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Coglianese - Achieving Regulatory Excellence

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Coglianese Achieving Regulatory Excellence
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Whether striving to protect citizens from financial risks, climate change, inadequate health care, or the uncertainties of the emerging sharing economy, regulators must routinely make difficult judgment calls in an effort to meet the conflicting demands that society places on them. Operating within a political climate of competing demands, regulators need a lodestar to help them define and evaluate success. Achieving Regulatory Excellence provides that direction by offering new insights from law, public administration, political science, sociology, and policy sciences on what regulators need to do to improve their performance. Achieving Regulatory Excellence offers guidance from leading international experts about how regulators can set appropriate priorities and make sound, evidence-based decisions through processes that are transparent and participatory. With increasing demands for smarter but leaner government, the need for sound regulatory capacity--for regulatory excellence--has never been stronger.;The challenge of regulatory excellence / Cary Coglianese -- Responsive excellence / John Braithwaite -- Regulating by the stars / Wendy Wagner -- Regulatory excellence and democratic accountability / Kathryn Harrison -- Beyond process excellence : enhancing societal well-being / John D. Graham and Paul R. Noe -- Regulatory equilibrium / Ted Gayer -- A risk regulation perspective on regulatory excellence / Bridget M. Hutter -- Regulatory excellence and lucidity / Robert Baldwin -- Regulatory excellence : lessons from theory and practice / Daniel C. Esty -- What makes a regulator excellent? : mission, funding, information, and judgment / Shelley H. Metzenbaum and Gaurav Vasisht -- Beyond best-in-class : three secrets to regulatory excellence / Adam M. Finkel -- Compliance, enforcement, and regulatory excellence / Neil Gunningham -- The role of policy learning and reputation in regulatory excellence / David Vogel -- Regulatory excellence via multiple forms of expertise / David Levi-Faur -- Insurance and the excellent regulator / Cary Coglianese and Howard Kunreuther -- A systems approach to regulatory excellence / Angus Corbett -- Performance principles for regulators / Donald P. Moynihan -- Measuring regulatory excellence / Cary Coglianese.

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ACHIEVING
REGULATORY
EXCELLENCE

CARY COGLIANESE

EDITOR

BROOKINGS INSTITUTION PRESS

Washington, D.C.

Copyright 2017

THE BROOKINGS INSTITUTION

1775 Massachusetts Avenue, N.W., Washington, D.C. 20036

www.brookings.edu

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Brookings Institution Press.

The Brookings Institution is a private nonprofit organization devoted to research, education, and publication on important issues of domestic and foreign policy. Its principal purpose is to bring the highest quality independent research and analysis to bear on current and emerging policy problems. Interpretations or conclusions in Brookings publications should be understood to be solely those of the authors.

Library of Congress Cataloging-in-Publication data

Names: Coglianese, Cary, editor.

Title: Achieving regulatory excellence / Cary Coglianese, editor.

Description: Washington, D.C. : Brookings Institution Press, [2017] | Includes index.

Identifiers: LCCN 2016030034 (print) | LCCN 2016042988 (ebook) | ISBN 9780815728429 (cloth : alk. paper) | ISBN 9780815728436 (epub) | ISBN 9780815728443 (pdf)

Subjects: LCSH: Delegated legislation. | Administrative procedure.

Classification: LCC K3178 .A24 2017 (print) | LCC K3178 (ebook) | DDC 348/.025dc23

LC record available at https://lccn.loc.gov/2016030034

9 8 7 6 5 4 3 2 1

Typeset in Baskerville

Composition by Westchester Publishing Services

To Orville G. Cope III
(19322016)

Contents

Jim Ellis

Cary Coglianese

John Braithwaite

Wendy Wagner

Kathryn Harrison

John D. Graham and Paul R. Noe

Ted Gayer

Bridget M. Hutter

Robert Baldwin

Daniel C. Esty

Shelley H. Metzenbaum and Gaurav Vasisht

Adam M. Finkel

Neil Gunningham

David Vogel

David Levi-Faur

Cary Coglianese and Howard Kunreuther

Angus Corbett

Donald P. Moynihan

Cary Coglianese

Foreword

THROUGHOUT MOST OF MY tenure in public service, I had been of the view that the primary role for regulatory activity is to serve a protective function. That is, regulators are to invoke the authority of the state to compel people and businesses to align their behavior with broader public interest considerations and manage societal risk. This conventional idea, that regulators assume a risk management role in society, continues to prevail, and it deservedly plays an important role and holds credence among the general public.

As I embarked on my journey as the CEO and president of one of the largest subnational energy regulatorsthe Alberta Energy Regulator (AER)my team and I realized that regulation has a broader societal purpose. At its core, regulation is a human phenomenon. For this reason, regulators should not confine themselves merely to advancing their statutory objectives. We hold a moral and ethical obligation to initiate bold and courageous action to improve the human condition. John Braithwaite eloquently points out in of this book that excellent regulators incessantly probe for strategic macro-opportunities to create public value, potentially by transforming an entire industry, even an entire economy. In other words, he continues, risk management goes to the basics of regulation; seizing opportunities for transformation goes to the heart of regulatory excellence.

Braithwaites words bear considerable weight at a timely moment in our evolution as an energy regulator in Alberta. As the international community commits to redefining a sustainable energy future in a carbon-constrained world, energy regulators like the AER are primed to play a critical role on this transformational journey. The level of vision, innovation, collaboration, and expertise required to meet such an ambitious goal will require energy regulators to elevate their organizational capabilities to a new level of strategic and operational excellence.

In my interactions with regulatory peers in Canada and abroad, I have observed that most regulators are confronted with similar twenty-first-century challenges that impede transformative change. First, most must navigate through diffuse power structures nested in complex policy systems to advance their strategic objectives. Building networks of trusted relationships with stakeholders, government ministries, and indigenous groups is an essential condition for regulators everywhere to leverage the diverse influence and knowledge required to sustain transformational momentum.

Second, regulators face mounting pressure from the private sector to be more agile and responsive to changes in technological and market conditions, and to simplify cumbersome regulatory procedures that impose unnecessary costs and impede innovation. Regulators have a tendency to respond to this pressure by taking a gradualist approach to reform that focuses on discrete, process-oriented problems that yield incremental changes, rather than pursuing transformative agendas that yield substantive and enduring societal benefits.

Third, regulators must respond to the tragic human and environmental consequences resulting from catastrophic failures. As Cary Coglianese has pointed out in another of his books, Regulatory Breakdown , major accidents and other calamitous events have the tendency to cast grave doubts over entire regulatory systems, leading to public outrage and the erosion of public confidence. In turn, regulators fall prey to the political fallout that typically ensues after such catastrophic events, ultimately reversing the momentum needed for positive transformational change.

Fourth, even in the absence of catastrophic failures, regulators contend with a growing, systemic trend of eroding public satisfaction with governmentand with an increasing skepticism about the regulators ability to avoid capture from corporate interests and to make unbiased decisions that are in the public interest. Citizens have grown increasingly cynical about the role and efficacy of governmental institutions and their ability to influence corporate behavior in positive ways. Furthermore, rapid advancements in social media and access to information expand the arena for emotionally charged policy discourse framed by hardened positions on either side of the ideological divide. Consequently, regulators need to devote a growing share of finite organizational resources to expanding their stakeholder engagement and communication efforts in response to increasing demands for greater democratic legitimacy and inclusiveness. Compounding these challenges is the fact that regulators often operate in some degree of isolation from the political organs of government to maintain their independence and impartial role as arbiters of competing societal interests. This sense of isolation results in a relative paucity of trusted peers that regulators can rely on to offer timely and unbiased advice.

Despite the best intentions of regulators to address these challenges, they persist and continue to confound even the most sophisticated regulatory agencies. Early on in my time at the AER, it became abundantly clear that we needed to place more emphasis on creating an ethos and culture of regulatory excellence that placed regulators in a favorable position to overcome the contemporary challenges of the twenty-first century. We were convinced that the AER needed to embark on this journey with the support and contribution of Albertas stakeholder community and indigenous peoples. A cross-representation of societal values and interests was critical to producing a framework for action that would gain universal credibility and public consent. Furthermore, we recognized the importance of coalescing regulatory practitioners, environmental organizations, academics, and others to create a framework to guide the AER that would be both operationally practical and applicable to a broad suite of regulatory domains.

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