For convenience, second-order agreements are assumed to involve two private parties in the remainder of this article, although more than two private parties are involved in many of these agreements. The second-order arrangements identified in this article require an extension of knowledge of private governance and suggest that the regulatory process is much more dynamic than administration scholars have recognized to date. First, the firm subject to first-order regulation often enters into second-order arrangements with other private actors.
The dynamic regulatory account suggests that the effects of second-order agreements should not only be considered in legislative decision-making, but also that these agreements are an important aspect of the regulatory regime itself. This article uses environmental law to demonstrate the shadow law of second-order agreements.15 It shows that, in response to public environmental laws, private firms have entered into a range of agreements with other private actors – not just with public authorities. The environmental regulatory regime is an appropriate regulatory area to demonstrate the influence of second-order agreements for several reasons.
It then provides an overview of the dynamic regulatory account needed to reflect the influence of second-order similarities. This suggests that by recognizing the influence of second-order similarities, a richer, more complete understanding of the regulatory scheme can emerge.
THE EVOLVING STORY OF AGENCY LEGITIMACY
Rather, the analysis has important implications for broader administrative law, as well as other regulatory areas in which private companies enter into agreements that impact the achievement of public regulatory objectives, including worker safety. The recognition of second-order similarities thus suggests a new agenda for empirical and theoretical work in many regulatory areas of interest to administrative law scholars.
The Traditional Account
During the New Deal era, widespread devolution and the growth of the regulatory state undermined the notion that agencies were simply transmission belts.22 The legitimacy of agencies during this period rested on the superior expertise of agency officials, and agencies were expected to exercise self-control in their implementation. their discretion.2 3. A few decades later, concerns about the industry's ability to capture agencies and growing skepticism about the value of expertise contributed to the development of an alternative model. In the new model of interest representation, the legitimacy of agency action was considered to be a function of agencies' ability to mimic the electoral process through in-.
In this model, the president's direct electoral responsibility is the basis for the enforcement of a larger presidential direction of the agencies' regulatory decision-making. 25. Regardless of the model, the traditional depiction of the regulatory state has maintained an exclusive focus on government actors as regulators.26 Administrative law scholars have examined the division of supervisory powers among the branches of government in order to increase the accountability and effectiveness of agency operations.27 Although views regarding the appropriate branch to implement of control and the scope of that control developed over time, regulatory models were essentially Mgmt., A Report of the Committee on Administrative Management Studies in the Federal Government Discussing the Practical Need for Discretion in Administrative Judgments and Its Consistency with the Rule of Law).
However, once an agency has promulgated a regulation, the regulated firms are assumed to make a comply-or-delay decision.28 The models differ widely in how to justify agency coercion of regulated firms and in how to use the regulatory apparatus. control or monitor. . Yet all existing models share an assumption that agencies are the relevant regulatory bodies and that private firms are the relevant regulated entities.29 Put differently, the traditional accounts of the administrative state begin with the premise that public regulations are the legal ones. requirements that encourage companies to change behaviour.
The New Focus on the Private Role
105:2029, but by entering into agreements with private actors.32 These public-private negotiated regulatory solutions are sometimes called "public/private hybrids" or "government-stakeholder network structures".33 Private governance experts have suggested that public/ private hybrids are involved in the three main functions traditionally assigned to public agencies: setting, implementing, and enforcing (including monitoring) standards. See e.g. Freeman, Private Role, supra note 8, at 646-49. (noting that trade associations and independent private organizations have developed private environmental management standards).
The enforcement authority, on the other hand, also goes from public/private hybrids to private companies.4 2 Thus, it is noted in the accounts of private governance that the legal requirements that cause companies to change their behavior do not only originate from agencies, but from public/private hybrids. Such hybrids can e.g. enable the government to achieve regulatory goals at lower costs than traditional public regulation.43 At the same time, however, public/private hybrids raise difficult accountability concerns.44 The traditional administrative law means to ensure the accountability of authorities. through judicial review of rulemaking and similar measures can do little to ensure that public/private hybrids are transparent and responsive to constituents.45 Importantly, scholars have argued that concerns about agency accountability should be redirected to a new search for alternative accountability mechanisms. which can ensure the aggregate accountability not only of agencies, but of the new public/private hybrids.4 6 In this view, public/private hybrids can be perceived as an opportunity to find new ways of accountability. For example, the public/private hybrids themselves may be subject to non-traditional accountability measures, such as public participation in the drafting of private codes of conduct and in the negotiation of public-private regulatory agreements.
Enthusiasts of private governance have concluded that the public-private hybrids they have identified should not only lead to a new emphasis on aggregate responsibility, but may also influence the public appetite for regulation. As with public-private hybrids, second-order agreements will not be constrained by traditional constitutional non-delegation and due process doctrines.
Toward a More Dynamic Account
THE EMPIRICAL CASE FOR A MORE DYNAMIC ACCOUNT
The limited academic work available on the role of second-order agreements also includes Ronald B. Finally, in some cases, two layers of second-order agreements may encourage lenders to play a regulatory role. An additional indication of the potential influence of second-order agreements is the growth of the bar whose practice consists of negotiating, drafting, monitoring and enforcing these agreements.
The existence and impact of second-order agreements suggest that traditional accounts of the regulatory administrative state, even as updated by private governance scholars, are impoverished. Second-order agreements complicate the division of institutions by requiring consideration of the dynamic institutional interactions that occur when private parties bargain over regulatory duties. Second-order agreements initially reduce transparency by introducing an additional layer of institutions into the regulatory process, adding enormous complexity to the administration of the regulatory state.
Second-order agreements influence the extent to which the regulatory state responds to public preferences, and the analysis here examines some of the most salient effects: arrest, inertia, expressive effects, and judicial oversight. Second-order agreements have mixed effects on capture, one of the main constraints on agency responsiveness. Second-order agreements can also have the effect of reducing catches in other ways.
The growth of second-order agreements may also undermine the extent to which courts are able to oversee the responsiveness of the regulatory state. The court therefore gave short shrift to the public consequences of private second-order agreements. In the process, it has reduced the responsiveness of the regulatory state by defining the extent to which federal courts can police private second-order agreements that have public consequences.
In these cases, second-order agreements can fill a gap that is not due to an error in the implementation of the regulatory scheme, but as part of its organic design. The emergence of good neighbor agreements suggests that this type of second-order agreements can facilitate redistribution in the form of compensation to communities that bear the brunt of the risks created by industrial plants. The complex effects of second-order agreements on the regulatory state make the way forward equally complex.
Courts can influence the effects of second-order agreements on the regulatory state in a variety of ways. In each case, the courts could improve the accountability and effectiveness of the regulatory regime if their decisions reflected an understanding of the public effects of private second-order agreements. For example, a recent draft EPA assessment of the benefits of CERCLA does not account for the changes in corporate behavior that arise from second-order agreements.
A second step on the empirical front is to examine the magnitude of the influence that second-order similarities have on firm behavior.
