The Tools of Government
Workbook 1
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Social Regulation Workbook
By Peter May

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Overview

This workbook is a companion to The Tools of Government: A Guide to the New Governance, edited by Lester M. Salamon. It includes original source documents that illustrate the operation of a government program that embodies social regulation as a tool of government. It is designed to help the reader better understand the process for implementing and managing a regulatory program involving social or environmental regulation.

Regulation, as a tool of government, consists of rules identifying permissible and impermissible activity on the part of individuals, firms, or government agencies along with accompanying sanctions and/or rewards. Social regulations are aimed at restricting behaviors that directly threaten public health, safety, welfare, or well- being. These include environmental pollution, unsafe working environments, unhealthy living conditions, and social exclusion. Social regulation is distinguished from economic regulation. The latter is aimed at ensuring competitive markets for good and services and avoiding consumer and other harms when such markets are not feasible.

Social regulation has been used as a tool of government to accomplish a number of public purposes. Many social regulations are aimed at preventing harms. Others are aimed at providing public benefits. Regulatory programs vary considerably in what they require and/or prohibit. Regulatory programs also differ in the timing of their intervention, especially as they concern potential harms from newly created products. While we normally think about regulation as entailing rules established by government to restrict behavior of private entities or citizens, social regulation also includes mandates from higher levels of government to lower levels.

This workbook addresses the mechanics of social regulation with particular attention to the operation of a regulatory program. This entails:

Rules that govern expected behaviors or outcomes;

Standards that serve as benchmarks for compliance;

Sanctions for non-compliance with the rules (or rewards for compliance); and

An administrative apparatus enforcing rules and administering sanctions.

Document Listing and Description

This workbook contains 18 documents related to the regulation of food safety as illustrated by the meat inspection program carried out by the Food Safety and Inspection Service of the United States Department of Agriculture. The documents are grouped into six categories, as outlined below. This section first lists the documents and then briefly describes each set.

Links to the electronic images of the documents are provided within these descriptions. To jump to a particular document, click with Adobe Reader on the highlighted number. You can also navigate through the documents using the navigation pane of Adobe Reader.

The documents are appended as part of this portable document file (pdf). A guide to the different sections of the electronic file, to be used in jumping to different documents, can be found by opening up the navigation pane (on the toolbar) of Adobe Reader. Links to individual items are also contained within the study questions that follow this section.

A. Presidential Initiative for a New Program

1. President Clinton's Radio Address, July 6, 1996

2. "Food Safety from Farm to Table: A New Strategy for the 21st Century," Discussion Draft and Current Thinking, A National Food Safety Initiative, U.S. EPA, Office of Water, April 1999 [excerpts]

Social regulations are typically developed to prevent harm to society. While there is much conceivable harm that could be addressed, it is up to governmental officials to determine the particular harms that deserve attention. This section illustrates the selection of "food safety" for attention. The first document (A1) is a Presidential radio address that discusses the efforts that the Clinton administration was making to ensure that meat products and other foods are safe for consumption. The second document (A2) sets forth the Clinton Administration strategy for food safety. It discusses the problem of food safety and the limits of the current regulatory system.

B. Authorizing Legislation and Administrative Regulations

1. Federal Meat Inspection Act, U.S. Code: Title 21, Chapter 12 [outline only]

2. Administrative Regulations - Meat and Poultry Inspection, Department of Agriculture, 9 CFR Parts 301- 407 (1998) [outline only]

3. Administration - "Protecting the Public From Foodborne Illness: The Food Safety and Inspection Service," Backgrounder, January 1995

Regulatory programs that embody social regulations are established by legislation that authorizes a program, defines purposes and objectives, and creates or assigns an agency to carry out the program. In the case of meat inspection, the original legislation was enacted in 1907 for which the provisions as amended are shown as the first document in this section (B1). The details of regulatory programs are contained within the administrative regulations that govern the program. An outline of these is the second document of this section (B2). Note the difference between (1) administrative regulations, which are agency rules that govern program operations, and (2) social regulations, which are tools of government that govern behavior of firms, individuals, or others. The relevant administrative agency for meat inspection is the Food Safety and Inspection Service. The third document of this section provides an overview of the agency functions (B3).

C. Rules: Setting Expectations

1. Substantive requirements - "Labeling receptacles or coverings of meat or meat food products" 21 U.S. Code 607(a) (1998)

2. Procedural requirements - "Record keeping requirements" 21 U.S. Code 642(a) (1998)

3. Exemptions to requirements - "Exemptions" 9 CFR 303.1 (1998)

4. Rulemaking procedures - Executive Order 12866, "Regulatory Planning and Review," September 30, 1993

The first step in the design and administration of a social regulation is the specification of rules that establish expectations of behavior. These are normally contained within the legislation that establishes a regulatory program. The specifics are provided as part of administrative regulations that govern regulatory agency actions. There are two basic types of rules, both of which are illustrated by the documents in this section. One type, illustrated with the first document concerning labeling of meats (C1), consists of substantive requirements that specify actions to be undertaken or to be avoided by regulated entities. The second type of rules, illustrated by record keeping requirements (C2), consists of procedural requirements that specify a process to be followed by regulated entities. Most regulations contain exemptions that specify the situations for which a given rule would not apply as illustrated by the exemptions listed in the third document of this section (C3).

The processes for developing rules, exemptions, standards, and enforcement systems as part of the administration of regulatory functions at the federal level in the United States is quite elaborate and is governed by the Administrative Procedures Act. The fourth document in this section contains an Executive Order on "Regulatory Planning and Review" (C4) issued by President Clinton in 1993 that was aimed at gaining control over unreasonable rules. As discussed in the chapter on social regulation in The Tools of Government, the Executive Order was one of a series of efforts over the years by the executive branch to regulate the proliferation of social and economic regulations.

D. Standards: Setting Benchmarks

1. Design (specification standards) - "Labels, Required Features" 9 CFR 317.2 (1998)

2. Performance standards - "Scale requirements for accurate weights, repairs, adjustments, and replacement after inspection" 9 CFR 317.20 (1998)

Rules are often sufficiently complex that they require specification of standards for performance. Standards serve as the benchmarks for determining compliance with a given rule. Standards can be either of two types. The first, illustrated by the required features of labels on meat (D1), are design (or specification) standards that specify the use of particular materials or means to achieve compliance. The illustration specifies particular format and spacing of labels on meat packages. The second type, illustrated by requirements for scales to be used in weighing meats (D2), specifies performance levels. Either type of standard can reference provisions devised by independent entities as also illustrated by the second document concerning scales. Note that it references standards for scales established by the National Institute of Standards and Technology.

E. Penalties and Rewards

1. Food Safety and Inspection Service, "Quarterly Regulatory and Enforcement Report" [excerpts]

2. "Clean Water Act Compliance Audit Program for Pork Producers," Fact Sheet, U.S. EPA, Office of Enforcement and Compliance Assurance, November 25, 1998.

Penalties are the sanctions to be applied for failure to comply with a given rule and rewards are positive inducements for compliance. Most social regulations compel compliance through threats of issuing penalties for noncompliance. As discussed in the chapter on social regulation, some newer regulatory programs contain inducements for compliance or seek to obtain "voluntary" compliance. The first document (E1) in this section is an enforcement report of the Food Safety and Inspection Service that shows the range of penalties that are invoked for noncompliance and the circumstances under which they are applied. The second document (E2) is from a different regulatory program and is provided to illustrate the use of incentives to induce compliance with regulations. This is a program under which pork producers can voluntarily participate in audits of their environmental pollution controls undertaken by third parties. In return for participating in this program, pork producers are eligible for reduced penalties for any violations that they identify and self-report.

F. Enforcement Systems

1. Administration - "Food Safety and Inspection Service" Appendix, Budget of the United States Government, Fiscal Year 2000, pp. 82-85

2. Notification Procedures - "Notification to Establishments of Intended Enforcement Actions," FSIS Notice no 12-98, April 8, 1998.

3. Appeal Procedures - "Inspection Decision Appeals," FSIS Notice no. 14-98, April 20, 1998

Enforcement systems are necessary to identify noncompliance and to invoke penalties or other measures for obtaining compliance. The first document in this section (F1) is a summary of the funding for the Food Safety and Inspection service. It provides a sense of the scale of enforcement resources for meat and poultry inspection. Enforcement actions typically entail a number of steps for which two are illustrated by the other documents in this section. One step, shown in the notification procedures document (F2), is a procedure for notifying regulatees about a violation, expected corrections, and potential subsequent regulatory actions. Another step, shown in the document about appeal procedures (F3), is establishment of a procedure under which regulatees can appeal enforcement actions and decisions.

G. Evaluation

1. "FSIS Customer Service Standards," FSIS, USDA, March 1997

2. Regulatory Performance - "Status of the FSIS Regulatory Reinvention Goals," FSIS, USDA, May 2000

Regulatory programs, like any program, can be evaluated according to how well they accomplished their goals. The two documents in this section illustrate the ways in which the Food Safety and Inspection Service attempts to evaluate agency performance. The first document (G1) discusses "customer service standards" and the performance of the agency in meeting those standards. The second document (G2) takes a broader view in considering the adequacy of regulatory approaches under the "reinventing government" program.

Discussion Questions

Consider food safety as an issue of public policy (A2). Why is this an issue at this point in time? What is the basis for a federal regulatory role? Why does this deserve presidential attention (A1)?

Consider the current approach to regulating the safety of meat products as evidenced by legislative provisions (B1) and relevant administrative regulations (B2). How would you characterize the use of the tool of social regulation in this case? How coercive is the approach? How "automatic" is the approach? How intrusive is the approach? [For additional information see B3 and E1.]

Consider the administration (B3) and funding (F1) for regulating the safety of meat products. What are the central issues that the Food Safety and Inspection Service faces in managing the regulatory function? How are resources allocated among different agency functions?

The existence of "red tape," consisting of unnecessary or overly cumbersome requirements, is a common complaint about regulations. Consider the examples of substantive (C1) and procedural requirements (C2) along with the examples of design (D1) and performance standards (D2). Which of these, or which aspects, do you think constitute red tape? Why do you think these take the form that they do? How could these provisions be revised to reduce or eliminate the red tape?

Consider exemptions to the meat inspection requirements illustrated by C3. How do these exemptions affect the overall safety of meat products? What reasons can you offer for these exemptions? Do these seem like reasonable exemptions?

Consider the regulatory rulemaking procedures under Executive Order 12866 (C4). What is the intent of this regulatory review process? What criteria are to be used to justify new regulations? How workable are these criteria and the review process?

Consider the due process aspects of notification (F2) and appeal (F3) procedures for the enforcement of requirements for the safety of meat products. How do these procedures protect regulated entities from overly zealous enforcement? How cumbersome are these procedures from the perspective of the regulatory agency? How would you modify these procedures?

Consider the criticisms of traditional approaches to ensuring the safety of meat products (A2) and the use of "voluntary" audit programs in other settings (E2). What are the criticisms of the traditional approach? How could voluntary regulation be applied to the safety of meat products (also see G2)?

A key issue in the regulation of food safety is inspiring public and elected officials' confidence in the regulatory system. How has the Food Safety and Inspection Service attempted to inspire this confidence (G1 and G2)? Which actions do you think would be the most effective in this regard? What would you do?

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