Concern has been expressed about the status of VAs under the ‘rule of law’ and these concerns are expressed in three main areas – the exercising of the public powers of government, legal protection of parties to the VA and the rights of third parties and the public (Sumikura, 2000, p59.; Glasbergen, 2000, p88). Rule of law refers to the principle established as the basis of constitutional states in which those exercising public power should be subject to legal constraints. Under this principle, law limits the public power of government and the necessity for the enacting of legislation provides this brake or legal constraint. A legislative instrument is not only an authority for the implementation of policies, but a limiting factor to the power of public policy. The separation of powers between legislature and executive does not
allow for direct negotiation between what are essentially private parties and the bureaucracy or administration. But the concept of the VA requires private parties to influence the setting, defining and enforcement of laws.
Barth & Dette (2001, p35) give four categories in respect to VAs and their relationship to legal norms. These are VAs preventing legal norms where there is no existing regulation but the state intends to use a VA instead of enacting legislation to achieve a particular goal. VAs preceding legal norms contain those provisions and conditions that will be featured in a new law but the VA establishes the working basis prior to the enactment of legislation. A VA may be used as a substitute for a legal norm where the state, having established policy or law, indicates an intention not to pursue the legislative course, but uses the VA to achieve the same purpose. Where a law exists, the establishment of the VA is predicated on either de-enactment of the law or on the non-enforcement of the law subject to the achievement of the aims of the VA. The use of this strategy of non- enforcement may be seen as supplementing the legal norm as substitution can only occur where the legislation allows for de-enactment or removal.
Under these conditions, it is necessary to ensure that there are no uncertainties to the legal use of VAs. The simplest method is to provide legislative backing and support to a VA, but this contradicts the basic tenet of the VA, that of providing a mechanism by which private parties contribute of their own volition. Also, once a law is enacted, this is binding on the bureaucracy or the administration and the administration does not have the power to circumvent the legislation by administrative decision or action. Then the VA may not contradict the enacted law and the enacted law has the capacity to restrain the use of VAs or to limit their
authority. On the other hand, the State may claim that there is an obligation to protect the safety and health of individuals and hence, to protect the environment as part of that general obligation. Therefore, the state may claim general powers by regulation, without reference to specific legislation, but the general principle of the separation of powers must limit the degree to which VAs can be instituted without reference to legislation.
The three most important limitations are substantive statutory controls, procedural statutory controls and judicial controls (Sumikura, 2000, p60). Substantive statutory controls refer to those controls where legislation stipulates the substantive constraints on the use of public power. This is to ensure that the discretion of public authorities is confined within legal bounds and provides specific statutory authorisation. These controls include such items as prescribing the activities that may be regulated, setting standards, goals to be achieved, conditions and penalties. Procedural statutory controls are those controls and procedures to which the public authority must submit in the exercise of their authority or function. It is a means of controlling the discretionary use of public power and is necessary to provide transparency in the use of public power. It includes the principles of a fair hearing, information disclosure, giving reasons for decisions and consultation with affected private parties or stakeholders. Lastly, judicial controls refer to the capacity of the judiciary to review the legality of administrative actions in a public court.
These four categories previously discussed directly relate VAs to the legal norm. A more fundamental division of VAs might be according to their statutory status; either statutory voluntary agreements or non-statutory voluntary agreements. However, this is complicated by the need to consider the VA in terms of its functional
equivalence to conventional regulation, in terms of regulatory formality, and the degree or amount of de facto coercion used. The relevant law or legislation should provide for the substantive and procedural controls necessary to ensure the working of the statutory agreement, but there are instances of the lack of either procedural or substantive controls even where legislation is in place (Sumikura, 2000, p58). On the other hand, a VA may be used as a substitute for legislation and be provided with substantive and procedural controls, but without the backing and authorisation of the legislative process. As a non-statutory voluntary agreement, it is outside the ‘rule of law’.
The adoption of a non-statutory voluntary agreement depends on the consensus reached amongst the parties and, in theory, participation in and compliance with the agreement is purely ‘voluntary’. In practice, the VA offers little legal protection to the parties involved. First, the lack of substantive and procedural statutory controls may provide a barrier to enforcement through the courts, although there is an argument that a properly constituted VA could be seen as a form of contract with enforcement available through the civil courts. This is predicated on the VA being a binding document and also that a complainant would be prepared to take civil action. The lack of legal status may warrant the VA being seen as an administrative practice, with non-compliance not necessarily being an illegal act. At the same time, the lack of legal status and the lack of statutory controls have the capacity to reduce the legal protection available to the parties involved.
Regulatory power may be inappropriately or irregularly used by public authorities or by private parties such as industry associations. The legal protection provided by statutory regulation provides a barrier to the imposition of different or more onerous
conditions at a lower legislative level. Public authorities and industry associations are in a position to provide coercive power to the establishment of a VA and the terms and conditions may not be the result of free, open and voluntary discussions. Where an association represents a private group, the discussions are more likely to have been the result of bargaining and negotiation behind closed doors. The result does not necessarily represent the interests or intentions of the individual group member and may be more representative of the bargaining power exerted by differing members of the group. Where more groups are involved, the bargaining power of each group is liable to be reflected in the outcome.
As the VA represents an agreement reached between private participating parties, the interests of third parties and even the environment itself are not necessarily considered. While the public interest is expected to be protected by parliamentary representatives and by the elected members of the various levels of government, there is no guarantee that the final resulting VA is in the public interest or in the best public interest. As negotiations are normally conducted between participating parties and with some degree of confidentiality, the VA can hardly be seen as the result of an open and transparent process with the public interest as a foundation. Whereas regulation is the result of an open public debate, VAs may not be seen as a credible form of control, but the ‘privatisation’ of public policy and a form of regulatory capture.