Wednesday, September 29, 2010
While the experience of the Minerals Management Service demonstrates the dangers of allowing industry domination of the regulatory agenda, a partnership approach does have advantages when engaged properly.

For example, Vice President Gore’s reinvention lead, Bob Stone, noted in 1998 that: “In Kansas City, the OSHA team offered training and a voluntary self-inspection to meatpacking companies with high injury rates. Working in partnership with OSHA, these companies reduced lost workdays by 15 percent. Even better, in response to their training, the employees identified and corrected 840 workplace hazards – far more than [OSHA] inspectors ever could.”

There were a number of other success stories, as well.  For example, according to Gore’s reinvention history, the Environmental Protection Agency (EPA) developed a number of voluntary partnership programs, called “33/50,” that encouraged and recognized environmentally friendly actions. In 1998 alone, these programs eliminated 7.8 million tons of solid waste; prevented the release of 80 million metric tons of carbon dioxide; and saved nearly 1.8 billion gallons of clean water. And, through their voluntary efforts, EPA's partners also saved lots of money -- $3.3 billion.

In another reinvention story, the Consumer Product Safety Commission (CPSC) recognized that when they worked with responsible companies, they could do a better job removing dangerous products from homes and the marketplace. So, they developed a Fast Track Product Recall program. When companies partner with CPSC to voluntarily recall their products, CPSC provides them with a streamlined process that saves time and money and prevents injuries. For example, under a traditional recall process, about 30 percent of recalled products might be returned. Under the Fast Track process, the percentage of products returned has climbed to nearly 60 percent.  The program was later recognized with a Ford Foundation innovation award.

Food Safety and Inspection Service (FSIS) also implemented the Hazard Analysis and Critical Control Points program (HACCP), a science-based, preventive system for ensuring safe meat and poultry production. In short, HACCP puts the responsibility for food safety into the hands of food producers, rather than into the hands of government inspectors. Three hundred large plants implemented HACCP in January 1998, and the improvements were seen as significant within a year. Salmonella had been reduced nearly 50 percent in chicken products, 30 percent in ground beef, and 25 percent in pork products.

Lessons on How to Use Regulatory Partnerships Effectively

According to the Washington Post article, the Minerals Management Service, in the 1990s, was seen as a successful partner with industry.  However, former secretary of the Interior Bruce Babbitt admitted : “It turned out that MMS was not capable of navigating its dual relationship as regulator and industry partner. . .”

Are there steps that agencies can take to ensure that they can effectively work in partnership with the industries they regulate, while reducing the potential for them to be “captured,” and then lose their regulatory effectiveness over time?  The partnership approach seems to have value for government (reduced oversight costs), industry (reduced burden), and citizens (more effective results). Do the potential dangers outweigh the benefits?

Several recent IBM Center reports examine what regulatory agencies might do to ensure effective regulatory oversight, within a partnership framework.

In a report, Food Safety – Emerging Public-Private Approaches:  A Perspective for Local, State, and Federal Government Leaders, by Noel Greis and Monica Nogueira, the authors recommend the creation of new co-regulation strategies to shape food safety policies.  This strategy would reflect mutual organizational and financial interests of both public and private sectors. But it would not extend to all aspects of oversight.  The authors suggest that co-regulation activities might include setting risk-based inspection standards and jointly establishing best practices, enforcement, and monitoring approaches.  The ultimate enforcement of these standards and practices would be kept in government hands.

In a second report, The Promise of Collaborative Voluntary Partnerships:  Lessons from the Federal Aviation Administration, author Russell Mills concludes that collaborative voluntary partnerships should be viewed as a complement to agency regulatory activities rather than as a replacement for the traditional command-and-control approach to regulation. Viewing voluntary activities as complementary to traditional regulatory activities will require a change in an organizational culture which has long considered the command-and-control approach its major regulatory option.

Based on his research and case studies at FAA, he offers three lessons:

  • The administrative lessons from the study include the importance of a regulatory agency dedicating a team to focus on the development and implementation of voluntary partnerships, and the use of collaborative processes in developing meaningful corrective actions by those being regulated.
  • The regulatory lessons include the insight that voluntary programs should be non-punitive and provide reduced regulatory oversight by those who participate and share information openly with regulatory agencies.  The voluntary programs are a complement, not a replacement, of traditional enforcement tools.
  • The technology lessons include the need for effective data analytic capabilities at the local and national level, along with a uniform reporting platform and a national-level database for analysis to produce safety alerts.

In a third report, Strategies for Supporting Frontline Collaboration:  Lessons from Stewardship Contracting, author Cassandra Moseley describes col­laborative partnerships created by the U.S. Forest Service and the Bureau of Land Management with both private companies and community-based nonprofit organizations to plan and execute land management initiatives, such as ecological restorations. Moseley found, as did Mills, that collabor­ative approaches require a major change in organizational culture to be more open to working together toward common goals rather than relying on a deterrence approach alone.

In conclusion, the Obama administration and Congress will likely assess the lessons learned from several recent high-profile cases that put into question the effectiveness and value of regulatory partnership with industry.  However, they should not start with the premise that the partnership approach is necessarily an inherently flawed model.  However, one insight from the above reports does reflect the need for continued managerial attention during implementation