Ch 1 Good Regulation: What It Takes

Good RegulationWhat It Takes

Public officials must be, and clearly be seen to be, independent of the interests they regulate.

A number of persons have offered explanations for the purpose of regulation.[1] Perhaps the most general and as well as succinct is this one: regulation is a “key lever of state power”[2] and a critical tool used by governments to shape the welfare of economies and societies.[3] The objective of regulation is to support economic growth and development as well as the achievement of broader societal objectives such as social welfare, environmental sustainability, and the respect of the rule of law.[4] Modern economies and societies need effective regulation for growth, investment, innovation, market openness, to support the rule of law and to promote better lives.[5] A poor regulatory environment undermines social welfare, business competitiveness, and citizens’ trust in government and it encourages corruption in public governance.[6]

This does not, however, mean that all regulation is good regulation. Sometimes the expected benefits do not manifest, in whole or in part. Sometimes the costs do not justify the benefits.[7] Sometimes (often) it’s hard to adequately understand the full extent of a regulation’s cost and/or benefits. It is because regulation can sometimes be bad regulation that the OECD promotes the importance for its member countries to develop a consistent and coherent regulatory policy, the objective of which is to ensure that the country’s “regulatory lever” works effectively, and so that regulations and regulatory frameworks are in the public interest.

Based upon OECD documents, six essential elements of an effective regulatory policy include (among other elements): (i) independent regulators who are free from conflicts of interest,[8] (ii) accountability and transparency in regulatory decision making,[9] (iii) the placement of regulatory oversight bodies “at the center of government,”[10] (iv) making regulatory stakeholders, including businesses but also, notably, citizens and consumers, part of the regulatory process and paying attention to their voices;[11] (v) the use of evidence-based regulatory impact assessments,[12] and (vi) the use of a risk-based approach to regulation.[13]

Let’s look at each of these elements, in turn:

Independence

The OECD explains that regulators operate in a complex environment and their actions have repercussions for many different types of persons and organizations. In this context, regulators necessarily interact with a number of actors, and most notably with public authorities, members of the regulated industry, and citizens. These interactions are inevitable and desirable[14] (indeed, as the discussion below regarding citizen engagement evidences, they are essential). At the core of independence, the OECD explains, is the balance between the appropriate—as opposed to the undue—influence that can be exercised through these interactions. For these reasons, regulators must behave and act objectively, impartially and consistently, without conflict of interest, bias or undue influence.[15] Regulators must act and make decisions in a manner that is disinterested and without regard for personal gain.[16] Independence means freedom from undue influence not only of governmental authorities (the executive as well as the legislature) but also from the regulated industry and from consumer groups and other special interest organizations. Regulators should regulate in the public interest, and undue influence from any of these actors makes regulation in the public interest very difficult, if not impossible.[17]

With respect to independence from governmental authorities, the OECD states that in certain situations there is need for the regulatory agency to be seen as independent in order to maintain public confidence.[18] In those situations, regulators should have sufficient autonomy to conduct their functions without political interference from the executive or legislature. However, the long term strategy and policy goals of the regulator should be in line with the broad strategic national priorities as set by elected representatives in the executive and legislature.[19] While there are different manners of protecting a regulator from undue political pressure or interference, some of the most important include requiring specific procedures and criteria for agency head and board appointments and dismissals,[20] autonomy in managing human and financial resources,[21] and setting clear and transparent boundaries on who does what, and who is accountable to whom.[22]

The OECD explains that undue pressure can be exercised at different points in the life of a regulatory agency. For that reason, independence cannot be taken for granted, but must be translated into practice in a number of ways, most notably in the regulator’s structure and in the way that the regulator attracts, motivates and retains staff.[23]

Further, regulators should engender an organizational culture that is “intolerant of conflicts of interest.”[24] This is because public office is held as a trust, and a public servant’s primary obligation is to the public interest. This means, the OECD explains, that the essence of public office is to uphold the general good above sectional interests. In relation to financial interests it is generally held that a public servant should not have any financial stake or relationship with the private corporations that he or she is responsible for regulating. Form and substance do matter: “public officials must be, and clearly be seen to be, independent of the interests they regulate.”[25]

In sum, independence is an essential element of an effective regulatory policy. In this context, “independence” encompasses not only from public authorities but also from the regulated industry and other private interests.

Accountability and Transparency

The OECD briefly defines accountability as the requirement for the regulator to report on set issues, usually backed by sanctions. Equally briefly, the OECD defines transparency as “the openness of process to external scrutiny.”[26]

The United Nations Economic and Social Commission for Asia and the Pacific has offered more extensive explanations of these terms: Transparency means that: (i) decisions taken and their enforcement are done in a manner that follows rules and regulations, (ii) information is freely available and directly accessible to those who will be affected by such decisions and their enforcement, and (iii) enough information is provided and it is provided in easily understandable forms and media. As regards accountability, not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. In general, an organization or an institution is accountable to those who will be affected by its decisions or actions.[27]

The OECD explains that, in particular, independence must be tied to accountability. Regulators who are given significant power and autonomy in their operations and decision making also need to be accountable to government and the legislature for the ways in which they have exercised that power. Strong accountability mechanisms for independent regulators, who are neither elected nor directly managed by elected officials, allow ministers and the legislature to assess whether the objectives set for them are being achieved efficiently and their powers exercised with integrity.[28]

The OECD observes that regulators are generally accountable to three groups of stakeholders: the minister and the legislature, regulated entities, and the public. For each kind of stakeholder, specific principles for accountability and transparency apply. For example, with respect to the minister and the legislature, the expectations for each regulator should be clearly outlined by the appropriate oversight body (discussed below), and they should be published. Further, regulators should report to ministers or legislative oversight committees on all major measures and decisions and on a regular basis. With respect to regulated entities, regulators should establish and publish processes for arm’s length internal review of significant delegated decisions. Finally, with respect to the public, all major decisions made by the regulator should be accompanied by publicly stated reasons.[29]

In sum, accountability is the flip—and essential—side of independence. At the same time, transparency and accountability go hand in hand, not the least because accountability requires transparency. Accountability also requires the next essential element of an effective regulatory policy under the OECD documents: regulatory oversight bodies.

Regulatory Oversight Bodies

An OECD working paper explains that while regulation can solve social problems, it can also impose its own problems. For this reason, regulation requires effective oversight, in order to reduce the costs and side effects of regulation, promote efficiency in standard setting and instrument choice, encourage consistency and transparency and improve the overall social outcomes of regulation. It is in this context that regulatory oversight bodies have become an integral part of reform programs in many countries, and, in doing so, have significantly affected the functioning of markets and governments.[30]

A regulatory oversight body (or a “regulator of regulators”) commonly serves one or more four core functions, as follows: (i) coordination and supervision (the implementation and monitoring of a regulatory policy or initiative), (ii) training, advice and technical support (assisting regulators in improving the quality of their regulations), (iii) advocacy (helping to identify opportunities for reform and to support and argue for the development and progress of reform measures), and (iv) challenge and scrutiny (appraising, on technical grounds, the quality of the regulator’s existing or new regulations and providing an opinion if not a veto on the regulator’s proposed new regulations).[31]

The same working paper points out that the fourth function, challenge and scrutiny, is the most resented and controversial. At the same time, however, it is considered to be essential because at the core of the oversight concept is the idea that self-assessment and self-improvement by regulators is required but not sufficient to prepare high-quality regulations.[32]

An oversight body must be properly “located” among other public authorities.[33] In most cases, the best location is at the “center of government,” be it the executive (most common), legislative, or judicial branch. Such a location enables the oversight body to exercise its functions in a manner that is coherent with other regulatory policies. It also contributes to the credibility of the oversight body in assuring regulatory quality.[34]

The creation and growth of an oversight body will likely be met with resistance from different types of actors. Regulators may perceive it as reducing their levels of autonomy and discretion as well as instituting “confrontational” oversight and external control in an environment that prioritizes cooperative and consensual traditions. Further, regulatees (the individuals/organizations who are the subject of the regulation) can show a lack of enthusiasm for, if not outright opposition to regulatory oversight, because they perceive it a threat to “cozy” arrangements they may have with the regulator.[35] In other words, effective regulatory oversight can serve to end or at least diminish undue influence on the regulator, if not regulatory capture itself. From this perspective it would be rational for those exercising undue influence to object to the creation of a regulatory oversight body.

Given the nature of the functions of a regulatory oversight body, and especially given its function to challenge and scrutinize, it is difficult to imagine that it could escape criticism, if not from those claiming it is playing a “gatekeeping” role too zealously, then from those claiming it is not playing that same role zealously enough. Nevertheless, once an oversight body is established, no one (or nearly no one) calls for its abolishment. To the contrary, they are seen to function as an essential link between society’s needs, political demand, and economic and social outcomes.[36] In sum, regulatory oversight bodies, warts and all, play a vital if not indispensable role in assuring effective regulatory policy.

Citizen Engagement (Open and Inclusive Policy Making)

One commentator has defined citizen engagement as all measures and/or institutional arrangements that link citizens more directly into the decision-making process of a State as to enable them to influence the public policies and programs in a manner that impact positively on their economic and social lives.[37] For the OECD, citizen engagement in the development, implementation and evaluation of regulatory policy is not just necessary but indispensable to the survival of open, democratic government.[38] This is because, the OECD explains, given the complexity and scale of emerging governance challenges, governments cannot hope to design effective policy responses, or to strengthen legitimacy and trust, without the input, ideas and insights of as wide a variety of citizens’ voices as possible.[39] It is with that input, ideas and insight that both better regulatory outcomes are achieved: They are more responsive and equitable and better suited to diverse needs,[40] and trust and confidence in the regulatory process itself is improved.[41] Further, the OECD perceives citizen engagement as an essential element in the development of inclusive policy outcomes[42] (that is, of policies that promote economic growth and opportunities for all segments of the population and distribute the dividends of increased prosperity fairly across society[43]).

Canadian Donald G. Lenihan perhaps stated it the most bluntly:

[E]ffective governance requires a new relationship between citizens, communities and stakeholders, on the one hand, and government, on the other. The basic reason is that many public goals—such as protecting the environment, ensuring safer streets, renewing the workforce, or building healthy communities—cannot be achieved by government alone. The public have a role to play. If they do not assume a new role in making choices, developing plans and taking action, goals such as these will not be achieved. Public engagement therefore is not just desirable; it is a condition of effective governance.[44] [emphasis in original]

In order for citizen engagement to succeed, it must, as mentioned above, include as wide a variety of citizen’s voices as possible.[45] This means going beyond the highly selective and unrepresentative “usual suspects.”[46] That is, this means going beyond highly-resourced industry and other special interest groups to include all the stakeholders as well as those who have specific knowledge or expertise with respect to the subject at hand. Because many of those who are the “least equipped” for public participation are often those from whom input is important if not vital, the OECD states that policymakers must make extra efforts to reach out and ensure they are included.[47] Merely creating a “level playing field” which allows for passive access to information, consultation and participation is not enough because it will not result in the needed diversity of voices.[48]

In making those extra efforts, policymakers have to overcome the “many good reasons” that people have for not participating in policymaking. As one French commentator observed: “many people continue to perceive public authorities as distant from their concerns and do not dare imagine that their opinion, even if it is very personal or noninstitutional, could legitimately be heard in a public decisionmaking process.”[49]

The OECD identifies two broad groups of persons who have “many good reasons” for not participating: On the one hand, there are those who are “willing but unable” to participate, for a variety of reasons, such as cultural or language barriers, geographical distance, disability or socio-economic status. On the other hand, there are those who are “unwilling but able” to participate, typically because they are not interested, they do not have the time, or they do not trust the policy makers to make good use of their input.[50] In the case of the former, the OECD states that policymakers must lower the barriers, such as making information multilingual. In the case of the latter, policymakers must make participation more attractive, such as by providing multiple channels for participation, including face-to-face, online and mobile options. Often, the OECD observes, people lack confidence in their knowledge and their ability to express themselves. In this context, the challenge for policymakers is to create an enabling environment which ensures people that they can participate if they want to. To this end, the OECD states, policymakers must build capacity, skills and knowledge to participate effectively.[51] Above all, policymakers must “go where the people are” when seeking to engage with them, rather than expecting people to come to the policymakers.[52]

There are obstacles to public engagement, and both resources and careful planning are required.[53] Nevertheless, the obstacles to successful citizen engagement must be overcome both in order to build open and democratic institutions and as a condition to effective governance.

Evidence-Based Regulatory Impact Assessments

Evidence-based regulatory impact assessments (RIA) has been defined in a number of ways, and those definitions continue to evolve. For our context, a useful definition this one offered by Andrea Renda: a systemic approach to critically assessing the positive and negative effects of proposed and existing regulations and non-regulatory alternatives.[54]

For the OECD, RIA is important both as an administrative and decision-making tool and as a regulatory quality process that helps policy makers to design policies which are evidence based and fit-for-purpose. The process assists integrity and trust in the regulation-making system through levers of transparency and accountability by disclosing the historical design of the regulation. A well-functioning RIA system can assist in promoting policy coherence by making transparent the trade-offs inherent in regulatory proposals and by identifying who is likely to benefit from a given regulation. Further, RIA can reveal how risk reduction in one area may create risks for another area of government policy. RIA improves the use of evidence in policy making and reduces the incidence of regulatory failure arising from regulation when there is no case for doing so, or failing to regulate when there is a clear need.[55]

RIA can be performed both prior to (ex ante) the adoption of regulation, as well as after a period of time subsequent to its adoption (ex post). As Renda explains, the key steps for an ex ante RIA include defining the problem, identifying alternative options (such as self- and co-regulation), collecting data, assessing alternative options (including “no change”), identifying the preferred policy option (which should be the subject of a more in-depth assessments, notably a quantitative one), and monitoring and evaluating over time.[56]

As regards ex post RIAs, the OECD explains that it is only after implantation that the effects and impacts of regulations can be fully assessed, including direct and indirect incidences and unintended consequences. Regulations may also become outdated as result of a change in societal preferences or technological advancement. Consequently, regular reviews are needed to ensure that regulations are still necessary, relevant and fit for purpose.[57]

The OECD further explains that different approaches can be used in conducting ex post RIAs. A common approach is to base them on a single principal, such as to promote competition or to reduce regulatory burdens. In addition, the OECD recommends that they be used even more strategically and systematically, by conducting comprehensive reviews that assess the cumulative impact of laws and regulations in a sector as a whole, with a particular focus on the policy outcomes. This could entail, the OECD points out, “the evaluation of an entire regulatory framework[58] (emphasis added).

The benefits of RIAs are not automatic. For example, an RIA that is designed to stress economic benefits or efficiency may create tension if the regulation’s underlying objectives are not primarily economic.[59] Further, some costs as well as benefits are difficult to identify and to measure, and those responsible for conducting the RIA may lack the time and resources to fully address them. The factors that are easier to identify and measure may be given undue precedence over those that are difficult. The regulated industry may offer its own information in its place, but this information may be subject to bias. If care is not taken, the end result may be that the public interest is not sufficiently taken into account.[60]

In sum, RIAs oblige the regulator to conduct fact-based, empirical research in order to justify the adoption, the amendment, the revocation and, in many cases, the mere maintenance, of any one or more regulations, if not an entire regulatory framework. In order to do this, the regulator must involve a wide range of stakeholders—including those with traditionally low rates of participation in customary consultation processes—and proceed in an unbiased, accountable, and fully transparent manner.

A Risk-Based Approach

While the concept of a risk-based approach to regulation has been described in a variety of manners,[61] the most salient for our purposes is the one offered by Julia Black: it is the use of “systematized frameworks of supervision or inspection” which are primarily designed to manage regulatory or institutional risk, and notably risks to the regulatory agency itself that it will not achieve its objectives. Risk-based regulation involves the development of decision-making frameworks and procedures to prioritize regulatory activities and deploy resources, based upon an assessment of the risks that regulated firms pose to the regulator’s objectives.

Importantly, risk-based regulation is not focused on the potential risks that individuals or firms may present to their customers, to the public, or to the economy. Instead, risk-based regulation is focused on the risks the regulator faces in failing to achieve its objectives. In this context, risk-based regulation requires the regulator to define its regulatory objectives[62] (the risks “to what” it is concerned to control[63]) and to translate its statutory mandates into operational objectives (this, in turn, requires clear statutory objectives for the regulator[64]). In doing so, the regulator establishes a means to identify what matters to it and what does not, and, on that basis, how it should allocate its necessarily limited resources. In sum, Black explains: The key element of risk-based frameworks for allocating resources is that the starting point is risks not rules. Risk-based frameworks require regulators to begin by identifying the risks that it is seeking to manage, not the rules it has to enforce.[65]

One kind of risk-based regulation is referred to as “management-based regulation.” Its underlying concept is to deploy regulatory authority in a way that leverages the private sector’s knowledge about its particular circumstances and engages firms in developing their own internal procedures and monitoring practices that respond to risks.[66] Under management-based regulation, firms are not mandated to adopt specific risk protection technologies or practices. Instead, firms are mandated to study their operations comprehensively and develop their own management strategies and plans suited to the risks they identify in their operations. Unlike traditional forms of regulation that treat a firm as a “black box”—with the regulator not particularly caring what goes on inside as long as the firm uses the means prescribed by the regulator, management-based regulation “seeks to shape the actual operations of a firm, imposing requirements for systematic planning with respect to public risks and the adoption of internal procedures, training and management practices.”[67]

A risk-based approach to regulation explicitly acknowledges that it is not possible to regulate to remove all risks and that regulatory action, when taken, should be proportionate, targeted and based on an assessment of the nature and magnitude of the risks and of the likelihood that regulation will be successful in achieving its aims.[68]

With a risk-based approach, the regulator must be willing to take risks, including the risk of erring, which the regulator is bound to do.[69] On the one hand, the risk of error may lie on the side of caution, in that the regulator assumes something is riskier than it actually is. On the other hand, the risk of error may lie on the side of risk, in that the regulator assumes something is safer than it actually is. The regulator must determine its risk appetite—that is, the types of risks it is prepared to tolerate and at what level.[70] As Black explains, the higher the political salience (that is, its prominence or visibility), the lower will be the regulator’s tolerance of failure in that area. As a result, the regulator may allocate resources not where its risk model says it should, but rather where there is the most political sensitivity.[71]

No one would claim that risk-based regulation is infallible.[72] This fact does not make it any less an essential element of an effective regulatory policy.

Conclusion

In this chapter, we have seen that while regulation is necessary to protect and shape the welfare of economies and societies, not all regulation is good regulation. For this reason, the OECD promotes the importance for each country to develop a consistent and coherent regulatory policy, the objective of which is to ensure that the country’s “regulatory lever” works effectively, and so that regulations and regulatory frameworks are in the public interest.

For the OECD, an effective regulatory policy includes these six essential elements (among other elements): (i) independent regulators who are free from conflicts of interest (ii) accountability and transparency in regulatory decision making, (iii) the placement of regulatory oversight bodies “at the center of government,” (iv) making regulatory stakeholders, including businesses but also, notably, citizens and consumers, part of the regulatory process and paying attention to their voices; (v) the use of evidence-based regulatory impact assessments, both before and after adoption, and (vi) the use of a risk-based approach to regulation.

These elements are the criteria we will use in our detailed examination of how legal services are regulated in England & Wales, Australia, Canada and the United States. More specifically, these are the criteria we will use to compare and assess their respective regulatory environments.

However, before moving on to that examination, we’ll first explore regulation in another manner: the specific context of legal services.

This chapter is an excerpt from Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about the book, please click here.

Notes

[1] See, for example, Robert Baldwin, Martin Cave and Martin Lodge, Understanding Regulation: Theory, Strategy and Practice (Toronto: Oxford University Press, 2011), 15-24, https://webcampus.unamur.be/claroline/backends/download.php?url=L0EuX0Rlc21ldF9fMV9CYWxkd2luXyZhbXA7X2NvX1VuZGVyc3RhbmRpbmdfcmVndWxhdGlvbi0xLnBkZg%3D%3D&cidReset=true&cidReq=ECONM864.

[2] OECD, “Regulatory Policy and the Road to Sustainable Growth,” 2010, 5, https://www.oecd.org/regreform/policyconference/46270065.pdf (hereinafter “OECD Road to Sustainable Growth”).

[3] OECD CleanGovBiz, “Regulatory Policy: Improving Governance,” July, 2012, 3, http://www.oecd.org/cleangovbiz/toolkit/49256979.pdf.

[4] Ibid.

[5] OECD, Regulatory Policy and Governance: Supporting Economic Growth and Serving the Public Interest (Paris: OECD Publishing, 2011), 15, http://www.oecd.org/gov/regulatory-policy/regulatorypolicyandgovernancesupportingeconomicgrowthandservingthepublicinterest.htm (hereinafter “OECD Supporting the Public Interest”).

[6] David Parker and Colin Kirkpatrick, “Measuring Regulatory Performance -The Economic Impact of Regulatory Policy: A Literature Review of Quantitative Evidence,” OECD Expert Paper No.3, August, 2012, 9, https://www.oecd.org/gov/regulatory-policy/3_Kirkpatrick%20Parker%20web.pdf; OECD Road to Sustainable Growth, 7.

[7] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 9.

[8] OECD Supporting the Public Interest, 9; Parker and Kirkpatrick,“Measuring Regulatory Performance,” 11.

[9] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 11; OECD CleanGovBiz, “Regulatory Policy,” 3-4, 6-7.

[10] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 11; OECD CleanGovBiz, “Regulatory Policy,” 6-7.

[11] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 11; OECD CleanGovBiz, “Regulatory Policy,” 4,6; OECD Road to Sustainable Growth, 39-40.

[12] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 11, 27-32; OECD CleanGovBiz, “Regulatory Policy,” 6; OECD Road to Sustainable Growth, 3, 8.

[13] Parker and Kirkpatrick, “Measuring Regulatory Performance,” 11; OECD CleanGovBiz, “Regulatory Policy,” 14; See generally OECD, Risk and Regulatory Policy: Improving the Governance of Risk (Paris: OECD Publishing, 2010), http://dx.doi.org/10.1787/9789264082939-en (hereinafter “OECD Risk and Regulatory Policy”).

[14] OECD , Being an Independent Regulator (Paris: OECD Publishing, 2016), 3, http://dx.doi.org/10.1787/9789264255401-en (hereinafter “OECD Being an Independent”).

[15] Ibid.

[16] OECD, Managing Conflict of Interest in the Public Service: OECD Guidelines and Overview (Paris: OECD Publishing, 2003), 25, http://www.oecd.org/corruption/ethics/48994419.pdf, (hereinafter “OECD Managing Conflict of Interest”); OECD Public Governance And Territorial Development Directorate Public Governance Committee, “Revolving Doors, Accountability and Transparency – Emerging Regulatory Concerns and Policy Solutions in the Financial Crisis,” Expert Group on Conflict of Interest Discussion Paper, May 5, 2009, 10, http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=GOV/PGC/ETH(2009)2&docLanguage=En (hereinafter, “OECD Revolving Doors”).

[17] OECD Revolving Doors, 50. Scott Hempling emphasizes that regulators must not see their role as balancing competing interests To the contrary, the regulator’s mission is to protect and promote the public interest, and an important part of the regulator’s job is to be able to identify when the interests of certain actors (public authorities, members of the regulated industry, even consumer groups) deviates from the public interest, in spite of their arguments to the contrary. Scott Hempling, Preside or Lead? The Attributes and Actions of Effective Regulators (Silver Spring, MD: Scott Hempling Attorney at Law LLC, 2013), 51-54.

[18] OECD Supporting the Public Interest, 84.

[19] OECD Being an Independent, 41.

[20] OECD Being an Independent, 17; OECD, The Governance of Regulators (Paris: OECD Publishing, Paris, 2014), 60-61, http://dx.doi.org/10.1787/9789264209015-en (hereinafter “OECD The Governance of Regulators”).

[21] OECD Being an Independent, 18, 44.

[22] OECD Being an Independent, 18.

[23] OECD Being an Independent, 4.

[24] OECD Managing Conflict of Interest, 27; OECD Revolving Doors, 10.

[25] OECD Revolving Doors, 50.

[26] OECD, Regulatory Policy in Perspective: A Reader’s Companion to the OECD Regulatory Policy Outlook 2015 (Paris: OECD Publishing, 2015), 25, http://dx.doi.org/10.1787/9789264241800-en (hereinafter “OECD Reader’s Companion”). But also see Christopher Carrigan, “Captured by Disaster? Reinterpreting Regulatory Behavior in the Shadow of the Gulf Oil Spill,” in Preventing Regulatory Capture: Special Interest Influence and How to Limit It, ed. Daniel Carpenter and David A. Moss (New York: Cambridge University Press, 2014), 239-291.

[27] United Nations Economic and Social Commission for Asia and the Pacific, “What is Good Governance?” 2009, http://www.unescap.org/sites/default/files/good-governance.pdf.

[28] OECD The Governance of Regulators, 51.

[29] Ibid., 80.

[30] Cesar Cordova-Novion and Stéphane Jacobzone, “Strengthening the Institutional Setting for Regulatory Reform: The Experience from OECD Countries”, OECD Working Papers on Public Governance, No. 19, OECD Publishing, 2011, 7, http://dx.doi.org/10.1787/5kgglrpvcpth-en.

[31] Ibid., 9-12.

[32] Ibid., 11.

[33] Ibid., 21.

[34] Ibid., 38-39, 49.

[35] Ibid., 13-14.

[36] Ibid., 48.

[37] Jocelyne Bourgon, “Why Should Governments Engage Citizens in Service Delivery and Policy Making?” in Focus on Citizens: Public Engagement for Better Policy and Services, OECD Studies on Public Engagement (Paris: OECD Publishing, 2009), 201, http://www19.iadb.org/intal/intalcdi/pe/2009/03785.pdf.

[38] OECD Studies on Public Engagement, Focus on Citizens: Public Engagement for Better Policy and Services, (Paris: OECD Publishing, 2009), 13, 22, http://www19.iadb.org/intal/intalcdi/pe/2009/03785.pdf (hereinafter, “OECD Studies on Public Engagement”).

[39] Ibid., 24; OECD Post-2015, “Building More Effective, Accountable, and Inclusive Institutions for All,” Element 6, Paper 1, n.d., 3-4, http://www.oecd.org/dac/_POST-2015%20effective%20and%20accountable%20institutions.pdf (hereinafter “OECD Post-2015”).

[40] OECD Post-2015, 2.

[41] OECD Studies on Public Engagement, 13; OECD Initiative on Inclusive Growth, All On Board: Making Inclusive Growth Happen (Paris: OECD Publishing, 2014), 162, 174, https://www.oecd.org/inclusive-growth/All-on-Board-Making-Inclusive-Growth-Happen.pdf (hereinafter “OECD Initiative on Inclusive Growth”).

[42] OECD Initiative on Inclusive Growth, 162.

[43] OECD Initiative on Inclusive Growth, 80.

[44] Donald G. Lenihan, “Public Engagement Is a Must in a Multi-Stakeholder World,” in Focus on Citizens: Public Engagement for Better Policy and Services, OECD Studies on Public Engagement (Paris: OECD Publishing, 2009), 208, http://www19.iadb.org/intal/intalcdi/pe/2009/03785.pdf.

[45] OECD Studies on Public Engagement, 13; OECD Initiative on Inclusive Growth, 162.

[46] OECD Studies on Public Engagement, 14; Archon Fung, “Participate, but Do so Pragmatically,” in Focus on Citizens: Public Engagement for Better Policy and Services, OECD Studies on Public Engagement (Paris: OECD Publishing, 2009), 228, http://www19.iadb.org/intal/intalcdi/pe/2009/03785.pdf.

[47] OECD Studies on Public Engagement, 14.

[48] OECD Studies on Public Engagement, 46; OECD Initiative on Inclusive Growth, 175.

[49] OECD Studies on Public Engagement, 50.

[50] Ibid., 14.

[51] Ibid., 49.

[52] Ibid., 14, 46-54.

[53] Ibid., 15; Edward Andersson and Richard Wilson, “Globalised Democracy,” in Focus on Citizens: Public Engagement for Better Policy and Services, OECD Studies on Public Engagement (Paris: OECD Publishing, 2009), 302, http://www19.iadb.org/intal/intalcdi/pe/2009/03785.pdf.

[54] Andrea Renda, “Regulatory Impact Assessment and Regulatory Policy,” in Regulatory Policy in Perspective: A Reader’s Companion to the OECD Regulatory Policy Outlook 2015, OECD (Paris: OECD Publishing, 2015), 36, http://dx.doi.org/10.1787/9789264241800-en.

[55] OECD, OECD Regulatory Policy Outlook 2015 (Paris: OECD Publishing, 2015), 96, http://dx.doi.org/10.1787/9789264238770-en (hereinafter “OECD Regulatory Policy Outlook”).

[56] Renda, “Regulatory Impact Assessment,” 36-37.

[57] OECD Regulatory Policy Outlook, 120.

[58] Ibid.

[59] Baldwin, Cave and Lodge, Understanding Regulation, 320.

[60] Ibid., 322-323; see also James Goodwin, “Racism, Cost-Benefit Analysis, and Trump Advisor Steve Bannon,” CPR Blog, November 29, 2016, http://www.progressivereform.org/CPRBlog.cfm?idBlog=BD292079-CA1F-3304-A41D96F4C6D2A68F.

[61] See, for example, Baldwin, Cave and Lodge, Understanding Regulation, 281-283.

[62] Julia Black, “Risk-Based Regulation: Choices, Practices and Lessons Being Learnt,” in Risk and Regulatory Policy: Improving the Governance of Risk, OECD (Paris: OECD Publishing, 2010), 187-188, http://dx.doi.org/10.1787/9789264082939-en.

[63] Julia Black and Robert Baldwin, “Really Responsive Risk-Based Regulation,” Law & Policy 32 (2010): 184, http://ssrn.com/abstract=1571808.

[64] Black, “Risk-Based Regulation,” 187-188, 194.

[65] Ibid., 190.

[66] Cary Coglianese, “Management-Based Regulation: Implications for Public Policy,” in Risk and Regulatory Policy: Improving the Governance of Risk, OECD (Paris: OECD Publishing, 2010), 159, http://dx.doi.org/10.1787/9789264082939-en.

[67] Ibid, 170.

[68] OECD Risk and Regulatory Policy, 16.

[69] Black, “Risk-Based Regulation,” 186, 193.

[70] Ibid., 190.

[71] Ibid., 194; Black and Baldwin, “Really Responsive,” 184. The public often demonstrates a willingness to accept certain risks, especially when the benefits to accepting them are well understood. At the same time, however, the public as well as regulators themselves often demonstrate a tendency to overestimate events associated with lower-probability events such as botulism and floods, and to underestimate the risks associated with higher-probability events, such as the risk of being killed in a car accident, or risks of cancer, heart disease and stroke. This can lead to regulators making decisions on the basis of biased perceptions rather than the best available estimates of the true level of risk. In this manner, public perceptions influence the regulator, who in then influences public perceptions, leading to what now US Supreme Court Justice Stephen Breyer has termed a “vicious circle.” For this reason, Breyer has argued in favor of “depoliticizing” the regulatory process in order to break this circle, notably by creating an independent super agency that would build a coherent risk-regulating system adaptable to different risk-related programs. OECD Risk and Regulatory Policy 96, 121-122. See also Stephen Breyer, Breaking the Vicious Circle: Toward Effective Risk Regulation (Cambridge, Massachusetts: Harvard University Press, 1993).

[72] Baldwin, Cave and Lodge take a highly cautious approach to risk-based regulation, stating that, among other dangers, it can cause regulators to focus on certain firms to the neglect of others and that is can be difficult to apply effectively if regulatory authority is shared among different bodies. Baldwin, Cave and Lodge, Understanding Regulation, 284, 287.

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