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Abstract: Numerous corporate scandals in the past several years have fueled widespread debate over proposals for government action. The central challenge for government is how to restore corporate integrity and market confidence without overreacting and stifling the dynamism that underlies a strong economy. To examine this challenge, the Center for Business and Government's Regulatory Policy Program organized a conference in May 2004 on The Role of Government in Corporate Governance. The conference brought together government officials, business leaders, and academic researchers to discuss three fundamental public policy issues raised by recent corporate abuses. First, who should regulate corporate management - government agencies or self-regulatory organizations? Second, how should regulatory commands be designed, either as detailed rules or broad principles? Finally, how should regulations be enforced? This report synthesizes the conference dialogue organized around these three questions and explores conditions under which different configurations of regulatory institutions, standards, and enforcement practices can further both corporate integrity and productivity.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted November 2004.
corporate governance, financial regulation, self-regulation, regulatory enforcement
Abstract: As conventionally understood, social movements, law reform, and society interact in a unidirectional fashion. Social movements seek to secure law reform; in turn, changes in the law bring about changes in society. While this conventional understanding may be helpful for some purposes, it is an incomplete empirical account that can lead reformers mistakenly to think that legal change is sufficient in order to achieve changed social conditions. In fact, social movements, law, and society interact with each other in much more complex, dynamic ways. Through an examination of the environmental movement in the United States, I show how a successful social movement not only uses law reform to change society, but how it also depends on changes in society to sustain its law reform efforts. For the environmental movement, the public's consistent acceptance of environmental values has helped sustain the laws brought about by the movement, even in the face of significant resistance. Even though social movements use law reform to affect society, society in turn affects the success of law reform. As a result, sustainable social movements will combine efforts at legal change with efforts to change underlying social values.
Advocacy and Persuasion, Environment and Natural Resources, Law and Legal Institutions, Political Science
Abstract: Regulatory policy has long been a source of controversy, eliciting criticism and calls for reform from virtually all quarters. In recent years, reform proposals have typically sought to restructure the institutional environment of regulatory policymaking by changing administrative law and thereby restructuring the procedures and institutions of regulatory governance. To understand how regulatory policy might be improved through changes to administrative law, empirical research is needed to evaluate the impacts of different institutional procedures and designs. In this paper, I argue for increased empirical inquiry of administrative law, highlighting the value of empirical analysis by reference to three salient aspects of regulatory procedure: (i) economic analysis of new agency rules; (ii) judicial review of agency rules; and (iii) negotiated rulemaking. The discussion of these areas shows how empirical analysis can help inform choices about regulatory design and suggests that such analysis should go hand in hand with any implementation of regulatory reform.
administrative law, law and social sciences, regulatory policy
Abstract: Regulation aims to improve the performance of individual and organizational behavior in ways that reduce social harms, whether by improving industry's environmental performance, increasing the safety of transportation systems, or reducing workplace risk. With this in mind, the phrase "performance-based regulation" might seem a bit redundant, since all regulation should aim to improve performance in ways that advance social goals. Yet regulators can direct those they govern to improve their performance in at least two basic ways. They can prescribe exactly what actions regulated entities must take to improve their performance. Or they can incorporate the regulation's goal into the language of the rule, specifying the desired level of performance and allowing those targeted by regulation to decide how to achieve that level. This second approach is the kind of regulation that is the subject of this working paper. Incorporating performance goals into regulatory standards is by no means a new idea, but in recent years there has been renewed interest in expanding the use of performance standards in a variety of areas of health, safety, and environmental regulation. In keeping with its mission of advancing research and promoting policy outreach, the Regulatory Policy Program at the John F. Kennedy School of Government convened a workshop on May 13, 2002, to see what could be learned from agencies' experiences with performance standards and to begin to identify the likely conditions for the effective use of performance standards. The workshop brought together decisionmakers from a dozen different government agencies as well as leading researchers from the fields of economics, engineering, law, and political science. The dialogue at the workshop sought to build on the experiences of different regulatory agencies that have used performance-based regulation and to clarify its advantages and disadvantages in addressing health, safety, and environmental problems. This working paper summarizes and syntheses the dialogue that emerged from the discussion, addressing the role of performance standards in the regulator's toolbox, the conditions under which performance standards can be effective, and the challenges associated with implementing performance-based regulation in practice.
Business and Government Policy, Environment and Natural Resources, Law and Legal Institutions, Public Management, Regulation
Abstract: For too long, environmental policymaking has relied on trial and error, without adequate or systematic learning from either the trials or the errors. Systematic program evaluation research has been remarkably scarce relative to the overall number of environmental policies adopted in the United States, as well as relative to the amount of evaluation research found in other fields, such as medicine, education, or transportation safety. This paper examines the role that program evaluation should play in environmental policy making, distinguishing such research from other types of analysis, including risk assessment, cost-effectiveness analysis, and cost-benefit analysis. It explains the kinds of methodological practices that researchers should use to isolate the causal effects of particular environmental regulations and policies. By adhering to the program evaluation methods discussed in this paper, researchers will be better able to isolate the effects of specific policy interventions and help inform future policy decisions. A renewed and expanded commitment to program evaluation of environmental policy is needed to move environmental policy making closer to an evidence-based practice, and conditions are probably more ripe now for fostering such a commitment than they have ever been before.
program evaluation, public policy, environmental policy and regulation
Abstract: Whether regulating mutual funds or chemical manufacturers, government's policy decisions depend on information possessed by industry. Yet it is not in any industry's interests to share information that will lead to costly regulations. So how do government regulators secure needed information from industry? Since information disclosed by any firm cannot be retrieved and can be used to regulate the entire sector, industry faces a collective action problem in maintaining silence. While collective silence is easy to maintain if all firms' interests are aligned, individual firms' payoffs for disclosure can vary due to heterogeneous effects of regulation and differing expectations about the regulator's expected actions with or without any given information. This leads to regulators' first strategy: exploit asymmetries in firms' interests in disclosure. Regulators' second strategy comes from their ability to create asymmetries of interest, namely by selectively rewarding or punishing individual firms. Both of these strategies work best when pursued informally, in less visible ways, since other firms can be expected to inflict retribution on a squealer. Although informal relationships have been long deplored due to the risk of regulatory bias or capture, our analysis shows how they can be beneficial to government in playing the information game. This has important implications for regulatory procedure. Since total transparency would detract from government's ability to secure valuable information, administrative law needs to balance between the competing needs of transparency to prevent abuse and opacity to facilitate information exchange. Posted paper, uploaded January 2010, is the published version of the working paper originally posted May 2004.
Regulatory Strategy, Information Asymmetry, Administrative Law
Abstract: Observers of environmental policy increasingly urge regulators to build consensus before making policy decisions. By seeking consensus, regulators are supposed to be able to reduce conflict, increase compliance, improve public policy, and promote public participation. Yet consensus-building markedly shifts the prevailing norms of governance in the United States by de-centering the role of agency officials, making them facilitators or negotiation partners rather than central, accountable decision makers charged with seeking solutions that advance the overall public interest. A shift to consensus as the basis for regulatory policy also creates or exacerbates at least six pathologies in the policy process: tractability over importance, imprecision, lowest common denominator, increased time and resources, unrealistic expectations, and additional sources of conflict. The widespread establishment of consensus as the goal of regulatory policy making would constitute a shift in the prevailing mode of governance that is neither necessary nor wise.
Abstract: Researchers who evaluate ordinary dispute resolution procedures understandably ask whether disputants are eventually satisfied with the resulting outcomes. But how should they evaluate techniques for involving the public in regulatory policymaking, i.e., techniques such as comment solicitation, public hearings, workshops, dialogue groups, advisory committees, and negotiated rulemaking processes? Researchers evaluating these various techniques have also typically used participant satisfaction as a key evaluative criterion. While this criterion may seem suitable for evaluating private dispute resolution techniques, those who disagree in policy-making processes are not disputants in the same sense that landlords and tenants, creditors and debtors, or tortfeasors and victims are disputants in private life. Disputes in regulatory policymaking arise over public policy, not over private grievances. This paper raises caution about using participant satisfaction, or other measures based on participants' attitudes and opinions, in evaluating dispute resolution and public participation in regulatory policymaking. It argues that a reliance on participant satisfaction encounters two conceptual limitations, namely that (a) participant satisfaction does not necessarily equate with good public policy and (b) participant satisfaction is at best an incomplete measure because it excludes those who do not participate. In addition, the paper outlines a series of problems in applying, measuring, and interpreting participant satisfaction that make it a problematic metric for evaluating public participation in regulatory processes. In light of the conceptual and measurement problems with relying on satisfaction, evaluation researchers should resist relying on participant surveys to evaluate public participation techniques, and instead should focus attention directly on the effectiveness, efficiency, and equity of the decisions that result from different forms of public participation.
Regulatory Policymaking, Negotiation, Public Participation, Evaluation, Administrative Law
Abstract: Regulation of business activity is nearly as old as law itself. In the last century, though, the use of regulation by modern governments has grown markedly in both volume and significance, to the point where nearly every facet of today's economy is subject to some form of regulation. When successful, regulation can deliver important benefits to society; however, regulation can also impose undue costs on the economy and, when designed or implemented poorly, fail to meet public needs at all. Given the importance of sound regulation to society, its study by scholars of law and social science is also of paramount importance. In this chapter, we review the state of the field by focusing on four major areas of empirical research: (1) regulatory policy making, (2) regulatory enforcement, (3) business responses to regulation, and (4) innovative models of regulation. We begin by reviewing the political economy literature on the factors that influence government regulators as well as the ways that overseers may use administrative procedures to affect decisions of regulatory agencies. We next highlight the varied empirical findings on adversarial versus cooperative enforcement styles. We then review explanations for business responses to regulatory pressures, including the range of factors influencing compliance and beyond-compliance behavior. Finally, we survey the ever-growing research literature on innovative approaches to regulation, including self-regulation, performance standards, and market-based incentives. This chapter serves both as a stand-alone account of the existing state of empirical regulatory research by political scientists and researchers from other disciplines, as well as an introduction to the authors' edited volume that reprints a diverse collection of classic studies of regulation and regulatory processes.
Administrative law, regulatory agencies, federal regulation, empirical research, regulatory policy making, regulatory enforcement, business responses to regulation, innovative models of regulation, self-regulation, performance standards, market-based incentives
Abstract: Each year, regulatory agencies promulgate thousands of important rules through a process largely insulated from ordinary citizens. Many observers believe the Internet could help revolutionize the rulemaking process, allowing citizens to play a central role in the development of new government regulations. This paper expresses a contrary view. In it, I argue that existing efforts to apply information technology to rulemaking will not noticeably affect citizen participation, as these current efforts do little more than digitize the existing process without addressing the underlying obstacles to greater citizen participation. Although more innovative technologies may eventually enable the ordinary citizen to play a greater role in rulemaking, such future applications will only raise the question of whether greater citizen involvement is necessarily a good thing. A substantial and systematic increase in citizen comments will not be a welcome development if it leads regulators to strive to satisfy those who file comments instead of selecting the policy option that best fulfills the statutory mandate or public interest. Overall, the novelty of applying information technology to the rulemaking process merits no special optimism, but rather such technology deserves careful assessment of both its positive and negative effects.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted July 2003, and formerly titled "The Internet and Public Participation in Rulemaking."
Information Technology, Regulation, Administrative Law, Business and Government Policy, Law and Legal Institutions, Public Management, Political Science
Abstract: We examine a rapidly emerging regulatory approach that we label management-based regulation. Management-based regulation shifts the locus of policy discretion from the government regulator to the regulated entity. Government directs private firms to incorporate public goals into their management practices, and provides general guidelines by which private management will be judged. We outline the conditions under which management-based regulation is likely to be an appropriate government strategy and discuss three applications of this approach.
Business and Government Policy, Environment and Natural Resources, Law and Legal Institutions, Regulation
Abstract: Improvements in environmental quality depend in large measure on changes in private sector management. In recognition of this fact, government and industry have begun in recent years to focus directly on shaping the internal management practices of private firms. New management-based strategies can take many forms, but unlike conventional regulatory approaches they are linked by their distinctive focus on management practices, rather than on environmental technologies or emissions targets. This article offers the first sustained analysis of both public and private sector initiatives designed specifically to improve firms' environmental management. Synthesizing the results of a conference of leading scholars and policymakers organized by the Regulatory Policy Program at Harvard University, we consider in this article whether management-based strategies can lead to improved environmental outcomes and, if so, how they should be designed to be most effective. We report research findings showing that management-based strategies can yield improvements in industry's environmental performance, indicating that anyone concerned about environmental quality should seriously consider the use of these strategies. Nevertheless, we urge caution about overstating what can be accomplished through management-based strategies, as they will not always lead to significant change in private sector firms' environmental performance. Although management-based strategies are unlikely to become the mainstay of society's approach to environmental protection, they deserve greater consideration because they can yield positive results.
Environmental management, environmental law and policy, Business and Government Policy, Environment and Natural Resources, Law and Legal Institutions, Regulation
Abstract: A new approach to environmental policy advocated by state agencies and by the U.S. Environmental Protection Agency is to create "tracks" of environmental performance. The philosophy behind performance track programs is simple: distinguish strong environmental performers from weak ones and give strong firms special recognition and rewards such as enforcement forbearance and flexibility. The implementation of an environmental management system, or EMS, is one criterion agencies are using to determine which companies deserve special treatment. In this paper, the authors raise questions about whether the mere presence of an EMS is an appropriate metric for differentiating among firms. Policymakers should bear in mind that the EMS tool by itself is not necessarily sufficient for firms to create superior environmental improvement. Improvements may depend much more on how effectively and ambitiously an EMS is implemented, how well the organization is managed overall, and how committed the managers are to seeing that the firm achieves real and continuous improvement. These factors will always be harder for public agencies to assess. Reduced regulatory oversight may actually weaken the EMSs that firms implement, because incentives for using EMSs aggressively to achieve positive outcomes may be reduced. An agency mandate for broad EMS adoption might lead to a variety of responses from firms, including the adoption of systems with trivial environmental goals. Instead, policymakers should consider providing technical assistance to firms interested in EMS implementation and recognizing EMS firms with certificates of participation, product labeling, or government-sponsored publicity.
Business and Government Policy, Environment and Natural Resources, Public Management, Regulation
Abstract: The spate of recent corporate scandals has produced a legislative and regulatory reaction aimed at restoring marketplace integrity. This response - consisting notably of the Sarbanes-Oxley Act of 2002, implementing regulations and stock market listing standards - has, in turn, affected relationships between the chief executive and the board, as well as between the corporation and gatekeepers. To take stock of these changes, the Mossavar-Rahmani Center for Business and Government's Regulatory Policy Program convened a roundtable dialogue in May 2006 that brought together government officials, business leaders, and academic researchers. Roundtable participants considered changes that have and have not occurred in corporate relationships, as well as their effect on current governance practices. One area participants also discussed that has not changed much - executive compensation - appears to be causing even greater concern now than several years ago. This report synthesizes the roundtable discussion, and includes a keynote address by SEC Commissioner Roel C. Campos. The report also highlights key public policy challenges that lie ahead, and calls for an appropriate balance in future policymaking between a long- and short-term focus, between national and state solutions, and, ultimately, between governmental and market action.
Business and Government Policy, Law and Legal Institutions, Regulation
Abstract: Regulators need to rely on science to understand problems and predict the consequences of regulatory actions, but over reliance on science can actually contribute to, or at least deflect attention from, incoherent policymaking. In this article, we explore the problems with using science to justify policy decisions by analyzing the Environmental Protection Agency's recently revised air quality standards for ground-level ozone and particulate matter, some of the most significant regulations ever issued. In revising these standards, EPA mistakenly invoked science as the exclusive basis for its decisions and deflected attention from a remarkable series of inconsistencies. For example, even though EPA claimed to base its standards on a singular concern for public health, it set its standards at levels that will still lead to hundreds, if not thousands, of deaths each year. In other ways, EPA's positions were like shifting sands, changing at points that apparently were expedient for the agency. Such an outcome should not be unexpected when an agency misuses science as a policy rationale, but it also need not be inevitable if agencies accept the limits of science in justifying risk standards. We conclude by offering a set of principles to give direction to standard setting by EPA and other agencies. In the case of EPA's air quality program, Congress will likely need to amend the Clean Air Act to enable EPA to break free of the conceptual incoherence in which it now finds itself mired. Decision makers in any setting, though, can avoid the problem of shifting sands by carefully understanding what science can and cannot do.
Risk management, administrative law, environmental regulation
Abstract: Administrative law scholars and governmental reformers argue that advances in information technology will greatly expand public participation in regulatory policymaking. They claim that e-rulemaking, or the application of new technology to administrative rulemaking, promises to transform a previously insulated process into one in which ordinary citizens regularly provide input. With the federal government having implemented several e-rulemaking initiatives in recent years, we can now begin to assess whether such a transformation in the works - or even on the horizon. This paper compares empirical observations on citizen participation in the past, before e-rulemaking, with more recent results on citizen participation after the introduction of various types of technological innovations. Contrary to prevailing predictions, empirical research shows that e-rulemaking makes little difference: citizen input remains typically sparse, notwithstanding the relative ease with which individuals can now learn about and comment on regulatory proposals. These findings indicate that the more significant barriers to citizen participation are cognitive and motivational. Even with e-rulemaking, it takes a high level of technical sophistication to understand and comment on regulatory proceedings. Moreover, even though information technology lowers the absolute cost of submitting comments to regulatory agencies, it also dramatically decreases the costs of a wide variety of entertainment and commercial activities that are much more appealing to most citizens. Given persistent opportunity costs and other barriers to citizen participation, even future e-rulemaking efforts appear unlikely to lead to a participatory revolution, but instead can be expected generally to deliver much the same level of citizen involvement in the regulatory process.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted July 2006.
E-rulemaking, Regulation, Public Participation, Internet, Democracy
Abstract: In order to channel interest in e-rulemaking toward effective and meaningful innovations in regulatory practice, the Kennedy School of Government's Regulatory Policy Program convened two major workshops, bringing together academic experts from computer sciences, law, and public management along with key public officials involved in managing federal regulation. This paper summarizes the discussions that took place at these workshops and develops an agenda for future research on information technology and the rulemaking process. It highlights the institutional challenges associated with using information technology in the federal regulatory process and suggests that in some cases existing rulemaking practices may need to be reconfigured in order to take full advantage of technological developments. Ultimately, the effective deployment of information technology to assist with government rulemaking will depend on integrating knowledge from across the social sciences, law, and information sciences.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted February 2004.
Business and government policy, law and legal institutions, political science, public management, regulation
Abstract: For many years, advocates of negotiated rulemaking have advanced enthusiastic claims about how negotiated rulemaking would reduce litigation and shorten the rulemaking process. In an earlier study, I tested these claims systematically by assessing the effectiveness of negotiated rulemaking against existing rulemaking processes. I found that negotiated rulemaking neither saves time nor reduces litigation. Recently, Philip Harter, a longtime advocate of negotiated rulemaking, has criticized my study and asserted that negotiated rulemaking has succeeded remarkably in achieving its goals. Harter criticized the way I measured the length of the rulemaking process, claimed that I failed to appreciate differences in litigation, and suggested that my results did not matter in any case since negotiated rulemaking has resulted in rules that are demonstrably better than rules developed through conventional regulatory practices. In this paper, I respond to Harter's continued defense of negotiated rulemaking, showing why none of his criticisms undercuts the findings of my original research. Harter disregarded basic standards for empirical research in the arguments he advanced to criticize the way I analyzed rulemaking duration and the incidence of litigation. Moreover, Harter has failed to provide any credible evidence to support his present claim that negotiated rulemaking has resulted in rules that are better than those developed through conventional processes. The absence of support for Harter's criticisms, like the absence of support for the claims made by other advocates of negotiated rulemaking over the years, serves only to underscore the conclusion of my original research that the promises made for negotiated rulemaking remain unfulfilled.
Abstract: Cass Sunstein, Daniel Kahneman, David Schkade, and Ilana Ritov have recently advanced a cognitive explanation for incoherence in legal decisionmaking, showing how decision makers tend to make micro-level judgments that make little sense when viewed from a broader perspective. Among other things, they claimed to have discovered striking incoherence in regulatory policy evidenced by varied penalty levels across different statutes, with less serious violations sometimes backed up with higher penalties than more serious violations. This paper comments on Sunstein et al.'s treatment of incoherence in regulatory policy, arguing that the same cognitive limitations that Sunstein et al. argue lead to incoherence in the design of regulatory policy also affect judgments about the existence of incoherence itself. Due to cognitive effects, individuals may have a tendency to "see" incoherence in the legal system when on closer examination there is none. Specifically, observable variations in regulatory policies will sometimes be sensible and justifiable, even though people may at first glance think they are obviously incoherent. When it comes to regulatory penalties, these penalties could quite sensibly be higher for less serious violations if other considerations discussed in this paper are taken into account. The same kind of bounded evaluation problem arises when regulations are judged to be incoherent based on variation in their cost-effectiveness. Regulatory policies that appear incoherent when compared along one dimension or evaluated with only one purpose in mind will not necessarily be properly viewed as incoherent once other dimensions or purposes are taken into account. Indeed, because the conditions underlying regulatory policy making are both varied and complex, judgments about the incoherence of regulatory policies will be unavoidably difficult and even sometimes incoherent themselves.
Regulatory Policy, Penalties, Judgment
Abstract: Parallels between corporate governance and state governance appear to be growing. This essay focuses on the suggestion that corporate governance is becoming structured much more like public government in certain ways. This shift may well be helpful for enhancing credibility and confidence in capital markets, but it also raises important questions. Will reforms enacted in the post-Enron era limit managers' discretion to innovate, take risks, and respond quickly to changing economic circumstances? How far should society go in imposing on corporations the kinds of procedures found commonly in democratic governments?
delaware, journal, corporate, law, governance, state governance, discretion
Abstract: Each year, federal regulatory agencies create thousands of new rules that affect the economy. When these agencies insulate themselves too much from the public, they are more likely to make suboptimal decisions and decrease public acceptance of their resulting rules. A nonpartisan Task Force on Transparency and Public Participation met in 2008 to identify current deficiencies in agency rule making procedures and develop recommendations for the next presidential administration to improve the quality of regulations and the legitimacy of regulatory proceedings. This report summarizes the Task Force's deliberations, indicating ways that federal agencies could do a better job of seeking citizen comment earlier in the rule making process and of reaching out to all affected groups in an evenhanded manner. The report includes not only targeted recommendations on transparency and public participation, but also strategic-management recommendations which, if adopted, should help ensure that agencies continue to improve their transparency and public participation practices over time.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted November 2008.
Administrative law, regulatory agencies, federal regulation, citizen comment, fairness
Abstract: Techno-optimists advocate the application of information technology to the rulemaking process as a means of advancing strong democracy - that is, direct, broad-based citizen involvement in regulatory policy making. In this paper, I show that such optimism is unfounded given the obstacles to meaningful citizen deliberation posed by the impenetrability of current e-rulemaking developments, the prevailing level of citizen disengagement from politics and policy making more generally, and most citizens' lack of the requisite technical information about and understanding of the issues at stake in regulatory decision making. As such, a more realistic goal for the application of new technology to the regulatory process is to expand the information base available to regulatory decision makers through increased interest group pluralism. Instead of creating conditions of strong democracy, information technology can expand the involvement and access of informed, knowledgeable, and affected parties to the rulemaking process, a weaker form of democracy that nevertheless can provide better information for government officials.
Administrative Law, Information Technology, Regulation, Democratic Theory
Abstract: In January 2007, President George W. Bush stirred up widespread controversy by issuing amendments to an executive order on regulatory review adopted initially by President Clinton. The Bush amendments variously require agencies to issue written regulatory problem statements, assign gate-keeping responsibilities to Regulatory Policy Officers within each agency, and undertake analytic reviews before adopting certain kinds of guidance documents. Both legal scholars and policy advocates charge that the Bush amendments place significant new burdens on administrative agencies and will delay the issuance of important new regulatory policies. This paper challenges the rhetorical claims of obstructionism that have emerged in response to the Bush amendments. It begins by comparing criticisms of the Bush amendments with criticisms of previous regulatory reforms, showing that concerns about delay date all the way back to the creation of the Administrative Procedure Act of 1946. Notwithstanding the perennial nature of charges of delay and obstruction, the U.S. regulatory state has grown dramatically in both size and impact over the last six decades. In addition, the extant social science literature has failed to find any systematic delays associated with the specific procedure affected by the Bush amendments, namely regulatory review by the Office of Management and Budget. Overall, the burdens associated with regulatory reforms appear to be far smaller, or more manageable, than critics usually suppose. This paper concludes with several explanations for persistent reality of regulatory growth in the face of the persistent rhetoric of obstruction. These alternative accounts not only help explain the rhetoric-reality divide over regulatory reform in general, but they also provide reason to expect the Bush amendments will have, at most, only a trivial impact on the overall regulatory process.
Administrative Law, Executive Order 13,422, rulemaking, bureaucracy, federal regulations, regulatory review, regulatory policy, regulatory process, regulatory delay, growth of regulation, cost-benefit analysis, economic analysis, Presidency
Abstract: Regulators must rely on science to understand problems and predict the consequences of regulatory actions, but science by itself cannot justify public policy decisions. We review the Environmental Protection Agency's efforts to justify recent changes to its National Ambient Air Quality Standards (NAAQS) for ozone and particulate matter, showing how the agency was able to cloak its policy judgments under the guise of scientific objectivity. By doing so, the EPA evaded accountability for a shifting and incoherent set of policy positions that will have major implications for public health and the economy. For example, even though EPA claimed to base its revised standards on a singular concern for public health, it set the new standards at levels that will still lead to hundreds, if not thousands, of deaths each year. The EPA's claim to rely solely on science contributed to positions that ultimately failed to meet the law's aspiration of reasoned decision-making by administrative agencies.
Environmental Protection Agency, air quality, air quality standards, EPA, regulation, Clean Air Act, public health, pollution, National Ambient Air Quality Standards, environmental regulation, administrative law, judicial review
Abstract: Voluntary programs intended to improve corporate environmental practices have proliferated in recent years. Why some businesses choose to participate in such voluntary programs, while others do not, remains an open question. Recent work suggests that companies environmental practices, including their decisions to participate in voluntary programs, are shaped by a license to operate comprised of social, regulatory, and economic pressures. Although these external factors do matter, by themselves they only partially explain business decision making, since facilities subject to similar external factors often behave differently. In this article, we draw from organizational theory to explain why we would expect a company's license to operate to be ultimately constructed by internal factors, such as managerial incentives, organizational culture, and organizational identity, as these shape both interpretations of the external pressures and organizational responses to them. Using qualitative data from an exploratory study of matched facilities that reached different decisions about participating in a prominent voluntary environmental program, we then report evidence indicative of the role of these internal factors in shaping facilities environmental decisions. Finally, we offer suggestions for future research that could further develop understanding of how internal organizational characteristics influence environmental management decisions, including those concerning participation in voluntary programs.
Abstract: Voluntary programs intended to improve corporate environmental practices have proliferated in recent years. Why some businesses choose to participate in such voluntary programs, while others do not, remains an open question. Recent work suggests that companies' environmental practices, including their decisions to participate in voluntary programs, are shaped by a license to operate comprised of social, regulatory, and economic pressures. Although these external factors do matter, by themselves they only partially explain business decision making, since facilities subject to similar external factors often behave differently. In this article, we draw from organizational theory to explain why we would expect a company's license to operate to be ultimately constructed by internal factors, such as managerial incentives, organizational culture, and organizational identity, as these shape both interpretations of the external pressures and organizational responses to them. Using qualitative data from an exploratory study of matched facilities that reached different decisions about participating in a prominent voluntary environmental program, we then report evidence indicative of the role of these internal factors in shaping facilities' environmental decisions. Finally, we offer suggestions for future research that could further develop understanding of how internal organizational characteristics influence environmental management decisions, including those concerning participation in voluntary programs.
administrative law, environmental law, organizations, voluntary programs, environmental practices, license, internal factors, managerial incentives, organizational culture, self-monitoring, attitudes, decisions
Abstract: In the late 1990s, the U.S. Environmental Protection Agency (EPA) conducted what the agency considered to be a "bold experiment" in regulatory reinvention, bringing representatives from six industrial sectors together with government officials and NGO representatives to forge a consensus on innovations in public policy and business practices. This paper assesses the impact of the agency's "experiment" - called the Common Sense Initiative (CSI) - in terms of the agency's goals of improving regulatory performance and technological innovation. Based on a review of CSI projects across all six sectors, the paper shows how EPA achieved, at best, quite modest accomplishments. The paper explains how EPA's decision to rely on consensus as a procedural rule contributed to CSI's failure to meet the agency's ambitious goals. Faced with delays, CSI participants tended to work on projects over which agreement was possible, such as on the development of training manuals or production of case studies, instead of tackling more significant issues. These information-gathering and educational projects avoided the kind of conflicts that would have arisen over more ambitious efforts, but at the expense of making more meaningful economic or environmental improvement. The EPA's experience with CSI provides cautionary lessons for regulators in any policy area who might contemplate using consensus as a decision rule.
Business and government policy, environment and natural resources, law and legal institutions, leadership and conflict management, regulation
Abstract: Federal policymakers' reluctance to enact a comprehensive climate change policy during the past decade has coincided with increased awareness of the inevitability and severity of the problems from global climate change. Thus, it is no surprise that piecemeal, sub-federal policies have garnered considerable support. Bolstered by the political science literature on the promise of incrementalism and democratic experimentalism, many proponents of climate change action favor incremental steps in the hope that they will improve the environment or at least serve as a basis for more comprehensive policies. Against this hopeful view, we explain why ad hoc responses to climate change may well be no better than, and possibly will be worse than, no action at all. Incremental climate change policies can give rise to predictable and nontrivial problems, such as non-effect, leakage, climate side effects, other side effects, lock-in, and lulling. Such problems not only can undermine the interim policies themselves but also may delay the adoption of a more comprehensive climate change policy. We present an upstream cap-and-trade policy as one such comprehensive alternative, showing how it would prove less susceptible to the kinds of policy failures that afflict incremental policies. Only by resisting the pressures to act immediately, and investing the necessary time and resources to craft a comprehensive solution, will environmental policymakers be able to guard against the perils that afflict ad hoc policymaking. Posted paper, uploaded January 2010, is the published version of the working paper originally posted June 2008.
Comprehensive climate change policy, incrementalism, democratic experimentalism, comprehensive policymaking, ad hoc responses to global warming, incremental policies, upstream cap and trade policy, policy failure
Abstract: President Obama has trumpeted transparency as a major part of his reform agenda, promising an "unprecedented" degree of governmental openness and overseeing a variety of open government reforms, from changes in Freedom of Information Act policies to the creation of new websites like Recovery.Gov. Although transparency is politically popular, and the Obama Administration benefits in the short run by contrasting itself with the Bush Administration's reputation for secrecy, in the long run President Obama's rhetoric on openness in government may backfire politically. Too much emphasis on making government a fishbowl will only raise expectations about an unattainable or undesirable level of openness. Transparency has clear benefits but it also has its costs, as when, for example, the prospect of disclosure dampens internal deliberation and self-criticism by government officials. The real choice for government, then, is how much transparency, and what type, to offer over different processes. The Obama Administration has already found itself needing to make tradeoffs and place limits on transparency, and it is likely to continue to do so in the years to come. Yet members of the public, and certainly open-government activists, are unlikely to appreciate the need for making such tradeoffs, generating disappointment among the administration's supporters and charges of hypocrisy by its opponents. It remains unclear whether Barack Obama will ultimately earn the mantle of the "transparency president" - or whether the unrealistic hopes for openness in government he has raised will, when unfulfilled, only serve to reinforce public cynicism about government.
Posted paper, uploaded January 2010, is the published version of the working paper originally posted July 2009.
governmental openness, disclosure, Freedom of Information Act, FOIA, secrecy, politics, internal deliberation, government information policy, signals, political risk, transparency limits, President Obama
Abstract: In the past decade, EPA and over 20 states have created voluntary environmental leadership programs designed to recognize and reward businesses that take steps that go beyond compliance with the strictures of environmental law. Environmental leadership programs seek not only to spur direct improvements to environment quality but also to advance broader social goals that may lead indirectly to environmental improvements, such as improving business-government relationships and changing business culture. Measuring progress toward leadership programs' social goals is a particularly challenging but essential task if researchers and decision makers are to understand the full impacts of these programs. In this paper, Jonathan C. Borck, Cary Coglianese, and Jennifer Nash present strategies for overcoming the three core challenges in evaluating the social effects of leadership programs and any voluntary environmental initiative: (1) defining appropriate measures of social goals, (2) inferring whether programs achieve those goals, and (3) linking social effects to environmental outcomes. Only through careful attention to these three empirical issues will it be possible to rule out alternative explanations and determine whether environmental leadership programs are truly generating their intended positive social effects as well as improvements to the environment.
Administrative law, regulatory agencies, state and federal regulation, regulatory policy making, voluntary environmental leadership programs, business responses to regulation, innovative models of regulation, self-regulation, social effects of voluntary environmental initiatives, empirical research
Abstract: In this thoughtful and intricate cross-disciplinary debate, Professors Eric W. Orts, of Penn's Wharton School, and Cary Coglianese, of Penn's Law School, discuss the benefits and disadvantages of collaborative public policy decision making in the environmental context. It is no exaggeration to say that each year the world grows ever more aware of the nature of the environmental problems we face, and yet critical policy solutions continue to remain beyond the grasp of even the most interested parties. Professor Orts argues that it is time to embrace a different policymaking approach - that of collaborative environmental lawmaking. He argues that the view that centralized governments acting alone will arrive at 'correct' solutions . . . begs the question of incommensurable values and the various people who hold them. Professor Orts's skepticism of the independence of political and other governmental actors in a world in which lobbyists and campaign financiers . . . play large and often decisive roles in th[e public policymaking] process leads him to conclude that in many situations, it makes better sense to trust less in the traditional centralized process of environmental lawmaking and to consider more frequently the alternative of engaging in collaborative environmental law. Professor Coglianese responds that collaborative environmental law is "not at all feasible for making real-world decisions about major environmental problems," and that this policymaking approach "introduces new types of predictable and serious problems." He cautions that "[t]he issue is not whether policymakers should reach out to affected interests and members of the public. Rather, the issue lies with the purpose of public engagement." Professor Coglianese contends that, by making agreement the primary aim of policymaking, collaborative environmental law actually conveys a willingness to give in to interested parties in pursuit of the "holy grail" of consensus. Instead, Professor Coglianese urges that public "engagement should be used with another goal in mind . . . mak[ing] the best possible decision [to] . . . best advance[] the overall public interest."
Environmental Law, Politics, Law & Society, collaborative public policy decision making, centralized environmental lawmaking, environment, decision-making, incommensurable values, incommensurability, collaboration, consensus-building, tractability
Abstract: In recent years, regulatory agencies, Congress, and the White House have taken steps to increase the use of information technology in the management of the rulemaking process. The latest such e-rulemaking effort is the design of a new, government-wide regulatory information system being developed by Bush Administration. The system, known as the Federal Docket Management System, will for the first time make all information pertaining to federal regulation available to the public via the Internet. By making information about government regulation available on-line, the Administration's eRulemaking Initiative seeks to improve the quality and legitimacy of the government's regulatory decisions. If developed properly, the Initiative's new on-line docket management system can also facilitate academic research that in the longer term should improve regulatory policymaking. The recommendations in this paper, joined by a group of fifty-five other scholars of regulation, were originally delivered in a letter to the Office of Management and Budget, which is spearheading the Administration's eRulemaking Initiative. The paper describes the information currently maintained by government agencies and emphasizes the importance of ensuring that no loss of information occurs in making the transition to the on-line system. It also offers steps that the Administration should take to ensure a high level of quality of the information stored in the new system as well as effective search and downloading capabilities. Posted paper, uploaded January 2010, is the published version of the working paper originally posted January 2005, and formerly titled "Recommendations for the Design of the Federal Docket Management System.”
Regulation, Rulemaking, Information Technology
Abstract: The U.S. Environmental Protection Agency (EPA) has established numerous voluntary environmental programs over the last fifteen years, seeking to encourage businesses to make environmental progress beyond what current law requires them to achieve. EPA aims to induce beyond-compliance behavior by offering various forms of recognition and rewards, including relief from otherwise applicable environmental regulations. Despite EPA's emphasis on voluntary programs, relatively few businesses have availed themselves of these programs -- and paradoxically, the programs that offer the most significant regulatory benefits tend to have the fewest members. We explain this paradox by focusing on (a) how programs' membership screening corresponds with membership rewards, and (b) how membership levels correspond, in turn, with membership screening. Our analysis of three major case studies, as well as of data we collected on all of EPA's "green clubs," shows that EPA combines greater rewards with more demanding membership screening, which in turn corresponds with lower participation. EPA's behavior can be understood as a response to the political risks the agency faces when it recognizes and rewards businesses it otherwise is charged with regulating. Given the political constraints on EPA's ability to offer significant inducements to business, we predict participation in all but the most inconsequential voluntary environmental programs will remain quite low, thereby inherently limiting the ultimate value of voluntary programs as a strategy for advancing environmental protection.
environmental leadership programs, innovative models of regulation, self-regulation, green clubs, political economy of regulation, Project XL, 33/50 Program, Performance Track, Environmental Protection Agency, Regulatory agencies, regulatory policy making, next generation environmental policy
Abstract: We examine 89 websites from federal regulatory agencies in order to evaluate their ease of use for those interested in commenting on or learning about their proposed regulations. We find that while there has been a lot of attention given to second and third generation "e-rulemaking" efforts, agency websites, a first generation innovation, still have considerable room for improvement. Notwithstanding legislative and executive branch efforts to enhance the accessibility of regulatory information on the Internet, our coding of regulatory agency websites reveals considerable variation in the quality of agency websites, with many websites still failing to provide relatively basic features.
e-rulemaking, websites, regulation.
Abstract: Over the past decade, the U.S. Environmental Protection Agency (EPA) and states have developed environmental leadership programs (ELPs), a type of voluntary environmental program designed to recognize facilities with strong environmental performance records and encourage facilities to perform better. Proponents argue that ELPs overcome some of the limitations of traditional environmental regulation by encouraging managers to address the full gambit of environmental problems posed by their facilities, reducing the costs of environmental regulation, easing adversarialism, and fostering positive culture change. Although ELPs have been in place for at least five years at the federal level and in seventeen states, these programs have been subject to little empirical evaluation. In this paper, we chart a course for assessing whether ELPs achieve their goals. Drawing on archival research and interviews with government officials who manage these programs, we provide the first comprehensive analysis of the characteristics of these programs, describing program goals, activities, communication strategies, and data collection practices. We find that EPA and many states have established ELPs to improve the environment and to achieve various social goals such as improving relationships between business and government. When it comes to collecting data that could be used to assess these programs' successes, however, government efforts fall short. Even when agencies collect reliable data, these data usually cannot be aggregated sensibly and are insufficient to draw inferences about the true impact of these programs. They also cannot help answer the question of whether ELPs are actually prompting pollution reductions or improving regulatory relationships. These general data weaknesses are significant, even surprising, given the aspirations for ELPs to facilitate policy learning and advocates' claims that these programs are delivering important environmental benefits.
Administrative law, regulatory agencies, state and federal regulation, regulatory policy making, voluntary environmental leadership programs, business responses to regulation, innovative models of regulation, self-regulation, evaluation of social effects of voluntary environmental initiatives
Abstract: Policy scholars and decision makers should be careful before concluding that President Bush's recent Executive Order 13422 will result in "paralysis by analysis." That lament has been heard about other changes to rule making procedures over the last seven decades, yet steady increases in the cost and volume of federal regulations during that time period clearly indicate that paralysis has yet to set in. Administrative procedures are embedded within a complex web of politics, institutions, and organizational behavior. Within that web, procedures are but one factor influencing government agencies.
Cary Coglianese, federal regulations, regulation, executive order, regulatory agencies, Office of Management and Budget, regulatory procedure, regulatory review, regulatory process, administrative procedure, bureaucracy, bureaucratic behavior, regulatory behavior, rhetoric, policy
Abstract: We analyze a little-studied regulatory approach that we call management-based regulation. Management-based regulation directs regulated organizations to engage in a planning process that aims toward the achievement of public goals, offering firms flexibility in how they achieve these goals. The paper develops a framework for assessing conditions for using management-based regulation as opposed to the more traditional technology-based or performance-based regulation. Drawing on case studies of management-based regulation in the areas of food safety, industrial safety, and environmental protection, we show how management-based regulation can be an effective strategy when regulated entities are heterogeneous and regulatory outputs are relatively difficult to monitor. In addition to analyzing conditions for the use of management-based regulation, the paper assesses the range of choices regulators confront in designing management-based regulations. We conclude that management-based regulation requires a far more complex intertwining of public and private sectors than is typical of other forms of regulation, owing to regulators' need to intervene at multiple stages of the production process as well as to the degree of ambiguity over what constitutes good management.
Regulation, Instrument Choice, Management Systems
Abstract: Over its thirteen year history, the negotiated rulemaking process has yielded only thirty-five final administrative rules. By comparison, the federal government publishes over 3,000 final rules each year through the ordinary notice-and- comment process. Why have federal agencies relied so little on negotiated rulemaking? I examine this question by assessing the impact of negotiating rulemaking on its two major purposes: (1) reducing rulemaking time; and (2) decreasing the amount of litigation over agency rules. My analysis suggests that the asserted problems used to justify negotiated rulemaking have been overstated and that the limitations of negotiated rulemaking have been understated. Negotiated rulemaking by all accounts consumes more resources for agencies and stakeholders than does notice-and-comment rulemaking, yet it fails to yield any significant impact on the levels of litigation or controversy which normal rulemaking occasionally engenders. Indeed, 6 out of the 12 negotiated rules adopted by the U.S. Environmental Protection Agency (EPA) have resulted in court challenges, a litigation rate higher than the overall rate for EPA rules. My findings draw into question the growing call among scholars and policymakers for reforming the regulatory process to rely more extensively on formal negotiated rulemaking, suggesting that formal negotiation can actually expand the range of potential conflicts in the regulatory process rather than reduce them.
Abstract: This article reports data that contrast with an extended tradition of viewing litigation as incompatible with ongoing relationships. Within the regulatory process at the U. S. Environmental Protection Agency (EPA), nongovernmental actors having the most sustained relationships with EPA are the ones most likely to engage in litigation against the agency. Litigation within regulatory relationships is not explained by existing theory, which treats litigation largely as a function of relationships. A disturbance theory of disputing, which focuses on how litigation interacts with existing relationships, provides a more robust account of litigation generally and of its compatibility with ongoing regulatory relationships.
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