Regulatory policy choice in post‐reform contexts: The case of industrial safety regulation in Mexico's oil and gas industry

Abstract

AbstractHow do the systemic features of a developing country shape regulatory policy choices? This paper examines the rationale behind the regulatory strategy adopted by Mexico's Safety, Energy, and Environment Agency (the ASEA), established after the country's 2013 energy reform to oversee the environmental and industrial safety of the entire national oil and gas sector. Building on the literature on high‐hazard regulation and the necessary conditions for effective regulatory design, we examine 24 core regulatory‐oversight instruments implemented by the agency in its initial years of operation. Our evidence suggests that the ASEA's regulatory strategy was shaped by the disparities in resources across different sectors of the country's oil and gas industry and the agency's limited capacity to oversee every stage of the industrial process systematically. These findings provide a greater understanding of the challenges faced by agencies seeking to oversee high‐hazard industries in post‐reform and developing contexts.