Agile Regulation and the Future of Governance

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Penn Program on Regulation hosts panel discussion on governing a fast-changing world.

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Does agile regulation amount to the latest fad among policymakers? Does it simply reflect concepts of management science repackaged for today’s regulatory agencies?

Or does it instead reflect a real path forward for centering innovation and efficiency across all levels of government?

During a recent panel discussion sponsored by the Penn Program on Regulation (PPR), leading experts asked these questions, and more.

Agile regulation, a framework for designing regulations to be flexible and adaptable to dynamic markets and a quickly changing world, holds immense promise for regulating the goods, services, and activities of the future, the panelists explained.

The dilemma, however, lies in balancing regulatory objectives with process-based considerations and constantly evolving technology.

One of the panel members, Paul Verkuil, former Chairman of the Administrative Conference of the United States (ACUS), discussed ACUS’s efforts to bring video conferencing technology to adjudicatory hearings at the Social Security Administration (SSA). Because the SSA had been facing an approximately 2 million case backlog in disability benefits hearings, ACUS advocated this process change as a way to bring agility and flexibility to the agency’s hearings.

Although ACUS received pushback on video hearings, the SSA eventually adopted an expedited practice for 20 percent of the disability benefits hearings they conducted. For these hearings, Verkuil reported that the SSA was able to complete the adjudicatory process much faster, as well as ultimately prove that the expedited process did not result in any adverse effects on the outcomes of the cases.

Panel member Ed DeSeve, of the National Academy of Public Administration, defined agile regulation as “an integrated framework that brings together all of the elements of developing and implementing policies, regulations, and programs at all levels of government.”

DeSeve sees agile governance as a way to “create persistent use of the tools of government to improve trust.” During the panel discussion, he cited the agile process reforms that then-Secretary of Veterans Affairs Bob McDonald implemented within the U.S. Department of Veterans Affairs. According to DeSeve, these agile processes improved the administration of social services for veterans across the country, increasing the public’s level of trust in the agency from 55 percent to 75 percent.

Another panel member, Heidi King, a former acting administrator of the National Highway Traffic Safety Administration (NHTSA), shared her own experiences with agile regulation. In particular, King drew attention to NHTSA’s authority over vehicle safety flaws, including elements that are not yet subject to a specific safety regulation.

She explained that NHTSA’s flexible regulations allow car manufacturers to bring new safety features and other technologies to market without a lengthy pre-approval regulatory process, but can still protect the public from flaws in design, manufacture, or performance. According to King, this system of agile regulation protects consumers but also allows for rapid innovation.

In considering the uses and implications of agile regulation, panelists also discussed one of its most challenging applications: technology. Panelists spoke to the challenge of regulating new technology that is coming to market every day, whether in the form of new vehicle designs, commercial drones, or artificial intelligence.

PPR visiting scholar Yael Kariv-Teitelbaum, also a research fellow at Hebrew University of Jerusalem, spoke on the panel about how policymakers can draw insights on how governments can regulate innovative uses of new technology from recent reports issued by the World Economic Forum, Organization for Economic Co-operation and Development, and National Academy of Public Administration.

Kariv-Teitelbaum emphasized the need to develop regulatory techniques that can advance more agile rule designs—such as outcome-based standards—as well as the need to deploy tools that can foster more agile processes for rulemaking and rule enforcing, such as regulatory sandboxes.

And when rapidly changing technology encounters rigid regulations, it can sometimes cause technology-based startups to go out of business, noted Michael Fitzpatrick of the Brunswick Group, another speaker on the PPR panel. Fitzpatrick also previously served as associate administrator of the White House Office of Information and Regulatory Affairs.

“The lack of agility right now at the Federal Aviation Administration (FAA) in not producing a regulatory framework is causing many commercial drone businesses to die in the ‘valley of death,’” he stated. “If firms don’t have license to operate, they can’t scale.”

And building on Fitzpatrick’s point, University of California, Berkeley professor Larry Rosenthal, the final panel member, contrasted the need for agile regulatory approaches with traditional regulatory approaches, the latter of which still may be needed in many settings. Rosenthal argued, for example, that the FAA’s order to ground deliveries of the Boeing 737 MAX illustrates the need sometimes for firm regulation.

Rosenthal noted that, even though agile regulation may suffice for establishing basic “rules of the road” for emerging technologies, agile practices must be modified when governing large markets and sectors of the economy. According to Rosenthal, balancing these interests will require sound judgment from regulators.

In addition, panel members tended to agree agile regulation does not have to be the end-all-be-all tool for regulators.

“Agile regulation doesn’t always have to be everywhere,” said Fitzpatrick. He went on to explain that if regulators are not careful, agile practices—such as using flexible oversight authority, or working closely with private industry—can actually facilitate regulatory capture.

Despite these concerns, the panel members remained positive about agile approaches to regulation. They agreed that agile regulation holds considerable promise for bringing efficiency and flexibility to regulatory functions across all levels of government.

Whether establishing baseline rules for healthcare applications of artificial intelligence, or implementing more efficient management practices within an executive agency, panelists held that agile regulation can help solve existing problems in government, as well as help government better face challenges that will shape the future.

A video recording of the panel discussion, which was moderated by Cary Coglianese, PPR’s director and a professor of law at the University of Pennsylvania, can be found online at PPR’s YouTube channel.