The re-occurrence of violations in occupational safety and health administration inspections

How well do firms in the United States maintain compliance with occupational safety and health administration (OSHA) standards after being cited for a violation? How and why does this vary among standards? This paper identifies serious violations of 91 frequently cited standards at manufacturing plants during 1992–2002 and tracks compliance with that standard in later inspections over 10 years. While formal measures of Repeat violations are quite low, we find considerably higher re-violation rates for some standards once we look separately at how often health standards are cited in later health inspections and safety standards cited in later safety inspections. Characteristics of the standards affect re-violation rates, but not always in the expected direction. Standards whose violations are rated as more hazardous or which received higher initial penalties tend to have more re-violations. These findings could reflect inspector behavior, with those standards getting more attention and thus being cited more frequently. When, as in the case of OSHA and other enforcement agencies, we know about violations only when inspectors cite them, we need to consider bureaucratic behavior as well as employers' incentives.     

Gorillas in the closet? Public and private actors in the enforcement of transnational private regulation

This paper examines to what extent the background presence of state regulatory capacity – at times referred to as the “regulatory gorilla in the closet” – is a necessary precondition for the effective enforcement of transnational private regulation. By drawing on regulatory regimes in the areas of advertising and food safety, it identifies conditions under which (the potential of) public regulatory intervention can bolster the capacity of private actors to enforce transnational private regulation. These involve the overlap between norms, objectives, and interests of public and private regulation; the institutional design of regulatory enforcement; compliance with due process standards; and information management and data sharing. The paper argues that while public intervention remains important for the effective enforcement of transnational private regulation, governmental actors – both national and international – should create the necessary preconditions to strengthen private regulatory enforcement, as it can also enhance their own regulatory capacity, in particular, in transnational contexts.     

Preventing construction deaths: The role of public policies

Are stronger direct financial incentives or regulatory enforcement effective in reducing fatalities in the construction industry? We examine two important policies—state workers' compensation (WC) programs and federal and state Occupational Safety and Health Administration (OSHA) activities—which embody those strategies. We examine their impact by looking at state-level fatality rates in the construction industry from 1992 to 2016. Setting aside highway crashes and violence, the majority of employee deaths occur in construction. We find that states which exempt small firms from the requirement to buy WC insurance have higher fatality rates. When eligibility for compensation is restricted by longer waiting periods, fatality rates are substantially higher. More frequent federal or state OSHA inspections and, especially, consultation visits are associated with lower fatality rates, but higher average penalties are not. Limited variation in these policies over our sample period, especially for WC, makes these results suggestive rather than definitively causal.     

Standard setting with incomplete enforcement revisited

Many regulatory agencies enforcing quality standards across diverse populations of firms lack sufficient resources to promote full compliance. Based on a model with lump-sum noncompliance penalties, W. Kip Viscusi and Richard J. Zeckhauser have advocated that, in most circumstances, an agency with insufficient enforcement resources should choose a less stringent standard than it would choose if it could induce full compliance. I show that the recommendation for regulatory restraint depends upon the shape of the penalty function. A review of inspection and penalty policies suggests that U.S. administrative law encompasses a diversity of variable expected penalty policies. The inspection and penalty policies employed in recent environmental statutes suggest, however, that agencies should compensate for insufficient resources by increasing the stringency of standards.     

Do markets enhance convergence on international standards? The case of financial regulation

Why do countries that did not participate in the establishment of international standards converge on them in the absence of external coercion? The market‐based perspective asserts that market forces enhance cross‐national convergence on international standards. This paper challenges the market‐based perspective, focusing on compliance with the 1988 Basel Capital Accord in South Korea and Taiwan. First, it argues that adoption of the Basel Capital Accord by these countries was mainly driven by their regulatory authorities’ concern about the potential risk of foreign market closure to noncompliant banks. Second, it demonstrates that enforcement by the two countries’ regulatory authorities was crucial in ensuring compliance. These findings suggest that national regulatory authorities are still key actors in voluntary convergence on international standards.     

Is cooperation the answer? Canadian environmental enforcement in comparative context

In recent years, a number of authors have been critical of the adversarial U.S. “regulatory style,” and have expressed interest in more cooperative regulatory approaches common in Western Europe. They have argued that the inflexible, deterrence-based approach that has characterized enforcement of U.S. health, safety, and environmental laws is not only inefficient in treating minor and significant violations equally, but counterproductive in fostering antagonistic relationships between regulators and the regulated. This article examines the effectiveness of the cooperative Canadian approach to enforcement of environmental regulations, using the pulp and paper industry as a case study. The resulting levels of compliance are compared with rates of compliance in the United States for the same industry. Significantly lower rates of compliance in Canada cast doubt on the growing consensus in favor of cooperative regulatory approaches.     

How regulations undervalue occupational fatalities

The U.S. Occupational Safety and Health Administration establishes incentives for safety by setting and enforcing regulatory standards. Using four and a half decades of inspection data, this article provides a comprehensive analysis of the factors underpinning penalties following fatalities. The “fatality premium” for regulatory violations following a worker death is quite modest and is several orders of magnitude below the value-of-a-statistical-life figure needed to establish efficient levels of deterrence in the absence of all other financial incentives. Although there are low statutory caps on penalties, only 8% of the penalties for violations involving fatalities are constrained by the cap, suggesting that current statutes establish norms for reasonable penalty amounts. In situations involving a fatality at firms with union representation during the inspection, the enforcement sanctions are more stringent. Fatalities involving migrant laborers are less heavily penalized.     

The politics of regulatory enforcement and compliance: Theorizing and operationalizing political influences

There is broad consensus in the literature on regulatory enforcement and compliance that politics matters. However, there is little scholarly convergence on what politics is or rigorous theorization and empirical testing of how politics matters. Many enforcement and compliance studies omit political variables altogether. Among those that address political influences on regulatory outcomes, politics has been defined in myriad ways and, too often, left undefined. Even when political constructs are explicitly operationalized, the mechanisms by which they influence regulatory outcomes are thinly hypothesized or simply ignored. If politics is truly as important to enforcement and compliance outcomes as everyone in the field seems to agree, regulatory scholarship must make a more sustained and systematic effort to understand their relationship, because overlooking this connection risks missing what is actually driving regulatory outcomes. This article examines how the construct of “politics” has been conceptualized in regulatory theory and analyzes how it has been operationalized in empirical studies of regulatory enforcement and compliance outcomes. It brings together scholarship across disciplines that rarely speak but have much to say to one another on this subject in order to constitute a field around the politics of regulation. The goal is to sharpen theoretical and empirical understandings of when and how regulation works by better accounting for the role politics plays in its enforcement.     

Campaign‐Style Enforcement and Regulatory Compliance

This article examines the recoupling mechanism of campaign‐style enforcement and its effects on environmental regulatory compliance. Drawing on the policy implementation literature and institutional theory, the authors develop a conceptual model of campaign‐style enforcement in which both resource mobilization and power redistribution are theorized to address decoupling problems in regulatory compliance. The two‐pathway recoupling mechanism is evidenced by an empirical investigation of the implementation of China's energy conservation and emission reduction policy as part of that country's 11th Five‐Year Plan. Findings suggest that campaign‐style enforcement can effectively improve regulatory compliance when it addresses the efficiency/legitimacy conflict by providing policy incentives and reorganizing a clear hierarchy of political authority. The article concludes with a discussion of the strengths and limitations of campaign‐style enforcement.     

A Standard for Regulatory Compliance? Industry Self‐regulation,the Courts and AS3806‐1998

The primary objective of this article is to describe recent Australian moves to greater industry self-regulation and, within that context, to examine the development of AS3806, a voluntary standard developed by Standards Australia, which firms may use as a model or template for the design and management of their regulatory compliance systems. The article is divided into four sections. The first provides an outline of recent Australian developments regarding industry self-regulation and compliance. The second describes the growing interest in industry codes of conduct and the role of the Australian Competition and Consumer Commission (ACCC). The third describes the main features of AS 3806. The fourth examines the question of compliance standards in relation to the legal process, focusing on two recent cases and is followed by a conclusion.     

Firm size and regulatory compliance costs: The case of workers' compensation insurance

This paper examines the relative costs of workers' compensation insurance across firm-size groups, with particular focus on administrative scale economies (“compliance effects”) and biases in rate-setting (“enforcement effects”). Analyzing data on premiums and losses from the insurance industry, the authors find that the costs of insurance per dollar of loss are relatively high for very small firms. These higher costs reflect certain fixed administrative costs insurance companies must bear, but for extremely small firms these higher costs tend to be mitigated by an “enforcement” bias in state rate-setting outcomes. Due to imperfect experience-rating of insurance premiums, middle-sized firms—which have the highest losses—pay less per dollar of loss than either the smallest or largest firms. Indeed, it appears that large firms purchasing commercial workers' compensation insurance subsidize other size groups.     

The Regulation Dilemma: Cooperation and Conflict in Environmental Governance

Across the United States and around the world, businesses have joined voluntary governmental and nongovernmental environmental regulations. Such codes often require firms to establish internal environmental management systems to improve their environmental performance and regulatory compliance. Meanwhile, governments have been offering incentives to businesses that self-police their regulatory compliance and promptly report and correct violations. This article examines how governmental regulatory enforcement can influence firms' compliance with mandatory and voluntary regulations. Cooperative regulatory enforcement—in which firms self-police their environmental operations and governments provide regulatory relief for voluntarily disclosed violations—yields optimal win–win outcomes, but only when both sides cooperate. If firms are likely to evade compliance, governments are better off adopting a deterrence approach. If governments insist on rigidly interpreting and enforcing laws, firms may have incentives to evade regulations and not voluntary codes. Cooperation is possible through credible signals between firms and government.     

The status of OSHA reform: A comment on mendeloff's proposals

Since its inception, the Occupational Safety and Health Administration (OSHA) has been the target of regulatory reform proposals. OSHA has attracted this continued critical attention both because of inadequacies in the design of OSHA regulation and shortcomings in its implementation. John Mendeloff's critique and program of reform for OSHA focus primarily on inadequacies in the structure of OSHA policy rather than its implementation. Within that class of issues, Mendeloff provides a thoughtful analysis of OSHA policy. His regulatory proposals also address what appear to be the principal shortcomings of OSHA. However, the specific aspects of his proposal raise new problems with respect to the stability of regulatory policy and its unintended role in establishing barriers to entry in industry.     

Improving compliance with state environmental regulations

This article reports on empirical tests of two theories for improving compliance with state environmental regulations. One theory argues for centralization of enforcement responsibilities with state agencies, while the other focuses on enforcement strategies, arguing for an approach that emphasizes capacity building and the social and moral bases of compliance in addition to deterrence and the threatened application of sanctions. Using evidence from North Carolina, we show that centralization does not necessarily enhance compliance, but cooperative enforcement strategies can improve the effectiveness of regulations that seek to attain performance standards. Compliance with simpler specification standards, however, can be attained just as well with easier to administer deterrent enforcement strategies based on frequent inspections and adequate sanctions.     

Uniformity as response to soft law: Evidence from compliance and non‐compliance with the Dutch corporate governance code

The objective of the paper is to examine how firms have dealt with the trade‐off between flexibility and uncertainty that is characteristic for the decision‐making of firms in coping with self‐regulatory initiatives in general and the comply‐or‐explain principle in corporate governance in particular. Using unique data for 126 listed Dutch firms, we find that firms respond to this self‐regulatory initiative by largely complying with the code recommendation, possibly out of fear that the firm's reputation may be damaged. Furthermore, we find evidence suggesting that firms confine themselves to adopting a specific set of code recommendations and use similar arguments to explain non‐compliance. Our findings indicate uniformity in adopting the standard of good governance which is not in line with the logic of corporate governance codes and casts doubt on the effectiveness of this form of soft law. Overall, the paper's findings indicate that more restrictive (regulatory) instruments may be necessary to make firms conform to the spirit of codes.     

Regulating factory safety in the Bangladeshi garment industry

This paper examines how far the workplace inspection program established under the 2013 Accord on Fire and Building Safety has served to improve safety in Bangladesh garment factories, and the extent to which its operation has been influenced by factors that the literature suggests are important in shaping the outcomes of private regulatory initiatives. The findings suggest that such regulation can generate positive outcomes, even in the absence of strong public regulatory support. They also caution against discounting the role of compliance‐based enforcement strategies, while highlighting the importance of their adequate resourcing and transparency. Some support is also offered for the argument that such regulatory initiatives could directly influence the market dynamics that shape supplier working conditions.     

Institutionalizing fairness in financial markets: Mission impossible?

This article analyzes the institutionalization of process‐oriented regulation, namely: regulatory institutions that allow firms to adapt regulation to their individual circumstances, while holding them to account for the adequacy and efficacy of their internal compliance systems. The article's main focus is on the strategies sought by compliance professionals to attain managers' receptiveness to regulatory expectations. It analyzes British financial firms' responses to a process‐oriented regulatory initiative, which sought to transform the widespread culture of product “mis‐selling” in this industry. Three key arguments and hypotheses are put forward: first, it is suggested that the existing theoretical literature on process‐oriented regulation overly stresses managers' rational, profit‐maximizing motivations for (non‐)compliance, whilst overlooking their emotive motivations. Second, it is proposed that managers' emotive resistance is expected when regulatory expectations challenge firms' “organizational identities” and thereby their individual identities. Third, it is hypothesized that when process‐oriented regulation poses a threat to organizations' identities, its institutionalization will entail delegation of the design and subsequent implementation of compliance systems to managers outside compliance, and reframing of regulatory expectations into existing businesses discourses and methodologies.     

Do Carrots Work? Examining the Effectiveness of EPA's Compliance Assistance Program

The role of compliance assistance in the U.S. Environmental Protection Agency's overall enforcement strategy has been quite variable over the past decade and a half, increasing in prominence under the Bush administration and now slated for significantly reduced funding under the Obama administration. While theoretical models and anecdotal evidence suggest that compliance assistance should play some role in a comprehensive enforcement strategy, to date there has been relatively little empirical evidence on the actual effectiveness of existing compliance assistance programs. To help inform the debate over the appropriate use of compliance assistance, this paper uses data on hazardous waste generators nationwide to assess the effect of federal compliance assistance programs in improving compliance with hazardous waste regulations. The paper also conducts a direct empirical analysis of the relationship between traditional enforcement tools and compliance assistance. The results show that federal compliance assistance efforts do increase compliance, but the evidence does not suggest any consistent relationship between traditional enforcement and compliance assistance. Also, while states do not appear to substitute federal compliance assistance for traditional enforcement, state compliance assistance programs do appear to decrease the likelihood of inspections among the smallest hazardous waste generators.     

INDEMNITY FOR COMPANIES ADVERSELY AFFECTED BY ENVIRONMENTAL REGULATION CHANGES

The problem addressed by this paper is the conditions under which the government may wish to indemnify firms for losses suffered when environmental regulations are revised. Larger firms are likely to be in a better competitive position than smaller firms when environmental standards are raised. Financial risks discourage firms from investing in environmental capital unless some of the cost is shared by the public. Not having a compensation program will slow compliance with new regulations and make markets less competitive. The examples o f TRIS and the herbicides 2,4,5-T and Silvex are described.     

The challenge of accountability in complex regulatory networks: The case of the Deepwater Horizon oil spill

A puzzle that faces public administrators within regulatory governance networks is how to balance the need for democratic accountability while increasingly facing demands from elected officials to optimize oversight of industry by utilizing the expertise of the private sector in developing risk‐based standards for compliance. The shift from traditional command and control oversight to process oriented regulatory regimes has been most pronounced in highly complex industries, such as aviation and deepwater oil drilling, where the intricate and technical nature of operations necessitates risk‐based regulatory networks based largely on voluntary compliance with mutually agreed upon standards. The question addressed in this paper is how the shift to process oriented regimes affects the trade‐offs between democratic, market, and administrative accountability frames, and what factors determine the dominant accountability frame within the network. Using post‐incident document analysis, this paper provides a case study of regulatory oversight of the deepwater oil drilling industry prior to the explosion of the Deepwater Horizon rig in the Gulf of Mexico, to explore how the shift to a more networked risk‐based regulatory regime affects the trade‐offs and dominant accountability frames within the network. The results of this study indicate that a reliance on market‐based accountability mechanisms, along with the lack of a fully implemented process‐oriented regulatory regime, led to the largest oil spill in US history.