America's Regulatory Leviathan is Resilient.
Legal reformer Philip K. Howard has penned an excellent essay: ‘Results-Based Regulation.’
As a longtime reformer, I read Mr. Howard’s ideas with great interest. I have experienced and studied regulation from many vantage points: complying with regulation as a business owner; assisting others, in all sectors, in comprehending and complying with regulations; having led a state regulatory agency; having led federal agency enforcement of regulations; counsel to the federal government’s human resources agency (i.e., civil service–incredibly highly regulated); participating in legislative drafting and oversight.
Regulatory Reform Credo: Strict Standards, Flexible Process
In reforming California’s environmental regulatory process in a time of great challenge–the recession of the early 1990s–we listened carefully to a wide swathe of stakeholders.
It became clear that there is great support for smart, tough regulatory standards. That refers to the goals. It might mean a stretch limit on how much pollution might be allowable in a given circumstance, such as tailpipe emissions. Or it could mean how much energy must be created in an efficient manner. And so on. This is the essence of what Howard calls a ‘results-based’ approach.
The primary problem is regulatory process. That refers to the various requirements often imposed on businesses and individuals. This is where regulations stray from setting a clear target that must be reached. Instead, they direct, often with mind-numbing specificity, exactly what must one do.
Complex regulatory processes can actually hinder achieving high standards. For example, they can, as a practical matter, impose prohibitive costs on innovators. The fact that such costs are hard to account for makes them no less real–but arguably even more insidious.
So, too, some well-connected entities may apply political influence to agency drafting of regulatory processes. In some cases it may be intended to favor particular products or services. In others it may be to raise barriers to entry for competitors.
Needlessly complex process requirements can distort the enforcement process. On the one hand, good-faith compliance and enforcement may be made difficult because processes are overly complicated. On the other, they can open regulated entities to capricious enforcement of minor requirements. The latter can be exacerbated if the regulating agencies obtain funding from such requirements or penalties.
Regulatory Reform Requires Broader Government Reform
The statutes under which agencies operate have become increasingly detailed in the past generation. Rather than drafting simple, comprehensible statutes of broad application, the Congress customarily imposes detailed language of great regulatory detail.
This has numerous untoward consequences. First is the continuing infiltration of special interests.
Second, at least as important, the congressional role is distorted. Rather than focusing on results and oversight, solons serve as de-facto ombudsmen and mediators for special interests vis-a-vis agencies. Meanwhile, as the agencies themselves become viewed as less competent and often less than fair and wise in their use of power, this dismaying pattern becomes a deepening trend.
From the viewpoint of the public interest, a foreseeable result is that the programs that emerge may well be incoherent as well as byzantine. The first time all aspects are considered is when the public is confronted with the totality, as a finished product or in implementation. The new federal health care legislation may be the high-water mark of this approach.
This is the ultimate consequence of having legislators act as regulators, and regulators act as legislators.
What Regulatory Reform Requires of Us
The bottom line: fixing regulation is necessary. It affects everyone. And getting at it is going to involve nearly everyone.
In my experience, most people recognize the need for comprehensive reform. They just have one caveat: leave my part alone. In such circumstances, if everyone gets their way, nothing gets done.
In the end, such reform will likely require executive leadership. That’s all the more appropriate, insofar as regulation is, ultimately, an executive function. To make a difference it must be a high priority, and in keeping with a broader vision than short-term electoral gain.
As Americans we have a right to demand this. Can we anticipate change? If we simply wait, it may be along wait. We need to make our voices heard over the cacophony of the status quo.
Reformers like Philip Howard and his non-partisan group, Common Good, offer a good hub to follow the discussion and add your two cents.
