The New Contractarian Paradigm in Environmental Regulation

Abstract

This article argues that a number of recent federal and state regulatory initiatives (HCPs, Project XL, Brownfields, SEPs) reflect a new contractarian paradigm in environmental regulation, the defining characteristics of which are that (1) regulatory requirements are the result of formal negotiation and assent, (2) the requirements are site-specific, and (3) the default for the requirements is existing or threatened command-and-control regulation. The article explores the possible implications of the shift to contractual regulation for judicial review of agency action: notably, courts understandably might analyze contractual regulation from the prism of "private" contract law instead of "public" administrative law, and that change in analytic prism might result in judicial interpretations of regulations that more consistently favor the interests of regulated entities. The article then explores what measures might be taken to help ensure that some of the "surplus" associated with contractarian reforms results in environmental improvements (in addition to compliance costs savings) and to ensure that a regime of contractarian regulation does not fall prey to the kind of entrenchment that critics claim is characteristic of command-and-control regulation. An important and unresolved empirical question is whether some of the possible measures to secure meaningful participation of well-informed environmental advocates in contractarian reform experiments would consume so much of the reform surplus so as to be, from an aggregate social welfare perspective, not worth the effort.