Regulatory Horcruxes

The regulator that designs and first implements a federal regulatory program does not always have the ability to control the timing and process of how that regulatory program will, in this Symposium’s language, “exit.” As the 2016 election has demonstrated, the initiating regulator cannot necessarily plan in advance for the program’s expiration, diminution, or scaling back. A successor instead wields this power. Whether one views this as a terrible thing or a salutary feature of democracy depends in part upon one’s relationship to the regulatory status quo, but also implicates broader questions about policy stability and democratic accountability. At the very least, however, this fact raises several important questions about strategic regulatory design. First, is it possible to insulate or harden regulatory programs from successor exit? And second, when, if ever, would this be a good thing? This Article offers a systematic account of how regulators can make regulatory exit more challenging by looking outward, beyond the walls of a single, primary federal agency to other potential regulators or co-regulators, including secondary federal agencies, the states, and private actors. This Article identifies as a potential antidote to regulatory exit a constellation of strategic techniques that I call regulatory horcruxes—much like the horcruxes Lord Voldemort created by placing portions of his soul into multiple external objects in order to ensure his immortality. An initiating regulator, be it Congress or a federal agency, can use such horcruxes in an effort to make successor exit more difficult by splitting programs beyond the walls of a single federal agency into other institutions. This Article first offers an analytical framework laying out five primary types of horcrux. It then examines horcruxes from a normative perspective, evaluating the comparative benefits and costs of their use in terms of their potential impact both on the durability of regulatory programs and on the quality of democratic deliberation. It acknowledges that horcruxes are an imperfect solution. Although dispersal or fragmentation of regulatory authority may insulate a program from deregulatory pressure, the fragmented regulatory program may exist in a weakened form that cannot accomplish as much as more direct, centralized regulation can. The Article concludes by offering a research agenda, including suggestions for further empirical research

Summary: Business Innovation Creates Policy Disruption

New forms of business in the sharing economy, and new technologies like autonomous vehicles, have the potential to “disrupt” existing regulatory structures. This seminar examined the challenges facing regulators and legislators, who must respond so as to both (a) promote innovation and (b) protect the public interest.https://repository.upenn.edu/pennwhartonppi_bschool/1009/thumbnail.jp

Advisory Nonpreemption

We are living in an era of dramatic and unpredictable technological and business innovation. Federal agencies have been at the forefront of updating substantive legal rules to meet new challenges not originally contemplated by Congress. Yet some innovations—for example, autonomous vehicles—also upset longstanding allocations of authority between the federal and state governments. Significant uncertainty about whether local or national concerns will predominate as innovations develop requires temporary flexibility in allocations of regulatory authority. This Article identifies a new method that federal agencies can use to promote such flexibility before the initiation of a rulemaking or before Congress acts to address such disruptions—advisory nonpreemption. Ordinary preemption shifts the balance of power from the states to the federal government. Advisory nonpreemption has the opposite effect. Advisory nonpreemption can open a dialogue among the federal government, the states, interest groups, and industry not only about the best substantive rules to address innovation, but who ought to govern and enforce those rules. Most importantly, advisory nonpreemption is a method of inserting de facto dynamic jurisdiction temporarily into an existing dual federalism scheme. This Article both describes advisory nonpreemption and defends its use as a normative matter using autonomous vehicle safety regulation as a case study. The approach’s costs in temporary regulatory uncertainty are outweighed by its benefits in promoting innovation, transparency, and the public interest

The Military-Environmental Complex

Although the military’s operations are largely exempt from environmental laws and regulations when those laws conflict with its national security mission, the military has important incentives to reduce its reliance on fossil fuels and combat climate change. If nurtured properly, the military’s extensive undertaking to improve its sustainable energy use and reduce demand for fossil-fuel-derived energy has the potential to become one important tool in the environmental regulatory toolkit.https://repository.upenn.edu/pennwhartonppi/1014/thumbnail.jp

Not the Only Game in Town: The Complementary Roles of Public & Private Environmental Governance

This Brief focuses on ways in which private firms are adopting tools that mirror public law instruments—such as internal carbon fees (similar to a public carbon tax) and private cap-and-trade schemes (like public emissions trading schemes)—to reduce greenhouse gas emissions and address climate change. These private case studies suggest that significant progress in reducing emissions can come from embedding emissions reduction programs into core business strategy. Moreover, these case studies indicate that climate change, as a global issue, requires public regulators to recognize the potential contributions of global multinational firms.https://repository.upenn.edu/pennwhartonppi/1031/thumbnail.jp

Insuring Nature

Scholars and policymakers have argued that insurance can shape behavior in ways that mitigate climate risks, such as by providing financial incentives to property owners to safeguard their property from increasingly intense hurricanes or from the risk of sea-level rise. But natural ecosystems like coral reefs, mangroves, and forest ecosystems can themselves protect property from these increased climate risks. This Article turns the climate governance literature on its head, examining the circumstances under which it is possible to insure nature itself in order to preserve these critical ecosystem services in the face of a changing climate

Anti-Woke Capitalism, the First Amendment, and the Decline of Libertarianism

Firms across the globe, including financial institutions like banks, asset managers, and pension fund managers, are adopting strategies to account for the risks they face from climate change. These strategies include declining to invest in certain emissions-intensive projects or advising firms in their portfolios to report or reduce climate impacts and risks. These forms of private environmental governance can be characterized as one aspect of the “E” within a broader management strategy of “ESG,” or the management of environmental, social, and governance factors. Regulators in the United States and other countries are beginning to mandate that firms take some of these factors into account. With the rise of firms’ consideration of ESG factors has come backlash, often under the umbrella of anti-wokeness. This backlash has come to a head in the form of state laws prohibiting state agencies and municipalities, including state pension funds, from doing business with financial institutions that are alleged to be “boycotting” the fossil fuel industry or that are broadly taking ESG factors into account. These laws are part of a larger trend of targeting firms’ decisions to address social and governance issues like declining to invest in gun manufacturing or taking positions on other social issues, including racial justice, abortion, and LGBTQ+ rights. The last three decades of First Amendment law have been strongly influenced by laissez-faire constitutionalism, stemming in significant part from the adoption of libertarian ideas by the conservative legal movement. New so-called “anti-woke” capitalism laws represent a fundamental shift in the conservative legal movement away from libertarianism, First Amendment Lochnerism, and deregulatory constitutionalism and toward identitarianism and efforts to directly influence the substance of firm decision-making. This Article traces this important turn away from laissez-faire law and policy, which has significant constitutional implications, particularly for the First Amendment. These anti-woke laws, and the identitarian politics they reflect, may foreshadow a similar turn in First Amendment law. At the same time, these laws raise important First Amendment issues. These include the difficult questions of when a governmental motive is sufficiently untoward to trigger heightened scrutiny or render a law unconstitutional, and when a social practice should be considered a medium of expression in public discourse for constitutional purposes. These issues have long vexed courts and scholars and are also crucial to the disposition of many of today’s most contested First Amendment questions. This Article offers the first in-depth constitutional analysis of these so-called “anti-woke capitalism” laws. Rather than declaring that some of these laws—which vary across doctrinally significant axes—are constitutional or unconstitutional, this Article focuses on articulating the questions and constitutional values that should guide analyses of these laws and others like them that regulate social practices at the intersection of political and economic life. By focusing on the First Amendment’s underlying objectives—to protect decisional and participatory liberty in both political life and the marketplace—this Article uses these laws as a lens to clarify and rethink existing doctrinal categories in order to forward a conception of the First Amendment that advances democracy in a thoroughgoing way

Parallels in Public and Private Environmental Governance

Private actors, including business firms and non-governmental organizations, play an essential role in addressing today’s most serious environmental challenges. Yet scholars have not fully recognized the parallels between public environmental law and the standard-setting and enforcement functions of private environmental governance. “Instrument choice” in environmental law scholarship is generally understood to refer to government actors choosing among options from the public law “toolkit,” which includes prescriptive rules, the creation of property rights, the leveraging of markets, and informational regulation. Each of these major public law tools, however, has a parallel in private environmental governance. This Article first provides a descriptive account of these parallels, which highlights two underappreciated tools used by both public and private actors: procurement and insurance for environmental risks. It then considers the normative criteria that should inform choices among instruments by using the example of climate change. The resulting portrait of a multi-tiered, global regime of environmental governance with both public and private options promises greater flexibility and institutional power to address otherwise intractable environmental problems than the traditional paradigm of relying only on public regulation

Parallels in Public and Private Environmental Governance

Private actors, including business firms and non-governmental organizations, play an essential role in addressing today’s most serious environmental challenges. Yet scholars have not fully recognized the parallels between public environmental law and the standard-setting and enforcement functions of private environmental governance. “Instrument choice” in environmental law scholarship is generally understood to refer to government actors choosing among options from the public law “toolkit,” which includes prescriptive rules, the creation of property rights, the leveraging of markets, and informational regulation. Each of these major public law tools, however, has a parallel in private environmental governance. This Article first provides a descriptive account of these parallels, which highlights two underappreciated tools used by both public and private actors: procurement and insurance for environmental risks. It then considers the normative criteria that should inform choices among instruments by using the example of climate change. The resulting portrait of a multi-tiered, global regime of environmental governance with both public and private options promises greater flexibility and institutional power to address otherwise intractable environmental problems than the traditional paradigm of relying only on public regulation