In early 2018, we embarked on a journey to improve regulation in government. We spent the previous year conducting research and publishing reports on regulation at our sister non-profit, Argive. After digging into government regulatory processes, we reached the conclusion that growing regulatory activity was inundating governments and, more importantly, serious technology applications were sorely lacking in the regulatory space. Despite initial apprehension of slow government sales cycles, procurement, and general bureaucratic sluggishness, Esper officially formed on March 1, 2018 with a vision for making regulation more transparent and data-driven.
A year later, we know more than anyone probably wants (or needs) to know about regulation. We are now operational in several governments, where regulators use our platform to collaboratively analyze and draft regulation. We’ve been fortunate to work with enthusiastic users that share lots of feedback, and we’ve had fun experimenting and building new features that address their unique concerns.
For the sake of institutional knowledge and posterity, we wanted to document and share our observations on working on one of the most important and impactful problems of present day.
States are more start-up friendly
States are much more willing to adopt new regulatory technology than the federal government. This is, in part, due to many reforms at the state level that require agencies to conduct regulatory review and introduce more data and analysis to their rulemaking processes. States like Arizona, Kentucky, and Texas all have mechanisms in place to review regulation on a regular cadence. While there is traction for regulatory improvement at the federal level, the procurement process and expensive IT barriers (like FedRamp compliance) made working with states in our first year a natural decision.
We’ve been consistently impressed with how engaged our users are at the state level. Most startups have to beg their users for feedback, while our users proactively reach out with product suggestions. Some of our most valuable tools, like policy project management and comparing policies across states, were developed based on user input.
Regulation is not a partisan issue
Contrary to popular belief, there is recognition across the political spectrum that the regulatory process can be improved. Likewise, our mission and products are built to enable better regulatory management, analysis, and transparency for all governments.To be clear, Esper doesn’t help regulators determine the contents of a rulemaking. We take objectivity very seriously and it has never been our intention to play a hand in regulatory outcomes. Our core driver is to incorporate more transparency and data into a somewhat arcane process, and provide administrators with desperately needed tools to improve efficiencies. This is something we can all get behind. It is our goal to continue building strong relationships across governments to encourage modernizing the regulatory process, prioritizing data, and listening to public feedback.
Regulatory data is not in good shape
Most regulations are published on government websites in varying, inconsistent formats. These sites are rarely searchable and make it difficult for people within the government to track and update regulation over time. This has contributed to regulatory overgrowth and stagnating policies at every level of government.
There is a strong need for states to have digital, searchable databases of regulation that are user-friendly and easy to navigate. A lot (and we mean a lot!!) of engineering hours at Esper were put into scraping regulatory data, standardizing it, and making it more accessible. Despite this being a somewhat monotonous task for software engineers, designing and building a policy ontology remains one of the most important things we’ve done at Esper. Getting quality data is key. After all, you can’t manage what you can’t measure.
Moving regulation from scanned-in documents to sophisticated databases is something all governments should strive to achieve, regardless of whether or not they use Esper. A modern economy demands modern policy infrastructure that is well-documented and organized.
Public engagement in regulation is generally low
Most governments require agencies to hold public comment periods for any new regulations. This is an important but oft overlooked part of the rulemaking process. The number and quality of public comments are highly variable depending on the subject of the rulemaking and how visible the rulemaking process is in a particular state. Some agencies are very proactive about soliciting public feedback on proposed regulations, while others take a more reactive stance.
In our first year, we launched a beta feature to help regulators collect feedback on proposed rulemakings. Our goal is to iterate on this feature and help guide more constructive feedback, kind of like a Yelp for regulation. Closing the feedback loop between regulated communities and regulatory agencies is important to designing fair and flexible regulatory schemes that consider the unique needs of various industries.
Regulators are bound by statutory requirements
Sometimes poor regulation is a result of poor legislation. One user described it to us this way: “Legislators pass lofty bills and then throw it over the fence for regulators to deal with.”
Regulators are left scrambling to figure out the details, piecing together regulation based on legislation that may change when the next legislative session hits. After learning about the stressful and frenetic pace of legislative session, we built a legislative tracker to help regulators more proactively identify statutory changes during the legislative session so that they can internally prepare for them.
This tool bridges the gap between legislation and regulation, and gives regulators more foresight into upcoming policy changes. While the legislative tracker was not initially part of our product roadmap, it became an important product that was quickly adopted by power users in Kentucky.
Required rulemaking forms can turn into box-checking exercises
Most governments require regulators to complete cost-benefit analyses and other impact analyses for every proposed rulemaking. By and large, these are treated as box-checking exercises within regulatory agencies. By no fault of their own, agencies rarely have in-house economists to conduct cost-benefit analyses and often come up with back of hand calculations. While impact analyses are an important part of determining and tracking the impacts of regulation over time, the initial assessment needs more qualitative and quantitative data.
Moving forward, we want to help governments find a cost-effective way to conduct cost-benefit analyses that incorporates industry data. A host of resources are available in the private and not for profit sector, and these may be a good starting point to gather diverse perspectives for a more informed analysis.
States like to learn from each other
States truly are policy laboratories and a lot of policy innovation is happening across the United States, particularly in emerging regulatory spaces. It’s not uncommon for regulators to call up their counterparts across state lines to ask how they regulate a particular issue. One of our favorite product features is a tool called “Similar Regulations” that allows regulators to quickly research similar regulations across jurisdictions. Helping regulators exchange best practices is and will continue to be an important part of Esper’s mission to make regulation more data-driven.
Further, this feature fosters some healthy competition across states. We love hearing our users talk about “what they’re doing out there in Arizona” and how they can adapt their own policies to match them. By fueling this friendly, competitive spirit, our goal is to build a marketplace of policy innovation where the best ideas win.
We’re more optimistic than ever before. In Year 1, we spent a lot of time standardizing regulatory data and building out our core workflow product that regulators use daily. We listened closely to our users and built tools to serve as the infrastructure for regulation moving forward.
There’s still much work to be done to continue improving the regulatory process and making it more accessible to the general public. Our plan for the upcoming year includes:
- Continuing to improve regulatory data. We will improve our categorization and regulatory ontology by tagging regulation with industry codes (like NAICS) and XRRL. With thousands of regulations at the federal, state, and municipal level, this is no small task. It’s important to prioritize data cleanliness for future analysis.
- Moving regulation online and out of paper. Regulation, and government writ large, won’t be truly accessible until government digitizes its processes.
- Improving public feedback collection and analysis. We will drive public feedback to be more constructive and transparent through intuitive and engaging in-app comment mechanisms.
- Fostering more ways for governments to exchange knowledge. We will provide governments with more resources to exchange best practices and share innovations in regulation. This means improving our “Similar Regulations” feature and even hosting in-person innovation roundtables around particular issue areas
- Encouraging outcome-based regulation. Using our product to have regulators indicate intended outcomes (costs, impact, etc) and routinely check in on regulatory performance.
We’re pretty fortunate to have awesome relationships with our users. One of our favorite notes we’ve ever received from a user:
“I personally do not like change and had initially not wanted to even use Esper because I am not technologically savvy — but I can honestly say that it’s made my job (life?) so much easier!