How does America ‘regulate for growth’?
Government is not always best placed to get the balance right between protecting the public and reducing burdens on businesses. The US offers a tried-and-tested alternative, says Joshua Flax
The news that the Prime Minister and Chancellor recently wrote to regulators asking them to remove obstacles to economic growth raises the question about what “regulating for growth” actually means – and, more to the point, how you actually get there. From those regulators’ responses which have been made public, it’s not clear that they really know.
Regulating for growth is not a policy; it is, however, a shared aspiration to reduce the burdens imposed by the array of agencies and offices that administer regulatory state. The current condition is not the fault of any one government: everyone is to blame. No one wants to live in a society without rules to protect them from fire, food-borne disease and exploding electric car batteries.
Of course, these rules are never simple because the social, industrial, economic and political interests that are impacted demand some spectacular navigational abilities. Ministers are beset on all sides by the call of special interests. Well-intentioned bureaucrats are sometimes thoroughly expert in the industry they are regulating – and sometimes they are not. For that reason, reasonable people might question whether government is the best developer of these rules.
Getting rule development just right – protecting the public from harms with a minimum of burdensome intrusion to British industry, commerce, local government and, of course, the public – might not be a job for government alone. Fortunately, there is a proven model in use in the United States we can look to – and it is a process that is more sheltered from changing political winds as well.
Negotiated rulemaking
Enter the world of American negotiated rulemaking for federal rules, which sprang up in the 1980s with notable success in the area of environmental regulation. To the bureaucrats at the Environmental Protection Agency (EPA) – and the administrations they served – the 1970s and 1980s felt like one long slog through the American judiciary. Every sweeping regulation the agency promulgated, even on public opinion no-brainers like rules meant to stop devastating chemical spills leaching into drinking water, were being litigated seemingly without end – and all the while, the public harm being addressed continued unabated.
A Senate committee studying this problem as early as 1980 identified a fundamental flaw with traditional rulemaking that is immediately recognisable in the UK today: the enforcing agency and the affected stakeholders were locked into a permanently adversarial relationship. Policymakers grew concerned that the massive power of the regulatory state was in fact missing a solid foundation – the willing participation of the governed. What to do?
Negotiated rulemaking sought to help government gain greater acceptability for rules by turning the traditional development process on its head: instead of agencies writing rules that would be tied up in endless litigation, the new process would first have the rulemaking agency assemble a committee of the affected stakeholders, and then the government side would actually sit down with the stakeholders – usually comprised of industry, noted experts of the topic in question, and public advocacy organisations – and negotiate the elements, intents, purposes, and written language of the new rule. Participation by stakeholders was deliberately made entirely voluntary – but you can bet that industry, for example, always wanted a seat at that table. Negotiations eventually resulted in a draft rule – and this could be shopped around using a participatory public comment period to gather feedback. Negotiators from all sides then reconvened to examine the feedback and use it to improve the rule – to improve its acceptability.
Glowing reports of the “new” relationships formed by government and stakeholder negotiators further contributed to ease of rule implementation and deal sustainability – precisely because stakeholders were there every step of the way: to help the government fulfil the public protection from harm imperative, to help all parties negotiate mutually acceptable shared objectives, and, most crucially, to ensure the new regulatory burden did not balloon beyond acceptable levels. The negotiated approach took hold because it ensured that the Federal government received the help it so sorely needed for effective, acceptable rule development.
Early examples of successful negotiated rulemaking drove Congress to enshrine the process in 1990 with the Negotiated Rulemaking Act. To be sure, many Federal rules are still written without using the negotiated approach – but many are, and Congress retains the authority today to force rulemaking agencies to use the negotiated approach (and some agencies do use the negotiated approach frequently).
To the government and regulators: Bring in your stakeholders from the cold
Though our two countries’ legislative models are notably different, our regulatory models are not – with the exception of negotiated rulemaking, which does not yet exist in Britain. “Regulating for growth” does mean one thing: it is indeed high time to re-design regulatory schemes to promote growth in the UK, and the government urgently needs help on the developmental side of the equation. To the government and regulators: Bring in your stakeholders from the cold. Bring industry, bring outside experts, and bring non-governmental advocates for the public good; bring them all to the negotiating table. Expand participation, and growth will follow.
Joshua Flax, a founding partner of UK-based Negotient LLP, is a British-born American who was a Federal Mediator for 20 years in the US government. He also lectures on negotiation, collective bargaining, and mediation at Harvard’s Kennedy School of Government.