Executive Summary

A more inclusive economy depends on an inclusive political process. Regulatory agencies are central institutions in
economic policymaking, yet regulators remain vulnerable to undue political influence from established business
and industry interests. How then can we reinvent regulation to be more accountable and responsive to the public at
large? This white paper provides a progressive framework for addressing the problem of regulatory reform. The
paper argues that instead of seeking to undo regulations or further insulate regulators, we must instead pursue
reforms that expand participation and representation for a more inclusive set of stakeholders within the regulatory
process itself.
The paper begins with a brief history of different attempts at reforms to ensure regulation serves the public
interest, from the New Deals faith in expertise to the rise of procedural statutory requirements for regulation to
the attempts by both left and right to respond to the charges of capture in the later 20th century. The paper then
highlights two particular episodes of democratizing reform efforts: the War on Poverty in the 1960s and 1970s, and
more recent innovations in participatory governance in the U.S. and internationally. These episodes suggest some
ways in which governance can harness democratic participation and representation to improve accountability and
responsiveness.
The paper then offers specific policy recommendations for reinventing progressive regulation by incorporating
these democratizing strategies. In particular, the paper calls for reforms that: (1) institutionalize stakeholder
representation within regulatory agencies; (2) empower grassroots citizens to drive monitoring and enforcement
of rules; (3) update the procedural and presidential oversight requirements for agencies to enable greater
participation; and (4) expand and rethink the staffing, resources, and structure of agencies to facilitate
participation.

Introduction
Contemporary economic policy has failed to address the pervasive and growing crises of inequality,
underemployment, and declining opportunity that have been escalating in recent decades. Recent research
highlights that economic inequality is not a product of natural market forces, but of deeper structural disparities
in political power and voice. As a result, policies themselves are skewed, structuring markets in ways that produce
severe economic imbalances. As the political clout of business and economic elites increases, economic policies tilt
in their favor, to the detriment of ordinary Americans.1 A more inclusive economy therefore depends to a great
degree on a more inclusive political process. Nowhere is this basic mechanism of disempowermentor the need for
greater political accountability and responsivenessmore apparent than in the day-to-day functioning of the
modern regulatory state.
Regulatory institutionsfrom the SEC to the Federal Reserve to the EPAbear the primary responsibility for
actually drafting and implementing most public policy. Regulatory agencies are charged with the granular work of

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making markets function, setting and enforcing the basic rules of the game on everything from insider trading and
financial regulation to labor and environmental standards. This responsibility is magnified in an era where,
whether owing to political gridlock or posturing, legislatures increasingly tend to produce broadly framed statutes
(if they pass a bill at all), leaving regulators to fill in many of the details of actual policy.
But just as legislative policy tends to favor the interests of economic and business elites, so too are regulatory
agencies prone to such special-interest capture. Big finance has been extraordinarily successful in using the
regulatory process to water down the impact of Dodd-Frank financial reform. The same story can be seen in labor
regulation, environmental regulation, and elsewhere.2 This kind of industry and elite influence sometimes
operates as a direct function of greater organization and political pressure on the part of business and elite
interests. But more subtle mechanisms are at work in this skewed regulatory regime as well. As policymakers share
social and economic backgrounds with economic elites to a greater degree, their own assessments of economic
conditions and policies become skewed away from working-class and middle-class interests.3 Policymakers
increasing reliance on industry members for data, information, and cooperation in devising policies creates
another vulnerability exploitable by sophisticated interest groups.4
These disparities in political power skew public policy in ways that further marginalize racial minorities, women,
and poorer citizens. This problem of capturethe ability of particular interest groups to skew public policy in
their favorhas been a long running concern for critics of the modern regulatory state. But where conventionally
the charge of capture has been used to motivate calls for deregulation by conservatives, or efforts to further
insulate regulatory experts from outside influence by liberals, this paper suggests a different response. Regulatory
capture and elite influence can be counteracted by reforms that expand the countervailing power of communities
to advocate for their views, bringing it to a level closer to that of more established and sophisticated interest
groups.
Achieving a more equitable economy therefore requires that we also reinvent the institutions charged with the
day-to-day task of writing, enforcing, and revising regulations. Just as we seek political equality in elections,
campaign finance, and legislatures, so too must we develop mechanisms to achieve a more equitable and inclusive
political process within the regulatory state. Conventionally, we might think about regulation as a top-down,
expert-driven process insulated from ordinary democratic politics. But instead, regulation might offer a process
through which affected constituencies can gain a greater sayand in so doing, help push the substance of
regulatory policy in more equality-promoting directions.
Regulatory reform offers an opportunity to do more than merely mitigate pathologies of capture and specialinterest influence. Done right, the regulatory process can be transformed into a dynamic, constructive arena that
actually expands democratic participation and inclusion. By institutionalizing stakeholder representation and
countervailing power, the regulatory process can be a major force for addressing disparities in political power and
promoting democratic participation and inclusion, thereby helping drive more equitable economic policies.
This white paper provides a brief history of attempts to ensure regulation serves the public interest (Part I),
addresses the ways that the experience of the War on Poverty and recent experiments in participatory governance
might inform regulatory reform today (Part II), and offers some policy recommendations for democratizing

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regulatory governance (Part III).

I. Regulation and the public interest: A brief history

The administrative process, proclaimed James Landis, speaking at Yale University in 1938, is, in essence our
generations answer to the inadequacy of the judicial and legislative process.5 A leading young law professor and
former clerk of Supreme Court Justice Louis Brandeis, Landis was already celebrated as one of the architects of the
Securities and Exchange Commission (SEC), which he would later chair. The SEC was the poster child for the New
Deals dramatic new experiment in creating aggressive, expert-based regulatory agencies to tackle the problems of
the Great Depression. The Depression had made clear that markets could not self-regulatebut Congress and
the courts were not up to the task of managing a complex modern economy efficiently and effectively. Legislatures
were too beholden to special-interest politics and pressures, while courts were too bound to archaic legal doctrines.
Instead, Landis argued, modern governance demanded a new institutional strategy: reliance on insulated experts,
given expansive authority by Congress to promote the common good through scientifically-grounded
policymaking. Such agencies would be better suited to adapting to complex, rapidly changing conditions, and
serving the general public interest. It is easier to plot a way through a labyrinth of detail, explained Landis, when
it is done in the comparative quiet of a conference room than when it is attempted amid the turmoil of the
legislative chamber or a committee room.
To harness the benefits of such expertise, policies needed to be crafted by regulatory agencies that, although
created by Congress and overseen by the judiciary and the elected executive, enjoyed broad delegation of power
and relative independence. Indeed, rather than restraining agencies through narrow grants of power and tight
oversight, Landis preferred to give agencies a relatively free hand, relying instead on the agencies professionalism,
expertise, and independence, as well as the beneficial effects of publicizing agency policies and their justifications,
to ensure that they served the common good.
The New Deal did much to consolidate this particularly technocratic vision of regulation into the fabric of the
modern state, and into our political imagination. As historian Alan Brinkley notes, late New Dealers in particular
sought to address economic policy issues through centralized, technocratic regulation. These New Dealers were
thus coming to a common vision of governmenta vision of capable, committed administrators who would seize
control of state institutions, invigorate them, expand their powers when necessary, and make them permanent
actors in the workings of the marketplace.6
Subsequent waves of regulatory reform have evolved against this baseline. On the one hand, there is the aspiration
of regulation as a way of achieving the public good through neutral, expert-based policymaking, particularly given
the complexities of the modern economy. But this hope is balanced against two recurring (and related) fears: first,
the fear of administrative overreachwhat many New Dealera lawyers castigated as administrative
authoritarianismand second, the fear of special-interest capture, the hijacking of such administrative authority
in the service of private, not public, interests.

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These concerns motivated three distinct waves of regulatory reform.

First, unease from the legal community led to some early judicial restraints on FDRs expansion of regulatory
power, most notably when the Supreme Court struck down the National Recovery Act in 1935 in Schechter Poultry
Corp. v. United States. For legal traditionalists, regulatory agencies raised deep constitutional concerns about
transferring too much legislative authority outside of Congress and into agencies that had broad powers of
policymaking, implementation, and adjudication. These concerns gave rise to the 1946 Administrative Procedure
Act (APA). The legislative debate over the APA revolved around this central concern about preventing unchecked
agency action and the risk of special-interest influence and corruption. The APA created a universal set of
procedures required of all agencies undertaking rulemaking or adjudication actions. Through such procedural
constraints, the hope was that the APA would rein in excessive agency authority and limit special-interest
influence, thereby ensuring that regulation would serve the public good.
By the 1960s, however, faith in agency expertise had declined, and courts and legislators began to experiment with
a different strategy for making sure that regulators served the public interest: expanding the representation of
different stakeholder groups within the regulatory process itself. Through revised judicial doctrines of due process
and of standing, and through statutory participation rights, these reforms sought to expand the diversity of
interests represented within agency policymaking. Such reforms were themselves a response to growing fears
about special-interest capture, as well as a newfound skepticism that expert regulators alone could identify and
pursue the common good as faithfully as Landis and the New Dealers initially hoped. Meanwhile, new legislation
such as the Freedom of Information Act made agency deliberations more readily transparent to the public, while
citizen suit provisions in statutes such as the Clean Air Act made it easier for citizens to challenge agency decisions
in court.
The civil rights movement also played an important role here. Community organizations seeking to promote racial
justice began to target the institutions responsible for poverty alleviation, social welfare, and economic policy. For
these advocates, poverty was a matter of disparate power; until African-Americans and poor people could have
more direct representation and participation in local and federal regulatory bodies, poverty policy would
systematically fail to address structural inequalities. These convictions shaped Lyndon Johnsons War on Poverty,
which created statutory requirements that antipoverty programs experiment with maximum feasible
participation when developing and implementing policies. Owing to these influences, administrative law in the
1960s and 1970s took as its goal the provision of a surrogate political process to ensure the fair representation of a
wide range of affected interests in the process of administrative decision.7
This effort, too, proved short-lived, and by the late 20th century this interest representation framework was seen
as a failure, more likely to create gridlock and induce capture than to prevent it through genuine accountability and
inclusive participation. Indeed, by the 1980s, a new mentality of conservative skepticism about regulation had
become dominant. The public choice school of economics argued that regulatory agencies were intrinsically
prone to special-interest capture, as well-organized interest groups would necessarily have the sophistication and
self-interest to trump the needs of the more diffuse and less-attentive general public. If agencies were fatally
flawedand if, as was becoming the norm, policymakers saw markets as more efficient and self-regulatingthen
the public good would be better served by the outright dismantling of regulatory systems. At the very least, it was

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claimed, regulation should instead take the form of permissive partnerships with private industry, allowing for
greater self-regulation.
This trajectory shapes contemporary discussions of regulatory reform. On the one hand, the specter of this
deregulatory critique looms large: the fear that agencies are too ineffectual, too prone to capture. On the other
hand, prior efforts to bind agencies to the public good, whether through increasingly convoluted and lengthy
procedures or through greater interest representation, have had mixed results. The challengeand opportunity
for regulatory reform today is to develop an alternative model of regulation that creates more room for genuine
democratic inclusion and participation, and in so doing can help drive a more equitable policy agenda.

II. Envisioning democratic regulation

In response to the deregulatory fervor of the 1980s and 1990s, contemporary defenses of regulation have tended to
revolve around two strategies.
First, modern regulatory reformers have turned to the new developments in social science, economics, and costbenefit analysis to attempt to provide a more objective foundation justifying regulation. Leading scholars such as
Cass Sunstein, who himself would later become the chief regulatory czar as the head of President Obamas Office
of Information and Regulatory Affairs, have argued that cost-benefit analysis can be more flexible than simply
counting economic impacts. Instead, analyses should incorporate assessments of equity, environmental
repercussions, and other more qualitative outcomes to provide a fuller, objective picture of which regulations are
truly socially beneficial.8 Thus tailored, cost-benefit analysis purports to provide objective proof and legitimacy for
regulations, ensuring that they did in fact serve the public good, and overcoming conservative attacks that
regulation would be overly costly and serve only special interests.
Second, and related, regulatory reformers appeal to the role of the elected presidential administration in ensuring
sufficient oversight and accountability for regulators. In this presidential administration model, regulators need
not necessarily base their decisions purely on expertise; rather, the central issue is to ensure that regulatory
agencies are directly accountable to the president, who, as a democratically elected official, has the authority and
legitimacy to shape agency policy agendas.9
These two strategiesrelying on modern forms of expertise or on the oversight of the elected executiverecall,
albeit in a more chastened and minimalist form, the regulatory vision of the New Deal era. But rather than doubling
down on expertise and executive oversight, regulatory agencies have an untapped potential to act as sites of
democratic inclusion and participation. By engaging a wider range of stakeholders in a productive and
participatory policymaking process, regulation can help combat special-interest capture by empowering
countervailing forces within the regulatory process itself. This strategy in turn can transform regulation into not
just a servant of statutory mandates, but an active space where stakeholders and civil society groups can start to
remedy the disparities of political power that skew our policymaking system more generally.

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How can we institutionalize this idea of democratic regulationof institutionalizing countervailing power within
the regulatory state? We can find some clues for future reform in the history of the War on Poverty, and in more
recent global experiences in participatory governance.

Democratic regulation 1.0: The experience of the War on Poverty Community Action
Program
Though often dismissed as a failure, this participatory strategy in the War on Poverty actually created some very
real avenues for empowering African-Americans, the urban poor, and other stakeholder groups, in turn enabling
the accountability of economic and political elites (albeit briefly). Understanding the exact lessons learned from
the War on Poverty can help us pioneer a more modern, and ultimately effective, strategy of participatory
regulation.10
While the bulk of the 1964 Economic Opportunity Act (EOA) focused on new entitlement programs for job
training, work-study, and access to legal services, the real radical innovation in the War on Poverty was its
commitment to grassroots participation as a way to mobilize community leaders to hold the bureaucracy itself
accountable to its poverty-reduction mandate. Formally, the EOA created community action programs, providing
funding for community groups to become mobilized in two main ways: first by creating local boards consisting of
local government officials and representatives from business, local community groups, and minority and lowincome stakeholders; and second, by involving community organizations in the implementing and service-delivery
aspects of operating poverty-reduction programs such as training centers and legal services clinics.
This approach of maximum feasible participation was rooted in a conviction that poverty was itself a matter of
political disempowerment, not just of insufficient income, and that therefore the only way to combat poverty was
to empower poor people with direct voice in the shaping, governing, and implementing of poverty programs. Only
through such direct empowerment could the poor hold the bureaucracy accountableand redress the traditional
disparities of political influence in local government.
In many ways this political strategy for reducing poverty proved effective. By creating institutionalized sources of
political power and leverage, the community action approach inspired many local community organizations to
channel funds toward expanding membership, providing services, and mobilizing constituencies as a political force
in defense of poverty-reducing policies. Even where local groups were denied representation on community action
boards by local elites, the institutional commitment to representation created a potent foundation for exerting
political pressure on policymakers.11
In some programs, these institutionalized avenues for direct participation dramatically changed the dynamics of
the policies themselves, making them more effective at promoting economic equity. The Community
Reinvestment Act (CRA) of 1977 offers a compelling example. Primarily focused on reducing lender discrimination
against minority borrowers, the CRA owed much of its success to an enforcement regime that borrowed from the
experience of community action. Under the CRA, federal agencies examine financial institutions on the basis of
their success in meeting local and minority credit needs. These rankings, in addition to public comments on the
CRA activities of these firms, were then considered when financial regulatory agencies examined merger

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applications and requests by these firms to open and close new branches. A critical component of this review
process involved community members themselves: Local groups could ask to review a firms CRA records,
comment on its CRA activities, and file challenges requesting federal inspections for firms that failed to meet
community credit needs. Because firms needed a good CRA score in order to get regulatory approvals for mergers,
these community challenges were surprisingly powerful in incentivizing firms to respond.
The evidence suggests that banks have, as a result of the CRA, changed their behavior, forming multibank
Community Development Corporations, investing in locally based Community Development Financial
Institutions, and dedicating special units to focus on meeting the needs of local low- and moderate-income
borrowers within the geographic area of the bank orders or branch. This economic impact is partly the result of
increased participation in enforcing the CRA mandate. The CRA bolstered local community involvement both by
incentivizing banks to lend to local businesses, and by empowering community-based organizations as local
brokers who could match worthy borrowers with willing banks. In a number of cities, the CRAs provision allowing
community groups to invoke federal regulatory involvement helped catalyze a broader effort among community
organizations to organize and expand their engagement with local banks. The background threat of federal
regulatory enforcement incentivized banks themselves to engage with these community groups and negotiate for
mutually agreeable community lending programs.
The failures of the War on Poverty Community Action Program are rooted in political conflict over the very goals of
participation and community action in the first place. As community action programs catalyzed the mobilization of
grassroots constituencies to advocate for more accountable and equitable economic policies, the backlash from
local power elitesfrom the political establishment to business interestsled to systematic efforts to defund and
dismantle community action.12 Ultimately, the problem was a lack of alignment over the importance of community
action itself. Federal officials saw participation as a more surface-level strategy to generate cooperation and
consensus among stakeholders, whereas the civil rights and welfare rights movements saw it as a mechanism for
reclaiming greater political power over economic policymaking. State and local governments, meanwhile, saw the
directive for formal representation of the poor as a categorical threat to their own authority and control of
patronage networks.13 Even the founders of the program in the Johnson administration often operated under
vastly different motivations and visions for how significantly the program should invest in poor peoples political
power, as opposed to merely providing welfare services.14 As a result of these tensions, while more than 1,600
community action boards were established by 1968, covering two-thirds of the nations counties, by 1974 most of
the funding for the most active programs had been withdrawn, with new restraints from Congress and the
dismantling of the Office of Economic Opportunity, the federal office charged with creating and coordinating
community action across the country.15
The War on Poverty thus suggests some important elements for how to harness the potential of democratic
participation as a form of countervailing power to hold regulators accountable to a wider range of stakeholders and
to help drive more equitable economic policies. First, there is a value to creating institutionalized forms of
representation for the poor, minorities, and other underrepresented interests. Second, where civil society actors
can play a constructive role, for example in monitoring and enforcing standards, they can be a part of making
regulation both more accountable and more efficacious.

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Indeed, this strategy of leveraging community participation in monitoring the degree to which regulators and
businesses alike follow and enforce existing standards has become a more widespread tool for empowering
communities and holding policymakers accountable in a variety of contexts. The global community and advocacy
group Slumdwellers International, for example, uses such participatory monitoring and audits as critical
mobilization and advocacy tools, empowering urban slum communities to monitor public officials, track progress
on promises for addressing basic infrastructure needs, and assert property rights of slumdwellers who would
otherwise be uprooted to make room for urban development projects.16 In the U.S. context, similar participatory
monitoring strategies are being employed to track developer and city commitments to local hire and community
development promises around large-scale urban redevelopment projects.17
The critical challenge for these models to work, however, is to secure the buy-in and cooperation both from
government officials and from community groups. As the War on Povertys failure indicates, where officials
themselves reject the core premise of participation, it is difficult to sustain these procedures. Similarly, where
communities are not organized and mobilized through advocacy and membership-based organizations, there is no
countervailing voice that can exert this kind of pressure and credibly claim to speak on behalf of these communities
when policies are made.

From participatory governance to regulation

Another source of valuable ideas for transforming regulation comes from abroad, in the growing literature and
practice around innovations in participatory governance. Over the last 20 years, there has been an emerging set of
tools and best practices for how to increase participation and make it actually effective in driving a regulatory or
policymaking regime, including integrating public participation with more traditional forms of bureaucratic
expertise.
Consider for example two modal examples of participatory governance: micropublics such as citizens juries and
other small-scale deliberative fora; and the case of participatory budgeting.
In deliberative micropublics, a small number of lay citizens are selected randomly and then tasked with working
with state policymakers and experts to devise a policy solution to a particular social problem, whether involving
large-scale policies such as health-care system design or local concerns such as environmental deterioration or
crime and safety. These deliberations are carefully moderated and structured to provide lay citizens with various
briefings on the relevant issues. The citizens then debate and deliberate, formulating a policy response in
consultation with experts and state officials.18 Citizens juries have been used in a variety of high-stakes instances,
from a rewriting of British Columbias constitution to the formulation of health-care policies in countries
belonging to the Organization of Economic Cooperation and Development.19
In participatory budgeting, the structured interactions between citizens, policymakers, and experts is similar.
However, the lay citizen participants are not randomly selected, but are representatives elected from within their
local district after a series of awareness-raising town hall meetings in which residents are briefed on the procedure,

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and then vote for representatives to the budgeting committee. The policy committees recommendations are then
sent back to the residents of the district for approval by referendum.20
Both of these approaches are increasingly being used in the United States. Groups such as the Participatory
Budgeting Project are working with governments and local stakeholders to implement participatory budgeting in
cities across the country. Local governments from New York to Chicago have started to use participatory budgeting
to allocate discretionary funds at the ward or city council level. Other cities are starting to use participatory
budgeting more directly to decide core budgetary issues.21 Similarly, micropublics are becoming a more common
strategy for policymakers to engage stakeholders in the early stages of policymaking. In a model similar to that of
other regulatory agencies, the Consumer Financial Protection Bureau convenes stakeholders through its online
RegulationRoom platform to help formulate focus areas for future regulations and to source ideas for how to help
key constituencies.22
These participatory processes share a common focus on engaging citizens in solving concrete problemsfor
example, the crafting of a budget, or the formulation of a particular policy issueoften in areas with which the
participants themselves have direct experience and interest. In formulating responses to these problems,
participants work in tandem with experts and decision-makers, who can offer advice and relevant information.23
The principle is that for participatory governance to work well, participants must (1) be empowered to make actual
decisions; (2) be situated alongside other stakeholders and policy experts to highlight a wider range of issues and
implications; and (3) be placed in a curated and structured context and process that facilitate deliberation and
concrete policy judgments.

III. Policy recommendations

The economic crisis of inequality and growing disparities of economic opportunity are rooted in disparities of
political power. Because of the vast discretion and importance of regulatory institutions in formulating and
enforcing policy regimes at the granular level, the regulatory state is an important front line in trying to restore
political equity, which in turn can help ensure more economically equitable policy. Conventionally, we have relied
on a combination of internal expertise and external actors such as the executive branch, Congress, or the courts to
ensure that agencies are responsive to the public good. The above discussion by contrast points to an enticing
alternative possibility: that regulatory agencies can be transformed to serve as a more inclusive political space for
democratic participation.
Such democratic regulation is also a necessity, critical to addressing the risks of capture and elite influence that
continue to bedevil regulation in a variety of contexts, from labor to environment to transportation. By engaging
and empowering more diverse stakeholders to shape regulations and help monitor and enforce rules, we can
institutionalize greater forms of countervailing voice within regulatory agencies, as a check on the kinds of capture
that skewed financial regulations before the crash.
A democratic approach to regulatory reform could be applied not only to federal agencies but also to local

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government bodies that address important policy issues. Such an approach could consist of four elements.

(1) Institutionalize modes of stakeholder representation within regulatory agencies.

Agencies can be reformed to include more direct forms of stakeholder representation, creating a more inclusive
regulatory process and thereby driving more equitable economic policy. Perhaps the boldest expression of this
reform strategy is the recent Fed Up campaign initiated by the Center for Popular Democracy. Fed Up, in
addition to demanding a greater focus on unemployment from the Fed, also calls for more direct representation of
worker and consumer interests in governance and decision-making within the Federal Reserve.24 Similarly, some
scholars have taken this idea of dedicated representation further, advocating the creation of a dedicated public
interest council in financial regulation, an independent governmental entity comprised of experts and public
advocates charged with conducting investigations, proposing policies, and auditing the regulations proposed and
implemented by other financial regulatory bodies, all in an effort to magnify and channel the countervailing
interests of citizens and prevent the capture of financial regulatory bodies by sophisticated industry players.25
Countervailing citizen interests can be represented through proxy advocacy, by which a regulatory office is
created with the explicit mission of representing the needs of a particular demographic of citizenssuch as
consumers, veterans, or farmersthrough advocacy, providing information to other regulators, and navigating the
rulemaking process with an eye to protecting these interests.26
Stakeholders may thus be represented by individuals or by community-based organizations that advocate on their
behalf. In creating these advocacy offices or other forms of representation, laws can specify which constituencies
should be represented, and what qualifies an individual or group to count as a representative of that constituency.
These mechanisms are not immune to the risk of capture or cooptionbut, as suggested above, the creation of an
institutionalized office voicing a particular constituencys needs, combined with a mobilized and engaged civil
society organization working with that constituency to engage with policymakers, can provide some protection
against the risk of capture.
Dodd-Frank already includes a variety of mechanisms to enhance representation of key stakeholders such as
shareholders, consumers, and homeowners through a mix of advisory boards and dedicated offices charged with
representing otherwise diffuse and politically marginal groups.27 The Consumer Financial Protection Bureau
(CFPB) itself can be understood as partly a form of proxy representation: while the agency operates as a traditional
expert-based rulemaking body, it also works hard to engage the public in general and consumer advocates in
particular to identify issues in need of policy solutions, in effect channeling consumer interests in a regulatory
ecosystem that often leaves ordinary people out of view. These activities are partly the result of statutory
directives: the CFPB has within it dedicated offices for community affairs, and for outreach to and engagement
with constituencies that may have particular needs but are often overlooked in financial regulation policy, such as
veterans, students, and pensioners. But this focus is also partly a result of the agencys character and ethos, as a
product of the consumer rights movement in its most recent postfinancial crisis form.
Pushing this idea further, we might create offices for regulatory public defenders, charged with identifying and
articulating the needs and views of affected but underrepresented groups.28 These regulatory offices would act not

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as neutral experts, but as representatives of a particular social interest, identifying and channeling its concerns
within the broader ecology of regulatory agencies and the policymaking process. Such an agency could help
underrepresented social groups participate in and put pressure on regulatory policy debates on an equal level with
more sophisticated insider-interest groups.

(2) Empower grassroots citizens to drive monitoring and enforcement of rules.

Through greater participation, citizens can act as diffuse networks tracking the degree to which regulatory bodies
in fact implement their policies effectively. Building on the example of the CRA, such participation can check the
manipulations of private actors by facilitating regulatory enforcement, while also protecting against potentially lax
enforcement by regulators themselves. A number of NGOs have pioneered the use of citizen networks as a way to
monitor and track the implementation of policies in a variety of contexts, from economic development programs to
the identification of infrastructure gaps in reconstruction after natural disasters.29 As noted earlier, other groups
have used participatory monitoring to pressure local governments to increase investment in marginalized
communities such as the slumdwellers in India.
An even more aggressive mode of participatory engagement would tap citizens to ensure governmental
accountability by devising their own performance goals, indicators, or targets, which can then be used to evaluate
the performance of policymakers and implementation.30 This capacity to devise standards and then monitor state
performancethrough auditing by civil society groups, issuing report cards, and diagnosing blockages, slowdowns,
or failures of implementationis an important contributor to increased accountability and responsiveness.31
Government can play an important role here as well, by financing and committing to the publication of data,
metrics, and scorecards that track public policy outcomes and activities.
Government policies can be made amenable to such participatory monitoring through further design features:
first, providing the means for citizens to monitor outcomes, such as the articulation of standards that outline the
goals of the policy and the collecting of data or other metrics on outcomes; second, providing citizens with real
leverage by empowering them to trigger actual policy and enforcement proceedings; and third, making these
findings and activities public.

(3) Issuing a new Executive Order on participatory regulation.

These techniques of representation and participatory monitoring can be institutionalized by statutory reform.
Arguably, federal administrative law is in dire need of an updated statutory scheme for administrative process; the
Administrative Procedure Act is over 60 years old. But given the limitations of todays Congress, a more fruitful
path may be the issuing of a new Executive Order on regulatory process.
Each presidential administration has conventionally issued a regulatory process Executive Order that usually
reaffirms prior orders requiring agencies to pursue cost-benefit analysis. As a result, there already exists a legal and
institutional infrastructure through which the executive branch incentivizes expertise and monitors regulation,
through the Office of Management and Budget, the Office of Information and Regulatory Affairs (OIRA), and the

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guidelines of Executive Orders 12866 (issued by President Clinton) and 13563 (issued by President Obama). An
alternative structure for regulatory review might require more of agencies at the initial policymaking stage in
terms of participatory engagement and consultations, while tasking OIRA with reviewing not just the technocratic
policy analysis but also whether agencies have adequately complied with such participatory requirements.
Executive Order 13563, the latest on Executive branch standards and procedures for regulation, includes language
on the importance of participation in the regulatory process but does not specify either substantive standards for
such participation nor explicit forms of review and monitoring by OIRA. A new Executive Order could, for example,
establish baseline procedures and standards to systematize ad hoc agency practices of citizen participation and
stakeholder consultation by, for example, instituting formal requirements for agencies to convene such forums,
and requiring that these forums be comprised of representatives from specified constituencies.32

(4) Staffing and structuring agencies to facilitate participation.

Finally, agencies themselves have a large role to play in fostering this kind of democratic regulation through their
own decisions about staffing and internal process and structure. Agencies have significant discretion already to
convene stakeholders and engage participants in their rulemaking or enforcement regimes. Pioneering agency
heads can deploy this discretion to create the kinds of representation and participation outlined above within their
agencies, even in the absence of statutory or Executive Order direction.
More important, productive participation is not an automatic guarantee; rather, it requires significant investment
on the part of the convenors. Agencies themselves should invest greater staff resources in facilitating and fostering
such participation. As the literature on participatory governance underscores, to make participation effective and
integrate it with more conventional forms of expertise in policymaking, three critical tasks will require intensive
work: curating participatory and deliberative meetings, providing briefings for the participants on the relevant
data and issues, and facilitating discussion to lead to concrete, usable recommendations. Each one demands a
particular set of skills and a significant investment of staff time and resourcesnot to mention agency budgets. Yet
agencies, by and large, tend not to invest in these skills or tasks. If we take democracy in regulation seriously, we
will have to start staffing and structuring agencies accordingly. Indeed, we may be well served by some scholars
proposals to create subgroups within agencies dedicated to developing participatory processes, training agency
staff, and monitoring success.33

IV. Conclusion
These proposals can help make regulation more inclusive and democratic. The imperative to do so is not just
because of the intrinsic value of democratic participation; rather, it is an urgent necessity to address both economic
and political inequality. Regulatory policies are essential to making the economy work in an equitable way. But for
these regulations themselves to serve the public interest, the regulatory process must also be inclusive of all
affected constituencies. Reinventing regulation through greater democratic participation and engagement offers
one way of addressing these structural inequities.

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Endnotes
1

See, e.g., Bartels, Larry, 2010, Unequal Democracy: The Political Economy of the New Gilded Age NJ: Princeton University Press; Hacker, Jacob and Paul
Pierson, 2011, Winner-Take-All Politics: How Washington Made the Rich Richerand Turned Its Back on the Middle Class New York: Simon & Schuster;
Gilens, Martin, 2014, Affluence and Influence: Economic Inequality and Political Power in America NJ: Princeton University Press; Gilens, Martin and
Benjamin Page, 2014, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens Perspectives on Politics 12:3.

See, e.g., Carpenter, Daniel and David Moss, eds., 2013, Preventing Regulatory Capture: Special Interest Influence and How to Limit It UK: Cambridge
University Press.

See, e.g., Carnes, Nicholas, 2013, White Collar Government: The Hidden Role of Class in Economic Policy-Making IL: University of Chicago Press.

See, e.g., Kwak, James, Cultural Capture and the Financial Crisis, and McCarty, Nolan, Complexity, Capacity, and Capture, in Carpenter and Moss, eds.,
Preventing Regulatory Capture.

Landis, James. 1938. The Administrative Process. New Haven, CT: Yale University Press.

Brinkley, Alan. 1989. The New Deal and the Idea of the State. Pp. 85-121 in The Rise and Fall of the New Deal Order, 1930-1980, edited by Steve Fraser
and Gary Gerstle. NJ: Princeton University Press.

Stewart, Richard. 1975. The Reformation of American Administrative Law. Harvard Law Review 88:8.

See, e.g., Sunstein, Cass, 2013, The Real World of Cost-Benefit Analysis: Thirty-Six Questions (And Almost As Many Answers), Harvard Public Law Working
Paper 13-11, available online at papers.ssrn.com/sol3/papers.cfm?abstract_id=2199112.

See, e.g., Kagan, Elena, 2001, Presidential Administration, Harvard Law Review 114.

10

For several recent analyses of the positive political effects of the War on Poverty and their implications for today, see, e.g., Melish, Tara, 2010, Maximum
Feasible Participation of the Poor: New Governance, New Accountability, and a 21st Century War on the Sources of Poverty, Yale Human Rights and
Development Law Journal 13; Cazenave, Noel, 2007, Impossible Democracy: The Unlikely Success of the War on Poverty Community Action Programs,
Albany, NY: SUNY Press.

11

See, e.g., Orleck, Annelise and Lisa Hazirjian, 2001, The War on Poverty: A New Grassroots History, 1940-1980, Athens, GA: University of Georgia Press.

12

Id.

13

Melish, Maximum Feasible Participation of the Poor, 28.

14

See, e.g., Gillette, Michael, 2011, Launching the War on Poverty: An Oral History, UK: Oxford University Press.

15

Melish, Maximum Feasible Participation of the Poor, 26-27.

16

See Xavier de Souza Briggs, 2008, Democracy as Problem Solving: Civic Capacity in Communities Across the Globe, Cambridge, MA: MIT Press.

17

See, for example, the Oakland Army Base redevelopment agreement and its use of community organizations to monitor compliance with local hiring and
community investment objectives.

18

See generally, Fishkin, James, 2011, When the People Speak: Deliberative Democracy and Public Consultation, UK: Oxford University Press; Goodin, Robert
and John Dryzek, 2006, Deliberative Impacts: The Macro-Political Uptake of Mini-Publics, Politics and Society 34; Goodin, Robert, 2008, Innovating
Democracy: Democratic Theory and Practice After the Deliberative Turn UK: Oxford University Press.

19
20

See, e.g., Fishkin, When the People Speak.

See generally, Russon-Gillman, Hollie, 2013, The Participatory Turn: Participatory Budgeting Comes to America, Harvard University unpublished Ph.D
dissertation; Fung, Archon, 2011, Reinventing Democracy in Latin America, Perspectives on Politics 9; Baiocchi, Gianpaolo, Patrick Heller, and Marcelo
K. Silva, 2011, Bootstrapping Democracy: Transforming Local Governance and Civil Society in Brazil (Redwood City, CA: Stanford University Press.

21

Russon Gillman, Hollie. 2016, Democracy Reinvented: Participatory Budgeting and Civic Innovation in America. Washington, DC: Brookings / Cambridge:
Ash Center for Democratic Governance, Harvard University.

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22

Farina, Cynthia, Hoi Kong, Cheryl Blake, Mary Newhart, and Nik Luka. 2013. Democratic Deliberation in the Wild: The McGill Online Design Studio and the
RegulationRoom Project. Fordham Urban Law Journal 41(5):1527-80

23

Fung, Archon and Erik Olin Wright. 2013. Thinking About Empowered Participatory Governance. Pp. 15-23 in Deepening Democracy: Institutional
Innovations in Empowered Participatory Governance, edited by Fung and Wright. London and New York: Verso.

24

Fed Up campaign http://whatrecovery.org.

25

Omarova, Saule. 2011. Bankers, Bureaucrats, and Guardians: Toward Tripartism in Financial Services Regulation. Journal of Corporate Law 37(3):621-74

26

See, e.g., Daniel Schwarcz, Preventing Capture Through Consumer Empowerment Programs: Some Evidence from Insurance Regulation, in Carpenter
and Moss, eds., Preventing Capture (examining case studies of how proxy advocacy and tripartism has helped mitigate the risk of capture in state-level
insurance regulation).

27

See, e.g., Dodd-Frank Act 901-911 (to be codified at 15 U.S.C. 78) (creating an Investor Advisory Committee, which is tasked with advising the Financial
Stability Oversight Council (FSOC) on regulatory reforms to protect investors comprised of a mix of representatives of various stakeholder interests,
such as state governments, senior citizens, and pension funds, in addition to relevant expertsincluding an Investor Advocate, who is explicitly
empowered to head an advocacy unit within the network of financial regulatory agencies); Dodd-Frank Act 915 (to be codified at 15 U.S.C. 80b-11
note) (empowering the Investor Advocate to lobby the SEC for policies favorable to investor interests); Dodd-Frank Act 919D (to be codified at 15
U.S.C. 78d) (creating a forum for individual investors to lodge complaints and report lapses in financial regulations); Dodd-Frank Act 973-976 (to be
codified at 15 U.S.C. 78) (establishing a Municipal Securities Rulemaking Board, comprised of experts and representatives of brokers, investors, and
the general public, to set standards for municipal securities advisors).

28

See Mariano-Florentino Cuellar, 2005, Rethinking Regulatory Democracy, Administrative Law Review 57.

29

There are a number of new community organizations that focus on empowering citizens by enabling them to monitor government service delivery for
economic development, post-conflict reconstruction, and natural disaster relief projects. See, e.g., Ushahidi (ushahidi.com) and Development Seed
(developmentseed.org/about). Other groups focus on monitoring of government performance by, for example, enabling citizens to monitor bribery and
corruption. See, e.g., I Paid A Bribe (ipaidabribe.com).

30

See, e.g., Melish, Maximum Feasible Participation of the Poor, 89-98.

31

Id.

32

Bingham, Lisa. 2010. The Next Generation of Administrative Law: Building the Legal Infrastructure for Collaborative Governance. Wisconsin Law Review
350-6 (proposing language for a new executive order).

33

Sabel, Charles, and William Simon. 2011. Minimalism and Experimentalism in the Administrative State. Unpublished manuscript, on file with author, Pp. 2730; also Cuellar, Rethinking Regulatory Democracy 491-97.

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