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Abstract
It is widely recognized that regulation involves more than just coercion and punishment and that regulators rely on a variety of soft, flexible tools to serve the public interest, including agreements and understandings with regulated entities.
This article advances a theoretical argument, grounded in law and regulation scholarship, that regulator-regulatee agreements are not simply another tool in the regulatory toolkit. Instead, they constitute the dominant paradigm of regulation—its very core principle.
When we closely examine various regulated areas—such as climate change, environmental protection, and public health—examples of agreement-based regulation are plentiful. Taken together, they form a clear picture in which regulation is often based on discussion, collaboration, consensus, and agreement with regulated entities. These understandings and dialogues occur throughout all phases of regulation: before, during, or after rulemaking, supervision, and enforcement actions.
Given the widespread nature of the practice, agreement-based regulation can provide a new, unified framework for understanding how regulatory norms are shaped, applied, and enforced within and outside the realm of environmental regulation. Importantly, it directly challenges the conventional distinction between regulatory rule types and tools, such as strict, detailed rules versus open-ended standards; performance versus design standards; and hard command-and-control rules versus softer approaches such as self-regulation, disclosure rules, voluntary programs, shaming, and sandboxes. I argue that since all forms of regulation are ultimately negotiated, distinguishing between them based on perceived rigidity or flexibility of specific types of rules or regulatory instruments would be theoretically misleading and of limited analytical and practical value.
The negotiation process inherent in every regulation renders the hard–soft divide, so entrenched in regulatory tools scholarship, much less relevant, because agreements accompany both “soft” and “hard” regulatory tools, making them all inherently soft.
Drawing on examples from multiple environmental policy domains, the article develops a theory of agreement-based regulation. This theory could significantly affect instrument choice and rule-design environmental policies. Typically, the conventional approach in regulatory policy treats different rule types and regulatory tools as distinct in mechanism, flexibility, social and economic justification, legitimacy, and effectiveness. In fact, the entire cost-benefit analysis process relies on regulators evaluating and comparing different applicable tools with varying levels of stringency. Viewing all regulation as negotiable and based on agreements with regulatees, however, suggests that selecting a specific mechanism, tool, or legal framework is not that consequential. For example, scholars and policymakers have considered various regulatory approaches to climate change. Given the theory of regulation through agreements, which suggests that the content of all regulatory styles is negotiable in practice, these debates may not be as critical as previously assumed.
For this special panel, the presentation will also consider an important implication of agreement-based theory relating to trust, posing the question of whether basic trust among industries, the public, and regulators is essential for agreement-based regulation to succeed. And in what ways?
