Aquaculture regulatory process: review

Regulatory Context

The Scottish Government's own regulatory agenda aims to focus on producing Better Regulation that allows businesses and sectors to operate within an environment that balances other societal and Government desires with the need to produce economic benefit within those constraints. It is therefore not about less or more regulation but to ensure that what is there works effectively and efficiently for all. It is governed by a set of principles that most developed countries throughout the world use, namely;

• Proportional
• Accountable
• Consistent
• Transparent
• Targeted

The Scottish Government is committed to have all regulation (both statutory and voluntary) guided by these principles.

Good regulation is also about having a process that exists within a framework that everyone understands, with rules and boundaries that allow those operating them to make good and consistent decisions based on evidence or fact using the 5 principles as the envelope within which they sit. That is why the process around how things are done within a regulatory framework can be at least, if not more important than the regulations themselves. Good regulations in a bad process or framework tend not to work and, at times, can create negative rather than positive outcomes. Good regulation does not always need the strength of legislation. Legislation can be a very blunt and inflexible tool and can sometimes make the legislation difficult to enact and in some cases contradictory within itself. It also relies on good guidance, for those who will use the legislation, to be issued at the same time so that it is clear what it means. Again that has not always been the case in recent decades and in certain instances has led to inconsistent decision making.

Regulation has evolved and self regulation is done by industry. Most of that though is now done in partnership with Government and has become known as Government Sponsored Voluntary Regulation. The threat of legislation being put in place behind this is why many industries now have their own rules and regulations that work well and more importantly are policed and monitored. The food and retail industry are good examples of that where much of what they do in terms of regulation comes from within the industry in partnership with Government.

To be clear though it is Government that sets regulatory policy and the frameworks that are created and others implement it. If others outside Government are left to create their own policy then divergence or contradictions in policy can occur which is not helpful or useful for anyone.

How judgements are made within those regulatory envelopes and processes have always been the subject of discussion but a key principle is that those making the decisions within the process need to be:

• Knowledgeable about what they are making the decision or judgement on;
• Understand the evidence base they need to source to make those decisions or judgements on, which is agreed by all to be the best evidence available at that time;
• Do it often enough to have built up learning of how the whole process works;
• Be at a level within the organisation taking the decision or making the judgement that is proportionate to the size or importance of that, and
• Do all the above in a collegiate and co-operative way that takes into account and understands the views of others, including other regulators, who may be involved in the process as well as those that the decision or judgement will impact on.

If the above is not done well and properly then decisions and judgements tend to be made inconsistently or worse, on the basis of evidence that might be flawed or out of date. It also relies to an extent on the frequency such decisions or judgements have to be made and done well, which is why those industries and regulatory frameworks where decisions or judgements are made on almost a daily basis tend to have a greater body of people who understand clearly what the evidence and issues are. Aquaculture is not like that with the number of decisions and judgements made being relatively limited as will be discussed later in this report. The above is important as decisions and judgements are being made on what has become known as the Precautionary Principle.

It should be noted that the Scottish Government are currently consulting on draft statutory guidance for the five guiding principles on the environment, set out at section 13(1) of the Continuity Act, following The UK's Withdrawal from the European Union (Continuity) (Scotland) Act 2021 ("the Continuity Act").

An academic institution which contributed to the review, in relation to the precautionary principle and in the context of aquaculture, stated that:

"The relevant interpretation of the Precautionary Principlerequires that no development should be allowed unless it can be shown that it will not cause harm to water quality, habitats, species and biodiversity. Adaptive Managementallows development to proceed on the basis of best existing scientific knowledge of impacts, subject to continued monitoring and if necessary adaption of farm management. Some sectors of the public favour the former, while the latter is more likely to allow the regulated expansion of aquaculture. Adaptive Management and the Precautionary Principle require different public strategies for ensuring compliance, but this does not seem to have been explicitly debated in recent years, and the present situation suffers from lack of clarity in policy and its enactment, relative to this distinction."

From my own knowledge of how the precautionary principle has been applied I have more than a degree of sympathy with that argument especially in an industry where knowledge, science and indeed the ways of operating, as is the case in aquaculture are growing, changing, and being added to constantly. If you are making a decision or making a judgement on an issue that you do not understand fully, do not interact with often, or sometimes just have no experience of then the caution applied can go beyond what the science or other factors may say, simply due to a lack of awareness so take no risk at all. Also without an agreed framework within which everyone operates to ensure that decisions are made consistently then different and sometimes conflicting decisions can be made on the same subject by different parts of the regulatory process. Government need to ensure that in terms of these overarching principles that can be applied across more than they were perhaps initially intended for, wider consequences are taken into account when they are initially discussed or proposed.

Two other things that good regulation has to do is to be enabling and not impede or prevent innovation. The latter can be impacted by harsh application of the precautionary principle or a regulators lack of knowledge of a sector or issue that makes them ultra-cautious. For any industry to develop it needs to innovate. Aquaculture is no different and indeed it could be argued that to develop and work within developing constraints put in place by their customers, Government and others it has to do so if it is to be sustainable and grow at the same time. Therefore, with any regulatory framework or system there has to be allowance, usually through special practices or derogations, to enable that to happen where it adds value in any way over what is there currently.

That regulations should be enabling would have been an additional 'key principle' if it had not been agreed that it covered all the other principles. Too often, historically, regulators issued companies with instructions that allow them to 'tick a box' rather than own and believe in what they had to do. Enabling is the opposite where the regulator helps the company in achieving what they need to do but the company owns what it is doing. All regulations and regulators should be enabling and help to make things happen in a way that gives that positive end result rather than just stop people from doing certain things. If all regulation and regulators do is stop things from happening they in effect become the compliance officer for that sector so the sector has no incentive to improve the performance or what it does. In my view SEPA for many years did not enable but enforced across much of what they did but have changed greatly, and are to be commended for that. That enabling action has helped them to become a better regulator and allow others who they regulate to take on that responsibility for their actions themselves and become better for it.

In cases where multiple regulators are involved in licensing and decision making for industry, multi-lateral discussions are replacing bi-lateral practices. This allows all parties to discuss and agree on the final outcome be that positive or negative.

Much of this has been driven by communities who felt that decisions were being taken about them without their initial involvement and by the time they were involved it could be too late to do anything. This multi-lateral approach has been shown, not just to make the process better in terms of time and resource for all parties but it has generally produced a better outcome. A discussion with all those involved, together, at the outset of the process allows each party to understand the wider issues and work together to find solutions where possible. This has worked well on wind farms – especially offshore – and other complex issues. Indeed, the much talked about and promoted 'One Stop Shop' that the Norwegian Government uses to produce aquaculture licences for Norway is in fact, just a system which improves efficiency of the process. The Norwegian single window enables a coordinated approach so that consents and licenses are granted at the same time/or in a sequence. The purpose is to improve efficiency of the process. The single window provides a single point of contact for the industry. Annexe E shows the process in flowchart form.

Finally, in this section two issues relating to investment and the size of businesses in a sector.

From other work RRG has been involved in over the years it is clear that the regulatory framework and ways of doing things as displayed by Government on its web and other outward facing sites can have a material impact on whether businesses from outside Scotland invest in a sector or particular company. For example, in the work that RRG did with the chemical sector some years ago, the Scottish Government, and SEPA depicted flood issue scenarios that were publicly available on the Scottish Government and SEPA web sites. The website displayed a single scenario resulting from the failure of flood defences. This showed half of Grangemouth as flooded, following a once in 1000 year event. It was clear that companies looking to invest in Grangemouth at that time could be put off. This has changed and the sites now display multiple scenarios that show all end results on the websites. This came about as all parties understand that the regulatory environment can impact on industry and is one of the first things that external investors look at when thinking about investing in a country. That multi-lateral approach was instrumental in achieving this.

What has become clear through this and previous work by the RRG is that while large companies are subject to negative public opinion in the media for example, assuming they will use their size to get around regulations, recent evidence suggests the contrary. Large international businesses operating in countries worldwide are more likely to be concerned about the reputational damage any deviations from or infringement of local regulations can have on them, not only in that country, but also on all their other business internationally. As a result they tend to be more cautious. The oil industry is a good example of this.

In the sections below I will look at where the aquaculture industry's current regulatory process sits in terms of the above and what I recommend that may need to change to satisfy the aspirations of the Scottish Government, the sector itself, those who interact with it, and perhaps most critically the communities within which this industry sits.

To reiterate, it is key that it is Government which makes policy and the frameworks within which policy operates. Agencies and regulators implement, not create policy themselves. If they did there is a danger that Scottish Government outcomes are not met.

I have considered all the evidence received within the context of the review and now provide advice and recommendations to the Cabinet Secretary. In doing so, the following criteria were applied to the responses provided:

• Must be relevant to what I have been asked to do, which is to review the effectiveness and relevance of the current regulatory system;
• Have the weight of scientific or other evidence to support them;
• That those making them represent a community or constituency directly impacted by the specific regulatory issues;
• That those making representations, especially on behalf of communities in its widest sense, represent as far as is possible the majority within them, and
• Responses were proportionate and realistic.