What Goes Up Must Come Down A Case Study of Elevator Regulation in the Province of Ontario Dave Barrows

History of elevators

Archimedes built the first elevator around 236 BCE. The first screw driven elevator was installed in the Russian Winter Palace in 1793. The Equitable Life Building (1870), in New York City, was the first office building to have passenger elevators.

The mechanical and electrical design of elevators is predicated on standards (codes), which may be international, national, state, regional or city based. Standards tend to be performance-based. The designer is responsible to ensure that elevators meet or exceed standards. Most elevators are built to provide about 30 to 40 years of service.

The international elevator standard, ISO 14798:2009, establishes general principles and procedures for assessing risk, including:

  • design, construction, installation and servicing
  • development of technical specifications and standards affecting the safety of lifts.

In most US and Canadian jurisdictions, passenger elevators are required to conform to the American Society of Mechanical Engineers' Standard A17.1, Safety Code for Elevators and Escalator

Regulation

Regulations derive from government legislation imposed on individuals and institutions to impact economic and social behaviors. The goal of economic, as opposed to social, regulation is to ensure the delivery of a safe and appropriate service, while not discouraging the effective functioning and development of businesses. To protect customers from market power in the presence of non-existent or ineffective competition, regulators should:

  • encourage competition
  • provide for economically efficient price structures
  • provide a transparent, predictable, legitimate, and credible regulatory system.

Canada is ranked the sixth best country in the world with respect to regulatory quality (the United States ranked 16th).

Regulation can have several elements:

  • Public statutes, standards, or statements of expectations.
  • A registration or licensing process
  • An inspection process to ensure compliance
  • A de-licensing process

In the absence of regulation, or in an attempt to forestall regulation, industries, corporations and trade associations may choose to adopt self-regulating models.

Regulatory capture is a form of government failure which occurs when a regulatory agency advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating. Cognitive or cultural capture occurs when the regulator begins to think like the regulated industry.

The Iron Law of Regulation argues that all government regulations eventually lead to a net loss in social welfare. “There is no form of market failure, however egregious, which is not eventually made worse by the political interventions intended to fix it.”

Some argue that companies behave in a socially responsible manner, by their commitment to stakeholders, their interest in preserving their reputation, and their goals for long term growth. Thus eliminating the need for external regulation.

Ontario's Technical Standards and Safety Authority

Ontario's Technical Standards and Safety Authority (TSSA) is a not-for-profit corporation to which the public-safety regulation functions of the province's Ministry of Consumer and Commercial Relations were transferred in 1997.

Bill 54, The Safety and Consumer Statutes Administration Act, was enacted in June 1996. The Act permitted designated, nonprofit corporations to generate and retain revenues by charging fees for membership and services to support their operations. The minister may amend the administrative agreement if the change is in the public interest.

The minister is permitted to appoint members to the board so long as the minister's appointees do not constitute a majority of the board. Employees are not Crown employees or agents.

The government lost much of its capacity to give the authority direction. Almost all of the Ministry’s policy and technical expertise was transferred to the TSSA.

TSSA’S objectives include both promoting the industry and undertaking activities which enhance public safety. It is not clear that these two objectives are compatible. Therefore, there exist potential issues of political, legislative, administrative and fiscal accountability.

The Good News

In 1995, prior to the establishment of the TSSA, there were 240 elevator incidents and serious injuries. In 1995 there were, approximately, 8,500 elevators in Ontario

Over the period 2008 – 2017, there were 3,509 occurrences, an average of 350 per year.  In 2017 there were, approximately, 20,000 elevators in Ontario.

Ontario experienced a significant increase in the number of elevators in operation. The data suggest a significant improvement in the per capita reduction of elevator incidents.

Ontario’s Auditor General: Over 80% of Ontario elevators failed their inspections in 2018

The not so good news. Ontario’s Auditor General reported:

“In 2018, just over 80% of elevators failed their TSSA inspection, mostly because maintenance and safety work required by law was not done on time,” “The TSSA has tried with little result to have these large elevator maintenance companies perform required maintenance and safety tests.”

Ontario's auditor general value-for-money audit states that the TSSA are doing little to address real safety risks in its areas of responsibility. "They are supposed to be protecting public safety. Their whole means of existence is inspections and to make sure things are working. And we didn't see that working."

The small numbers of elevator maintenance companies that dominate the market are failing to get safety work done on time, but the TSSA is having little success in cracking down. 

"In 2018, the TSSA renewed the operating licenses of over 300 elevators that, at the same time, were shut down by the TSSA for being unsafe to operate". The report found that the TSSA has little ability to enforce elevator safety rules.

The TSSA expressed strong views that accountability for availability cannot reside within their current mandate, which is focused on safety. They say linkage of these two concepts could impede current processes and lead to a weakening of Ontario’s strong record for safety.

Availability vs. Safety

Elevator entrapment incidences are typically compiled by local fire departments (and 911 calls). Strictly speaking, elevator entrapments are not under TSSA’s mandate, however as entrapments present a potential safety risk (e.g. people trying to escape), and are a general reflection of the efficacy of overall maintenance. Overall occurrences demonstrate an increasing trend of approximately 14% per year.

Questions for Discussion

  • Is safety and availability the same thing?
  • Is this an example of the iron law of regulation?
  • Is the TSSA correct to assert that safety regulations and availability are incompatible?
  • Is this an example of regulatory capture?
  • Is it feasible for an agency to both regulate and promote the industry?
  • Is it legitimate for government to designate not-for-profit agencies as regulators and prosecutors?
  • What is the role of government dealing with industry not-for-profit agencies?