Voluntary Regulation

Abstract

Regulation is ubiquitous in the modern administrative state, profoundly impacting areas as diverse as antitrust, environmental protection, road safety, and telecommunications. Most often, the term regulation is associated with a set of rules that administrative agencies enforce by imposing penalties or other sanctions, an approach scholars and policymakers refer to as mandatory regulation. In recent times, however, voluntary regulation-that is, government initiatives guiding people's and firms' behaviors by resorting to persuasion rather than mandates-has gained significant traction. Federal statutes authorizing billions of dollars in spending, such as the Inflation Reduction Act and the Farm Bill, rely heavily on this form of regulation. Despite its importance, many aspects of voluntary regulation remain undertheorized, including the question of when and under what circumstances policymakers should use it. This Article fills this gap by analyzing some of the most notable voluntary programs and, based on this examination, by proposing a set of scenarios where policymakers should consider using voluntary regulation. This includes instances where mandatory alternatives are unlikely to be adopted for political reasons, cannot be adequately enforced due to limited information, or would generate constitutional or legal risks, such as requiring the payment of compensation pursuant to the Takings Clause. This article makes two additional contributions. It challenges the notion that voluntary initiatives must operate against a backdrop of mandatory regulation in order to be useful, and it highlights the central role that voluntary regulation should play in the context of legal change.