Silencing Whistleblowers by Contract

In 2015 the corporate world was jolted as the Securities and Exchange Commission (SEC) commenced its first enforcement action against employer‐mandated confidentiality agreements to silence would‐be whistleblowers, imposing sanctions on KBR Inc. (KBR) for contractually restricting its employees from becoming whistleblowers. Lying dormant until this action, Dodd–Frank's Rule 21F‐17, which bars restrictions on SEC whistleblowing, now provides the SEC with an active enforcement mechanism through which the agency regularly penalizes noncompliant employers. Although it is now clear from a regulatory standpoint that such confidentiality agreements violate the law, Rule 21F‐17 is void of guidance or explanation as to a much thornier question—whether employers may restrict their employees from turning over to the SEC internal, confidential documents supporting their whistleblowing disclosures. While incorporating the results of a request by the author under the Freedom of Information Act pertaining to Dodd–Frank's whistleblower submission process, this article is the first scholarly attempt to fill this void in the law. By integrating law from related legal doctrines, including contract law, employment law, and precedent under the False Claims Act, this article proposes regulatory amendments to Rule 21F‐17 that balance the employer's concern of safeguarding confidential documents with the whistleblower's need for providing documentary support of his or her claims. Such clarifications to the law will not only provide the SEC and the courts a clear mechanism to determine the lawfulness of such transmissions, but will, most importantly, serve as advance guidance to whistleblowers as to the boundaries of relying on documentary support as they reveal wrongdoing.     

Regulatory Agencies and Interest Groups in Occupational Health and Safety in Great Britain and West Germany: A Perspective from West Germany*

In this paper, results are introduced of an empirical study which investigated the practice of occupational health and safety regulation in two countries, Great Britain and West Germany. The analysis concentrates on the specific relationship that regulatory agencies and the concerned interest groups, employers and trade unions, develop in the two stages of policy formulation and implementation of health and safety regulation. Results show that interest groups actively participate in the regulation-making systems in both countries. Their policy pursued in this process is influenced and mediated by their actual resources as well as by individual views and assessments of each side's representatives. In Germany, a strong fragmentation with numerous private and quasi-governmental bodies entitled to formulate standards makes it difficult for the interest groups to concentrate on the competent and important committees. In contrast, we find a clearer responsibility of bodies and committees in the case of Britain. In both countries, enforcement policy prefers an advisory and persuasive style even though the legal backgrounds are quite different.     

An Enforcement Taxonomy of Regulatory Agencies

A variety of multivariate techniques were used to develop a taxonomy of regulatory agencies from the first comprehensive study of the disparate enforcement strategies employed by business regulatory agencies in one country. Seven types of agencies were identified: Conciliators, Benign Big Guns, Diagnostic Inspectorates, Detached Token Enforcers, Detached Modest Enforcers, Token Enforcers and Modest Enforcers. Agencies were distinguished primarily according to their orientation to enforcement versus persuasion, according to their commitment to detached (or arms length) command and control regulation versus cooperative fostering of self-regulation, and according to their attachment to universalistic rulebook regulation versus particularistic regulation. Nevertheless, it is not unreasonable to view regulatory agencies as lying on a single continuum from particularistic non-enforcers who engage in cooperative fostering of self-regulation to rulebook enforcers whose policy is detached command and control. This approximates the suggestions of Hawkins and Reiss for distinguishing regulatory agencies according to a "sanctioning/deterrence" versus "compliance" dimension. The predominant regulatory style in Australia, however, is distant from both poles, being a perfunctory regulatory approach which is neither distinctively diagnostic and educative nor litigiously "going by the book"; rather it amounts to "going through the motions". The typology also partially conforms to Black's categorisation of social control as penal, therapeutic, conciliatory and compensatory.     

The Better Regulation Initiative at the Judicial Gate: A Trojan Horse within the Commission's Walls or the Way Forward?

While most academic attention is currently being paid to the goals and to the merits of the Better Regulation initiative (BR), this article examines the most immediate legal implications stemming from reliance on the main tools of BR (such as systematic impact analysis and consultation procedures on proposed legislation) within the European legal order. Since the BR package boils down into a set of regulatory requirements, enforcement issues are likely to arise. For instance, what if the Commission omits to undertake (or badly performs) an impact assessment of a legislative proposal? Who is currently in charge of ensuring the Commission's compliance with these requirements? After illustrating the existing administrative oversight mechanisms designed to ensure effective compliance with BR requirements, by focusing notably on the recently established Impact Assessment Board, the article examines to what extent the European courts may be called upon to review the respect paid to the requirements of BR by the Commission services. To prevent the BR initiative from turning into a Trojan Horse within its own walls, the Commission is likely to comply with these regulatory requirements, thereby paving the way for the initiative's success.     

Reforming Natural Gas Fracking Regulations in 2017–2018: How Should States Enforce Regulations?

While much scholarly work has been published on hydraulic fracturing regulatory frameworks, there is little discussion on the enforcement mechanisms of these regulations and statutes. This article explores state hydraulic fracturing regulations and the expansion of a criminal framework to enforce compliance. More specifically, this article takes a comparative look at fracking enforcement regimes in California and several states with the most hydraulic fracturing activities. First, the article discusses fracking's economic benefits and environmental issues. The article then analyzes federal regulations, (which essentially leaves the bulk of regulation and enforcement to state and local governments) and state enforcement systems in California and the four states with the most fracking wells (Texas, Wyoming, Pennsylvania, and Colorado). California, a state that is pushing for more renewable resources, has robust regulations under Senate Bill 4. In the end, states that rely heavily on fracking should reform the enforcement mechanisms to disincentive noncompliance. Regulatory regimes in the other states appear to have deficiencies that could be remedied by adopting stricter enforcement mechanisms—such as criminal sanctions—that would disincentivize noncompliance, which could lead to large-scale environmental disasters. This article postulates that a model system incorporating a variety of methods including increased criminal enforcement could provide for proper remedies, justice, and deterrence. An ideal enforcement framework for effective deterrence should focus on transparency, flexibility, trusted delegation, and proportionality.     

Theory and Practice of Regulatory Enforcement: Occupational Health and Safety Regulation in British Columbia*

Data about the activities of occupational health and safety officials in British Columbia is utilized to explore competing explanations for the overwhelming prevalence of persuasion over punishment in regulatory enforcement. By plotting the compliance histories of individual firms, this study demonstrates that many offenders repeatedly commit the same infraction. Few of these repeat offenders are punished. These findings suggest that the very limited use of penalties is not a result of the vast majority of firms being good apples induced to comply by mechanisms of social control other than punishment. Rather, there appears to be institutionalized tolerance of widespread violations. The enforcement deficit may be partly explained by such aspects of regulatory structure as the ongoing relationship between regulated firms and field officers who are the gatekeepers of the penalty process.     

Regulating to ensure patient safety in hospitals: towards a comprehensive framework

This article critically examines the successes and failures of the current internal and external regulatory regimes for ensuring the delivery of patient safety in public hospitals. It argues that governments should develop a holistic approach to regulation through the enhancement of existing compliance mechanisms in conjunction with some formal regulation to ensure that public hospital systems-deliver high standards of service with minimal patient harm. It recommends that a Patient Safety Authority be established in order to assist with the monitoring of incidents and the enforcement of compliance with patient safety standards.     

Regulation and In-Company Environmental Management in the Netherlands*

This paper addresses the relationship between preventive systems of social control and regulation of the behavior of public bodies and private organizations. Illustrated with material on new developments in self-regulation concerning environmental management in companies in the Netherlands, the author argues that a combination of stimulated (or “regulated”) self-regulation and stringent enforcement policies is feasible and should lead to company compliance with environmental regulation. The article discusses the assertion that to reduce the social distance between government and individual citizen, between regulator and regulated, a mixture of policy instruments is needed, ergo: by involving societal groups of interested people in policy formation and self-regulation, enhancing the creation of normative systems (involvement “by association”) on the one hand and the availability of adequate law enforcement procedures on the other, corporations, through responsive government regulation, could promote an adequate and successful preventive system of social control.     

Pharma on the hot seat

The pharmaceutical industry has been receiving greater scrutiny lately due in large part to the many public and private legal enforcement actions taken against pharmaceutical manufacturers. These enforcement actions, along with legal developments such as the OIG Compliance Guidance for Pharmaceutical Manufacturers, the Sarbanes-Oxley Act's statutory guidelines for public corporations, the HIPAA privacy regulations, and the Medicare Modernization Act, have the potential to encourage the pharmaceutical industry to self-regulate beyond the bounds currently required by the law. After a brief overview of enforcement actions and compliance programs directed toward the pharmaceutical industry, this Article reviews a similar situation the hospital industry faced when Medicare promulgated major reimbursement modifications. The Article proposes that the pharmaceutical industry, in the face of such intense scrutiny and uncertainty, should implement more rigorous self-regulation. Without more stringent self-regulation, this intense interest in the pharmaceutical industry may result in a regulatory push that establishes unanticipated and cumbersome measures for the industry.     

Smartphone platforms as privacy regulators

A series of recent developments highlight the increasingly important role of online platforms in impacting data privacy in today's digital economy. Revelations and parliamentary hearings about privacy violations in Facebook's app and service partner ecosystem, EU Court of Justice judgments on joint responsibility of platforms and platform users, and the rise of smartphone app ecosystems where app behaviour is governed by app distribution platforms and operating systems, all show that platform policies can make or break the enjoyment of privacy by users. In this article, we examine these developments and explore the question of what can and should be the role of platforms in protecting data privacy of their users.The article first distinguishes the different roles that platforms can have in ensuring respect for data privacy in relevant ecosystems. These roles include governing access to data, design of relevant interfaces and privacy mechanisms, setting of legal and technical standards, policing behaviour of the platform's (business) users, coordinating responsibility for privacy issues between platform users and the platform, and direct and indirect enforcement of a platform's data privacy standards on relevant players. At a higher level, platforms can also perform a role by translating different international regulatory requirements into platform policies, thereby facilitating compliance of apps in different regulatory environments. And in all of this, platforms are striking a balance between ensuring the respect for data privacy in data-driven environments on the one hand and optimization of the value and business opportunities connected to the platform and underlying data for users of the platform on the other hand.After this analysis of platforms’ roles in protecting privacy, the article turns to the question of what should this role be and how to better integrate platforms in the current legal frameworks for data privacy in Europe and the US. The article will argue for a compromise between direct regulation of platforms and mere self-regulation, in arguing that platforms should be required to make official disclosures about their privacy-related policies and practices for their respective ecosystems. These disclosures should include statements about relevant conditions for access to data and the platform, the platform's standards with respect to privacy and the way in which these standards ensure or facilitate compliance with existing legal frameworks by platform users, and statements with respect to the risks of abuse of different data sources and platform tools and actions taken to prevent or police such abuses. We argue that such integration of platforms in current regulatory frameworks is both feasible and desirable. It would make the role that platforms already have in practice more explicit. This would help to highlight best practices, create more accountability and could save significant regulatory and compliance resources in bringing relevant information together in one place. In addition, it could provide clarity for business users of platforms, who are now sometimes confronted with restrictive decisions by platforms in ways that lack transparency and oversight.     

Stemming the flow of bood? The illusion of self-regulation

This paper considers the viability of the self-regulation of occupational safety. It reports upon case studies of six companies currently operating in the UK chemicals sector. These companies and this sector provide highly favourable ‘testing sites’ for self-regulatory practices. However, through an examination of the power and location of safety staff within organisations, forms of management accountability, the state of safety training, and the mechanisms for communicating compliance problems, it becomes clear that many of the fundamental elements of self-regulation are not being met. This highlights the dangers of placing faith in self-regulation as a strategy that can be generalized, and indicates that compliance with safety regulations and standards must be forced upon companies by various stakeholding groups.     

The "Compliance" Trap: The Moral Message in Responsive Regulatory Enforcement

Simple deterrence will often fail to produce compliance commitment because it does not directly address business perceptions of the morality of regulated behavior. Responsive regulation, by contrast, seeks to build moral commitment to compliance with the law. This article shows that a regulator can overcome the deterrence trap to improve compliance commitment with the skillful use of responsive regulatory techniques that "leverage" the deterrence impact of its enforcement strategies with moral judgments. But this leads it into the "compliance trap." The compliance trap occurs where there is a lack of political support for the moral seriousness of the law it must enforce, such as is the case with cartel enforcement in Australia. In these circumstances, business offenders are likely to interpret the moral leveraging of responsive regulation as unfair or stigmatizing, and business perceptions of regulator unfairness are likely to have a negative influence on long-term compliance with the law. Moreover, big businesses that perceive regulatory enforcement as illegitimate are also likely to actively lobby for the political emasculation of the regulator. In these circumstances, most regulators are likely to avoid conflict by taking the easy option of enforcing the law "softly," and therefore ineffectively.     

Organisational restructuring/downsizing, OHS regulation and worker health and wellbeing

A growing body of international evidence indicates that downsizing and related forms of organisational restructuring are having profound adverse effects on worker safety, health and wellbeing. In particular, evidence links downsizing to poorer mental health outcomes, including bullying and other forms of occupational violence. In Australia federal, state and territory occupational health and safety (OHS) legislation imposes obligations on employers who make changes to the workplace or work processes to identify hazards, undertake risk assessment, consult with employee representatives and take appropriate steps to manage any significant hazards that are identified, including psychosocial hazards. This study shows that while Australian regulators are aware of the problems posed by downsizing they have made only modest efforts to pursue compliance with legislative duties, producing some guidance material that refers to restructuring and workloads and launching a small number of prosecutions. At the same time, there is an increased willingness to address staffing levels and other impacts of downsizing (like working in isolation). Employer and union responses were also examined. The article concludes by identifying a number of initiatives that would enable regulators, unions and employers to address the problems posed by downsizing more effectively.     

Comparative Compliance: Digital Piracy,Deterrence, Social Norms,and Duty in China and the United States

The study of compliance has been predominantly Western, and we do not know whether existing theories and findings also apply elsewhere. As a first venture in developing a comparative view on compliance, this study seeks to gain a comparative understanding of compliance decision making among Chinese and American students. It studies their decisions in response to two scenarios that offer an opportunity to use pirated online content. It tests how their decisions are shaped by subjective deterrence, social norms, and perceived duty to obey the law, comparing a control group with a group who received an explicit deterrence message from a strong campaign targeting the use of pirated digital content. The results indicate that, regardless of the explicit enforcement context, Chinese students' inclination to engage in digital piracy hinges chiefly on the perceived behavior and approval of others. This stands in contrast to US students. Within an explicit enforcement context, both social norms and perceived enforcement affect US students' decision making, whereas when there is no explicit enforcement context, both social norms and perceived duty to obey the law affect decision making. This study thus provides a warning that compliance theories and findings may not generalize well beyond the Western context. This necessitates the development of comparative compliance studies and more cross‐national replication.     

Private roles in food safety provision: the law and economics of private food safety

Private food safety standards play a crucial role in ensuring the safety of the foods we consume. A voluntary instrument, private standards are so widespread to have become de facto mandatory for suppliers who wish to access the most profitable markets. Developed by retailers and business coalitions and enforced through third-party certification, private food safety standards constitute one of the principal food safety governance instruments of agribusiness value chains. Albeit private and voluntary, such standards have profound public implications because they contribute to food safety and protect consumers’ health. This article uses law and economics theory to identify their strengths and vulnerabilities and understand the relationship between public and private regulation. Specifically, it examines whether private standards can fulfill the public interest objective of protecting consumers’ health and whether they compete with or rather complement public regulation. The article argues that private standards have emerged in response to food scares to coordinate complex food value chains and have become ever more relevant in the context of intense market globalization, an area in which public regulation often failed. Among the advantages of private standards, are their flexibility and ability to rapidly respond to new risks. Through their focus on management-based regulation and strong market incentives for producers, private standards promote compliance better than traditional inspection methods. Private standards also present several gray areas including increased risk of capture due to their limited transparency and gaps in enforcement by third-party certifiers. The article suggests areas that deserve additional scrutiny, especially the opacity of standards vis-à-vis consumers and the public sector and the quality and reliability of third party certification.     

VOLUNTARY COMPLIANCE AND REGULATORY ENFORCEMENT

Enforcement strategies that encourage "voluntary compliance" can improve regulatory efficiency by reducing unnecessary enforcement and compliance costs associated with legal confrontation between firms and agencies. This article analyzes the enforcement dilemma that causes confrontation and describes a "Tit for Tat" strategy capable of increasing socially beneficial cooperation. The strategy requires agencies to be reasonable toward cooperative firms, vengeful toward cheaters, unrelenting in pursuit of chronic evaders, but conciliatory toward repentant firms. Reforms in this neglected and poorly understood part of the regulatory process could yield considerable social benefits.     

The Dangers of Hanging Baskets: 'Regulatory Myths' and Media Representations of Health and Safety Regulation

The successful enforcement of health and safety regulation is reliant upon the ability of regulatory agencies to demonstrate the legitimacy of the system of regulatory controls. While 'big cases' are central to this process, there are also significant legitimatory implications associated with 'minor' cases, including media-reported tales of pettiness and heavy-handedness in the interpretation and enforcement of the law. The popular media regularly report stories of 'regulatory unreasonableness', and they can pass quickly into mainstream public knowledge. A story's appeal becomes more important than its factual veracity; they are a form of 'regulatory myth'. This paper discusses the implications of regulatory myths for health and safety regulators, and analyses their challenges for regulators, paying particular attention to the Health and Safety Executive (HSE) which has made concerted efforts to address regulatory myths attaching to its activities. It will be shown that such stories constitute sustained normative challenges to the legitimacy of the regulator, and political challenges to the burgeoning regulatory state, because they reflect some of the key concerns of late-modern society.     

Toward a Theory of Compliance in State‐Regulated Livelihoods: A Comparative Study of Compliance Motivations in Developed and Developing World Fisheries

This article addresses the question of how states can best promote citizens' compliance with laws that regulate livelihoods. Based on ethnographic data from fishing communities in three countries—Norway, Canada, and South Africa—the article compares compliance motivations that exist under different socioeconomic and political conditions. The comparisons give rise to a typology of three compliance motivations: deterrence, moral support for the law's content, and the legislator's authority. This article then identifies three governable preconditions—enforcement, empowerment of citizens, and civic identity—that respectively explain these motivations. The article argues that the compliance discourse in a given type of state must be framed such that it includes at least the governable preconditions for compliance that have not been met in that state. Consequently, a functional compliance strategy would vary between different state types. The article thus questions the transferability of the developed world's compliance discourses to the developing world.     

Beyond Endogeneity: How Firms and Regulators Co‐Construct the Meaning of Regulation

What role do regulators and firms play in the construction of open‐ended regulatory terms? The new institutional legal endogeneity model posits that organizations respond to legal uncertainty by adopting formal structures to symbolically signal their compliance. These structures, however, tend to embody businesses' managerial and commercial values, as opposed to regulatory goals. Law becomes endogenous insofar as legal actors then defer to businesses' institutionalized ideas about regulation and compliance. Professionals, such as lawyers and human‐resource managers, and their strategic deployment of framing, are portrayed as the engines of the above process of legal endogeneity. By comparison, administrative agencies' strategies in shaping the meaning that corporations attach to the law are practically ignored. Building on a detailed case study of British financial firms' responses to the Financial Services Authority's Treating Customers Fairly initiative, this article problematizes the supposition of regulatory deference to business constructions of law. Instead, it develops a more balanced model that recognizes business professionals' and regulators' co‐construction of regulation and compliance. The process of regulatory meaning co‐construction, as depicted by this model, involves alignment and disputes between regulators' and professionals' strategic framing of regulatory concerns with tangible consequences for the enactment of regulation.