Introduction

By almost universal consensus, our existing federal systems of environmental and public health regulation are inefficient, incoherent, and slow to adapt to changing times. Our regulatory statutes do not achieve their ends at the lowest economic cost. Indeed, their very structure often prohibits low-cost approaches. They often prescribe in great and binding detail the way an agency must approach a problem, whether or not that approach is the most effective. Such statutes tend to function as piles of unrelated commands, not tied together by any operationally effective common goal. Although we live in an era of rapid change, such statutes will be particularly unable to react to new knowledge and priorities, since that requires substituting new tools for old approaches that have not worked or that have not solved their problems.

This Dialogue argues that a new statute authorizing "regulatory reform contracts" could help cure these problems. That statute would authorize agencies to accept a limited number of offers from the regulated each year to comply with a set of regulatory obligations different from the existing legal requirements, as long as "equal social benefits" would result. The statute would specify the range of obligations that could be traded, e.g., "all pollution control requirements under statutes administered by the U.S. Environmental Protection Agency (EPA)," and, perhaps, set other conditions as well, e.g., forbidding trades that caused violations of air or water quality standards. Since most EPA statutes impose comprehensive planning burdens on states, states would qualify as regulated entities entitled to make contract offers. The statute would also subject all such contracts to public comment and limited judicial review. Any contract that met those conditions would be valid.

This Dialogue is organized as follows. First, it discusses the causes of the statutory defects just outlined, and why current reform suggestions cannot adequately address them. It then argues that "regulatory reform contracts" could address these causes and that the potential objections to their use are largely insubstantial. It concludes by outlining the reformed regulatory system that widespread reliance on reform contracts might produce.