance rates. Education is
the best way to ensure that the target group is as well informed as possible, offering
them the best chance of compliance. Ensuring that industry operators have knowledge
of the rules minimizes the likelihood that unintentional violations will take place (Baldwin
et. al., 2012). Interviews conducted during this project phase indicated that lack of
education likely leads to accidental non-compliance. Education and outreach programs
to inform large asset owners who do not know that they are in violation could lead to
reductions in non-compliance and improve data on the target group as a whole.
Moreover, educating asset owners who are knowingly non-compliant about the real
costs and benefits of expired operating permits could positively affect the compliance
rate of that subset. If operators had a true valuation of all the advantages and
disadvantages of compliance or non-compliance, expressed in time, money, and other
resources, they should be more likely to comply with BCSA rules.
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The Dutch Ministry of Justice (DMJ) discusses the principles underpinning the
process of ensuring education and awareness of the rules6. DMJ (2004) notes that
knowledge of the rules prompt a specific set of questions because compliance and non-
compliance are the result of a myriad of factors. Education and awareness is the best
way to ensure that the target group knows the rules, that they are applying them
correctly, and that the rules themselves are presented in such a way that can be
understood. Implementing the BC OGC compliance and enforcement model, for
example, is one useful way to determine the extent to which operators are familiar with
the rules and can apply them correctly.
Educating and making large asset owners aware of their regulatory requirements
is only one aspect of this option. Making the public more aware and educated about the
role of permits is also beneficial. Public pressure can have significant impacts on firm
behaviour. BCSA would be wise to utilize this aspect of social pressure influencing
safety outcomes in the same way that it publicizes the addresses of buildings operating
dangerous single-bottom elevator infrastructure.
Awareness and education campaigns are beneficial because they are a low-risk
way for the regulator to establish a positive relationship with the target group. Thus, it is
highly congruent with Nudge and Choice Architecture Theory. This option is scalable
and sustainable; therefore, it can be adapted dependent upon resources and capacity to
implement campaigns according to target groups. The option can begin immediately
according to various timelines and planning phases. This option implies positive
communication and learning experiences going both ways between the target group and
BCSA. It is adaptive and flexible. Education opportunities may present ways for the
regulator to better allocate resources, identify gaps, or assist all actors in developing
individualized triage protocols. Launching awareness and education campaigns does not
necessarily imply substantive changes or challenges for current administrative
6 See Dutch Ministry of Justice. (2004). “The Table of Eleven: A Versatile Tool.” Law Enforcement Expertise Centre, The Hague: The Netherlands. Retrieved from: http://www.sam.gov.lv/images/modules/items/PDF/item_618_NL_The_table_of_Eleven.pdf
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organization and expertise. Administrative burden is case-dependent. This option is
highly suitable for implementation as a pilot project, or series of pilot projects with
different target and control groups.
Awareness and education campaigns are only effective to a point. It is
improbable that this option will be able to address persistent or flagrant non-compliance.
Therefore, we cannot presume that this option alone will be effective in significant
improvements to compliance. Nevertheless, because interviews have identified that
there may be a large population of the target group that is ignorant of the rules,
campaigns may offer a good return on investment of BCSA resources. There may be
some danger of loss of public reputation of the regulator, in cases where education and
awareness campaigns are used without appropriate interventions for repeat offenders.
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8.5. Policy Option 5: Data Collection and Reporting
Option 5 establishes a framework for BCSA to determine potential barriers to
compliance experienced by its target population. It is essential for the organization to
know what barriers to compliance exist for two reasons. First, some non-compliance is
inevitably unintentional. Some organizations simply cannot cope with the existing
regulations. As such, by understanding what barriers exist, BCSA can work to
ameliorate these conditions for affected organizations to help bring them into
compliance. The second is that some organizations are willfully negligent of the
regulations. BCSA can work to improve regulations by understanding what barriers
contribute to conditions of active non-compliance. An example of this is low monitoring
levels. The following table presents an example of the framework in action. It presents
and defines areas for examination. In addition, data collected through the course of
creating this report are included as a starting point for the type of useful information.
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Table 8-2 Data Collection
Barrier Barrier Description Data Currently Collected
Incentives Are positive and negative incentives sufficient to influence behaviour?
Unclear. Whether the majority of the remaining non-compliance is a result of poor education or willful negligence requires assessment. However, the idea of legitimization through being compliant is an incentive for some.
Monitoring Is the level of monitoring sufficient to make the regulated entities feel there is appropriate oversight?
No. Major stakeholders feel that monitoring is not sufficient to provide a sense of oversight.
Enforcement Are safety officers constrained in accomplishing their duties?
Yes. There are insufficient safety officers for the jurisdictions that BCSA regulates; they do not have the resources, in time or labour to undertake effectively their enforcement duties.
Information Cognition: Capacity Are regulated entities getting the information they need in order to be compliant?
Unclear. Many stakeholders feel a lack of education impacts compliance. However, those who are compliant seem to do well with the information currently provided.
Information Cognition: Willingness Do regulated entities know how to use the information they have in order to achieve compliance?
Unclear. Here, again, education could be a factor. It is important for BCSA to assess whether their target population is using the provided information as intended.
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Barrier Barrier Description Data Currently Collected
Attitudes & Beliefs: Cultural Are there particular cultural considerations that need to be addressed that affect rates of compliance?
Unclear. While not discussed in enough detail to warrant its own sub-section in the interviews portion of this report, foreign ownership did come up in one interview as a potential for non-compliance. Asset owners from a different cultural background might not understand their role in the regulatory environment in BC. Furthermore, language barriers might contribute to non-compliance.
Attitudes & Beliefs: Equity Does the target community view the regulations in place as fair and reasonable?
Yes. At least one major regulated stakeholder feels that for the most part BCSA’s regulations are credible and fair.
Peer Effects Does the behaviour of the target community reinforce compliant or non-compliant behaviour?
Unclear. Some within the industry feel peer effects have little effect. However, increasing social policing could increase compliance.
Target Resources Do the regulated entities have the money, human capital, and proximity to important regulatory locations to be successful in compliance?
Unclear. While not discussed in enough detail to warrant a place in the interview section some data were provided. With the exception of cost, one major stakeholder felt that the potential for other resource constraints was minimal. However, it is important to consider the highly heterogeneous nature of this target group. It is unlikely that their experience can be extrapolated to all actors. BCSA should engage in further examining what possible resource constraints exist.
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Barrier Barrier Description Data Currently Collected
Ongoing Requirement Does compliance require the target population engage in repeated actions to maintain compliance?
Yes. Permitting is an ongoing process, which requires the active participation of the target population. BCSA should examine whether this has an impact on compliance and note that asset owners may have multiple permits, which require re-permitting at different times. This has the potential to reduce compliance for resource-constrained organizations.
Target Heterogeneity Is the target population diverse in nature?
Yes. BCSA should explore the heterogeneity of target populations. Current regulations might be more difficult to comply with for some organizations than others might.
It is important for BCSA to have a sophisticated and nuanced understanding of
the regulatory barriers to compliance, which exist in its jurisdiction. By formalizing a
process of data collection, which keys into recognized areas where barriers to
compliance exist, BCSA will increase its capacity to understand where, why, and how
regulatory failure is occurring. As a result, BCSA can better design regulations, which
help bring into compliance organizations that are non-compliant through accident, as
well as reduce conditions, which lead to environments where willful non-compliance can
take place.
A drawback of this policy option is that it does not immediately deal with the issue
of current non-compliance. The process of data collection and analysis produces a lag
time before regulatory change could be take place. Since the issue of non-compliant
large high-voltage asset owners is a matter of public safety, it might be morally
incongruent with BCSA’s mandate to wait before trying to ameliorate the compliance
problem. Furthermore, formalized data collection in this way would likely be resource
intensive. It would likely require significant stakeholder engagement throughout BCSA’s
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expansive jurisdiction, as well as the use of other means of data collection, and
analysis. BCSA might not have the capacity in terms of time, money, or human
resources to adopt fully this policy option.
As part of Policy Option 5, we also considered the possibility of establishing
additional data sharing agreements between BCSA and BC Hydro. BC Hydro would
provide data on where they have linked high voltage assets to the electrical
grid. Because BC Hydro requires permitting of high voltage assets before they can be
connected to the grid, BCSA can use this data to figure out locations where the original
permit has lapsed without being renewed. However, the drawbacks are administrative
complexity and the lack of direct benefit to BC Hydro. BC Hydro has also stated that the
ability to triangulate the locations of potential non-compliant entities is likely more difficult
than assumed by other stakeholders.
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Chapter 9. Recommendations
Since BCSA has expressed an interest in trying out a number of potential
solutions in dealing with its large high-voltage asset compliance problem, this report
combines all of its options into a portfolio recommendation broken down based on
relative priorities. It should be noted that while BCSA is interested in utilizing non-
punitive means of social control, information derived from the literature suggests that
sufficient monitoring and enforcement needs to be in place to ensure their success. As
a result, top priority recommendations center on increasing BCSA’s monitoring and
enforcement capacity, and increasing their knowledge of the regulatory
environment. Middle priority recommendations are those that produce potential benefits
that are likely contingent on robust monitoring and enforcement. Low priority
recommendations are those that have the potential for beneficial impact, but have major
constraints that limit their feasibility.
9.1. High Priority
Increased Enforcement - The need for increased enforcement was a consistent
theme throughout the stakeholder interviews. This report firmly states that BCSA is not
performing enough monitoring or enforcement. Furthermore, monitoring and
enforcement are essential to the success of non-punitive means of social control.
Data Collection Framework - This policy option will help BCSA determine
where monitoring and enforcement should take place, and how. Overall, it will allow
BCSA to be more responsive to the needs of its target population when crafting future
regulations or reforming current ones.
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9.2. Middle Priority
Incentive Programs - A strong incentive can reduce non-compliance by
increasing the relative value of being compliant. However, the success of incentives is
limited. The gains in compliance derived from this option are likely to be less than (and
likely somewhat contingent on) those gained through increased enforcement.
Education and Awareness - Education and awareness is an important
component in remediating the behaviour of those who are accidentally outside of
compliance. However, education and awareness has a hard limit in that it is likely not
going to correct the behaviour of those who are flagrantly non-compliant. Here, again,
increased monitoring and enforcement is essential if BCSA wants to reduce non-
compliance as much as possible.
9.3. Low Priority
Tying Permits to Insurance - While this would be an innovative idea in creating
a “path of least resistance” default to permitting as described in nudge literature, the
likelihood of uptake on the part of insurance companies is low.
BC Hydro Data Sharing Partnership – It may be difficult to triangulate to non-
compliant entities. In addition, there are drawbacks from the point of view of BC Hydro,
which limits their buy-in to the partnership.
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References
Alberta Energy Regulator. (2016a). Integrated Compliance Assurance Framework. AER: Calgary, AB. Retrieved from: https://www.aer.ca/documents/enforcement/IntegratedComplianceAssuranceFramework_February2016.pdf
Alberta Energy Regulator. (2016b). Who We Are. AER Website: Calgary, AB. Retrieved
from: https://www.aer.ca/about-aer/who-we-are
Alberta Energy Regulator. (2016c). Play-Based Regulation: Piloting a New Approach to Oil and Gas Development. Calgary, AB: Alberta Energy Regulator. https://www.aer.ca/documents/about-us/PBR_Brochure.PDF
Baldwin, Robert, Martin Cave, and Martin Lodge. (2012). Understanding Regulation: Theory, Strategy and Practice, 2nd Edition. Oxford University Press.
BC Oil and Gas Commission. (2015). Supplementary Information for Area-Based Analysis. BC OGC Website. Government of BC: Victoria, BC. Retrieved from: http://www.bcogc.ca/node/12693/download
BC Oil and Gas Commission. (2015a). Compliance & Enforcement Manual. BC OGC Website. Government of BC: Victoria, BC. Retrieved from: https://www.bcogc.ca/node/6096/download
BC Safety Authority (2015a). Board Governance Manual. 1-58. Retrieved from: http://www.safetyauthority.ca/sites/default/files/bcsa_governance_manual_dec_2015.pdf
BC Safety Authority (2015b). Safety Authority Fact Sheet. Retrieved from: http://www.safetyauthority.ca/sites/default/files/2015_bcsa_fact_sheet_-_may_2015.pdf
BC Safety Authority (2015c) Information Bulletin: Operating Permits. Retrieved from http://www.safetyauthority.ca/alert/electrical-operating-permit-requirements-bulletin#_Toc42117560
BCSA (2016a). Acts, Regulations, and Agreements. Retrieved from: http://www.safetyauthority.ca/about/legal-and-policy
https://www.aer.ca/documents/enforcement/IntegratedComplianceAssuranceFramework_February2016.pdfhttps://www.aer.ca/documents/enforcement/IntegratedComplianceAssuranceFramework_February2016.pdfhttps://www.aer.ca/about-aer/who-we-arehttps://www.aer.ca/documents/about-us/PBR_Brochure.PDFhttp://www.bcogc.ca/node/12693/downloadhttps://www.bcogc.ca/node/6096/downloadhttp://www.safetyauthority.ca/sites/default/files/bcsa_governance_manual_dec_2015.pdfhttp://www.safetyauthority.ca/sites/default/files/bcsa_governance_manual_dec_2015.pdfhttp://www.safetyauthority.ca/sites/default/files/2015_bcsa_fact_sheet_-_may_2015.pdfhttp://www.safetyauthority.ca/sites/default/files/2015_bcsa_fact_sheet_-_may_2015.pdfhttp://www.safetyauthority.ca/alert/electrical-operating-permit-requirements-bulletin#_Toc42117560http://www.safetyauthority.ca/alert/electrical-operating-permit-requirements-bulletin#_Toc42117560http://www.safetyauthority.ca/about/legal-and-policy
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BCSA (2016b). About US. Retrieved from: http://www.safetyauthority.ca/about
BCSA (2016c). Electrical Oper