REGULATORY ADMINISTRATION Regulation has become a major and controversial public administrative activity.

Regulatory administrative provide a good illustration of how the managerial, political, legal perspectives can converge and conflict in a major policy area. The roots of governmental regulation are economic, political, and social. Regulatory structure and process often involve a commission format and the combination of executive, legislative, and judicial functions. For federal regulatory agencies, two points must be in mind that: 1. Regulatory administration is illustrative of many of the broader problems confronting public administration. 2. A great deal of what takes place on the federal level is matched by the operation of state regulatory agencies. THE DEVELOPMENT AND GROWTH OF REGULATORY ADMINISTRATION The general origin of federal regulatory activities is associated with the growing economic, technological, and social complexity of life during the past century or so. The increasing division of labor and greater specialization make us highly dependent upon one another but less able to assess the predictability and reliability of each others behavior. For example we are dependent upon farmers, food handlers, and processors whom we do not know personally. They are anonymous, so traditional channels for exercising control over their behavior and assessing their reliability is unavailable to us. We can still exercise some personal judgment about the safety of the foods, drugs, products and mode of transportation. Organizations like consumers union and underwriters laboratories might also help to inform us of dangerous or hazardous products. Regulatory administration to assures the Safety of products, services, processes and technologies is handled by the FDA, FAA, CPSC, NHTSA, NRC and variety of other agencies. Regulatory is not only aimed at assuring safety. We are economically interdependent. We rely on market forces, rather than agencies to regulate economic practices. However markets are imperfect and sometimes they fail. So we want some economics practices to be made predictable, reliable and perhaps stable through regulation. Rate setting is one example. A regulatory activity has also been great concern with environmental regulation. One reason regulation of the environment appears sensible and desirable to many is that the forces of the marketplaces do not always seem to work as an adequate check on the shortterm practices of a broad range of economic concerns. Environmental regulation relies on engineering, agronomy, hydrology, biology and a host of others sciences as well as economic analysis. Employment is another area of comprehensive regulatory activity. Because it consist of human effort, labor differs from other commodities or factors of production bought and sold in the market. Some economics and production practices have such undesirable and major social consequences that are prohibited through regulation. Child labor and unsafe sweetshops are classic cases. The regulation of employment practices is so broad and

prone to overlap other form of regulation that it necessarily involves a variety of techniques. Main types of regulatory administration are discussed above. There is also the federal election commission, which regulates some aspects of election campaigns for federal office. Several federal and state agencies are engaged in regulatory activity to protect individuals and civil rights. A great deal of federal regulatory activity is augmented by state and local agencies. Regulatory administration has two categories: one is old style or economic style and second one is new style or social style. New style is considered better than the old one because of some reasons like it is not clear why unfair- practices regulation including discrimination, monopolization. Political patterns Regulatory administration is established as a political response to a problem, real or imagined, in the economy, society or ecology. In consisting the origins of regulatory administration, James Q. Wilson has identified several types of political conditions. They are as follow: Majoritarian politics: when the cost and benefits of a governmental policy or activity are widely distributed, we see majoritarian politics occurring. all or most of society expects to gain; all or most society expects to pay

Interest Group Politics:

When both costs and benefits are narrowly concentrated IGP results. A regulation will often benefit a relatively small group at the expense of another comparable small group. Each side has a strong incentive to organize and exercise political influence. The Shipping Act of 1916 by Federal Maritime Commission and The National Labor Relations Act of 1935 are the best examples in regulatory realm.

Client politics:
At those times when the benefits of a prospective policy are concentrated but the costs are widely distributed client politics prevails. The client politics model makes clear that despite the popular view that private enterprise thoroughly opposes government regulation, there is reason to believe that some industries have sought to be regulated.

Entrepreneurial politics:
When a policy may be proposed that will confer general (through perhaps small) benefits at a cost to be borne chiefly by a small segment of society. What is peculiar about this type of politics is the inability of the small segment upon whom the burden fall to block regulatory policy at issue. Client policy describes much surrogate market regulation; entrepreneurial politics much health and safety regulation.

SOCIAL FACTORS:
Sometimes the contemporary administrative state is referred to as welfare state. FIRST this society has frequently sought to augment personal responsibility with government regulation. It is a matter of personal responsibility. In many places it is now a regulation to be enforced by the police and courts not something left up to the individual. FTC seeks

to protect the consumer from being deceived or cheated. OSHA regulations tend to treat workers as though they were incapable of judging how to use equipments safety and move about in the workplace. The NPM may be part of a larger trend in the United State to reemphasize personal responsibility. And the NPMs strong emphasis on results place greater responsibility on public servants. Second it has observed that wholly aside from objective changes in risk, cultural changes in the past two decades [1960s-1970s] have increased out intolerance of risk, resulting in greater expectations of security from physical hazards, illness, and even from being cheated in the marketplace. Public interest groups and political entrepreneurs both in and out of government have taken it upon themselves to represent for what the publics interests in reducing risk. THE STRUCTURE AND PROCESS OF REGULATION ADMINISTRATION: Regulatory administration can also take several organizational forms. The purpose of this arrangement is to insulate the working of the regulatory commission from elected politics. They are intent to develop a clear vision of the public interest by making highly specific rules and adjudicating cases that may arise under them. It has become more common for regulatory agencies to be placed within executive branch departments, e.g. OSHA, NHTSA. Such as EPA are placed within the executive branch. This type of agencies are not headed by a commission, but by a director appointed by president. These structural arrangements are intended to give the president greater influence or control over policy making. Many regulatory agencies are also engaged in adjudication like FTC. Adjudicatory Procedures is regulated by administrative law and constitutional concerns. How cases should be selected is a matter of adjudicatory policy. Agency employees respond to these complaints in many ways, some are dismissed as frivolous, some are routed. Additional steps many include investigating bring formal charges. Proactive cases are those developed by a regulatory agency through an investigation. Many proactive cases however are of are of a different nature called structural cases and they do not arise from specific events. Structural cases are often informed by theory.

STRUCTURAL CASES:
DRAWBACKS:
Structural cases involve a lot of draw backs. Some of their major drawbacks are that they are time consuming,they can be delayed for years, they involve a lengthy procedure of inclusion of new legal theories or interpretations of existing ones, they are expensive for the agency dealing with them and they create a personnel problem because the agency requires experienced human resource for them which is hard to find and retain.

ROLE OF INSPECTORS IN IMPLEMENTAION OF REGULATORY POLICY:

Many agencies depend upon inspectors for the implementation of their policies that ultimately lead to adjudication. The inspectors are known as street - level bureaucrats because they are not held fully accountable by the administrative hierarchy and offer a

great deal of threat to the businesses which they inspect. These inspectors are responsible for the poor or efficient performance of the regulatory process. If the inspector wins the confidence of those being inspected then he can make the regulatory process work well and if he shows animosity then the regulatory process will decline and then those who are inspected will try to mislead the inspectors. The discouraging behavior of the inspectors will violate the first objective of regulatory policy which is to evoke responsible social and economic behavior by the private parties. A good inspector through his technical competencies, honesty, tough-mindedness, empathy and willingness to exercise authority can evoke responsible social behavior in the society and make the missions of the regulatory agencies more manageable. In order to implement their objectives the regulatory agencies rely on testing. Testing can be both pre-market i.e testing a product before it is sent to the market such as food additives, drugs etc and post-market i.e testing a product after it is sent to the market. Post market testing is often done when any suspicion is suggested by the pre-market testing and results in product recalls.

PROBLEMS IN REGULATORY ADMINISTRATION:

Regulation is the most criticized aspect of public administration and this criticism reached at its peak in the 1970s and 1980s. Regulatory administration has been criticized on the following grounds: 1. The compliance cost which is the cost incurred by the firms or private agencies in order to become submissive to the rules and the policies of the regulatory agency makes regulatory administration an expensive process and hinders the process of innovation, productivity and competitiveness. 2. Regulatory administration reduces the economic productivity by setting large fares or rates as a result of which small companies cannot enter the markets because of unaffordable compliance costs. As a result of this there is less competition in the market which limits the process of growth and competition. 3. Most of the regulatory commissioners are hired from the related industries which results in corruption in the regulation process because the regulatory commissioners develop friendly relationships with those being inspected and offer them flexibility in policies beyond the legal limits. 4. Regulatory administration has the authority of adding new rules without deleting the obsolete ones in accordance with the needs and circumstances. This process is called regulatory ratchet. This flaw ca be removed by providing the reasons for the addition of the new regulatory rules so that it might not be blamed for doing over-inclusiveness.

5. The regulatory agencies are considered to be the fourth branch of government with all the legislative, judicial and executive roles without under direct presidential or congressional control. This makes the whole regulatory process out of control. 6. In regulatory administration there are no parameters for the measurement of success which makes the regulation process difficult to evaluate.

DEREGULATION AND REGULATORY REFORM

The problems involved in the regulatory administration prompted a movement toward deregulation and regulatory reform that began in the 1970s and continued into the mid 1990s. Deregulation is usually supported by the following four basic arguments:
Free markets can provide more benefits to the society than regulated ones. Liability law can be used to assure safety in many aspects of life. There is a great potential for the private sector to engage in self regulation. If business enterprises were required to disclose relevant information of their products such as safety, healthfulness, security etc, then the public could act as its own inspectors.

The reforms were aimed at augmenting the rule making provisions contained in the Administrative Procedure Act of 1946 (APA), which provides two types of legislative rule making : Informal and Formal. Informal requires that the proposed rules be published in the Federal Register for comment, agencies maintain its record, that they explain the basis of their final rules. Formal is much more procedurally oriented and complicated. It involves quasi judicial hearings. From the point of view of the reformers, the limitation of the APA is that it does not require rules to meet a substantive policy test. Reformers favored augmenting the APAs informal rule making with regulation by negotiation.

PERSPECTIVES TOWARD REGULATORY ADMINISTRATION

The Traditional Managerial Perspective:
The traditional managerial perspective toward regulatory administration emphasizes the values of effectiveness, efficiency, and economy. In regulation, effectiveness has often been considered the avoidance of a major failure viewed by the public as a crises or scandal. There are three ways to avoid scandals or crises while also remaining efficient and economical. First way is that there will be a strong tendency toward strict even rigid enforcement of the rules. Second, there will be strong tendency to avoid deleting rules, even though it may appear that they are outdated. Third, the development of new rules and application of new policies will be slow. Major departures from past approaches, such as widespread and immediate deregulation, are likely to be avoided because results

may be unpredictable. The major difficulty from managerial standpoint is that they can undercut efficiency and economy. Strict enforcement of rules and conservatism in responding to rapidly changing conditions and technologies can lead to inefficiency.

The New Public Management Approach To Regulation:

The NPMs general approach toward regulation stands in contrast to traditional managerial model. It views segments of public less as a regulated community than as partners, emphasizes on customers service for regulatees, focuses on impacts and effectiveness rather than outputs and efficiency. It uses a range of tactics to resolve problems including education, strengthening regulatees commitment and sense of responsibility. The most striking aspect of NPM regulatory enforcement is its willingness to trust regulates and become partners with them.

New Public Management:

The key feature of new public management is the substitution of discretion for rules.NPM focuses on rules while compliance with rules is considered of secondary or lesser importance that will lead to new regulatory spirit of trust and cooperation.NPM model seeks to correct the worst features of the traditional managerial perspective on regulatory enforcement. However it bears careful watching.

Criticism on New Public Management:

Discretionary law enforcement as a positive good may weaken commitment to the rule of law in a society already plagued by high crime rates and lawlessness, therefore here the regulatory spirit of trust and cooperation is not valid. Discretionary enforcement also makes it more difficult to hold public administration accountable, and it expands the potential for corruption. Much regulatory administration aimed at preventing deception, often a real danger to the public where the safety of food, drugs, products, and technologies are involved. Finally the NPM model does conflict at some points with values central to the political and legal perspectives on regulation.

The Political Approach to Regulatory Administration:

The movement toward deregulation and regulatory reform, as well as the scrutiny of regulatory activities by public interest groups and legislators, has transformed the political approach toward regulatory administration. Three key values have emerged. One is greater attention to the full range of constituencies of a regulatory program, or expanded representation. The public is resumed to be represented by public interest groups and spokespersons. The agencies pay attention to their mandates to serve the public interest. A second emergent value in the political approach toward regulatory administration is the importance placed on forward-looking assessments of the impacts of rules or actions on interests that government seeks to protect. Such impact assessments go beyond benefitcost analyses and have been used to protect environment. At state and local levels, environmental impact statements have fostered a good deal of citizen participation. At the federal level, a third value of the contemporary political approach is to subject agency rules to substantive congressional review. Since congress delegates its legislative

authority to agencies to make rules, it ought to be able to negate those that are not in keeping with its intent.

The legal Approach to Regulatory Administration:

The legalistic quality of regulatory administration is understandable because the regulation affects the rights of individual, groups, and business enterprises. Like the managerial and political approaches, the legislative perspective places a distinct emphasis on certain values.

Adversary Procedure:
At the stage of deciding how regulatory rules should be enforced, the legalistic approach tends to favor cases that place the agencies or one party against another in an adversary proceeding. First the legal approach depends upon the building of cases for adjudication. The adversarial approach of the legislative perspective tends to view it as developing, documenting, and winning cases. Second, the legal approach tends to favor relatively simple conduct cases where one party or the agency alleges that another has violated the law.

Neutrality and the Administrative Law judge:

At the level of adjudication, the legalistic approach relies on the adversary proceeding before an impartial administrative law judge, similar functionary, or court. In practice, the neutrality of the administrative law judge stands in stark contrast to the traditional managerial emphasis on control through hierarchy, the NPMs effort to form cooperative partnerships, and the political perspectives stress on accountability.

Due Process Protection:

The rights of the private party being charged with a violation or being sued will be protected through the set of formal procedural requirements. Such parties will often have constitutional protections at the stage in which the agency is gathering information and building its case. If the agency decides to press the case, the regulated parties must be given adequate notice of the charges against them, and the agencys proposed action. The regulated party may also have a right to take the case to court for judicial review of the agencys behavior and decision making.

Reasonableness:
At the level of determination of the outcome of the case, the legalistic approach will emphasize fairness not only of procedure, but also in the result. This often involves a judicial assessment of the reasonableness of the agencys action.

Judicial review:
In the legal approach judicial review is very important. The main examples are motor vehicle manufacturers association vs. state farm mutual automobile insurance. In this case court found that NHTSA failed to present an adequate basis and explanation for rescinding an earlier rule. In several cases property rights have been the focus of the cases

dealing with regulatory takings. Constitution amendments prohibit individuals of their property without due process. There are some relatively clear limitations on how much judges can require. The Supreme Court held that the courts should not force agencies to engage in rule making process procedures more elaborate than the minimum requirements of procedure making acts. Under some circumstances judiciary should not review agencies discretionary decisions not to enforce statues. In sum legal approach to regulation emphasis adversary relationship, the legal obligations and rights of the parties, procedural fairness and reasonableness of regulatory administrative decisions.

Synthesis:
There are many conflicts and tensions among managerial, political and legal approach in regulatory administration. The NPM favors discretionary enforcement and opposes legal procedures and judicial review. Consumers can be in tension with legal approach. Effectiveness of managerial approach is frequently at odd with political approach. Cost benefit analysis can be expensive. Efficiency is at odds with adjudications and procedural due process. The need is to first recognize the broad objectives of regulation and then to consider which of the perspective is most suitable to it.

The public interest:

Regulatory administration involves broad public interest so, political approach is most suitable. Whatever is happening in environment will effect now and also in future. If all people involve then accountability becomes paramount. The place is to start is by considering each regulatory program individually on its merit from this perspective, rather than trying to prejudge everything at once on the basis of theory.

Balancing the interest of private parties against each other:

Regulation aims the proper balance between two private concerns, such as monopoly procedures and consumers. For this legal approach is most suitable. For example the regulation of utility and other rates fit into this area. Adjudications of such matters enable a balancing among the competing interests with an acceptable compromise as a result. Where legal approach is most suitable, its efficiency can be enhanced by using alternate dispute resolution. From the political perspective ADR is beneficial because it is potentially more inclusive of or responsive to a broad variety of interests that may not get consideration in formal adjudication. The legal approach will not support ADR insofar as the procedures used and outcomes are fair and rational. The traditional managerial approach appreciates the potential efficiency and economy of ADR.

Protection against disasters:

Regulatory administration is aimed at protection against disastrous events and accidents, a mix of managerial perspectives may be most suitable. All the legal approach demands is minimal compliance with law, the managerial orientation seeks cooperation with the purpose of regulatory administration.

It is necessary to emphasize once again that in the regulatory world, as in public administration in general, cases do not come in such neat packages all the time. Many cases will be mixed and more difficult than those presented here. Knowing how best to respond to them I part of the art of public administration.