Research Design

Making a direct comparison of public and private standards-setting practically requires that the two sectors be active in the same area. Otherwise, whether outcomes or procedures are evaluated, case studies in either sector will leave the same lingering question: compared to what? The criterion of economic efficiency, often a useful benchmark, probably has limited potential. "Determining the proper level of product safety is next to impossible," note Eads and Reuter in the introduction to their case studies of corporate safety efforts.^[13] Without independently conducting cost-benefit analyses, it is doubtful that existing information will facilitate anything more than a crude analysis of outcomes.

An obvious answer to the benchmark problem is to compare the

private sector directly with the public. After all, the most important public policy questions about private standards are comparative. What really matters in assessing possible government action is how that action compares to the actual alternatives. One can only speculate whether public standards would actually be stricter in the thousands of areas presently regulated exclusively by private standards. But in the areas where public and private efforts overlap, outcomes can be evaluated comparatively.

If appropriate "pairs" can be found, the comparative approach has two obvious advantages. First, it solves the benchmark problem. Without a comparative framework, it is difficult to imagine how to evaluate either public or private standards in a fashion that will shed light on the other sector. The exercise would be entirely hypothetical: guessing what the other sector might have done. Second, the comparative approach might also facilitate broader generalizations by "controlling" for the idiosyncrasies of issues. It is frequently alleged that general theories of regulation are fruitless because circumstances such as industry profitability and structure, the quality of available information, and the mixture of political interests vary significantly by issue. A related argument, relevant to the study of public and private regulation, is that only certain types of issues are regulated by government. Government, the argument goes, regulates the issues that industry will not, making the public cases unique. Both of these arguments fade if the public and private sectors are active in the same area.

There are drawbacks, however, to studying only those cases in which public and private efforts can be paired. First, the universe of possible cases is very small. Public and private standards rarely regulate the same things. Moreover, when there is overlap, there is the attendant danger that the effects of their interaction will obscure the influences that might otherwise prevail. In other words, the observed outcomes might reflect "strategic behavior" more than they reflect the indigenous characteristics of either sector. If either sector acts strategically—that is, based primarily on the anticipated response from the other sector—then the pairs themselves might be idiosyncratic. In other words, special patterns of regulatory behavior might characterize such pairs. One likely pattern is "splitting the territory"—the strategy by which both sectors adapt their behavior to avoid direct overlap. This problem is not unique to actual pairs, however. Strategic behavior is considered a primary characteristic of most private standards-setting. The nature and significance of the pair problem is examined in chapter 8.

The possibilities for "paired" case studies are limited mainly by the comparatively narrow scope of government regulation. There are private safety standards in almost every field where there are government standards. With so little known about these standards and the organizations that write them, however, it is difficult to know how potential case studies from the private sector fit into the larger universe of standards-setting.

Several considerations guided the choice of cases for this study. First, in order to permit an actual comparison of public and private decisionmaking, the cases had to overlap in content but have some degree of independence in development. In some cases, similar content denotes a lack of independent effort. Sometimes, a government standard is nothing more than a private standard with the force of law. The HUD mobile home standard was originally written by NFPA. The FDA relies largely on UL to evaluate microwave ovens. In other cases, the overlap is in title only. With many of the automotive safety standards, for example, the private sector (the Society of Automotive Engineers) writes test methods in areas where government standards specify performance levels.

These considerations narrowed the apparent field of possible pairs considerably, leading to the second consideration: how "representative" the pairs would be of the public and private sector. Recognizing that it would be impossible to select truly representative pairs without knowing more about the universe, particularly on the private side, selection was based on reputation. A primary goal was to examine private organizations with the best possible reputations, a variation on deviantcase analysis. Examining "best case" examples should provide a basis for estimating the outer bounds of the private sector's potential. Conversely, it should avoid the criticism that the sample is tilted toward the "bad apples."

By this reasoning, the most suspect class of private standards-setting organizations—trade associations—was eliminated from further consideration. Trade associations seem least likely to advance public purposes because of the narrow scope of their interests. Although trade associations vary more than is often appreciated, few have sufficient independence from immediate membership demands to seek a more enlightened, long-term course.^[14] The remaining organizations—professional societies, general membership organizations, and third-party certifiers—are not necessarily better, but their form of organization suggests greater potential for something beyond parochialism.

Within this grouping, UL clearly had to be one of the private organizations studied. It is not only the oldest and best-established private standards-setter; according to knowledgeable observers, it is also widely thought to be more independent and public-spirited than other private organizations. In addition, UL is most active in consumer products, an area in which standards policy may be most significant. Not coincidentally, there is practically no overlap between UL's standards and the few that have been successfully promulgated by the Consumer Product Safety Commission. UL actively seeks to keep the CPSC off its turf. The CPSC has considered getting involved in many areas regulated by UL, but the only case of dual standards is that of woodstoves. Accordingly, that is the first pair in this study.

The overlap between UL and the CPSC is minimal in the woodstove case. Instead of developing a product standard for woodstoves, the CPSC supplemented UL's product standard with a labeling standard—an unusual form of CPSC regulation. Therefore, although the woodstove case offers an opportunity to examine UL, it appears to provide a peculiar view of the CPSC. Selection of the second pair was motivated by a desire to balance the woodstove case with one in which the CPSC adopted a full-fledged product standard—its more usual role in regulation. Given the CPSC's relative inaction in recent years, there were only two possibilities: lawn mowers and gas space heaters. The private sector's lawn mower standard was adopted by an ANSI committee under the sponsorship of the Outdoor Power Equipment Institute; the gas space heater standard was also adopted by an ANSI committee, but under the supervision of the American Gas Association Laboratories. The latter was chosen for two reasons. First, the gas space heater case is more recent, minimizing the chance that subsequent changes in either the public or private sector would render the findings outdated. Second, the lawn mower case has been studied many times; gas space heaters have not."^[15]

Desire for a "best case" example of public standards-setting motivated the selection of the remaining cases. The CPSC may provide close to the "worst case" example of government regulation. The agency's short history has been marked by failure and poor judgment."^[16] (An American Enterprise Institute study in 1983 suggested abolishing the CpSC.)^[17] In order to ensure that the pairs were more representative of the potential for government regulation, the remaining cases had to involve government agencies with better reputations.

The possibilities included automobile safety (where there is some

overlap between NHTSA and the Society of Automotive Engineers), nuclear power safety, aviation safety, and grain elevator safety. The first two were eliminated for practical reasons—they appeared to require a researcher to have substantial engineering (and possibly physics) background. Accordingly, the remaining cases were selected as the third and fourth pairs. In aviation safety, the FAA's 1984 proposal concerning fire extinguishers and smoke detectors overlaps directly with an NFPA standard. Although the FAA is criticized occasionally for an inadequate inspection and maintenance program, the agency enjoys strong congressional support and a surprising level of industry support for its regulatory activities.

The grain elevator case involves an OSHA standard, also paired with an NFPA one. Although OSHA's reputation, unlike the FAA's, is only a little better than the CPSC'S, this case study seemed appropriate for three reasons. First, it looked at "the new OSHA"—that is, OSHA under President Reagan. The grain elevator standard is one of only a few OSHA standards promulgated under the Reagan administration, and as such it might not be prone to the perceived excesses of previous OSHA standards. Second, like the CPSC, OSHA addresses the kinds of issues in which questions about the relationship between public and private standards are most likely to arise. Finally, the grain elevator case offered a research opportunity unavailable on the private side of the other selected cases: to observe the revision process in action. The NFPA grain elevator standard was due to be revised at a two-day subcommittee meeting in July 1985, offering an opportunity to observe the committee responding to comments and deliberating over specific language. This seemed likely to make possible a more complete and realistic view of private standards-setting than the other case studies (based as they are on documents and after-the-fact interviews).

Notes on Fieldwork

The fieldwork for the case studies was conducted from September to December 1984 in Washington, D.C., New York, and Boston, and from May to July 1985 in Chicago, Cleveland, New York, Washington, D.C., and Minneapolis. Seventy-two detailed interviews were conducted, approximately half of which were tape-recorded and transcribed (a list of these is given in the Appendix). Additional information on the research method is contained in notes that precede the bibliographies for each case.

A major problem encountered during the fieldwork, but not anticipated in designing the research, was access. As it turned out, initial contacts with Underwriters Laboratories were met with suspicion and an assertion that UL would not permit its engineers to be interviewed. The NFPA, which professes openness, was also hesitant about providing certain documents and allowing attendance at subcommittee meetings. These organizations are more secretive than they appear. They are sued with regularity and are not anxious to talk about it. Moreover, they have been on the defensive since the FTC began its investigation of standards and certification. Shortly before this fieldwork began, Mother Jones magazine ran an article containing criticisms of UL.^[18] A few years earlier the "60 Minutes" television program did a critical story on the American Gas Association Laboratory.

In both cases, personal contact eventually resulted in access: UL's representative in Washington, D.C., arranged for access to UL's engineers, and after a lengthy personal meeting, an NFPA vice president provided assistance in obtaining documents. Even so, a few NFPA committee members were unwilling to discuss their work in detail, and several UL engineers were quite guarded in conversation. During the course of the fieldwork, the FAA standard on fire extinguishers and smoke detectors was approved. The OSHA standard on grain elevators was adopted two years after conclusion of the fieldwork.

The other unexpected development during the course of the fieldwork involved revelations about the relationship between product standards and installation codes. An apparent advantage of the initial case selection appeared to be the diversity of private standards-writers; the four pairs involved three different organizations (UL, AGA, and NFPA). It turns out that NFPA plays an important role in the standards of both UL and AGA Labs. Accordingly, the case studies contain much more information about the NFPA than originally expected. This points up a potentially important distinction between codes and standards that was not understood during the research design. The two are so different that they are probably best studied separately. However, this discovery bears out the decision to do case studies in order to identify such factors, instead of doing a broader survey.