PRAISE FOR C ACHIEVING How regulators can strengthen O G their ability to protect the public ACHIEVING REGULATORY EXCELLENCE L I A and support economic vitality. N E S E All of our lives and well-being depend on sound, effective regulation. Achieving REGUL ATORY Cary Coglianese is the Edward B. Shils Professor of Regulatory Excellence’s rich and insightful collection of essays from the world’s The need for top-flight regulatory capacity—for regula- Law and professor of political science at the Univer- leading experts provides regulators with much-needed guidance to meet some of tory excellence—has never been stronger. Achieving Reg- A sity of Pennsylvania, where he serves as the director the most pressing challenges of our time. ulatory Excellence explains what regulators must do to C of the Penn Program on Regulation. His most recent David Kessler, Commissioner, Food and Drug Administration, 1990–97 EXCELLENCE set priorities and make sound, evidence-based decisions H books include Does Regulation Kill Jobs? and Regu- through transparent and participatory processes. I latory Breakdown: The Crisis of Confidence in U.S. Brilliantly conceived and executed, this broad collection of essays on how to govern E V Whether striving to protect citizens from the ravages of Regulation. well has great value for regulators and reformers, politicians and the general public. I financial fraud, climate change, inadequate health care, or It shows us just how important excellence in government is and why we must fight N the risks of the emerging sharing economy, regulators are for it. G often tasked with seemingly impossible missions and even Paul Verkuil, Chairman, Administrative Conference of the United States, 2010–15 R competing mandates. In Achieving Regulatory Excellence, E leading international experts provide pivotal insights from Ever since the global financial crisis, securing “better regulation” has become even G the disciplines of law, public administration, political sci- more urgent. This book could not be more timely. First-rate scholars and practi- U ence, economics, and sociology, as well as their own high- tioners provide thoughtful and practical guidance on how to strike the right reg- L level government experience, offering guidance on how ulatory balance and strengthen regulators’ capacity to learn and adapt. Excellent A regulators can make smarter decisions at a time when both leadership is, as ever, instrumental. This book is a must-read for senior policymak- T citizens and elected officials around the world demand ers, regulators, and politicians. O more effective yet leaner government. R Gary Banks, Chair, Regulatory Policy Committee, Y In addition to chapters by editor Cary Coglianese, con- Organization for Economic Cooperation and Development, and Dean, tributors include Robert Baldwin (London School of Eco- Australia and New Zealand School of Government E X nomics and Political Science), John Braithwaite (Australian C National University), Angus Corbett (University of Penn- What does it mean to regulate well? In this terrific book, former regulators and E sylvania), Daniel Esty (Yale University), Adam Finkel (Uni- scholars define regulatory excellence and explain how to achieve it. They admira- L versity of Pennsylvania and University of Michigan), Ted bly provide grounded examples of regulating successfully, even in complex environ- L Gayer (Brookings Institution), John Graham (Indiana Uni- ments. Readers will find Achieving Regulatory Excellence both thought provoking E versity), Neil Gunningham (Australian National University), N and practical. Kathryn Harrison (University of British Columbia), Bridget C David E. Lewis, Chair, Department of Political Science, Hutter (London School of Economics and Political Science), E and William R. Kenan Jr. Professor, Vanderbilt University Howard Kunreuther (Wharton School at the University of Pennsylvania), David Levi-Faur (Hebrew University of Jeru- salem), Shelley H. Metzenbaum (Volcker Alliance), Don- ald P. Moynihan (University of Wisconsin–Madison), Paul R. CARY COGLIANESE, EDITOR Noe (American Forest and Paper Association), Gaurav brookings institution press Vasisht (Volcker Alliance), David Vogel (University of Cal- Cover design and art by Susan E. Kelly Washington, D.C. ifornia–Berkeley), and Wendy Wagner (University of Texas Cover photograph by Radu Razvan www.brookings.edu/press School of Law). Achieving Regulatory Exellence - Coglianese - SKelly [full jacket FINAL 10-31-16].indd 1 11/14/16 10:08 AM PRAISE FOR C ACHIEVING How regulators can strengthen O G their ability to protect the public ACHIEVING REGULATORY EXCELLENCE L I A and support economic vitality. N E S E All of our lives and well-being depend on sound, effective regulation. Achieving REGUL ATORY Cary Coglianese is the Edward B. Shils Professor of Regulatory Excellence’s rich and insightful collection of essays from the world’s The need for top-flight regulatory capacity—for regula- Law and professor of political science at the Univer- leading experts provides regulators with much-needed guidance to meet some of tory excellence—has never been stronger. Achieving Reg- A sity of Pennsylvania, where he serves as the director the most pressing challenges of our time. ulatory Excellence explains what regulators must do to C of the Penn Program on Regulation. His most recent David Kessler, Commissioner, Food and Drug Administration, 1990–97 EXCELLENCE set priorities and make sound, evidence-based decisions H books include Does Regulation Kill Jobs?and Regu- through transparent and participatory processes. I latory Breakdown: The Crisis of Confidence in U.S. Brilliantly conceived and executed, this broad collection of essays on how to govern E V Whether striving to protect citizens from the ravages of Regulation. well has great value for regulators and reformers, politicians and the general public. I financial fraud, climate change, inadequate health care, or It shows us just how important excellence in government is and why we must fight N the risks of the emerging sharing economy, regulators are for it. G often tasked with seemingly impossible missions and even Paul Verkuil, Chairman, Administrative Conference of the United States, 2010–15 R competing mandates. In Achieving Regulatory Excellence, E leading international experts provide pivotal insights from Ever since the global financial crisis, securing “better regulation” has become even G the disciplines of law, public administration, political sci- more urgent. This book could not be more timely. First-rate scholars and practi- U ence, economics, and sociology, as well as their own high- tioners provide thoughtful and practical guidance on how to strike the right reg- L level government experience, offering guidance on how ulatory balance and strengthen regulators’ capacity to learn and adapt. Excellent A regulators can make smarter decisions at a time when both leadership is, as ever, instrumental. This book is a must-read for senior policymak- T citizens and elected officials around the world demand ers, regulators, and politicians. O more effective yet leaner government. R Gary Banks, Chair, Regulatory Policy Committee, Y In addition to chapters by editor Cary Coglianese, con- Organization for Economic Cooperation and Development, and Dean, tributors include Robert Baldwin (London School of Eco- Australia and New Zealand School of Government E X nomics and Political Science), John Braithwaite (Australian C National University), Angus Corbett (University of Penn- What does it mean to regulate well? In this terrific book, former regulators and E sylvania), Daniel Esty (Yale University), Adam Finkel (Uni- scholars define regulatory excellence and explain how to achieve it. They admira- L versity of Pennsylvania and University of Michigan), Ted bly provide grounded examples of regulating successfully, even in complex environ- L Gayer (Brookings Institution), John Graham (Indiana Uni- ments. Readers will find Achieving Regulatory Excellence both thought provoking E versity), Neil Gunningham (Australian National University), N and practical. Kathryn Harrison (University of British Columbia), Bridget C David E. Lewis, Chair, Department of Political Science, Hutter (London School of Economics and Political Science), E and William R. Kenan Jr. Professor, Vanderbilt University Howard Kunreuther (Wharton School at the University of Pennsylvania), David Levi-Faur (Hebrew University of Jeru- salem), Shelley H. Metzenbaum (Volcker Alliance), Don- ald P. Moynihan (University of Wisconsin–Madison), Paul R. CARY COGLIANESE, EDITOR Noe (American Forest and Paper Association), Gaurav brookings institution press Vasisht (Volcker Alliance), David Vogel (University of Cal- Cover design and art by Susan E. Kelly Washington, D.C. ifornia–Berkeley), and Wendy Wagner (University of Texas Cover photograph by Radu Razvan www.brookings.edu/press School of Law). Achieving Regulatory Exellence - Coglianese - SKelly [full jacket FINAL 10-31-16].indd 1 11/14/16 10:08 AM ACHIEVING REGULATORY EXCELLENCE A C H I E V I N G REGUL ATORY E XCE L L ENCE CARY COGLIANESE EDITOR BROOKINGS INSTITUTION PRESS Washington, D.C. Copyright © 2017 THE BROOKINGS INSTITUTION 1775 Mas sa chu setts Ave nue, 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. Th e Brookings Institution is a private nonprofi t organi zation devoted to research, education, and publication on impor tant issues of domestic and foreign policy. Its principal purpose is to bring the highest quality in de- pen dent research and analy sis to bear on current and emerging policy probl ems. 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. Identifi ers: LCCN 2016030034 (print) | LCCN 2016042988 (ebook) | ISBN 9780815728429 (cloth : alk. paper) | ISBN 9780815728436 (epub) | ISBN 9780815728443 (pdf ) Subjects: LCSH: Delegated legislation. | Administrative procedure. Classifi cation: LCC K3178 .A24 2017 (print) | LCC K3178 (ebook) | DDC 348/.025— dc23 LC rec ord available at https:// lccn . loc . gov / 2016030034 9 8 7 6 5 4 3 2 1 Typeset in Baskerville Composition by Westchester Publishing Ser vices To Orville G. Cope III (1932–2016) Contents Foreword ix Jim Ellis 1 Th e Challenge of Regulatory Excellence 1 Cary Coglianese PART I Defi ning Regulatory Excellence 2 Responsive Excellence 23 John Braithwaite 3 Regulating by the Stars 36 Wendy Wagner 4 Regulatory Excellence and Demo cratic Accountability 56 Kathryn Harrison 5 Beyond Pro cess Excellence: Enhancing Societal Well- Being 72 John D. Graham and Paul R. Noe 6 Regulatory Equilibrium 88 Ted Gayer 7 A Risk Regulation Perspective on Regulatory Excellence 101 Bridget M. Hutter 8 Regulatory Excellence and Lucidity 115 Robert Baldwin viii Contents PART II Seeking Regulatory Excellence 9 Regulatory Excellence: Lessons from Th eory and Practice 133 Daniel C. Esty 10 What Makes a Regulator Excellent? Mission, Funding, Information, and Judgment 148 Shelley H. Metzenbaum and Gaurav Vasisht 11 Beyond Best- in- Class: Th ree Secrets to Regulatory Excellence 166 Adam M. Finkel 12 Compliance, Enforcement, and Regulatory Excellence 188 Neil Gunningham 13 Th e Role of Policy Learning and Reputation in Regulatory Excellence 207 David Vogel 14 Regulatory Excellence via Multiple Forms of Expertise 225 David Levi- Faur 15 Insurance and the Excellent Regulator 238 Cary Coglianese and Howard Kunreuther 16 A Systems Approach to Regulatory Excellence 255 Angus Corbett PART III Assessing Regulatory Excellence 17 Per for mance Princi ples for Regulators 273 Donald P. Moynihan 18 Mea sur ing Regulatory Excellence 291 Cary Coglianese Contributors 309 Acknowl edgments 311 Index 315