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Volumn 85, Issue 2, 2010, Pages 393-456

The institutional dynamics of transition relief

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EID: 77954693439     PISSN: 00287881     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article
Times cited : (20)

References (312)
  • 1
    • 77954732688 scopus 로고    scopus 로고
    • Transition policy: A conceptual framework
    • Transition relief, when provided by the government, usually has assumed the form of "grandfathering" preexisting behavior or compensating for its discontinuation, 163, [hereinafter Kaplow, Transition Policy] ("[A] variety of transition provisions can be implemented, including partial or full compensation of losses and taxation of gains, grandfathering, phase-ins, and so forth."%);
    • Transition relief, when provided by the government, usually has assumed the form of "grandfathering" preexisting behavior or compensating for its discontinuation. See, e.g., Louis Kaplow, Transition Policy: A Conceptual Framework, 13 J. CONTEMP. LEGAL ISSUES 161, 163 (2003) [hereinafter Kaplow, Transition Policy] ("[A] variety of transition provisions can be implemented, including partial or full compensation of losses and taxation of gains, grandfathering, phase-ins, and so forth."%);
    • (2003) J. Contemp. Legal Issues , vol.13 , pp. 161
    • Kaplow, L.1
  • 2
    • 38049132739 scopus 로고    scopus 로고
    • Timing rules and legal institutions
    • 584,(arguing that "Delay Rules" provide partial compensation alternative to generally assumed choice between "just compensation" and "no compensation"). This is not always the case, however. On occasion, the government grants a firm or industry valuable new rights at the same time that it imposes costly regulation-a type of regulatory tradeoff. The Hatch- Waxman Act, which established the modern regulatory regime concerning general pharmaceutical drugs, is an example of this type of regime. Pub. L. No. 98- 417, 98 Stat. 1585 (codified as amended in scattered sections of 15, 21, 35, and 42 U.S.C.)
    • cf. Jacob E. Gersen & Eric A. Posner, Timing Rules and Legal Institutions, 121 HARV. L. REV. 543, 584 (2007) (arguing that "Delay Rules" provide partial compensation alternative to generally assumed choice between "just compensation" and "no compensation"). This is not always the case, however. On occasion, the government grants a firm or industry valuable new rights at the same time that it imposes costly regulation-a type of regulatory tradeoff. The Hatch- Waxman Act, which established the modern regulatory regime concerning general pharmaceutical drugs, is an example of this type of regime. Pub. L. No.98-417, 98 Stat. 1585 (codified as amended in scattered sections of 15, 21, 35, and 42 U.S.C.);
    • (2007) Harv. L. Rev. , vol.121 , pp. 543
    • Jacob, E.G.1    Eric, A.P.2
  • 3
    • 33749318580 scopus 로고    scopus 로고
    • Patents and new product development in the pharmaceutical and biotechnology industries
    • Spring, at 7, (describing tradeoffs involved in statutory scheme). The arguments that we offer regarding transition relief apply equally to all types of government-provided relief, and so, in the Sections that follow, we discuss transition relief generally, with occasional references to particular grandfathering regimes for purposes of explication.
    • see also Henry Grabowski, Patents and New Product Development in the Pharmaceutical and Biotechnology Industries, 8 GEO. PUB. POL'Y REV., Spring 2003, at 7, 11-14 (describing tradeoffs involved in statutory scheme). The arguments that we offer regarding transition relief apply equally to all types of government-provided relief, and so, in the Sections that follow, we discuss transition relief generally, with occasional references to particular grandfathering regimes for purposes of explication.
    • (2003) Geo. Pub. Pol'y Rev. , vol.8 , pp. 11-14
    • Grabowski, H.1
  • 4
    • 37749039804 scopus 로고    scopus 로고
    • Grandfathering and environmental regulation: The law and economics of new source review
    • 1678, (discussing grandfathering of pollution sources under Clean Air Act of 1970)
    • See, e.g., Jonathan Remy Nash & Richard L. Revesz, Grandfathering and Environmental Regulation: the Law and Economics of New Source Review, 101 NW. U. L. REV. 1677, 1678 (2007) (discussing grandfathering of pollution sources under Clean Air Act of 1970).
    • (2007) Nw. U. L. Rev. , vol.101 , pp. 1677
    • Jonathan, R.N.1    Richard, L.R.2
  • 5
    • 47749155099 scopus 로고    scopus 로고
    • Should greenhouse gas permits be allocated on a per capita basis?
    • 57-65, (highlighting unique issues associated with allocating greenhouse gas emissions permits at international level)
    • See, e.g., Eric A. Posner & Cass R. Sunstein, Should Greenhouse Gas Permits Be Allocated on a Per Capita Basis?, 97 CAL. L. REV. 51, 57-65 (2009) (highlighting unique issues associated with allocating greenhouse gas emissions permits at international level);
    • (2009) Cal. L. Rev. , vol.97 , pp. 51
    • Eric, A.P.1    Cass, R.S.2
  • 6
    • 50249085077 scopus 로고    scopus 로고
    • A meaningful U.S. cap-and-trade system to address climate change
    • 320-321 (proposing system that both auctions and grandfathers permits, with grandfathering phased out over time)
    • Robert N. Stavins, A Meaningful U.S. Cap-and-Trade System To Address Climate Change, 32 HARV. ENVTL. L. REV. 293, 320-321 (2008) (proposing system that both auctions and grandfathers permits, with grandfathering phased out over time).
    • (2008) Harv. Envtl. L. Rev. , vol.32 , pp. 293
    • Robert, N.S.1
  • 7
    • 77954752583 scopus 로고    scopus 로고
    • Huge bonus hangs over pay review
    • Aug. 13, at B1 (reporting Citibank's argument that compensation it owes to trader is exempt from federal review on ground that "it is part of a contract signed before the law establishing the review system was passed")
    • See, e.g., Stephen Labaton & Eric Dash, Huge Bonus Hangs over Pay Review, N.Y. TIMES, Aug. 13, 2009, at B1 (reporting Citibank's argument that compensation it owes to trader is exempt from federal review on ground that "it is part of a contract signed before the law establishing the review system was passed").
    • (2009) N.Y. Times
    • Labaton, S.1    Dash, E.2
  • 8
    • 84934564251 scopus 로고
    • An economic analysis of legal transitions
    • 533-36 [hereinafter Kaplow, Legal Transitions] (asserting that natural disasters and government-created risks are analogous); Kaplow, Transition Policy, supra note 1, at 176-77, 179 (same)
    • E.g., Louis Kaplow, An Economic Analysis of Legal Transitions, 99 HARV. L. REV. 509, 533-36 (1986) [hereinafter Kaplow, Legal Transitions] (asserting that natural disasters and government-created risks are analogous); Kaplow, Transition Policy, supra note 1, at 176-77, 179 (same).
    • (1986) Harv. of L. Rev. , vol.99 , pp. 509
    • Kaplow, L.1
  • 9
    • 77954715500 scopus 로고    scopus 로고
    • Kaplow, Legal Transitions, supra note 5, at 528-531
    • Kaplow, Legal Transitions, supra note 5, at 528-531
  • 10
    • 84934562066 scopus 로고
    • Compensation for takings: An economic analysis
    • 582-599, (contending absence of private insurance against government action may necessitate compensation for government takings in order to minimize suboptimally low investments)
    • See, e.g., Lawrence Blume & Daniel L. Rubinfeld, Compensation for Takings: An Economic Analysis, 72 CAL. L. REV. 569, 582-599 (1984) (contending absence of private insurance against government action may necessitate compensation for government takings in order to minimize suboptimally low investments);
    • (1984) Cal. L. Rev. , vol.72 , pp. 569
    • Blume, L.1    Daniel, L.R.2
  • 11
    • 0345562962 scopus 로고    scopus 로고
    • Tax transitions, opportunistic retroactivity and the benefits of government precommitment
    • 1138-1143, (arguing that without transition relief, tax incentives may become more expensive to government)
    • Kyle D. Logue, Tax Transitions, Opportunistic Retroactivity, and the Benefits of Government Precommitment, 94 MICH. L. REV. 1129, 1138-1143 (1996) (arguing that without transition relief, tax incentives may become more expensive to government);
    • (1996) Mich. L. Rev. , vol.94 , pp. 1129
    • Kyle, D.L.1
  • 12
    • 38149061917 scopus 로고    scopus 로고
    • Judicial deference and the credibility of agency commitments
    • 1025, 1041-47 (asserting transition relief may be appropriate to induce actors to undertake socially desirable voluntary projects)
    • Jonathan Masur, Judicial Deference and the Credibility of Agency Commitments, 60 VAND. L. REV. 1021, 1025, 1041-47 (2007) (asserting transition relief may be appropriate to induce actors to undertake socially desirable voluntary projects)
    • (2007) Vand. L. Rev. , vol.60 , pp. 1021
    • Masur, J.1
  • 13
    • 76949098994 scopus 로고    scopus 로고
    • Allocation and uncertainty: Strategic responses to environmental grandfathering
    • 831, 833-34, [hereinafter Nash, Allocation and Uncertainty] (arguing that transition relief occasionally may enhance government legitimacy)
    • Jonathan Remy Nash, Allocation and Uncertainty: Strategic Responses to Environmental Grandfathering, 36 ECOLOGY L.Q. 809, 831, 833-34 (2009) [hereinafter Nash, Allocation and Uncertainty] (arguing that transition relief occasionally may enhance government legitimacy);
    • (2009) Ecology L.Q. , vol.36 , pp. 809
    • Remy Nash, J.1
  • 14
    • 47749108284 scopus 로고    scopus 로고
    • Nash & Revesz, supra note 2, at 1727-28, 1730-32 (noting that limited transition relief might be justified on grounds of investment efficiency and fairness); Steven Shavell, On Optimal Legal Change, Past Behavior, and Grandfathering, 37 J. LEGAL STUD. 37, 44-50 (2008) (advocating transition relief where social costs of transition relief's absence outweigh social costs of transition relief%)
    • Nash & Revesz, supra note 2, at 1727-28, 1730-32 (noting that limited transition relief might be justified on grounds of investment efficiency and fairness); Steven Shavell, On Optimal Legal Change, Past Behavior, and Grandfathering, 37 J. LEGAL STUD. 37, 44-50 (2008) (advocating transition relief where social costs of transition relief's absence outweigh social costs of transition relief%);
  • 15
    • 0346703088 scopus 로고    scopus 로고
    • Changes, anticipations, and reparations
    • 1665-1666 (describing transition relief as way to compensate politically powerful interests who otherwise would stand to lose under, and therefore would oppose, new legal regime)
    • cf. Saul Levmore, Changes, Anticipations, and Reparations, 99 COLUM. L. REV. 1657, 1665-1666 (1999) (describing transition relief as way to compensate politically powerful interests who otherwise would stand to lose under, and therefore would oppose, new legal regime).
    • (1999) Colum. L. Rev. , vol.99 , pp. 1657
    • Levmore, S.1
  • 16
    • 77954748064 scopus 로고    scopus 로고
    • See, e.g., Nash & Revesz, supra note 2, at 1727-1728 (advocating limiting transition relief to actors who invest in advanced control technology ahead of legal requirements)
    • See, e.g., Nash & Revesz, supra note 2, at 1727-1728 (advocating limiting transition relief to actors who invest in advanced control technology ahead of legal requirements).
  • 17
    • 77954736852 scopus 로고    scopus 로고
    • We note at the outset that we are not concerned here with every conceivable type of regulation that a legislature or agency might implement. Our focus is on economic regulations of all types-environmental protections, workplace safety laws, food quality regulations, etc. We place to the side all strictly "social" regulation, such as rules regarding marriage or abortion. Issues stemming from California's recent prohibition on same-sex marriage after its prior legalization, for instance, are beyond the scope of this Article. While we recognize that the line between these two categories may not be entirely clean or precise, we will generally focus on only those types of regulations that money alone can compensate
    • We note at the outset that we are not concerned here with every conceivable type of regulation that a legislature or agency might implement. Our focus is on economic regulations of all types-environmental protections, workplace safety laws, food quality regulations, etc. We place to the side all strictly "social" regulation, such as rules regarding marriage or abortion. Issues stemming from California's recent prohibition on same-sex marriage after its prior legalization, for instance, are beyond the scope of this Article. While we recognize that the line between these two categories may not be entirely clean or precise, we will generally focus on only those types of regulations that money alone can compensate.
  • 18
    • 77954756532 scopus 로고    scopus 로고
    • Kaplow, Legal Transitions, supra note 5
    • Kaplow, Legal Transitions, supra note 5.
  • 19
    • 77954739926 scopus 로고    scopus 로고
    • Id. at 533-36
    • Id. at 533-36
  • 21
    • 77954733932 scopus 로고    scopus 로고
    • E.g., Kaplow, Legal Transitions, supra note 5, at 533-536
    • E.g., Kaplow, Legal Transitions, supra note 5, at 533-536
  • 22
    • 77954698983 scopus 로고    scopus 로고
    • Id. at 528-531
    • Id. at 528-531
  • 23
    • 77954727770 scopus 로고    scopus 로고
    • Id. With respect to policy-based changes in the law, Daniel Shaviro argues that it might be optimal both to compensate those who stand to lose under a new legal regime and also to seek compensation from those who stand to gain. SHAVIRO, supra note 11, at 99-100. He recognizes, however, that the political reality is that those who stand to lose are much more likely to obtain compensation than are those who stand to gain likely to be compelled to surrender it. Id. at 100-101 Given this asymmetry, he concludes that the better norm is to deny transition relief across the board. Id. at 101. For a discussion of Shaviro's view with respect to non-policy-based legal changes, see infra note 42 and accompanying text
    • Id. With respect to policy-based changes in the law, Daniel Shaviro argues that it might be optimal both to compensate those who stand to lose under a new legal regime and also to seek compensation from those who stand to gain. SHAVIRO, supra note 11, at 99-100. He recognizes, however, that the political reality is that those who stand to lose are much more likely to obtain compensation than are those who stand to gain likely to be compelled to surrender it. Id. at 100-101 Given this asymmetry, he concludes that the better norm is to deny transition relief across the board. Id. at 101. For a discussion of Shaviro's view with respect to non-policy-based legal changes, see infra note 42 and accompanying text.
  • 24
    • 77954745912 scopus 로고    scopus 로고
    • See Kaplow, Transition Policy, supra note 1, at 178-186 (predicting greater efficiency from private insurance scheme than from transition relief)
    • See Kaplow, Transition Policy, supra note 1, at 178-186 (predicting greater efficiency from private insurance scheme than from transition relief).
  • 25
    • 77954741718 scopus 로고    scopus 로고
    • See, e.g., Kaplow, Legal Transitions, supra note 5, at 527-528 ("Insurance is one of the more common techniques for mitigating risk . . . .")
    • See, e.g., Kaplow, Legal Transitions, supra note 5, at 527-528 ("Insurance is one of the more common techniques for mitigating risk . . . .").
  • 26
    • 77952262084 scopus 로고    scopus 로고
    • Single stock futures and crossborder access for U.S. investors
    • In addition to private insurance, some actors are able to hedge against future economic change using futures contracts. 239, ("Futures contracts are used to lock in the price of assets in the future to protect the investor from adverse changes in the spot market price of the asset.")
    • In addition to private insurance, some actors are able to hedge against future economic change using futures contracts. See, e.g., Eric J. Pan, Single Stock Futures and Crossborder Access for U.S. Investors, 14 STAN. J.L. BUS. & FIN. 221, 239 (2008) ("Futures contracts are used to lock in the price of assets in the future to protect the investor from adverse changes in the spot market price of the asset.").
    • (2008) Stan. J.L. Bus. & Fin. , vol.14 , pp. 221
    • Eric, J.P.1
  • 27
    • 77954708700 scopus 로고    scopus 로고
    • See Blume & Rubinfeld, supra note 7, at 592-597 (explaining absence of private insurance markets against legal change)
    • See Blume & Rubinfeld, supra note 7, at 592-597 (explaining absence of private insurance markets against legal change).
  • 28
    • 77954734273 scopus 로고    scopus 로고
    • See Kaplow, Legal Transitions, supra note 5, at 545 n.99 (noting possibility of government support of private insurance)
    • See Kaplow, Legal Transitions, supra note 5, at 545 n.99 (noting possibility of government support of private insurance).
  • 29
    • 77954714309 scopus 로고    scopus 로고
    • This is not to suggest that, normatively, the absence of an insurance market should mandate transition relief. We mean only to suggest that the analogy between the settings is not so clear, and also that, as a positive matter, transition relief might be more common than government mitigation of natural social and economic change given the absence of a private insurance market for regulatory change
    • This is not to suggest that, normatively, the absence of an insurance market should mandate transition relief. We mean only to suggest that the analogy between the settings is not so clear, and also that, as a positive matter, transition relief might be more common than government mitigation of natural social and economic change given the absence of a private insurance market for regulatory change.
  • 30
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    • Shavell, supra note 7, at 38
    • Shavell, supra note 7, at 38.
  • 31
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    • Id. at 38-39
    • Id. at 38-39.
  • 32
    • 77954748407 scopus 로고    scopus 로고
    • Id. at 39
    • Id. at 39.
  • 33
    • 77954730033 scopus 로고    scopus 로고
    • See Masur, supra note 7, at 1041-47 (arguing that vulnerability to legal transitions may discourage investment); Nash & Revesz, supra note 2, at 1727-1728 (noting that limited transition relief might be justified on grounds of investment efficiency)
    • See Masur, supra note 7, at 1041-47 (arguing that vulnerability to legal transitions may discourage investment); Nash & Revesz, supra note 2, at 1727-1728 (noting that limited transition relief might be justified on grounds of investment efficiency).
  • 34
    • 77954712769 scopus 로고    scopus 로고
    • See Logue, supra note 7, at 1138-1143 (arguing that without transition relief, tax incentives may become more expensive to government)
    • See Logue, supra note 7, at 1138-1143 (arguing that without transition relief, tax incentives may become more expensive to government).
  • 35
    • 77954752251 scopus 로고    scopus 로고
    • See Blume & Rubinfeld, supra note 7, at 582-599 (contending that absence of private insurance against government action may necessitate compensation for government takings in order to minimize suboptimally low investments)
    • See Blume & Rubinfeld, supra note 7, at 582-599 (contending that absence of private insurance against government action may necessitate compensation for government takings in order to minimize suboptimally low investments).
  • 36
    • 77954745551 scopus 로고    scopus 로고
    • Masur, supra note 7, at 1041-1047
    • Masur, supra note 7, at 1041-1047
  • 37
    • 77954737207 scopus 로고    scopus 로고
    • Id. at 1025
    • Id. at 1025
  • 38
    • 77954702776 scopus 로고    scopus 로고
    • Entrenching environmentalism: Private conservation easements over public land
    • (forthcoming) (arguing that legislative entrenchment of preexisting private law might be proper in some circumstances, but only if appropriately limited)
    • See also Christopher Serkin, Entrenching Environmentalism: Private Conservation Easements over Public Land, U. CHI. L. REV. (forthcoming 2010), available at http://ssrn.com/abstract=1474288 (arguing that legislative entrenchment of preexisting private law might be proper in some circumstances, but only if appropriately limited).
    • (2010) U. Chi. L. Rev.
    • Serkin, C.1
  • 39
    • 77954755086 scopus 로고    scopus 로고
    • Nash & Revesz, supra note 2, at 1727-1728 (footnotes omitted)
    • Nash & Revesz, supra note 2, at 1727-1728 (footnotes omitted).
  • 40
    • 77954710047 scopus 로고    scopus 로고
    • Id.; cf. Masur, supra note 7, at 1043 (noting that actors may avoid investments in absence of commitment to regulatory stability)
    • Id.; cf. Masur, supra note 7, at 1043 (noting that actors may avoid investments in absence of commitment to regulatory stability).
  • 41
    • 77954717892 scopus 로고    scopus 로고
    • Logue, supra note 7, at 1138-1139
    • Logue, supra note 7, at 1138-1139
  • 42
    • 77954734271 scopus 로고    scopus 로고
    • Id. at 1139
    • Id. at 1139.
  • 43
    • 77954698434 scopus 로고    scopus 로고
    • See generally U.S. CONST. amend. V (prohibiting taking of private property "for public use, without just compensation")
    • See generally U.S. CONST. amend. V (prohibiting taking of private property "for public use, without just compensation").
  • 44
    • 77954744529 scopus 로고    scopus 로고
    • Blume & Rubinfeld, supra note 7, at 582-599
    • Blume & Rubinfeld, supra note 7, at 582-599
  • 45
    • 77954751792 scopus 로고    scopus 로고
    • Levmore, supra note 7, at 1665-1666
    • Levmore, supra note 7, at 1665-1666
  • 46
    • 77954714625 scopus 로고    scopus 로고
    • Id
    • Id.
  • 47
    • 77954707143 scopus 로고    scopus 로고
    • Nash Allocation and Uncertainty supra note 7 at 831, 833-834
    • Nash, Allocation and Uncertainty, supra note 7, at 831, 833-834
  • 48
    • 77954714969 scopus 로고    scopus 로고
    • Id. at 834 (suggesting that avoidance of externalities justified government relief to financial sector in recent economic crisis)
    • Id. at 834 (suggesting that avoidance of externalities justified government relief to financial sector in recent economic crisis).
  • 49
    • 77954695431 scopus 로고    scopus 로고
    • Id. (arguing that transition relief may be justified "to protect lifestyles and community cohesion")
    • Id. (arguing that transition relief may be justified "to protect lifestyles and community cohesion").
  • 50
    • 77954723154 scopus 로고    scopus 로고
    • Nash & Revesz, supra note 2, at 1730-1731 (footnote omitted)
    • Nash & Revesz, supra note 2, at 1730-1731 (footnote omitted).
  • 51
    • 47749112976 scopus 로고    scopus 로고
    • Logue legal transitions, rational expectations and legal progress
    • 213, (noting that "competitive, evolutionary pressures" that make corporations likely to anticipate risks do not apply to individuals)
    • See Kyle D. Logue, Legal Transitions, Rational Expectations, and Legal Progress, 13 J. CONTEMP. LEGAL ISSUES 211, 213 (2003) (noting that "competitive, evolutionary pressures" that make corporations likely to anticipate risks do not apply to individuals).
    • (2003) J. Contemp. Legal Issues , vol.13 , pp. 211
    • Kyle, D.1
  • 52
    • 77954715830 scopus 로고    scopus 로고
    • SHAVIRO, supra note 11, at 101-103
    • SHAVIRO, supra note 11, at 101-103
  • 53
    • 77954708348 scopus 로고    scopus 로고
    • See, e.g., Blume & Rubinfeld, supra note 7, at 572 ("Although one might expect investors to avoid the costs associated with risk by obtaining insurance in the private market, such insurance is not available because of market failure.")
    • See, e.g., Blume & Rubinfeld, supra note 7, at 572 ("Although one might expect investors to avoid the costs associated with risk by obtaining insurance in the private market, such insurance is not available because of market failure.").
  • 54
    • 77954726793 scopus 로고
    • Corporate debt relationships: Legal theory in a time of restructuring
    • Investors might well prefer that publicly owned and traded companies operate neutrally with respect to risk. An investor can hedge risk on her own simply by assembling a diverse portfolio of assets. In reality, of course, agency costs within firms often lead them to behave in risk-averse fashion. Executives seeking to protect their jobs will avoid risky behavior, even at the expense of lower expected net returns (describing management's risk aversion due to its "undiversifiable investment in human capital")
    • Investors might well prefer that publicly owned and traded companies operate neutrally with respect to risk. An investor can hedge risk on her own simply by assembling a diverse portfolio of assets. In reality, of course, agency costs within firms often lead them to behave in risk-averse fashion. Executives seeking to protect their jobs will avoid risky behavior, even at the expense of lower expected net returns. See William W. Bratton, Jr., Corporate Debt Relationships: Legal Theory in a Time of Restructuring, 1989 DUKE L.J. 92, 128 n.163 (describing management's risk aversion due to its " undiversifiable investment in human capital");
    • (1989) Duke L.J. , vol.92 , pp. 128-163
    • William Jr., W.B.1
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    • Corporate liability strategies and the costs of legal controls
    • 864, (noting that market pressures are unlikely to overcome top management's aversion to risk). This risk-averse behavior makes regulatory (or other) insurance potentially socially valuable even for publicly traded firms with diversified owners, which otherwise might manage risk effectively on their own. There may also be some risks small enough to allow large firms to self-insure (i.e., absorb the risk and count on the firm's large size to protect it against significant shocks). However, for smaller firms most regulatory risks will be too large to permit self-insurance; and some regulatory events-major carbon taxes, for instance-may be so significant that even large firms cannot self-insure. There are thus many contexts in which self-interested firm executives would pursue outside insurance
    • Reinier H. Kraakman, Corporate Liability Strategies and the Costs of Legal Controls, 93 YALE L.J. 857, 864 (1984) (noting that market pressures are unlikely to overcome top management's aversion to risk). This risk-averse behavior makes regulatory (or other) insurance potentially socially valuable even for publicly traded firms with diversified owners, which otherwise might manage risk effectively on their own. There may also be some risks small enough to allow large firms to self-insure (i.e., absorb the risk and count on the firm's large size to protect it against significant shocks). However, for smaller firms most regulatory risks will be too large to permit self-insurance; and some regulatory events-major carbon taxes, for instance-may be so significant that even large firms cannot self-insure. There are thus many contexts in which self-interested firm executives would pursue outside insurance.
    • (1984) Yale L.J. , vol.93 , pp. 857
    • Reinier, H.K.1
  • 56
    • 77954709045 scopus 로고    scopus 로고
    • See Kaplow, Transition Policy, supra note 1, at 197-198 (noting that compensation for preexisting interests may reduce or eliminate resistance of those who otherwise would stand to lose under new legal regime and that "private insurance may also produce a similar effect")
    • See Kaplow, Transition Policy, supra note 1, at 197-198 (noting that compensation for preexisting interests may reduce or eliminate resistance of those who otherwise would stand to lose under new legal regime and that "private insurance may also produce a similar effect").
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    • Takings, insurance, and michelman: Comments on economic interpretations of "just compensation" law
    • If parties did not know in advance whether they would be winners or losers under a new legal regime, they would all elect to insure, leaving them in similar positions once the new regime was implemented, 282-283, (discussing how insurance against takings would not cover demoralization costs-that is, negative feelings about government that result from exercise of eminent domain)
    • If parties did not know in advance whether they would be winners or losers under a new legal regime, they would all elect to insure, leaving them in similar positions once the new regime was implemented. But see William A. Fischel & Perry Shapiro, Takings, Insurance, and Michelman: Comments on Economic Interpretations of "Just Compensation" Law, 17 J. LEGAL STUD. 269, 282-283 (1988) (discussing how insurance against takings would not cover demoralization costs-that is, negative feelings about government that result from exercise of eminent domain).
    • (1988) J. Legal Stud. , vol.17 , pp. 269
    • William, A.F.1    Shapiro, P.2
  • 58
    • 33846595327 scopus 로고    scopus 로고
    • Framing effects and regulatory choice
    • 340, (describing "optimal level of pollution" analogously)
    • Cf. Jonathan Remy Nash, Framing Effects and Regulatory Choice, 82 NOTRE DAME L. REV. 313, 340 (2006) (describing "optimal level of pollution" analogously).
    • (2006) Notre Dame L. Rev. , vol.82 , pp. 313
    • Remy Nash, J.1
  • 59
    • 50049086920 scopus 로고    scopus 로고
    • Karkkainen bottlenecks and baselines: Tackling information deficits in environmental regulation
    • 1413-1415, (detailing information deficits faced by government agencies in evaluating environmental regulatory decisions)
    • See Bradley C. Karkkainen, Bottlenecks and Baselines: Tackling Information Deficits in Environmental Regulation, 86 TEX. L. REV. 1409, 1413-1415 (2008) (detailing information deficits faced by government agencies in evaluating environmental regulatory decisions).
    • (2008) Tex. L. Rev. , vol.86 , pp. 1409
    • Bradley, C.1
  • 60
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    • Stewart reforming environmental law
    • 1342-1343, (arguing that implementation of marketable pollution emission allowance scheme in place of environmental command-and-control regulation "would immediately eliminate most of the information-processing tasks that are presently overwhelming the federal and state bureaucracies" and "[i]nstead of giving the job of economic and technological assessment to bureaucrats, . . . would put the informationprocessing burden precisely where it belongs: upon business managers and engineers who are in the best position to figure out how to cut back on their plants' pollution costs")
    • Cf. Bruce A. Ackerman & Richard B. Stewart, Reforming Environmental Law, 37 STAN. L. REV. 1333, 1342-1343 (1985) (arguing that implementation of marketable pollution emission allowance scheme in place of environmental command-and-control regulation "would immediately eliminate most of the information-processing tasks that are presently overwhelming the federal and state bureaucracies" and "[i]nstead of giving the job of economic and technological assessment to bureaucrats, . . . would put the informationprocessing burden precisely where it belongs: upon business managers and engineers who are in the best position to figure out how to cut back on their plants' pollution costs").
    • (1985) Stan. L. Rev. , vol.37 , pp. 1333
    • Bruce, A.A.1    Richard, B.2
  • 61
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    • mmentators laud the notion of Congress setting the level of pollution under a cap-and-trade regime. See, e.g., id. at 1353 (noting regime's advantages over commandand- control policies)
    • Some commentators laud the notion of Congress setting the level of pollution under a cap-and-trade regime. See, e.g., id. at 1353 (noting regime's advantages over commandand- control policies);
  • 62
    • 77954720888 scopus 로고
    • Sunstein administrative substance
    • 636 [hereinafter Sunstein, Administrative Substance] (observing that one benefit of cap-andtrade system as compared to command-and-control regulation is that cap-and-trade systems put political and public focus on how much pollution will be allowed)
    • Cass R. Sunstein, Administrative Substance, 1991 DUKE L.J. 607, 636 [hereinafter Sunstein, Administrative Substance] (observing that one benefit of cap-andtrade system as compared to command-and-control regulation is that cap-and-trade systems put political and public focus on how much pollution will be allowed);
    • (1991) Duke L.J. , pp. 607
    • Cass, R.1
  • 63
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    • Sunstein democratizing america through law
    • 967, [hereinafter Sunstein, Democratizing America] (same). This argument is made, however, in the context of "democratizing" the development of environmental law by focusing attention on an issue that the public can easily digest, not on the idea that in fact government is by design more likely than a private market to arrive at an "optimal" level of pollution
    • Cass R. Sunstein, Democratizing America Through Law, 25 SUFFOLK U. L. REV. 949, 967 (1991) [hereinafter Sunstein, Democratizing America] (same). This argument is made, however, in the context of "democratizing" the development of environmental law by focusing attention on an issue that the public can easily digest, not on the idea that in fact government is by design more likely than a private market to arrive at an "optimal" level of pollution.
    • (1991) Suffolk U. L. Rev. , vol.25 , pp. 949
    • Cass, R.1
  • 64
    • 0346685326 scopus 로고    scopus 로고
    • Too much market? Conflict between tradable pollution allowances and the "polluter pays" principle
    • 525 n.224, noting possibility that democratically determined pollution cap might differ from optimal level of pollution
    • See Jonathan Remy Nash, Too Much Market? Conflict Between Tradable Pollution Allowances and the "Polluter Pays" Principle, 24 HARV. ENVTL. L. REV. 465, 525 n.224 (2000) (noting possibility that democratically determined pollution cap might differ from optimal level of pollution).
    • (2000) Harv. Envtl. L. Rev. , vol.24 , pp. 465
    • Remy Nash, J.1
  • 65
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    • Lance liebman, private insurance, social insurance and tort reform: Toward a new vision of compensation for illness and injury
    • 106-107, (discussing differences between social insurance and private insurance in context of tort reform)
    • See Kenneth S. Abraham & Lance Liebman, Private Insurance, Social Insurance, and Tort Reform: Toward a New Vision of Compensation for Illness and Injury, 93 COLUM. L. REV. 75, 106-107 (1993) (discussing differences between social insurance and private insurance in context of tort reform);
    • (1993) Colum. L. Rev. , vol.93 , pp. 75
    • Kenneth, S.A.1
  • 66
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    • Takings reassessed
    • Abraham Bell & Gideon Parchomovsky, Takings Reassessed, 87 VA. L. REV. 277, 309 (2001) (describing how private insurance would not be perfect substitute for takings liability because it does not cover demoralization costs suffered by society when government takes property). (Pubitemid 33656644)
    • (2001) Virginia Law Review , vol.87 , Issue.2 , pp. 277
    • Bell, A.1    Parchomovsky, G.2
  • 67
    • 65349125813 scopus 로고    scopus 로고
    • Fixing innovation policy: A structural perspective
    • 42
    • Stuart Minor Benjamin & Arti K. Rai, Fixing Innovation Policy: A Structural Perspective, 77 GEO. WASH. L. REV. 1, 42 (2008).
    • (2008) Geo. Wash. L. Rev. , vol.77 , pp. 1
    • Stuart, M.B.1    Arti, K.R.2
  • 68
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    • Revesz, centralized oversight of the regulatory state
    • For a review of capture theory, 1284-1292
    • For a review of capture theory, see Nicholas Bagley & Richard L. Revesz, Centralized Oversight of the Regulatory State, 106 COLUM. L. REV. 1260, 1284-1292 (2006).
    • (2006) Colum. L. Rev. , vol.106 , pp. 1260
    • Bagley, N.1    Richard, L.2
  • 69
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    • Mank superfund contractors and Agency Capture
    • arguing that "agency capture is a continuum" on which outside influence may not rise to level of total capture). Moreover, the success of interest groups at attaining transition relief at one stage may serve to fuel demands for additional transition relief-including extensions of earlier relief-at later stages. As Nash and Revesz explain: "Transition relief . . . generally gives rise to . . . an incentive for existing actors to try to preserve and extend transition relief so they can continue to extract the economic rents it creates." Nash & Revesz, supra note 2, at 1729. Thus, lobbying begets transition relief, which may in turn beget more lobbying later for even more (or extensions of) transition relief
    • See Bradford C. Mank, Superfund Contractors and Agency Capture, 2 N.Y.U. ENVTL. L.J. 34, 49 (1993) (arguing that "agency capture is a continuum" on which outside influence may not rise to level of total capture). Moreover, the success of interest groups at attaining transition relief at one stage may serve to fuel demands for additional transition relief-including extensions of earlier relief-at later stages. As Nash and Revesz explain: "Transition relief . . . generally gives rise to . . . an incentive for existing actors to try to preserve and extend transition relief so they can continue to extract the economic rents it creates." Nash & Revesz, supra note 2, at 1729. Thus, lobbying begets transition relief, which may in turn beget more lobbying later for even more (or extensions of) transition relief.
    • (1993) N.Y.U. Envtl. L.J. , vol.2 , pp. 34-49
    • Bradford, C.1
  • 70
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    • Levmore, supra note 7, at 1665
    • Levmore, supra note 7, at 1665.
  • 71
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    • describing how polluting sources in eastern United States secured amendment of clean air legislation to limit ability of western states, where air was relatively cleaner, to attract prospective competitors through promise of less stringent air quality controls
    • See, e.g., BRUCE A. ACKERMAN & WILLIAM T. HASSLER, CLEAN COAL/DIRTY AIR 44-54 (1981) (describing how polluting sources in eastern United States secured amendment of clean air legislation to limit ability of western states, where air was relatively cleaner, to attract prospective competitors through promise of less stringent air quality controls).
    • (1981) Clean Coal/Dirty Air , pp. 44-54
    • Bruce, A.A.1    William, T.H.2
  • 72
    • 77954711790 scopus 로고    scopus 로고
    • Levmore, supra note 7, at 1665-1666
    • Levmore, supra note 7, at 1665-1666
  • 73
    • 77954751420 scopus 로고    scopus 로고
    • E.g., Bell & Parchomovsky, supra note 50, at 307-10
    • E.g., Bell & Parchomovsky, supra note 50, at 307-10;
  • 74
    • 77954711471 scopus 로고    scopus 로고
    • Blume & Rubinfeld, supra note 7, at 590-92
    • Blume & Rubinfeld, supra note 7, at 590-92;
  • 75
    • 64249089403 scopus 로고    scopus 로고
    • Eminent domain economics: Should "just compensation" be abolished, and would "takings insurance" work instead?
    • 513-516
    • Steve P. Calandrillo, Eminent Domain Economics: Should "Just Compensation" Be Abolished, and Would "Takings Insurance" Work Instead?, 64 OHIO ST. L.J. 451, 513-516 (2003);
    • (2003) Ohio St. L.J. , vol.64 , pp. 451
    • Steve, P.C.1
  • 76
    • 77954730354 scopus 로고    scopus 로고
    • Kaplow Legal Transitions supra note 5, at 537-41
    • Kaplow, Legal Transitions, supra note 5, at 537-41;
  • 77
    • 77954698982 scopus 로고    scopus 로고
    • Shavell, supra note 7, at 78
    • Shavell, supra note 7, at 78.
  • 78
    • 77954737926 scopus 로고    scopus 로고
    • See supra Part I.C
    • See supra Part I.C.
  • 79
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    • Legal transitions: The case of retroactivity in income tax revision
    • Our claim that a functioning market for private regulatory insurance would enhance social welfare is based upon the arguments of numerous other scholars detailed in Part I. We do not intend to break any new ground on this question here. Nonetheless, we pause to address briefly one commonly raised objection to transition relief, namely, that it will disincentivize firms from adapting to new rules in socially beneficial ways. Were it to exist, private regulatory insurance would be unlikely to generate this unwelcome effect so long as insurance contracts were structured properly. As we describe below in the subsection on moral hazard, these contracts should be written to provide fixed payouts in the event of regulation, not unlimited liability based upon an insured's actual losses. See infra Part II.B.1.a. Consider, for instance, the effect of a carbon tax on the American automobile industry. A carbon tax will make SUVs more expensive relative to smaller, more fuel-efficient cars. Consumers will accordingly shift some consumption to those smaller cars, and automotive companies will adjust production towards those types of vehicles as well. This shift will occur irrespective of whether the industry is insured against carbon regulation: So long as insurance contracts are written to provide fixed payments in the event of regulation, insurance will not change firms' incentives at the margin. The firm will collect the fixed insurance payout regardless of what action it takes in response to the regulation. The firm will then make the same competitive decision it would have made absent insurance; it has no reason to adjust its behavior. Thus, the presence of insurance will not significantly dissuade firms from anticipating legal change, which is sometimes required as a matter of efficiency. See Michael J. Graetz, Legal Transitions: the Case of Retroactivity in Income Tax Revision, 126 U. PA. L. REV. 47, 65-66 (1977) (explaining that it is often efficiency enhancing when private parties anticipate legal change); Levmore, supra note 7, at 1663 (same). Insurance might have some effect on industries' incentives to anticipate legal change. But even this will be a second-order effect. Again, insurance would not disincentivize firms from taking into consideration the possibility of future regulation at the margin; it would only affect the risk profile of the various options available to the firm. Thus, even if regulation is endogenous to firm behavior-e.g., the more that automobile manufacturers switch to fuel-efficient cars, the more likely it is that the government will impose a carbon tax- the availability of insurance would not significantly alter the probability of legal change. The principal effects of insurance would be to cushion the industry against the costs of switching production and possibly to disincentivize the industry from lobbying against regulatory change.
    • (1977) U. Pa. L. Rev. , vol.126 , pp. 47
    • Michael, J.G.1
  • 80
    • 77954730035 scopus 로고    scopus 로고
    • note
    • See infra Part II.B.1.b (describing effect of regulatory insurance on industry lobbying). It is thus conceivable that the availability of insurance would have salutary effects on the rate of legal change. Cf. Levmore, supra note 7, at 1668-74 (describing ways in which transition relief can encourage legal change by mitigating losses of losers in new regime, but arguing such benefits are outweighed by risk of rent-seeking). Automobile firms would be disincentivized from altering their behavior only if they were insured based on actual lost profits. In this circumstance, insured firms would have little or no incentive to mitigate the harm to their businesses caused by regulation-in fact, they might as well shut down. This presents a typical case of moral hazard, a threat that we believe can be dealt with by contract. We discuss the contractual solution to this problem infra Part II.B.1.
  • 81
    • 77954691864 scopus 로고    scopus 로고
    • See, e.g., Shavell, supra note 7, at 78
    • See, e.g., Shavell, supra note 7, at 78;
  • 83
    • 77954697037 scopus 로고    scopus 로고
    • See, e.g., Kaplow, Legal Transitions, supra note 5, at 537-541 (taking existence of private market insurance for granted in discussing moral hazard problem)
    • See, e.g., Kaplow, Legal Transitions, supra note 5, at 537-541 (taking existence of private market insurance for granted in discussing moral hazard problem).
  • 84
    • 0038172267 scopus 로고    scopus 로고
    • The global fifth amendment? NAFTA's investment protections and the misguided quest for an international "regulatory takings" doctrine
    • It is noteworthy that a robust market exists for insurance against foreign government expropriation of American firms' assets abroad. See Vicki Been & Joel C. Beauvais, the Global Fifth Amendment? NAFTA's Investment Protections and the Misguided Quest for an International "Regulatory Takings" Doctrine, 78 N.Y.U.L. REV. 30, 111-14 (2003) (describing market). Yet even this insurance covers only genuine seizure of property, not standard regulation. The policies written by the two major providers are illustrative. The Multilateral Investment Guarantee Agency insures only against [a]ny legislative action or administrative action or omission attributable to the host government which has the effect of depriving the holder of a guarantee of his ownership or control of, or a substantial benefit from, his investment, with the exception of non-discriminatory measures of general application which governments normally take for the purpose of regulating economic activity in their territories. Convention Establishing the Multilateral Investment Guarantee Agency art. 11(a), Oct. 11, 1985, T.I.A.S. No.12,089, 1508 U.N.T.S. 99 (emphasis added). Similarly, the Overseas Private Investment Corporation (OPIC) insures policyholders only against "total expropriation" in violation of international or local laws, not standard legal regulation.
    • (2003) N.Y.U. L. Rev. , vol.78 , pp. 30
    • Been, V.1    Joel, C.B.2
  • 85
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    • See Been & Beauvais, supra, at 112-113 & n.383 (citing variety of OPIC documents and discussing possible limits of coverage, including regulatory expropriations)
    • See Been & Beauvais, supra, at 112-113 & n.383 (citing variety of OPIC documents and discussing possible limits of coverage, including regulatory expropriations).
  • 86
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    • See, e.g., Blume & Rubinfeld, supra note 7, at 593-595 (discussing complete lack of competitive insurance markets for regulatory and physical takings)
    • See, e.g., Blume & Rubinfeld, supra note 7, at 593-595 (discussing complete lack of competitive insurance markets for regulatory and physical takings);
  • 87
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    • Calandrillo, supra note 57, at 513-514 (arguing that subjective valuations of real property by owners pose problems for market value-based compensation)
    • Calandrillo, supra note 57, at 513-514 (arguing that subjective valuations of real property by owners pose problems for market value-based compensation);
  • 88
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    • (Jan. 31, (unpublished manuscript, on file with the New York University Law Review) (blaming failure of markets to emerge in part on inability to separate insurable risks from those under individual's control%)
    • see also Lee Anne Fennell, Unbundling Risk 34-36 (Jan. 31, 2010) (unpublished manuscript, on file with the New York University Law Review) (blaming failure of markets to emerge in part on inability to separate insurable risks from those under individual's control%);
    • (2010) Unbundling Risk , pp. 34-36
    • Lee, A.F.1
  • 89
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    • Insurability and moral hazard in agricultural insurance markets
    • 604, (noting that moral hazard is one of foremost obstacles to establishing private agricultural insurance markets)
    • cf. Robert G. Chambers, Insurability and Moral Hazard in Agricultural Insurance Markets, 71 AM. J. AGRIC. ECON. 604, 604 (1989) (noting that moral hazard is one of foremost obstacles to establishing private agricultural insurance markets).
    • (1989) Am. J. Agric. Econ. , vol.71 , pp. 604
    • Robert, G.C.1
  • 90
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    • Uncertainty and the welfare economics of medical care
    • 961, examining moral hazard as limitation on insurance
    • See, e.g., Kenneth J. Arrow, Uncertainty and the Welfare Economics of Medical Care, 53 AM. ECON. REV. 941, 961 (1963) (examining moral hazard as limitation on insurance).
    • (1963) Am. Econ. Rev. , vol.53 , pp. 941
    • Arrow, K.J.1
  • 91
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    • The economics of moral hazard: Comment
    • (applying economic analysis to moral hazard in medical insurance)
    • See generally Mark V. Pauly, the Economics of Moral Hazard: Comment, 58 AM. ECON. REV. 531 (1968) (applying economic analysis to moral hazard in medical insurance);
    • (1968) Am. Econ. Rev. , vol.58 , pp. 531
    • Mark, V.P.1
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    • On moral hazard and insurance
    • (discussing partial solutions to moral hazards)
    • Steven Shavell, On Moral Hazard and Insurance, 93 Q.J. ECON. 541 (1979) (discussing partial solutions to moral hazards)
    • (1979) Q.J. Econ. , vol.93 , pp. 541
    • Shavell, S.1
  • 93
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    • On the genealogy of moral hazard
    • For a broader treatment of the topic
    • For a broader treatment of the topic, see generally Tom Baker, On the Genealogy of Moral Hazard, 75 TEX. L. REV. 237 (1996).
    • (1996) Tex. L. Rev. , vol.75 , pp. 237
    • Baker, T.1
  • 94
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    • See Kaplow, Legal Transitions, supra note 5, at 538 & n.79 (explaining interaction of moral hazard and efficient precautions); Chunchi Wu & Peter F. Colwell, Moral Hazard and Moral Imperative, 55 J. RISK & INS. 101, 112-115 (1988) (same)
    • See Kaplow, Legal Transitions, supra note 5, at 538 & n.79 (explaining interaction of moral hazard and efficient precautions); Chunchi Wu & Peter F. Colwell, Moral Hazard and Moral Imperative, 55 J. RISK & INS. 101, 112-115 (1988) (same).
  • 95
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    • Moral hazard and observability
    • 74, (noting role of asymmetric information in causing moral hazard problems due to one contracting party's inability to observe perfectly other party's behavior)
    • See Bengt Holmström, Moral Hazard and Observability, 10 BELL J. ECON. 74, 74 (1979) (noting role of asymmetric information in causing moral hazard problems due to one contracting party's inability to observe perfectly other party's behavior).
    • (1979) Bell J. Econ. , vol.10 , pp. 74
    • Holmström, B.1
  • 96
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    • See supra note 59 and sources cited therein
    • See supra note 59 and sources cited therein.
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    • Unity in tort, contract, and property: The model of precaution
    • Social costs are minimized when both parties take all efficient precautions, 6
    • Social costs are minimized when both parties take all efficient precautions. Robert Cooter, Unity in Tort, Contract, and Property: the Model of Precaution, 73 CAL. L. REV. 1, 6 (1985).
    • (1985) Cal. L. Rev. , vol.73 , pp. 1
    • Cooter, R.1
  • 98
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    • An insurer could employ the same mechanisms that the EPA might use to verify a firm's production or use of a particular chemical and, in many situations, could simply piggyback off of already existing permitting and disclosure requirements. The additional advantage of these verification efforts is that, in many instances, fraudulent disclosures would be penalized civilly or criminally by state or federal authorities rather than as mere instances of contract breach
    • An insurer could employ the same mechanisms that the EPA might use to verify a firm's production or use of a particular chemical and, in many situations, could simply piggyback off of already existing permitting and disclosure requirements. The additional advantage of these verification efforts is that, in many instances, fraudulent disclosures would be penalized civilly or criminally by state or federal authorities rather than as mere instances of contract breach.
  • 100
    • 77954740733 scopus 로고    scopus 로고
    • See Calandrillo, supra note 57, at 493-495 (discussing excess incentives to invest in improvements under system of government compensation)
    • See Calandrillo, supra note 57, at 493-495 (discussing excess incentives to invest in improvements under system of government compensation).
  • 101
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    • Richardson mandating environmental liability insurance
    • 295-296, (describing structure of conventional insurance contracts)
    • See Benjamin J. Richardson, Mandating Environmental Liability Insurance, 12 DUKE ENVTL. L. & POL'Y F. 293, 295-296 (2002) (describing structure of conventional insurance contracts).
    • (2002) Duke Envtl. L. & Pol'y F. , vol.12 , pp. 293
    • Benjamin, J.1
  • 102
    • 0001206564 scopus 로고
    • Insurance information and individual action
    • 383, analyzing manner in which insurers write typical contracts
    • See Michael Spence & Richard Zeckhauser, Insurance, Information, and Individual Action, 61 AM. ECON. REV. 380, 383 (1971) (analyzing manner in which insurers write typical contracts);
    • (1971) Am. Econ. Rev. , vol.61 , pp. 380
    • Spence, M.1    Zeckhauser, R.2
  • 103
    • 77954741717 scopus 로고    scopus 로고
    • see also Kaplow, Legal Transitions, supra note 5, at 538-540 (same)
    • see also Kaplow, Legal Transitions, supra note 5, at 538-540 (same).
  • 104
    • 77954732687 scopus 로고    scopus 로고
    • of course, arson and theft for hire similarly involve human-catalyzed insurable risks. But these are rare, illegal activities deterred by the criminal justice system, and so they do not raise the same concerns as the possibility of legal individual action to influence the likelihood of the occurrence of a covered event
    • of course, arson and theft for hire similarly involve human-catalyzed insurable risks. But these are rare, illegal activities deterred by the criminal justice system, and so they do not raise the same concerns as the possibility of legal individual action to influence the likelihood of the occurrence of a covered event.
  • 105
    • 77954733377 scopus 로고    scopus 로고
    • A similar concern motivated the traditional notion that an insurance firm will provide coverage only against events that arise from pure "fortuity.", Eric Mills Holmes ed., 2d ed., (describing fortuity and exclusion of intentional conduct from coverage)
    • A similar concern motivated the traditional notion that an insurance firm will provide coverage only against events that arise from pure "fortuity." See ERIC MILLS HOLMES & MARK S. RHODES, HOLMES'S APPLEMAN ON INSURANCE § 1.4(A) (Eric Mills Holmes ed., 2d ed. 1996) (describing fortuity and exclusion of intentional conduct from coverage);
    • (1996) Holmes's Appleman on Insurance , vol.14 , Issue.A
    • Holmes, E.M.1    Rhodes, M.S.2
  • 106
    • 77954711090 scopus 로고    scopus 로고
    • (14th ed. "Thus, by definition, insurance is not available for losses that the policyholder knows of, planned, intended, or is aware are substantially certain to occur.")
    • BARRY R. OSTRAGER & THOMAS R. NEWMAN, HANDBOOK ON INSURANCE COVERAGE DISPUTES § 8.02, at 561 (14th ed. 2008) ("Thus, by definition, insurance is not available for losses that the policyholder knows of, planned, intended, or is aware are substantially certain to occur.");
    • (2008) Handbook on Insurance Coverage Disputes , vol.802 , pp. 561
    • Ostrager, B.R.1    Newman, T.R.2
  • 107
    • 77954720252 scopus 로고    scopus 로고
    • 3d ed. Supp. 2010) (to same effect)
    • JEFFREY W. STEMPEL, STEMPEL ON INSURANCE CONTRACTS § 1.06(A)(1) (3d ed. Supp. 2010) (to same effect).
    • Stempel on Insurance Contracts , vol.106 , Issue.A , pp. 1
    • Stempel, J.W.1
  • 108
    • 77954700940 scopus 로고    scopus 로고
    • 2 U.S.C. §§ 1603-1604 (2006)
    • 2 U.S.C. §§ 1603-1604 (2006).
  • 109
    • 77954711470 scopus 로고    scopus 로고
    • 2 U.S.C. § 434(a)-(c) (2006)
    • 2 U.S.C. § 434(a)-(c) (2006).
  • 110
    • 77954696234 scopus 로고    scopus 로고
    • 5 U.S.C. § 552 (2006)
    • 5 U.S.C. § 552 (2006).
  • 111
    • 77954721226 scopus 로고    scopus 로고
    • 5 U.S.C. §§ 551-559 (2006)
    • 5 U.S.C. §§ 551-559 (2006).
  • 112
    • 0347876092 scopus 로고    scopus 로고
    • Theories of regulation: Incorporating the administrative process
    • 125 ("[G]ood-government supplements to the APA . . . make participation easier by facilitating agency monitoring . . . . [T]hese acts owe their origin in part to efforts to render administrative government more open by lowering the costs of monitoring agency deliberations." (footnotes and internal quotation marks omitted))
    • See Steven P. Croley, Theories of Regulation: Incorporating the Administrative Process, 98 COLUM. L. REV. 1, 125 (1998) ("[G]ood-government supplements to the APA . . . make participation easier by facilitating agency monitoring . . . . [T]hese acts owe their origin in part to efforts to render administrative government more open by lowering the costs of monitoring agency deliberations." (footnotes and internal quotation marks omitted)).
    • (1998) Colum. L. Rev. , vol.98 , pp. 1
    • Croley, S.P.1
  • 113
    • 0346498177 scopus 로고    scopus 로고
    • Informational regulation and informational standing: Akins and beyond
    • 614, (describing use of federal statutes to reveal information on public deliberations and lobbying)
    • See generally Cass R. Sunstein, Informational Regulation and Informational Standing: Akins and Beyond, 147 U. PA. L. REV. 613, 614 (1998) (describing use of federal statutes to reveal information on public deliberations and lobbying).
    • (1998) U. Pa. L. Rev. , vol.147 , pp. 613
    • Sunstein, C.R.1
  • 114
    • 77954752253 scopus 로고    scopus 로고
    • Indeed, monitoring even the most basic details of a firm's lobbying efforts would appear to be a substantial undertaking. The sheer volume of issues that large firms spend resources on can be astounding. For example, a study conducted after the passage of the Lobbying Disclosure Act of 1995, Pub. L. No.104-65, 109 Stat. 691 (codified as amended at 2 U.S.C. §§ 1601-1612 (2006)), found that during the six-month period between July and December 1996, General Motors filed 47 reports with the government detailing 157 issues on which they had lobbied and spent over $15 million
    • Indeed, monitoring even the most basic details of a firm's lobbying efforts would appear to be a substantial undertaking. The sheer volume of issues that large firms spend resources on can be astounding. For example, a study conducted after the passage of the Lobbying Disclosure Act of 1995, Pub. L. No.104-65, 109 Stat. 691 (codified as amended at 2 U.S.C. §§ 1601-1612 (2006)), found that during the six-month period between July and December 1996, General Motors filed 47 reports with the government detailing 157 issues on which they had lobbied and spent over $15 million.
  • 115
    • 77954742650 scopus 로고    scopus 로고
    • Studying interest groups using lobbying disclosure reports
    • (Ray C. Bliss Inst. of Applied Politics, Univ. of Akron, Akron, Ohio), Summer, at 1, available at. Furthermore, the lobbyists engaged by interest groups will often have the discretion to choose both the forms that their lobbying efforts will take and the intensity of those efforts
    • Frank R. Baumgartner & Beth L. Leech, Studying Interest Groups Using Lobbying Disclosure Reports, 18 VOX POP NEWSL. POL. ORGS. & PARTIES (Ray C. Bliss Inst. of Applied Politics, Univ. of Akron, Akron, Ohio), Summer 1999, at 1, 2, available at http://www.uakron.edu/bliss/docs/Vol-18-Iss-1. pdf. Furthermore, the lobbyists engaged by interest groups will often have the discretion to choose both the forms that their lobbying efforts will take and the intensity of those efforts.
    • (1999) Vox Pop Newsl. Pol. Orgs. & Parties , vol.18 , pp. 2
    • Baumgartner, F.R.1    Leech, B.L.2
  • 116
    • 0345059870 scopus 로고    scopus 로고
    • Choosing battlegrounds: Interest group lobbying across multiple venues
    • For a discussion of the flexible approach lobbyists apply to issue advocacy, Lastly, it is difficult to imagine how a firm could accurately report the total quantity and effectiveness of its informal or grassroots lobbying efforts
    • For a discussion of the flexible approach lobbyists apply to issue advocacy, see generally Thomas T. Holyoke, Choosing Battlegrounds: Interest Group Lobbying Across Multiple Venues, 56 POL. RES. Q. 325 (2003). Lastly, it is difficult to imagine how a firm could accurately report the total quantity and effectiveness of its informal or grassroots lobbying efforts.
    • (2003) Pol. Res. Q. , vol.56 , pp. 325
    • Holyoke, T.T.1
  • 117
    • 0003718910 scopus 로고    scopus 로고
    • providing broad-ranging analysis of lobbying in United States). Given the range of activities in which firms engage, difficult determinations might have to be made about whether ostensibly nonpolitical activities have some influence on political access. For example, should charitable donations be monitored as part of a firm's lobbying effort?
    • See generally KENNETH M. GOLDSTEIN, INTEREST GROUPS, LOBBYING, AND PARTICIPATION IN AMERICA (1999) (providing broad-ranging analysis of lobbying in United States). Given the range of activities in which firms engage, difficult determinations might have to be made about whether ostensibly nonpolitical activities have some influence on political access. For example, should charitable donations be monitored as part of a firm's lobbying effort?
    • (1999) Interest Groups, Lobbying, and Participation in America
    • Goldstein, K.M.1
  • 118
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    • The new corporate philanthropy
    • May-June, 105, (describing use of charitable donations as form of lobbying)
    • See Craig Smith, the New Corporate Philanthropy, 72 HARV. BUS. REV., May-June 1994, at 105, 109-110 (describing use of charitable donations as form of lobbying).
    • (1994) Harv. Bus. Rev. , vol.72 , pp. 109-110
    • Smith, C.1
  • 119
    • 0035540326 scopus 로고    scopus 로고
    • Interest niches and policy bandwagons: Patterns of interest group involvement in national politics
    • 1195 tbl.1 (finding that among businesses that participated in substantial lobbying activity, 73% utilized professional lobbying firms and only 27% engaged in their own lobbying activities)
    • See Frank R. Baumgartner & Beth L. Leech, Interest Niches and Policy Bandwagons: Patterns of Interest Group Involvement in National Politics, 63 J. POL. 1191, 1195 tbl.1 (2001) (finding that among businesses that participated in substantial lobbying activity, 73% utilized professional lobbying firms and only 27% engaged in their own lobbying activities).
    • (2001) J. Pol. , vol.63 , pp. 1191
    • Baumgartner, F.R.1    Leech, B.L.2
  • 120
    • 77954751794 scopus 로고    scopus 로고
    • This practice might of course create other problems of correlated risk, which we address infra Part II.B.3. But if insurers are diversified adequately, it should be possible for them to obtain economies of scale without subjecting themselves to undue threats
    • This practice might of course create other problems of correlated risk, which we address infra Part II.B.3. But if insurers are diversified adequately, it should be possible for them to obtain economies of scale without subjecting themselves to undue threats.
  • 121
    • 77954714310 scopus 로고    scopus 로고
    • See Baumgartner & Leech, supra note 82, at 1194-1198 (showing that businesses and trade associations account for vast majority of lobbying expenditures)
    • See Baumgartner & Leech, supra note 82, at 1194-1198 (showing that businesses and trade associations account for vast majority of lobbying expenditures);
  • 122
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    • The environmental lobbying game: Who plays it on capitol hill and how
    • 640-642 (discussing lobbying efforts of trade associations in area of environmental regulation). We hasten to add that we take no position on whether lobbying is socially beneficial or harmful, or what amount of lobbying is optimal. We mean only to argue that large-scale regulatory insurance would not likely affect the overall quantity of lobbying. The most significant change would simply be a substitution away from trade associations and other interest groups and toward insurance companies
    • see also Ron Chepesiuk, the Environmental Lobbying Game: Who Plays It on Capitol Hill and How, 102 ENVTL. HEALTH PERSP. 640, 640-642 (1994) (discussing lobbying efforts of trade associations in area of environmental regulation). We hasten to add that we take no position on whether lobbying is socially beneficial or harmful, or what amount of lobbying is optimal. We mean only to argue that large-scale regulatory insurance would not likely affect the overall quantity of lobbying. The most significant change would simply be a substitution away from trade associations and other interest groups and toward insurance companies.
    • (1994) Envtl. Health Persp. , vol.102 , pp. 640
    • Chepesiuk, R.1
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    • The political economy of the rent-seeking state
    • 295 (arguing that rent-seeking often leads to welfare losses)
    • E.g., Anne O. Krueger, the Political Economy of the Rent-Seeking State, 64 AM. ECON. REV. 291, 295 (1974) (arguing that rent-seeking often leads to welfare losses);
    • (1974) Am. Econ. Rev. , vol.64 , pp. 291
    • Krueger, A.O.1
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    • The theory of economic regulation
    • 3,( arguing that demand from industry groups shapes form of regulations%)
    • see George J. Stigler, the Theory of Economic Regulation, 2 BELL J. ECON. & MGMT. SCI. 3, 4-6 (1971) (arguing that demand from industry groups shapes form of regulations%);
    • (1971) Bell J. Econ. & Mgmt. Sci. , vol.2 , pp. 4-6
    • Stigler, G.J.1
  • 125
    • 0032398786 scopus 로고    scopus 로고
    • The limits of rent seeking: Why protectionists become free traders
    • 38 (arguing that governments can turn rent-seekers into proponents of free trade by convincing them that rents are unavailable)
    • cf. Michael Lusztig, the Limits of Rent Seeking: Why Protectionists Become Free Traders, 5 REV. INT'L POL. ECON. 38 (1998) (arguing that governments can turn rent-seekers into proponents of free trade by convincing them that rents are unavailable).
    • (1998) Rev. Int'l Pol. Econ. , vol.5
    • Lusztig, M.1
  • 126
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    • Adverse consequences of adverse selection
    • 922, (describing self-selection process creating adverse selection problem)
    • See Mark Pauly & Sean Nicholson, Adverse Consequences of Adverse Selection, 24 J. HEALTH POL., POL'Y & L. 921, 922 (1999) (describing self-selection process creating adverse selection problem);
    • (1999) J. Health Pol., Pol'y & L. , vol.24 , pp. 921
    • Pauly, M.1    Nicholson, S.2
  • 127
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    • The current insurance crisis and modern tort law
    • 1540-1542 (discussing systemic effects of adverse selection)
    • see also George L. Priest, the Current Insurance Crisis and Modern Tort Law, 96 YALE L.J. 1521, 1540-1542 (1987) (discussing systemic effects of adverse selection);
    • (1987) Yale L.J. , vol.96 , pp. 1521
    • Priest, G.L.1
  • 128
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    • Equilibrium in competitive insurance markets: An essay on the economics of imperfect information
    • 636 (discussing equilibrium of market with imperfect information)
    • Michael Rothschild & Joseph Stiglitz, Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information, 90 Q.J. ECON. 629, 636 (1976) (discussing equilibrium of market with imperfect information).
    • (1976) Q.J. Econ. , vol.90 , pp. 629
    • Rothschild, M.1    Stiglitz, J.2
  • 129
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    • See Fennell, supra note 63, at 41-43 (describing manner in which adverse selection problems can frustrate systems of insurance)
    • See Fennell, supra note 63, at 41-43 (describing manner in which adverse selection problems can frustrate systems of insurance).
  • 130
    • 77954752252 scopus 로고    scopus 로고
    • E.g., Blume & Rubinfeld, supra note 7, at 595-96
    • E.g., Blume & Rubinfeld, supra note 7, at 595-96;
  • 131
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    • Calandrillo, supra note 57, at 526-27
    • Calandrillo, supra note 57, at 526-27;
  • 132
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    • Fischel & Shapiro, supra note 46, at 286 ("An explanation for lack of private taking insurance . . . is adverse selection. A public planner might tip off landowners of an impending taking and encourage them to apply for insurance in order to reduce political opposition to his project.")
    • Fischel & Shapiro, supra note 46, at 286 ("An explanation for lack of private taking insurance . . . is adverse selection. A public planner might tip off landowners of an impending taking and encourage them to apply for insurance in order to reduce political opposition to his project.").
  • 133
    • 77954713487 scopus 로고    scopus 로고
    • See Calandrillo, supra note 57, at 526 (noting individuals with inside knowledge of likely takings will buy insurance at disproportionate rates)
    • See Calandrillo, supra note 57, at 526 (noting individuals with inside knowledge of likely takings will buy insurance at disproportionate rates).
  • 134
    • 77954715829 scopus 로고    scopus 로고
    • In contrast, adverse selection problems are far less likely with respect to takings of, for instance, beachfront property. It is no secret whether a parcel of land includes beach access, and this is precisely the type of information that insurers are likely to collect before writing insurance contracts
    • In contrast, adverse selection problems are far less likely with respect to takings of, for instance, beachfront property. It is no secret whether a parcel of land includes beach access, and this is precisely the type of information that insurers are likely to collect before writing insurance contracts.
  • 135
    • 77954738826 scopus 로고    scopus 로고
    • See supra notes 76-80 and accompanying text (describing public nature of lobbying and regulation, which suggests that regulated firms have no greater access to relevant information on regulators than insurers do)
    • See supra notes 76-80 and accompanying text (describing public nature of lobbying and regulation, which suggests that regulated firms have no greater access to relevant information on regulators than insurers do).
  • 136
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    • Epstein, products liability as an insurance market
    • 648-653, (explaining economic advantages of ability to diversify risk)
    • See Richard A. Epstein, Products Liability as an Insurance Market, 14 J. LEGAL STUD. 645, 648-653 (1985) (explaining economic advantages of ability to diversify risk).
    • (1985) J. Legal Stud. , vol.14 , pp. 645
    • Richard, A.1
  • 137
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    • Catastrophe insurance ,capital markets and uninsurable risks
    • 206 (noting that "catastrophe risks" may be uninsurable if they are "too large")
    • See Dwight M. Jaffee & Thomas Russell, Catastrophe Insurance, Capital Markets, and Uninsurable Risks, 64 J. RISK & INS. 205, 206 (1997) (noting that "catastrophe risks" may be uninsurable if they are "too large");
    • (1997) J. Risk & Ins. , vol.64 , pp. 205
    • Jaffee, D.M.1    Russell, T.2
  • 138
    • 0034829587 scopus 로고    scopus 로고
    • Innovations in agricultural and natural disaster insurance
    • (discussing unwillingness of traditional insurance markets to cover agricultural products in event of catastrophe and offering as solution possible securitization of these risks%)
    • see also Mario Miranda & Dmitry V. Vedenov, Innovations in Agricultural and Natural Disaster Insurance, 83 AM. J. AGRIC. ECON. 650 (2001) (discussing unwillingness of traditional insurance markets to cover agricultural products in event of catastrophe and offering as solution possible securitization of these risks%);
    • (2001) Am. J. Agric. Econ. , vol.83 , pp. 650
    • Miranda, M.1    Vedenov, D.V.2
  • 139
    • 77954701272 scopus 로고    scopus 로고
    • Uncertainty as a basis for standing
    • 1129, ("[T]he president of the Reinsurance Association of America has reportedly warned that global warming could bankrupt the insurance industry.")
    • cf. Daniel A. Farber, Uncertainty as a Basis for Standing, 33 HofSTRA L. REV. 1123, 1129 (2005) ("[T]he president of the Reinsurance Association of America has reportedly warned that global warming could bankrupt the insurance industry.").
    • (2005) Hofstra L. Rev. , vol.33 , pp. 1123
    • Farber, D.A.1
  • 140
    • 77954750527 scopus 로고    scopus 로고
    • Chairman and General Re Corp. (Sept. 26, (predicting that U.S. insurance industry would be unable to sustain effects of multiple attacks on level of those witnessed on September 11). However, the extent to which insurers will be liable in the event of a future terrorist attack is still largely uncertain
    • See Ronald E. Ferguson, Chairman, General Re Corp., Statement on the Impact of the September 11, 2001 Terrorist Attacks on the U.S. Insurance and Reinsurance Industry (Sept. 26, 2001), http://financialservices.house.gov/media/ pdf/092601fe.pdf (predicting that U.S. insurance industry would be unable to sustain effects of multiple attacks on level of those witnessed on September 11). However, the extent to which insurers will be liable in the event of a future terrorist attack is still largely uncertain.
    • (2001) Statement on the Impact of the September 11 2001 Terrorist Attacks on the U.S. Insurance and Reinsurance Industry
    • Ferguson, R.E.1
  • 141
    • 22544470896 scopus 로고    scopus 로고
    • Known unknowns: The illusion of terrorism insurance
    • 790-798, (explaining that, in spite of federal government's efforts to require coverage of terrorist attacks by insurance companies, vast majority of policies still contain valid exclusions for nuclear, biological, and chemical attacks, and arguing that terrorism in United States is essentially uninsurable)
    • See Michelle E. Boardman, Known Unknowns: the Illusion of Terrorism Insurance, 93 GEO. L.J. 783, 790-798 (2005) (explaining that, in spite of federal government's efforts to require coverage of terrorist attacks by insurance companies, vast majority of policies still contain valid exclusions for nuclear, biological, and chemical attacks, and arguing that terrorism in United States is essentially uninsurable).
    • (2005) Geo. L.J. , vol.93 , pp. 783
    • Boardman, M.E.1
  • 142
    • 77954735843 scopus 로고    scopus 로고
    • See, e.g., CONG. BUDGET ofFICE, THE TOTAL COSTS of CLEANING UP NONFEDERAL SUPERFUND SITES 15-16 (1994), available at, (estimating that continuing costs to private parties for Superfund cleanups would exceed $43 billion)
    • See, e.g., CONG. BUDGET ofFICE, THE TOTAL COSTS of CLEANING UP NONFEDERAL SUPERFUND SITES 15-16 (1994), available at http://www.cbo.gov/ftpdocs/48xx/ doc4845/ EntireReport.pdf (estimating that continuing costs to private parties for Superfund cleanups would exceed $43 billion).
  • 143
    • 0347966089 scopus 로고    scopus 로고
    • Counting the cost of health, safety, and environmental regulation
    • For a wide-ranging look at and critique of ex ante cost assessments and the lack of retrospective empirical studies determining compliance costs for various regulatory programs
    • For a wide-ranging look at and critique of ex ante cost assessments and the lack of retrospective empirical studies determining compliance costs for various regulatory programs, see generally Thomas O. McGarity & Ruth Ruttenberg, Counting the Cost of Health, Safety, and Environmental Regulation, 80 TEX. L. REV. 1997 (2002).
    • (2002) Tex. L. Rev. , vol.80 , pp. 1997
    • McGarity, T.O.1    Ruttenberg, R.2
  • 144
    • 78249279515 scopus 로고    scopus 로고
    • Obama directs regulators to tighten auto standards
    • Regulations in a state such as California can affect businesses located elsewhere that merely do business in California, forcing them to adjust their practices if they hope to maintain their access to that valuable market, Jan. 26, (describing effects of allowing states such as California and New York to set higher automobile mileage standards)
    • Regulations in a state such as California can affect businesses located elsewhere that merely do business in California, forcing them to adjust their practices if they hope to maintain their access to that valuable market. See John M. Broder, Obama Directs Regulators To Tighten Auto Standards, N.Y. TIMES, Jan. 26, 2009, http://www.nytimes.com/2009/ 01/27/us/politics/27calif.html (describing effects of allowing states such as California and New York to set higher automobile mileage standards).
    • (2009) N.Y. Times
    • Broder, J.M.1
  • 145
    • 77954751793 scopus 로고    scopus 로고
    • This is the equivalent of a homeowner's insurance policy protecting only the furniture or the second bedroom against fire, rather than the entire house
    • This is the equivalent of a homeowner's insurance policy protecting only the furniture or the second bedroom against fire, rather than the entire house.
  • 146
    • 77954721775 scopus 로고    scopus 로고
    • note
    • Suppose there are fifty California firms that use the same chemical and only two regulatory insurers in the marketplace. Each insurer might be willing to write only twenty contracts on the same regulatory risk within the same jurisdiction for fear of taking on too much correlated risk. Under these circumstances, only forty of the firms would be able to obtain coverage for regulatory risk related to that chemical, and ten firms would remain uninsured.
  • 147
    • 77954730034 scopus 로고    scopus 로고
    • note
    • It is worth noting that we do not think that the threat of correlated risks can account fully for the absence of a catastrophe or terrorism insurance market, either. All of these same options for managing risk are available to the firms that write such policies, and firms need only limit the number of policies written in one geographic area if they wish to contain their overall risk exposure. Furthermore, financial services firms are adept at slicing financial products and securities into tranches, each of which contains a small piece of a large number of financial instruments. The resulting financial products can help distribute risk and guard against all but the most widely spread national risks. Natural disasters are essentially never national phenomena, and only the most serious conceivable terrorist threat would have national reach-at which point paying insurance claims might no longer be a relevant consideration. Instead, we think that the lack of a viable market for these types of insurance products is attributable to the cause we describe infra Part II.B.4.
  • 148
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    • We hasten to add that a transfer from Democratic to Republican control might be no less threatening than a transfer in the opposite direction, despite the fact that Republicans are conventionally thought to favor less regulation than Democrats. In many cases, firms may wish to insure against deregulation; for instance, a firm that has developed a safe alternative to CFCs and staked a sizeable investment in their continued regulation might want to insure against deregulation of the ozone-depleting gas. The model we present here is fully generalizable to any legislative or agency action, regardless of direction
    • We hasten to add that a transfer from Democratic to Republican control might be no less threatening than a transfer in the opposite direction, despite the fact that Republicans are conventionally thought to favor less regulation than Democrats. In many cases, firms may wish to insure against deregulation; for instance, a firm that has developed a safe alternative to CFCs and staked a sizeable investment in their continued regulation might want to insure against deregulation of the ozone-depleting gas. The model we present here is fully generalizable to any legislative or agency action, regardless of direction.
  • 149
    • 47249126847 scopus 로고    scopus 로고
    • Political cycles of rulemaking: An empirical portrait of the modern administrative state
    • 931 chart 1 (demonstrating that federal bureaucracy as whole produces on order of 800-1000 regulations per year)
    • See Anne Joseph O'Connell, Political Cycles of Rulemaking: An Empirical Portrait of the Modern Administrative State, 94 VA. L. REV. 889, 931 chart 1 (2008) (demonstrating that federal bureaucracy as whole produces on order of 800-1000 regulations per year).
    • (2008) Va. L. Rev. , vol.94 , pp. 889
    • O'Connell, A.J.1
  • 150
    • 77954714199 scopus 로고    scopus 로고
    • See id. (comparing George H.W. Bush, Bill Clinton, and George W. Bush administrations)
    • See id. (comparing George H.W. Bush, Bill Clinton, and George W. Bush administrations).
  • 151
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    • Environmental liability and the limits of insurance
    • 955-976 (laying blame for unavailability of environmental liability insurance in mid-1980s partly on inability of insurance firms to assess expected losses due to high levels of legal uncertainty created by then-recent expansion of environmental liability)
    • See Kenneth S. Abraham, Environmental Liability and the Limits of Insurance, 88 COLUM. L. REV. 942, 955-976 (1988) (laying blame for unavailability of environmental liability insurance in mid-1980s partly on inability of insurance firms to assess expected losses due to high levels of legal uncertainty created by then-recent expansion of environmental liability).
    • (1988) Colum. L. Rev. , vol.88 , pp. 942
    • Abraham, K.S.1
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    • Efficiency and fairness in insurance risk classification
    • For a discussion of risk classification, which attempts to resolve the tension between the efficiency-promoting and risk-distributional features of classification
    • For a discussion of risk classification, see generally Kenneth S. Abraham, Efficiency and Fairness in Insurance Risk Classification, 71 VA. L. REV. 403 (1985), which attempts to resolve the tension between the efficiency-promoting and risk-distributional features of classification
    • (1985) Va. L. Rev. , vol.71 , pp. 403
    • Abraham, K.S.1
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    • The efficiency effects of categorical discrimination in the insurance industry
    • which argues that costless imperfect categorization, such as that based on age, sex, or race, always increases efficiency
    • and Keith J. Crocker & Arthur Snow, the Efficiency Effects of Categorical Discrimination in the Insurance Industry, 94 J. POL. ECON. 321 (1986), which argues that costless imperfect categorization, such as that based on age, sex, or race, always increases efficiency.
    • (1986) J. Pol. Econ. , vol.94 , pp. 321
    • Crocker, K.J.1    Snow, A.2
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    • The insurance classification controversy
    • 519-526, (explaining methodology employed by insurance companies to estimate accident rates for classes of insured individuals)
    • See Regina Austin, the Insurance Classification Controversy, 131 U. PA. L. REV. 517, 519-526 (1983) (explaining methodology employed by insurance companies to estimate accident rates for classes of insured individuals).
    • (1983) U. Pa. L. Rev. , vol.131 , pp. 517
    • Austin, R.1
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    • O'Connell, supra note 101, at 931. We have not been able to locate reliable data, but we suspect that states are somewhat less prolific, with dozens to hundreds of state regulatory acts per year
    • O'Connell, supra note 101, at 931. We have not been able to locate reliable data, but we suspect that states are somewhat less prolific, with dozens to hundreds of state regulatory acts per year.
  • 156
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    • the most prolific regulator, the Department of the Interior, averages approximately 100 regulations per year, with a high of 200. Id. at 939 chart 5. A variety of other federal agencies, including the Department of Commerce, Department of Transportation, SEC, FCC, and EPA average between 25 and 100 regulations per year. Id. In addition, many agency regulations are not truly "regulatory" in the sense that private firms or other interested parties would understand the term. Many concern internal agency procedures or set nonbinding guidelines and thus are unlikely to be the type of actions that firms would wish to insure against. Presumably, a large percentage of the Department of the Interior's activities, which concern internal management of federal lands, fall into that category. Accordingly, the number of data points available to an insurer are likely substantially lower than the rough estimates that we present as upper bounds
    • the most prolific regulator, the Department of the Interior, averages approximately 100 regulations per year, with a high of 200. Id. at 939 chart 5. A variety of other federal agencies, including the Department of Commerce, Department of Transportation, SEC, FCC, and EPA average between 25 and 100 regulations per year. Id. In addition, many agency regulations are not truly "regulatory" in the sense that private firms or other interested parties would understand the term. Many concern internal agency procedures or set nonbinding guidelines and thus are unlikely to be the type of actions that firms would wish to insure against. Presumably, a large percentage of the Department of the Interior's activities, which concern internal management of federal lands, fall into that category. Accordingly, the number of data points available to an insurer are likely substantially lower than the rough estimates that we present as upper bounds.
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    • Cultural cognition and public policy
    • describing effect of differing cultural worldviews on risk perception and policy priorities
    • Cf. Dan M. Kahan & Donald Braman, Cultural Cognition and Public Policy, 24 YALE L. & POL'Y REV. 149 (2006) (describing effect of differing cultural worldviews on risk perception and policy priorities);
    • (2006) Yale L. & Pol'y Rev. , vol.24 , pp. 149
    • Kahan, D.M.1    Braman, D.2
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    • Masur, supra note 7, at 1041-1047 (describing possibility of rapid shifts in government policy and potentially deleterious effects of such shifts)
    • Masur, supra note 7, at 1041-1047 (describing possibility of rapid shifts in government policy and potentially deleterious effects of such shifts).
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    • Of montreal and kyoto: A tale of two protocols
    • 13-14, (describing public reaction to discovery of ozone-depleting effects and subsequent industry reductions on production)
    • See Cass R. Sunstein, of Montreal and Kyoto: A Tale of Two Protocols, 31 HARV. ENVTL. L. REV. 1, 13-14 (2007) (describing public reaction to discovery of ozone-depleting effects and subsequent industry reductions on production).
    • (2007) Harv. Envtl. L. Rev. , vol.31 , pp. 1
    • Sunstein, C.R.1
  • 160
    • 77954747396 scopus 로고    scopus 로고
    • It is, of course, possible that some major change in law or technology-the repeal of speed limits or the advent of airbags-could have dramatic effects on accident rates or costs. But these sorts of events are uncommon and often predictable, and they produce new equilibria that again become susceptible to large-scale data collection and analysis. In the end, our point is a comparative one: Pricing automobile insurance has become a science due to the predictable nature of accident rates, but pricing regulatory insurance remains ineluctably an art
    • It is, of course, possible that some major change in law or technology-the repeal of speed limits or the advent of airbags-could have dramatic effects on accident rates or costs. But these sorts of events are uncommon and often predictable, and they produce new equilibria that again become susceptible to large-scale data collection and analysis. In the end, our point is a comparative one: Pricing automobile insurance has become a science due to the predictable nature of accident rates, but pricing regulatory insurance remains ineluctably an art.
  • 161
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    • In other words, automobile accidents are independent events, while regulatory activities are not. Because of the idiosyncrasies inherent to the regulatory process, it is unlikely that insurers will have enough information to navigate the endogeneities involved in pricing insurance contracts
    • In other words, automobile accidents are independent events, while regulatory activities are not. Because of the idiosyncrasies inherent to the regulatory process, it is unlikely that insurers will have enough information to navigate the endogeneities involved in pricing insurance contracts.
  • 162
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    • The transformation of the southern democratic party
    • 1002-1005 (describing diminishing power and presence of conservative whites in southern Democratic Party over time and rise of Republican Party as viable alternative)
    • Cf. Merle Black, the Transformation of the Southern Democratic Party, 66 J. POL. 1001, 1002-1005 (2004) (describing diminishing power and presence of conservative whites in southern Democratic Party over time and rise of Republican Party as viable alternative).
    • (2004) J. Pol. , vol.66 , pp. 1001
    • Black, M.1
  • 163
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    • As noted above, this type of clause is likely to be included in a regulatory insurance contract in order to avoid risks associated with moral hazard. See supra notes 76-80 and accompanying text
    • As noted above, this type of clause is likely to be included in a regulatory insurance contract in order to avoid risks associated with moral hazard. See supra notes 76-80 and accompanying text.
  • 164
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    • A complex(ity) strategy for breaking the logjam
    • 177 (describing regulations as "a fait accompli" before traditional notice-and-comment rulemaking purports to solicit outside expertise)
    • See Beth S. Noveck & David R. Johnson, A Complex(ity) Strategy for Breaking the Logjam, 17 N.Y.U. ENVTL. L.J. 170, 177 (2008) (describing regulations as "a fait accompli" before traditional notice-and-comment rulemaking purports to solicit outside expertise);
    • (2008) N.Y.U. Envtl. L.J. , vol.17 , pp. 170
    • Noveck, B.S.1    Johnson, D.R.2
  • 165
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    • Re-inventing rulemaking
    • 1492-1494, (arguing that formal public notice-and-comment procedures have little to no effect on rulemaking but are used primarily to build detailed record for judicial review after proposed rule has already "jelled" into its final form)
    • see also E. Donald Elliott, Re-inventing Rulemaking, 41 DUKE L.J. 1490, 1492-1494 (1992) (arguing that formal public notice-and-comment procedures have little to no effect on rulemaking but are used primarily to build detailed record for judicial review after proposed rule has already "jelled" into its final form);
    • (1992) Duke L.J. , vol.41 , pp. 1490
    • Elliott, E.D.1
  • 166
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    • Cognitive consistency: Theory maintenance and administrative rulemaking
    • 621-623, (suggesting that agencies can suffer from "lock-in," or inflexible commitment to previously decided upon policy, which undermines "regulatory goals of participation and deliberation")
    • Stephanie Stern, Cognitive Consistency: Theory Maintenance and Administrative Rulemaking, 63 U. PITT. L. REV. 589, 621-623 (2002) (suggesting that agencies can suffer from "lock-in," or inflexible commitment to previously decided upon policy, which undermines "regulatory goals of participation and deliberation").
    • (2002) U. Pitt. L. Rev. , vol.63 , pp. 589
    • Stern, S.1
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    • Rules, adjudications, and other sources of law in an executive department: Reflections on the interior department's administration of the mining law
    • 1238, (noting that decisions are often unavailable and that affected parties often lack notification)
    • See Peter L. Strauss, Rules, Adjudications, and Other Sources of Law in an Executive Department: Reflections on the Interior Department's Administration of the Mining Law, 74 COLUM. L. REV. 1231, 1238 (1974) (noting that decisions are often unavailable and that affected parties often lack notification);
    • (1974) Colum. L. Rev. , vol.74 , pp. 1231
    • Strauss, P.L.1
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    • Chenery II: A forty-year ret- rospective
    • 165-166, (citing criticism of adjudicative process for lack of notice or public input)
    • Russell L. Weaver, Chenery II: A Forty-Year Ret- rospective, 40 ADMIN. L. REV. 161, 165-166 (1988) (citing criticism of adjudicative process for lack of notice or public input).
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    • Weaver, R.L.1
  • 169
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    • Administrative law's federalism: Preemption, delegation, and agencies at the edge of federal power
    • 1949-52 (arguing that internal congressional processes, including private conference committee meetings and strategic voting behavior, lead to legislative transparency that is "only skin deep" for all but most savvy and connected special interest groups)
    • See Brian Galle & Mark Seidenfeld, Administrative Law's Federalism: Preemption, Delegation, and Agencies at the Edge of Federal Power, 57 DUKE L.J. 1933, 1949-52 (2008) (arguing that internal congressional processes, including private conference committee meetings and strategic voting behavior, lead to legislative transparency that is "only skin deep" for all but most savvy and connected special interest groups).
    • (2008) Duke L.J. , vol.57 , pp. 1933
    • Galle, B.1    Seidenfeld, M.2
  • 170
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    • Note to SEC: "And mental causation enacted?" you have got to be kidding!
    • Mar., (citing Disclosure Related to Climate Change, Securities Act Release No. 9106, Exchange Act Release No. 61,469, 75 Fed. Reg. 6290 (Feb. 8, 2010)) (expressing disbelief that private firms could possibly gauge which regulations or legislation are likely to be enacted in given year). The SEC interpreted § 303 of Regulation SK, 17 C.F.R. § 229.303 (2009), to require management to "evaluate whether . . . pending legislation or regulation is reasonably likely to be enacted. Unless management determines that it is not reasonably likely to be enacted, it must proceed on the assumption that the legislation or regulation will be enacted." Disclosure Related to Climate Change, 75 Fed. Reg. at 6296
    • Cf. W. Brinkley Dickerson, Jr. et al., Note to SEC: "Reasonably Likely To Be Enacted?" You Have Got To Be Kidding!, TROUTMAN SANDERS, Mar. 3, 2010, http://www. troutmansanders.com/note-to-sec-reasonably-likely-to-be- enacted-you-have-got-to-bekidding- 03-03-2010 (citing Disclosure Related to Climate Change, Securities Act Release No. 9106, Exchange Act Release No. 61,469, 75 Fed. Reg. 6290 (Feb. 8, 2010)) (expressing disbelief that private firms could possibly gauge which regulations or legislation are likely to be enacted in given year). The SEC interpreted § 303 of Regulation SK, 17 C.F.R. § 229.303 (2009), to require management to "evaluate whether . . . pending legislation or regulation is reasonably likely to be enacted. Unless management determines that it is not reasonably likely to be enacted, it must proceed on the assumption that the legislation or regulation will be enacted." Disclosure Related to Climate Change, 75 Fed. Reg. at 6296.
    • (2010) Troutman Sanders , vol.3
    • Dickerson Jr., W.B.1
  • 171
    • 77954730716 scopus 로고    scopus 로고
    • We suspect that a similar explanation underlies the lack of catastrophe or terrorism insurance. Devastating hurricanes and crippling acts of terrorism are similarly infrequent, highly contingent events for which no reliable actuarial data exists. Lacking traditional predictive tools, insurers are likely reticent to gamble on uncertain outcomes with high variance
    • We suspect that a similar explanation underlies the lack of catastrophe or terrorism insurance. Devastating hurricanes and crippling acts of terrorism are similarly infrequent, highly contingent events for which no reliable actuarial data exists. Lacking traditional predictive tools, insurers are likely reticent to gamble on uncertain outcomes with high variance.
  • 172
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    • Making markets: Network effects and the role of law in the creation of strong securities markets
    • 336-341 (suggesting that government can play role in overcoming network effects that might impede development of robust private markets)
    • Cf. Robert B. Ahdieh, Making Markets: Network Effects and the Role of Law in the Creation of Strong Securities Markets, 76 S. CAL. L. REV. 277, 336-341 (2003) (suggesting that government can play role in overcoming network effects that might impede development of robust private markets);
    • (2003) S. Cal. L. Rev. , vol.76 , pp. 277
    • Ahdieh, R.B.1
  • 173
    • 39049163350 scopus 로고    scopus 로고
    • Regulation by networks
    • 1184-1195 (describing situations in which government regulation is and is not necessary to facilitate private ordering)
    • Amitai Aviram, Regulation by Networks, 2003 BYU L. REV. 1179, 1184-1195 (describing situations in which government regulation is and is not necessary to facilitate private ordering).
    • (2003) Byu L. Rev. , pp. 1179
    • Aviram, A.1
  • 174
    • 33748563372 scopus 로고    scopus 로고
    • The economics of crime and punishment: Implications for sentencing of economic crimes and new technology offenses
    • In theory, increased sanctions for fraud help to deter fraudulent behavior by consumers, lowering costs for insurers and reducing the premiums that honest insurance customers must pay, 506-507 (discussing fraud risk and attempts to prevent fraud as increasing costs for other consumers)
    • In theory, increased sanctions for fraud help to deter fraudulent behavior by consumers, lowering costs for insurers and reducing the premiums that honest insurance customers must pay. Cf. Mark A. Cohen, the Economics of Crime and Punishment: Implications for Sentencing of Economic Crimes and New Technology offenses, 9 GEO. MASON L. REV. 503, 506-507 (2000) (discussing fraud risk and attempts to prevent fraud as increasing costs for other consumers).
    • (2000) Geo. Mason L. Rev. , vol.9 , pp. 503
    • Cohen, M.A.1
  • 175
    • 77954706802 scopus 로고    scopus 로고
    • Similarly, securities disclosure laws such as Sarbanes-Oxley represent governmental attempts to cure irrationalities, failures, and information asymmetries in the securities markets. See Pub. L. No.107-204, 116 Stat. 745 (codified as amended in scattered sections of 11, 15, 18, 28, and 29 U.S.C.). Whether they are successful or necessary is a separate matter, and one on which we express no opinion here
    • Similarly, securities disclosure laws such as Sarbanes-Oxley represent governmental attempts to cure irrationalities, failures, and information asymmetries in the securities markets. See Pub. L. No.107-204, 116 Stat. 745 (codified as amended in scattered sections of 11, 15, 18, 28, and 29 U.S.C.). Whether they are successful or necessary is a separate matter, and one on which we express no opinion here.
  • 176
    • 77954733376 scopus 로고    scopus 로고
    • Criticizing the critics: Sarbanes-oxley and quack corporate governance
    • 319-334 (arguing that it is too early to determine whether Sarbanes-Oxley has been successful)
    • Compare J. Robert Brown, Jr., Criticizing the Critics: Sarbanes-Oxley and Quack Corporate Governance, 90 MARQ. L. REV. 309, 319-334 (2006) (arguing that it is too early to determine whether Sarbanes-Oxley has been successful)
    • (2006) Marq. L. Rev. , vol.90 , pp. 309
    • Brown Jr., J.R.1
  • 177
    • 34547363013 scopus 로고    scopus 로고
    • Sarbanes-oxley and the cross-listing premium
    • 1875-95 (finding that Sarbanes-Oxley has created greater costs than benefits for certain classes of firms as investors believed it would)
    • with Kate Litvak, Sarbanes-Oxley and the Cross-listing Premium, 105 MICH. L. REV. 1857, 1875-95 (2007) (finding that Sarbanes-Oxley has created greater costs than benefits for certain classes of firms as investors believed it would).
    • (2007) Mich. L. Rev. , vol.105 , pp. 1857
    • Litvak, K.1
  • 178
    • 77954722137 scopus 로고    scopus 로고
    • See 5 U.S.C. § 553(b)(3) (2006) (permitting rulemaking without notice and comment under certain circumstances)
    • See 5 U.S.C. § 553(b)(3) (2006) (permitting rulemaking without notice and comment under certain circumstances).
  • 179
    • 77954691863 scopus 로고    scopus 로고
    • of course, significant costs would accompany these measures-costs that might well outweigh whatever benefits they would provide. We raise these possibilities only as a thought experiment, in the interest of analyzing what measures Congress might take to facilitate pricing of regulatory insurance
    • of course, significant costs would accompany these measures-costs that might well outweigh whatever benefits they would provide. We raise these possibilities only as a thought experiment, in the interest of analyzing what measures Congress might take to facilitate pricing of regulatory insurance.
  • 180
    • 0346997864 scopus 로고
    • The changing weather forecast: Government in the sunshine in the 1990s-an analysis of state sunshine laws
    • cataloging state "sunshine laws" that provide for open government and greater public information on legislative and regulatory processes
    • See generally Teresa Dale Pupillo, the Changing Weather Forecast: Government in the Sunshine in the 1990s-An Analysis of State Sunshine Laws, 71 WASH. U. L.Q. 1165 (1993) (cataloging state "sunshine laws" that provide for open government and greater public information on legislative and regulatory processes).
    • (1993) Wash. U. L.Q. , vol.71 , pp. 1165
    • Pupillo, T.D.1
  • 181
    • 77954735518 scopus 로고    scopus 로고
    • See supra notes 111-112 and accompanying text
    • See supra notes 111-112 and accompanying text.
  • 182
    • 77954741067 scopus 로고    scopus 로고
    • See, e.g., DeRieux v. Five Smiths, Inc., 499 F.2d 1321, 1332 (Temp. Emer. Ct. App. 1974) (permitting agency to avoid notice-and-comment rulemaking because of fear that private parties would evade rules and render them useless)
    • See, e.g., DeRieux v. Five Smiths, Inc., 499 F.2d 1321, 1332 (Temp. Emer. Ct. App. 1974) (permitting agency to avoid notice-and-comment rulemaking because of fear that private parties would evade rules and render them useless);
  • 183
    • 77954714308 scopus 로고    scopus 로고
    • Clay Broad. Corp. of Tex. v. United States, 464 F.2d 1313, 1320 (5th Cir. 1971) (permitting agency to proceed without notice-and-comment rulemaking because of unacceptable delay that procedure would entail)
    • Clay Broad. Corp. of Tex. v. United States, 464 F.2d 1313, 1320 (5th Cir. 1971) (permitting agency to proceed without notice-and-comment rulemaking because of unacceptable delay that procedure would entail).
  • 184
    • 77954721774 scopus 로고    scopus 로고
    • In a more straightforward fashion, a bank might create a derivative that is worth $1 if the S&P 500 Index closes above 1000 points on December 31, 2010, and $0 if it closes below 1000 points on that date. A derivative might also be written to be worth $1 if the Boston Red Sox win the 2010 World Series and $0 if they do not
    • In a more straightforward fashion, a bank might create a derivative that is worth $1 if the S&P 500 Index closes above 1000 points on December 31, 2010, and $0 if it closes below 1000 points on that date. A derivative might also be written to be worth $1 if the Boston Red Sox win the 2010 World Series and $0 if they do not.
  • 185
    • 77954703572 scopus 로고    scopus 로고
    • For instance, if the median trader believes that there is a fifty percent chance that the Red Sox will win the World Series, the Red Sox derivatives will trade at around fifty cents
    • For instance, if the median trader believes that there is a fifty percent chance that the Red Sox will win the World Series, the Red Sox derivatives will trade at around fifty cents.
  • 186
    • 77954741066 scopus 로고    scopus 로고
    • Miranda & Vedenov, supra note 93, at 650 (adding that high rates lead to decreased demand and adverse selection problems)
    • Miranda & Vedenov, supra note 93, at 650 (adding that high rates lead to decreased demand and adverse selection problems).
  • 187
    • 77954742275 scopus 로고    scopus 로고
    • Id. at 652. The derivative solves the moral hazard problem by acquiring value based on events (e.g., the weather) that no one can control, as opposed to events that are under the farmer's influence (e.g., the farmer's crop yield)
    • Id. at 652. The derivative solves the moral hazard problem by acquiring value based on events (e.g., the weather) that no one can control, as opposed to events that are under the farmer's influence (e.g., the farmer's crop yield).
  • 188
    • 77954729726 scopus 로고    scopus 로고
    • See Standard & Poor's, Case-Shiller Home Price Indices, (follow "S&P/Case-Shiller Home Price Indices" hyperlink) (last visited Mar. 2, 2010)
    • See Standard & Poor's, Case-Shiller Home Price Indices, http://www.standardand poors.com/home/en/us (follow "S&P/Case-Shiller Home Price Indices" hyperlink) (last visited Mar. 2, 2010).
  • 189
    • 77954712126 scopus 로고    scopus 로고
    • Intrade (last visited Jan. 19 2010)
    • Intrade, http://www.intrade.com (last visited Jan. 19, 2010).
  • 190
    • 77954700223 scopus 로고    scopus 로고
    • There is also the matter of legalizing these markets in the United States; Intrade's legal status is somewhat uncertain. The only operating real-money information market whose legality is not in question in the United States is the Iowa Electronic Markets, run by the University of Iowa's Tippie College of Business
    • There is also the matter of legalizing these markets in the United States; Intrade's legal status is somewhat uncertain. The only operating real-money information market whose legality is not in question in the United States is the Iowa Electronic Markets, run by the University of Iowa's Tippie College of Business.
  • 191
    • 77954701271 scopus 로고    scopus 로고
    • Iowa Electronic Markets, last visited Mar. 21 2010). There is also a new information market that plans to allow participants to bet real money on Hollywood box office figures
    • See Iowa Electronic Markets, http://www.biz.uiowa.edu/iem/ (last visited Mar. 21, 2010). There is also a new information market that plans to allow participants to bet real money on Hollywood box office figures.
  • 192
    • 77954693624 scopus 로고    scopus 로고
    • A place to bet real money on movies
    • Mar. 10, available at, . of course, this market will be of little interest to regulated firms outside of Hollywood
    • See Joseph Plambeck, A Place To Bet Real Money on Movies, N.Y. TIMES, Mar. 10, 2010, available at http://www.nytimes.com/2010/03/11/business/media/ 11futures.html. of course, this market will be of little interest to regulated firms outside of Hollywood.
    • (2010) N.Y. Times
    • Plambeck, J.1
  • 193
    • 77954713845 scopus 로고    scopus 로고
    • Intrade, supra note 131 (use "Market Search" to locate market, then look at value in "Vol" column of displayed table). This low trading volume is potentially due to a number of factors, including the questionable legality of trading on Intrade and the lack of interest in those particular markets. Still, the extremely modest volume is striking and likely indicative of larger problems
    • Intrade, supra note 131 (use "Market Search" to locate market, then look at value in "Vol" column of displayed table). This low trading volume is potentially due to a number of factors, including the questionable legality of trading on Intrade and the lack of interest in those particular markets. Still, the extremely modest volume is striking and likely indicative of larger problems.
  • 194
    • 77954747395 scopus 로고    scopus 로고
    • Cf. supra Part II.A (discussing need for regulatory insurance in order to encourage investment)
    • Cf. supra Part II.A (discussing need for regulatory insurance in order to encourage investment).
  • 195
    • 77954737561 scopus 로고    scopus 로고
    • See supra Part II.B.4 (discussing difficulty of pricing regulatory insurance)
    • See supra Part II.B.4 (discussing difficulty of pricing regulatory insurance).
  • 196
    • 77954697724 scopus 로고    scopus 로고
    • See supra notes 76-80 and accompanying text
    • See supra notes 76-80 and accompanying text.
  • 197
    • 4444322568 scopus 로고    scopus 로고
    • Infor mation markets, administrative decisionmaking, and predictive cost-benefit analysis
    • 948-949
    • This is the approach currently taken by the Iowa Electronic Markets. For an analysis of different methods for structuring prediction markets, see Michael Abramowicz, Infor mation Markets, Administrative Decisionmaking, and Predictive Cost-Benefit Analysis, 71 U. CHI. L. REV. 933, 948-949 (2004).
    • (2004) U. Chi. L. Rev. , vol.71 , pp. 933
    • Abramowicz, M.1
  • 198
    • 77954746229 scopus 로고    scopus 로고
    • U.S. Dep't of the Treasury How Treasury Auctions Work, (last visited Mar. 21 2010)
    • See U.S. Dep't of the Treasury, How Treasury Auctions Work, http://www.treasury direct.gov/instit/auctfund/work/work.htm (last visited Mar. 21, 2010).
  • 199
    • 77954736183 scopus 로고    scopus 로고
    • note
    • Firms might also attempt to hedge risk by engaging in more unconventional behavior, such as purchasing other companies whose success is negatively correlated with their own. For instance, imagine that Ford Motor Company is considering making substantial investments in designing vehicles powered by natural gas. If executives at Ford fear that greenhouse gas regulation could raise the price of natural gas and diminish consumer interest in the cars, they might consider purchasing a company that manufactures wind energy turbines as a hedge. Yet this option is hardly straightforward. At the limit, it might commit a firm to owning and running another company engaged in a completely separate- even diametrically opposed-business. It is surely not efficient for executives at an automobile company to manage a wind energy firm. Even if nothing more than the purchase of stock were involved, firms still face significant hurdles in finding the proper hedge. Imagine that, instead of buying a wind energy corporation, Ford instead makes a significant investment in the firm. Ford would now be forced to hedge against losses by that company that have nothing to do with greenhouse gas regulation-for instance, a general downturn in demand for wind turbines, or an increase in the price of a key production input. These hedges might in turn create further risks, which Ford would cover with additional investments. This in turn would create further risks, and so forth. In essence, a firm would be forced to acquire a highly complex bundle of securities in a quixotic effort to isolate a specific business risk. It is thus not surprising that this type of behavior is not widely observed.
  • 200
    • 77954703945 scopus 로고    scopus 로고
    • See Abramowicz, supra note 137, at 961-92 (analyzing usefulness of subsidizing prediction markets); Michael Abramowicz & M. Todd Henderson, Prediction Markets for Corporate Governance, 82 NOTRE DAME L. REV. 1343, 1351-53 (2007) (describing process of subsidizing corporate prediction markets). Ideally, the relevant governmental policymakers- agency employees and congressional staff-would be involved, although such efforts might be foiled by public corruption and gift laws. See 5 U.S.C. § 7353 (2006) (prohibiting gifts to federal employees); 18 U.S.C. § 201 (2006) (federal public corruption law)
    • See Abramowicz, supra note 137, at 961-92 (analyzing usefulness of subsidizing prediction markets); Michael Abramowicz & M. Todd Henderson, Prediction Markets for Corporate Governance, 82 NOTRE DAME L. REV. 1343, 1351-53 (2007) (describing process of subsidizing corporate prediction markets). Ideally, the relevant governmental policymakers- agency employees and congressional staff-would be involved, although such efforts might be foiled by public corruption and gift laws. See 5 U.S.C. § 7353 (2006) (prohibiting gifts to federal employees); 18 U.S.C. § 201 (2006) (federal public corruption law).
  • 201
    • 3242763804 scopus 로고    scopus 로고
    • A dynamic pari-mutuel market for hedging, wagering, and information aggregation
    • 171-178 (describing design of pari-mutuel information market, which can continuously incorporate information and is highly liquid and risk-free for market institutions)
    • See David M. Pennock, A Dynamic Pari-Mutuel Market for Hedging, Wagering, and Information Aggregation, in EC '04: PROCEEDINGS of THE 5TH ACM CONFERENCE ON ELECTRONIC COMMERCE 170, 171-178 (2004) (describing design of pari-mutuel information market, which can continuously incorporate information and is highly liquid and risk-free for market institutions).
    • (2004) Ec '04: Proceedings of the 5th ACM Conference on Electronic Commerce , pp. 170
    • Pennock, D.M.1
  • 202
    • 0037258594 scopus 로고    scopus 로고
    • Combinatorial information market design
    • 109-113 (describing design of market scoring system, which aims to overcome incentive problems for information acquisition and sharing)
    • See Robin Hanson, Combinatorial Information Market Design, 5 INFO. SYS. FRONTIERS 107, 109-113 (2003) (describing design of market scoring system, which aims to overcome incentive problems for information acquisition and sharing).
    • (2003) Info. Sys. Frontiers , vol.5 , pp. 107
    • Hanson, R.1
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    • 77954703571 scopus 로고    scopus 로고
    • See Abramowicz, supra note 137, at 959-60 (describing operation and virtues of market scoring systems); Abramowicz & Henderson, supra note 140, at 1352-53 (same); Pennock, supra note 141, at 171 (describing "infinite liquidity" of pari-mutuel markets). A full description of the operation of these types of markets is beyond the scope of this Article. For further discussion, see sources cited supra notes 141-143
    • See Abramowicz, supra note 137, at 959-60 (describing operation and virtues of market scoring systems); Abramowicz & Henderson, supra note 140, at 1352-53 (same); Pennock, supra note 141, at 171 (describing "infinite liquidity" of pari-mutuel markets). A full description of the operation of these types of markets is beyond the scope of this Article. For further discussion, see sources cited supra notes 141-143
  • 204
    • 77954730353 scopus 로고    scopus 로고
    • See Abramowicz & Henderson, supra note 140, at 1346 (reviewing literature on prediction markets' success)
    • See Abramowicz & Henderson, supra note 140, at 1346 (reviewing literature on prediction markets' success).
  • 205
    • 77954706801 scopus 로고    scopus 로고
    • Nonetheless, it might be interesting to witness the newly incentivized newsgathering by Washington, D.C., reporters if such a system were in place
    • Nonetheless, it might be interesting to witness the newly incentivized newsgathering by Washington, D.C., reporters if such a system were in place.
  • 206
    • 77954712125 scopus 로고    scopus 로고
    • Posting of Jonathan Masur to University of Chicago Law School Faculty Blog, Strategic Manipulation of the Information Markets, (Oct. 6 2008, 01:40:13 PM) (describing potential manipulation of Intrade political markets during 2008 election)
    • Cf. Posting of Jonathan Masur to University of Chicago Law School Faculty Blog, Strategic Manipulation of the Information Markets, http://uchicagolaw. typepad.com/faculty/ 2008/10/just-over-a-wee.html (Oct. 6, 2008, 01:40:13 PM) (describing potential manipulation of Intrade political markets during 2008 election).
  • 207
    • 77954751245 scopus 로고    scopus 로고
    • In addition, a relatively accurate information market could produce other benefits, even if it never generated sufficient liquidity to allow firms to hedge. If the market reflected a high probability of legal change, firms could respond accordingly in anticipation. The same would be true for regulatory insurance, were it to exist. If premiums reflected a high likelihood of regulation, firms could anticipate legal change
    • In addition, a relatively accurate information market could produce other benefits, even if it never generated sufficient liquidity to allow firms to hedge. If the market reflected a high probability of legal change, firms could respond accordingly in anticipation. The same would be true for regulatory insurance, were it to exist. If premiums reflected a high likelihood of regulation, firms could anticipate legal change.
  • 208
    • 77954698817 scopus 로고    scopus 로고
    • Cf. Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445 (1915) (holding that due process right to direct voice in adoption of policy does not attach to broad legislative decisions that affect large swaths of population)
    • Cf. Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445 (1915) (holding that due process right to direct voice in adoption of policy does not attach to broad legislative decisions that affect large swaths of population).
  • 209
    • 77954732685 scopus 로고    scopus 로고
    • See, e.g., Nash & Revesz, supra note 2, at 1713-1715 (describing how "new source review" under Clean Air Act applies where modification to existing facility which otherwise would be grandfathered is " substantial")
    • See, e.g., Nash & Revesz, supra note 2, at 1713-1715 (describing how "new source review" under Clean Air Act applies where modification to existing facility which otherwise would be grandfathered is " substantial").
  • 210
    • 77954750887 scopus 로고    scopus 로고
    • See, e.g., Logue, supra note 7, at 1176-1180 (describing difficulty of deciding this question in context of changes to tax law)
    • See, e.g., Logue, supra note 7, at 1176-1180 (describing difficulty of deciding this question in context of changes to tax law).
  • 211
    • 0035568518 scopus 로고    scopus 로고
    • Markets and geography: Designing marketable schemes to control local and regional pollutants
    • 585 [hereinafter Nash & Revesz, Markets and Geography] (describing methods by which permits are grandfathered under Clean Air Act's national sulfur dioxide trading program)
    • See, e.g., Jonathan Remy Nash & Richard L. Revesz, Markets and Geography: Designing Marketable Schemes To Control Local and Regional Pollutants, 28 ECOLOGY L.Q. 569, 585 (2001) [hereinafter Nash & Revesz, Markets and Geography] (describing methods by which permits are grandfathered under Clean Air Act's national sulfur dioxide trading program).
    • (2001) Ecology L.Q. , vol.28 , pp. 569
    • Nash, J.R.1    Revesz, R.L.2
  • 212
    • 77954702432 scopus 로고    scopus 로고
    • See supra note 149 and accompanying text
    • See supra note 149 and accompanying text.
  • 213
    • 33947630415 scopus 로고    scopus 로고
    • § 41.03[4]-[5], (discussing grandfathering in zoning laws)
    • See PATRICK J. ROHAN, ZONING AND LAND USE CONTROLS § 41.03[4]-[5] (2009) (discussing grandfathering in zoning laws).
    • (2009) Zoning and Land Use Controls
    • Rohan, P.J.1
  • 214
    • 77954740345 scopus 로고    scopus 로고
    • See, e.g., 42 U.S.C. § 12183(a)(2) (2006) (providing that facility owners shall make alterations "to the maximum extent feasible" so that "the path of travel to the altered area and the bathrooms, telephones, and drinking fountains serving the altered area[ ] are readily accessible to and usable by individuals with disabilities" but only "where such alterations . . . are not disproportionate to the overall alterations in terms of cost and scope" (emphasis added)); 28 C.F.R. § 36.403(f)(1) (2009) ("Alterations made to provide an accessible path of travel to the altered area will be deemed disproportionate to the overall alteration when the cost exceeds 20% of the cost of the alteration to the primary function area.")
    • See, e.g., 42 U.S.C. § 12183(a)(2) (2006) (providing that facility owners shall make alterations "to the maximum extent feasible" so that "the path of travel to the altered area and the bathrooms, telephones, and drinking fountains serving the altered area[ ] are readily accessible to and usable by individuals with disabilities" but only "where such alterations . . . are not disproportionate to the overall alterations in terms of cost and scope" (emphasis added)); 28 C.F.R. § 36.403(f)(1) (2009) ("Alterations made to provide an accessible path of travel to the altered area will be deemed disproportionate to the overall alteration when the cost exceeds 20% of the cost of the alteration to the primary function area.").
  • 215
    • 77954709044 scopus 로고    scopus 로고
    • See supra note 150
    • See supra note 150.
  • 216
    • 77954711469 scopus 로고    scopus 로고
    • The great bankruptcy rush of 2005 and its aftermath: The view from texas
    • Sept., 34 ("[T]he signing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 . . . set off a massive rush to the bankruptcy courts.")
    • See, e.g., Stephen W. Sather, the Great Bankruptcy Rush of 2005 and Its Aftermath: the View from Texas, AM. BANKR. INST. L. REV., Sept. 2006, at 34, 34 ("[T]he signing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 . . . set off a massive rush to the bankruptcy courts.").
    • (2006) Am. Bankr. Inst. L. Rev. , pp. 34
    • Sather, S.W.1
  • 217
    • 77954719913 scopus 로고    scopus 로고
    • See supra note 151 and accompanying text
    • See supra note 151 and accompanying text.
  • 218
    • 77954732342 scopus 로고    scopus 로고
    • See generally Nash, Allocation and Uncertainty, supra note 7 (discussing methods of allocating finite natural resources)
    • See generally Nash, Allocation and Uncertainty, supra note 7 (discussing methods of allocating finite natural resources).
  • 219
    • 77954748782 scopus 로고    scopus 로고
    • See supra notes 51-53 and accompanying text (discussing possibility of capture in transition relief context)
    • See supra notes 51-53 and accompanying text (discussing possibility of capture in transition relief context).
  • 220
    • 77954727158 scopus 로고    scopus 로고
    • Cf. Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 472-476 (2001) (rejecting argument that directive requiring agency to set standard to protect public health failed to provide "intelligible principle" against which to gauge agency action, thus indicating that legislative delegation was proper)
    • Cf. Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 472-476 (2001) (rejecting argument that directive requiring agency to set standard to protect public health failed to provide "intelligible principle" against which to gauge agency action, thus indicating that legislative delegation was proper).
  • 221
    • 36348942998 scopus 로고    scopus 로고
    • The politics of "cap and trade" policies
    • 449-451 (breaking process of implementing cap-and-trade emissions allowance regime into three steps-setting cap, allocating allowances, and then permitting trading-and noting that each step raises distinct political pressures and concerns)
    • Cf. B. Timothy Heinmiller, the Politics of "Cap and Trade" Policies, 47 NAT. RESOURCES J. 445, 449-451 (2007) (breaking process of implementing cap-and-trade emissions allowance regime into three steps-setting cap, allocating allowances, and then permitting trading-and noting that each step raises distinct political pressures and concerns).
    • (2007) Nat. Resources J. , vol.47 , pp. 445
    • Heinmiller, B.T.1
  • 222
    • 77954752749 scopus 로고    scopus 로고
    • See supra notes 148-151 and accompanying text
    • See supra notes 148-151 and accompanying text.
  • 223
    • 77954731378 scopus 로고    scopus 로고
    • In addition, we acknowledge that merely because we can disaggregate the constituent steps of affording transition relief does not mean in practice that government actors in fact divide the process in this way, or that responsibility for the steps is divvied up among multiple actors. For example, the first phase of the sulfur dioxide emissions allowance trading program under the Clean Air Act Amendments of 1990 involved Congress deciding (i) that allowances would be distributed via grandfathering, (ii) exactly which industrial plants would receive allowances, and (iii) exactly how many allowances each plant would receive
    • In addition, we acknowledge that merely because we can disaggregate the constituent steps of affording transition relief does not mean in practice that government actors in fact divide the process in this way, or that responsibility for the steps is divvied up among multiple actors. For example, the first phase of the sulfur dioxide emissions allowance trading program under the Clean Air Act Amendments of 1990 involved Congress deciding (i) that allowances would be distributed via grandfathering, (ii) exactly which industrial plants would receive allowances, and (iii) exactly how many allowances each plant would receive.
  • 224
    • 0000599191 scopus 로고
    • Selling pollution and forcing democracy
    • 328-332(discussing evidence of groups influencing Congress in establishing Clean Air program)
    • See Lisa Heinzerling, Selling Pollution, Forcing Democracy, 14 STAN. ENVTL. L.J. 300, 328-332 (1995) (discussing evidence of groups influencing Congress in establishing Clean Air program);
    • (1995) Stan. Envtl. L.J. , vol.14 , pp. 300
    • Heinzerling, L.1
  • 225
    • 0042487673 scopus 로고    scopus 로고
    • The political economy of market-based environmental policy: The U.S. acid rain program
    • 51-58, (same)
    • Paul L. Joskow & Richard Schmalensee, the Political Economy of Market-Based Environmental Policy: the U.S. Acid Rain Program, 41 J.L. & ECON. 37, 51-58 (1998) (same);
    • (1998) J.L. & Econ. , vol.41 , pp. 37
    • Joskow, P.L.1    Schmalensee, R.2
  • 226
    • 77954719912 scopus 로고    scopus 로고
    • Nash & Revesz, Markets and Geography, supra note 151, at 585 (summarizing initial allowance allocation). Some existing practices, of course, may not be normatively desirable. Our point is simply that disaggregation allows us to consider what distributions of responsibility would be normatively preferable
    • Nash & Revesz, Markets and Geography, supra note 151, at 585 (summarizing initial allowance allocation). Some existing practices, of course, may not be normatively desirable. Our point is simply that disaggregation allows us to consider what distributions of responsibility would be normatively preferable.
  • 227
    • 77954718217 scopus 로고    scopus 로고
    • See, e.g., Alliance Against IFQs v. Brown, 84 F.3d 343, 352 (9th Cir. 1996) (discussing value of transition relief)
    • See, e.g., Alliance Against IFQs v. Brown, 84 F.3d 343, 352 (9th Cir. 1996) (discussing value of transition relief).
  • 228
    • 77954748063 scopus 로고    scopus 로고
    • See supra notes 37-39 and accompanying text (discussing legitimacy as possible justification for transition relief)
    • See supra notes 37-39 and accompanying text (discussing legitimacy as possible justification for transition relief).
  • 229
    • 77954736529 scopus 로고    scopus 로고
    • See supra notes 40-42 and accompanying text (discussing fairness as possible justification for transition relief)
    • See supra notes 40-42 and accompanying text (discussing fairness as possible justification for transition relief).
  • 230
    • 77954749468 scopus 로고    scopus 로고
    • See supra notes 24-34 and accompanying text (discussing investment incentives as possible justification for transition relief)
    • See supra notes 24-34 and accompanying text (discussing investment incentives as possible justification for transition relief).
  • 231
    • 77954690924 scopus 로고    scopus 로고
    • Levmore supra note 7 at 1665-1667 (discussing tradeoffs involved in decision to compensate politically powerful losers when enacting new regulatory scheme)
    • See Levmore, supra note 7, at 1665-1667 (discussing tradeoffs involved in decision to compensate politically powerful losers when enacting new regulatory scheme).
  • 232
    • 77954730032 scopus 로고    scopus 로고
    • Ackerman & Stewart, supra note 49, at 1353 (lauding tradable pollution permit regimes over command-and-control regimes to achieve environmental goals on ground that former regimes vest important decision of how much overall pollution should be allowed with legislature, thus enhancing democracy)
    • Cf. Ackerman & Stewart, supra note 49, at 1353 (lauding tradable pollution permit regimes over command-and-control regimes to achieve environmental goals on ground that former regimes vest important decision of how much overall pollution should be allowed with legislature, thus enhancing democracy);
  • 233
    • 77954753101 scopus 로고    scopus 로고
    • Administrative Substance supra note 49, at 636 (same); Sunstein, Democratizing America, supra note 49, at 967 (same)
    • Sunstein, Administrative Substance, supra note 49, at 636 (same); Sunstein, Democratizing America, supra note 49, at 967 (same).
  • 234
    • 77954720251 scopus 로고    scopus 로고
    • note
    • In a cap-and-trade system, the government caps the total acceptable amount (over a period of time, usually a year) of behavior that the new legal regime otherwise outlaws. It then divides that total cap among a number that it distributes to societal actors, who then may trade them. Nash, supra note 47, at 321. Each permit authorizes its holder to engage in a set amount of the restricted behavior, and only those with permits may engage in the behavior at all. Id.
  • 235
    • 77954706800 scopus 로고    scopus 로고
    • the EPA's tradable permits program, though not technically an emissions regulation program, phased out the use of lead in gasoline during the 1980s. See Nash, supra note 49, at 488-489
    • the EPA's tradable permits program, though not technically an emissions regulation program, phased out the use of lead in gasoline during the 1980s. See Nash, supra note 49, at 488-489
  • 236
    • 77954746705 scopus 로고    scopus 로고
    • The overallocation problem in cap-and-trade: Moving toward stringency
    • 407 (describing cap employed by Chicago Emissions Reduction Market System)
    • See Lesley K. McAllister, the Overallocation Problem in Cap-and-Trade: Moving Toward Stringency, 34 COLUM. J. ENVTL. L. 395, 407 (2009) (describing cap employed by Chicago Emissions Reduction Market System).
    • (2009) Colum. J. Envtl. L. , vol.34 , pp. 395
    • McAllister, L.K.1
  • 237
    • 77954704945 scopus 로고    scopus 로고
    • Cf. supra note 59 (arguing that fixed insurance payments will not change firms' incentives at margin)
    • Cf. supra note 59 (arguing that fixed insurance payments will not change firms' incentives at margin).
  • 238
    • 77954743653 scopus 로고    scopus 로고
    • See Alliance Against IFQs v. Brown, 84 F.3d 343 (9th Cir. 1996)
    • See Alliance Against IFQs v. Brown, 84 F.3d 343 (9th Cir. 1996) (adjudicating litigation challenging allocation of fisheries quotas). In Alliance, the court considered a chal lenge by workers that the council's allocation of quota shares to owners and lessees but not workers was not, as the governing statute required, "fair and equitable." See id. at 348 (quoting 16 U.S.C. § 1851(a)(4)(A) (2006)). Though it described the argument as "sensible," id., the court proceeded to reject the argument on two grounds. First, the statute did not make the "fair and equitable" requirement the sole criteria with which the council had to comply. See id. at 348-349 Second, the council's logic that owners and lessees have put capital at risk and thus deserve quota shares was sound: "The Secretary thought that the problem of overfishing resulted more from investment in boats than occupational choices of fishermen, so the administrative remedy should be measured by ownership and leasing of boats." Id. at 349.
  • 239
    • 33644621767 scopus 로고    scopus 로고
    • The persistent puzzles of safeguards: Lessons from the steel dispute
    • In the context of international trade agreements "safeguards relief" provisions provide loopholes that countries may invoke when a domestic industry is put in a precarious economic position by the implementation of a new trade accord. For discussion, see, for example, 526-538, (describing provisions in international trade agreements and as implemented under U.S. law and discussing how such provisions work)
    • In the context of international trade agreements, "safeguards relief" provisions provide loopholes that countries may invoke when a domestic industry is put in a precarious economic position by the implementation of a new trade accord. For discussion, see, for example, Alan O. Sykes, the Persistent Puzzles of Safeguards: Lessons from the Steel Dispute, 7 J. INT'L ECON. L. 523, 526-538 (2004) (describing provisions in international trade agreements and as implemented under U.S. law and discussing how such provisions work).
    • (2004) J. Int'l Econ. L. , vol.7 , pp. 523
    • Sykes, A.O.1
  • 240
    • 77954741403 scopus 로고    scopus 로고
    • For example, trade adjustment assistance programs provide protection to those who suffer disemployment by virtue of new free trade agreements. See 19 U.S.C. § 2271(a) (2006) (establishing mechanism by which adversely affected workers may apply for relief)
    • For example, trade adjustment assistance programs provide protection to those who suffer disemployment by virtue of new free trade agreements. See 19 U.S.C. § 2271(a) (2006) (establishing mechanism by which adversely affected workers may apply for relief);
  • 241
    • 84937290399 scopus 로고
    • Walter corson, international trade and worker displacement: Evaluation of the trade adjustment assistance program
    • 759-760 (providing overview of Trade Adjustment Assistance program)
    • Paul T. Decker & Walter Corson, International Trade and Worker Displacement: Evaluation of the Trade Adjustment Assistance Program, 48 INDUS. & LAB. REL. REV. 758, 759-760 (1995) (providing overview of Trade Adjustment Assistance program)
    • (1995) Indus. & Lab. Rel. Rev. , vol.48 , pp. 758
    • Decker, P.T.1
  • 242
    • 77954736182 scopus 로고    scopus 로고
    • see also Joskow & Schmalensee, supra note 163, at 5
    • see also Joskow & Schmalensee, supra note 163, at 50 (describing controversy over Byrd Amendment to 1990 Clean Air Act that would have provided benefits to coal mine employees who lost their jobs);
  • 243
    • 27744602815 scopus 로고    scopus 로고
    • The legislative history of U.S. air pollution control
    • 721-722, (same)
    • Arnold W. Reitze, Jr., the Legislative History of U.S. Air Pollution Control, 36 HOUS. L. REV. 679, 721-722 (1999) (same).
    • (1999) Hous. L. Rev. , vol.36 , pp. 679
    • Reitze Jr., A.W.1
  • 244
    • 77954719556 scopus 로고    scopus 로고
    • Heinmiller supra note 161, at 457 ("Considering the high stakes nature of the allocation process, users and potential users are strongly motivated to protect their essential self-interests, so the allocation process is best understood as a distributive conflict between rival user groups presided over by governmental regulators . . . . [R]ival users . . . are typically multiple and highly fragmented.")
    • See Heinmiller, supra note 161, at 457 ("Considering the high stakes nature of the allocation process, users and potential users are strongly motivated to protect their essential self-interests, so the allocation process is best understood as a distributive conflict between rival user groups presided over by governmental regulators . . . . [R]ival users . . . are typically multiple and highly fragmented.").
  • 245
    • 77954737560 scopus 로고    scopus 로고
    • note
    • the legislative and executive branches are not the only branches of government that may promulgate a new legal regime. When a court announces a new decision, that announcement itself may raise questions of legal transition relief. See infra notes 196-98 and accompanying text. This type of setting lies beyond the scope of this Article for several reasons. First, courts announcing a new interpretation of law may believe, alternatively, that they are actually announcing a "new rule" of law, or simply that they are "clarifying" preexisting law. The latter case presumably does not raise questions of transition relief. Second, to the extent that a court decision may have retroactive application, it traditionally has been the court itself that determines the retroactive effect of its ruling. See, e.g., Harper v. Va. Dep't of Taxation, 509 U.S. 86, 100 (1993) (finding prior ruling to have retroactive effect and rejecting state court's ruling on issue of retroactivity). Indeed, efforts by other branches to dictate retroactive effects of laws on court decisions have met with court disapproval on separation of powers grounds. See Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 217-19 (1995) (declaring unconstitutional congressional attempt to use new, extended statute of limitations to open cases already dismissed under old statute of limitations and now-final judgments).
  • 246
    • 77954693253 scopus 로고    scopus 로고
    • But cf. Danforth v. Minnesota, 128 S. Ct. 1029 (2008) (holding that state courts were free to apply new constitutional rule of criminal procedure retroactively even where federal courts would not). Third, settings where courts announce new rules of law lie beyond the paradigmatic "new legal regime" setting with which we are concerned in this Article: We are interested here in settings where there is a new, broad legal regime affecting numerous actors. Courts rarely announce such regimes and, to the extent they do so, it is usually a matter of consequence, not design
    • But cf. Danforth v. Minnesota, 128 S. Ct. 1029 (2008) (holding that state courts were free to apply new constitutional rule of criminal procedure retroactively even where federal courts would not). Third, settings where courts announce new rules of law lie beyond the paradigmatic "new legal regime" setting with which we are concerned in this Article: We are interested here in settings where there is a new, broad legal regime affecting numerous actors. Courts rarely announce such regimes and, to the extent they do so, it is usually a matter of consequence, not design.
  • 247
    • 0345759748 scopus 로고    scopus 로고
    • Shattering the fragile case for judicial review of rulemaking
    • 1327-33 (arguing for complete abandonment of judicial review of agency rulemaking)
    • See generally Frank B. Cross, Shattering the Fragile Case for Judicial Review of Rulemaking, 85 VA. L. REV. 1243, 1327-33 (1999) (arguing for complete abandonment of judicial review of agency rulemaking)
    • (1999) Va. L. Rev. , vol.85 , pp. 1243
    • Cross, F.B.1
  • 248
    • 38849177137 scopus 로고
    • Statutory interpretation in the administrative state
    • 592-98, (concluding that courts should defer to agencies where Congress has endowed agencies with significant policymaking responsibility)
    • Colin S. Diver, Statutory Interpretation in the Administrative State, 133 U. PA. L. REV. 549, 592-98 (1985) (concluding that courts should defer to agencies where Congress has endowed agencies with significant policymaking responsibility);
    • (1985) U. Pa. L. Rev. , vol.133 , pp. 549
    • Diver, C.S.1
  • 249
    • 0346345177 scopus 로고
    • Statutory interpretation and the balance of power in the administrative state
    • 467-526 (arguing that judicial deference to agencies is unconstitutional)
    • Cynthia R. Farina, Statutory Interpretation and the Balance of Power in the Administrative State, 89 COLUM. L. REV. 452, 467-526 (1989) (arguing that judicial deference to agencies is unconstitutional);
    • (1989) Colum. L. Rev. , vol.89 , pp. 452
    • Farina, C.R.1
  • 250
    • 33644679561 scopus 로고    scopus 로고
    • Legislative allocation of delegated power: Uncertainty, risk, and the choice between agencies and courts
    • 1049-1070 (arguing that agencies tend to be consistent across issues but variable over time, while courts tend to be consistent across time but variable across issues, and that Congress should take these features into account in structuring delegations)
    • Matthew C. Stephenson, Legislative Allocation of Delegated Power: Uncertainty, Risk, and the Choice Between Agencies and Courts, 119 HARV. L. REV. 1035, 1049-1070 (2006) (arguing that agencies tend to be consistent across issues but variable over time, while courts tend to be consistent across time but variable across issues, and that Congress should take these features into account in structuring delegations);
    • (2006) Harv. L. Rev. , vol.119 , pp. 1035
    • Stephenson, M.C.1
  • 251
    • 77951661517 scopus 로고
    • On the costs and benefits of aggressive judicial review of agency action
    • 522-529 (evaluating costs and benefits of courts as legal authority)
    • Cass R. Sunstein, On the Costs and Benefits of Aggressive Judicial Review of Agency Action, 1989 DUKE L.J. 522, 522-529 (evaluating costs and benefits of courts as legal authority).
    • (1989) Duke L.J. , pp. 522
    • Sunstein, C.R.1
  • 252
    • 77954751418 scopus 로고    scopus 로고
    • Cf. supra note 169 (identifying commentators who advocate, on grounds of democratic accountability, congressional determination of caps in cap-and-trade pollution programs)
    • Cf. supra note 169 (identifying commentators who advocate, on grounds of democratic accountability, congressional determination of caps in cap-and-trade pollution programs).
  • 253
    • 67649553027 scopus 로고    scopus 로고
    • Digitally democratizing congress? technology and political accountability
    • For a critical examination, 643-648 , which questions whether Congress is as accountable as it could be
    • For a critical examination, see Jane S. Schacter, Digitally Democratizing Congress? Technology and Political Accountability, 89 B.U. L. REV. 641, 643-648 (2009), which questions whether Congress is as accountable as it could be.
    • (2009) B.U. L. Rev. , vol.89 , pp. 641
    • Schacter, J.S.1
  • 254
    • 0347776234 scopus 로고    scopus 로고
    • The choice of regulatory instruments in environmental policy
    • 322-25 (describing legislation as product of supply by legislators and demand by special interests)
    • See, e.g., Nathaniel O. Keohane, Richard L. Revesz & Robert N. Stavins, the Choice of Regulatory Instruments in Environmental Policy, 22 HARV. ENVTL. L. REV. 313, 322-25 (1998) (describing legislation as product of supply by legislators and demand by special interests)
    • (1998) Harv. Envtl. L. Rev. , vol.22 , pp. 313
    • Keohane, N.O.1    Revesz, R.L.2    Stavins, R.N.3
  • 255
    • 0042170038 scopus 로고    scopus 로고
    • Two stories about the evolution of property rights
    • S425-29, (describing argument that property systems are designed to benefit well-organized interest groups)
    • Saul Levmore, Two Stories About the Evolution of Property Rights, 31 J. LEGAL STUD. S421, S425-29 (2002) (describing argument that property systems are designed to benefit well-organized interest groups);
    • (2002) J. Legal Stud. , vol.31
    • Levmore, S.1
  • 256
    • 0347109859 scopus 로고    scopus 로고
    • Explaining market mechanisms
    • 280-281 (describing argument that legislation tends to be designed to reward politically powerful groups)
    • Thomas W. Merrill, Explaining Market Mechanisms, 2000 U. ILL. L. REV. 275, 280-281 (describing argument that legislation tends to be designed to reward politically powerful groups).
    • (2000) U. Ill. L. Rev. , pp. 275
    • Merrill, T.W.1
  • 257
    • 77954721773 scopus 로고    scopus 로고
    • Heinzerling supra note 163 at 328-32 (explaining that much of allocation of emissions allowances under national sulfur dioxide trading program established under 1990 amendments to Clean Air Act was attributable to rent-seeking); Joskow & Schmalensee, supra note 163, at 51-58 (same)
    • See Heinzerling, supra note 163, at 328-32 (explaining that much of allocation of emissions allowances under national sulfur dioxide trading program established under 1990 amendments to Clean Air Act was attributable to rent-seeking); Joskow & Schmalensee, supra note 163, at 51-58 (same).
  • 258
    • 77954734640 scopus 로고    scopus 로고
    • See supra note 177 and accompanying text. Congress's freedom to pass laws on an individualized basis is also limited. See Schiavo ex rel. Schindler v. Schiavo 403 F.3d 1223 1226-1227 (11th Cir. (2005) (alluding to, without resolving, possible unconstitutionality of congressional statute designed to change legal standards to benefit particular plaintiff in individual case)
    • See supra note 177 and accompanying text. Congress's freedom to pass laws on an individualized basis is also limited. See Schiavo ex rel. Schindler v. Schiavo, 403 F.3d 1223, 1226-1227 (11th Cir. 2005) (alluding to, without resolving, possible unconstitutionality of congressional statute designed to change legal standards to benefit particular plaintiff in individual case);
  • 259
    • 77954705300 scopus 로고    scopus 로고
    • Schiavo ex rel. Schindler v. Schiavo, 404 F.3d 1270, 1272-1275 (11th Cir. 2005) (Birch, J., specially concurring in denial of rehearing en banc) (arguing that statute was unconstitutional on separation of powers grounds)
    • Schiavo ex rel. Schindler v. Schiavo, 404 F.3d 1270, 1272-1275 (11th Cir. 2005) (Birch, J., specially concurring in denial of rehearing en banc) (arguing that statute was unconstitutional on separation of powers grounds).
  • 260
    • 77954745911 scopus 로고    scopus 로고
    • See, e.g., Galle & Seidenfeld, supra note 116, at 1959 (stating that, as compared to agency staff, congressional staffs lack substantive expertise and professional connections)
    • See, e.g., Galle & Seidenfeld, supra note 116, at 1959 (stating that, as compared to agency staff, congressional staffs lack substantive expertise and professional connections).
  • 261
    • 70449130853 scopus 로고    scopus 로고
    • Preemption hard look review, regulatory interaction, and the quest for stewardship and intergenerational equity
    • e.g., id. (noting expertise of agency staff in comparison to congressional committee staff members); 1543 (noting great expertise of federal regulators as first movers in their respective areas)
    • See, e.g., id. (noting expertise of agency staff in comparison to congressional committee staff members); William W. Buzbee, Preemption Hard Look Review, Regulatory Interaction, and the Quest for Stewardship and Intergenerational Equity, 77 GEO. WASH. L. REV. 1521, 1543 (2009) (noting great expertise of federal regulators as first movers in their respective areas).
    • (2009) Geo. Wash. L. Rev. , vol.77 , pp. 1521
    • Buzbee, W.W.1
  • 262
    • 67849083101 scopus 로고    scopus 로고
    • What riegel portends for FDA preemption of state law products liability claims
    • 445 (identifying state law's conflict with "federal regulatory framework" as area that "might fall outside the expertise of the agency")
    • Cf. Catherine M. Sharkey, What Riegel Portends for FDA Preemption of State Law Products Liability Claims, 103 NW. U. L. REV. 437, 445 (2009) (identifying state law's conflict with "federal regulatory framework" as area that "might fall outside the expertise of the agency").
    • (2009) Nw. U. L. Rev. , vol.103 , pp. 437
    • Sharkey, C.M.1
  • 263
    • 77954696600 scopus 로고    scopus 로고
    • We employ this terminology not to distinguish between agencies such as the EPA and cabinet-level agencies such as the Department of Labor, but to distinguish between agencies under the control of the President ("executive branch" agencies) and independent agencies. The latter are discussed below
    • We employ this terminology not to distinguish between agencies such as the EPA and cabinet-level agencies such as the Department of Labor, but to distinguish between agencies under the control of the President ("executive branch" agencies) and independent agencies. The latter are discussed below.
  • 264
    • 0345775539 scopus 로고    scopus 로고
    • The psychology of accountability and political review of agency rules
    • 1068-1091 (describing and assessing executive and legislative oversight of agency rulemaking)
    • See Mark Seidenfeld, the Psychology of Accountability and Political Review of Agency Rules, 51 DUKE L.J. 1059, 1068-1091 (2001) (describing and assessing executive and legislative oversight of agency rulemaking).
    • (2001) Duke L.J. , vol.51 , pp. 1059
    • Seidenfeld, M.1
  • 265
    • 77954701270 scopus 로고    scopus 로고
    • Id. at 1091-1093
    • Id. at 1091-1093
  • 266
    • 77954731377 scopus 로고    scopus 로고
    • See, e.g., Whitman v. Am. Trucking Ass'ns, 531 U.S. 457 (2001) (upholding congressional delegation to EPA of authority to set standard requisite to protect public health)
    • See, e.g., Whitman v. Am. Trucking Ass'ns, 531 U.S. 457 (2001) (upholding congressional delegation to EPA of authority to set standard requisite to protect public health).
  • 267
    • 26444549193 scopus 로고    scopus 로고
    • Capture theory and the courts: 1967- 1983
    • 1064-67 (noting judicial awareness of risks of agency capture)
    • See, e.g., Thomas W. Merrill, Capture Theory and the Courts: 1967-1983, 72 CHI.- KENT L. REV. 1039, 1064-67 (1997) (noting judicial awareness of risks of agency capture).
    • (1997) Chi.- Kent L. Rev. , vol.72 , pp. 1039
    • Merrill, T.W.1
  • 268
    • 33846091564 scopus 로고    scopus 로고
    • Prejudging judges
    • 2171 (noting that "independence frees judges to make unpopular decisions")
    • See, e.g., Jonathan Remy Nash, Prejudging Judges, 106 COLUM. L. REV. 2168, 2171 (2006) (noting that "independence frees judges to make unpopular decisions")
    • (2006) Colum. L. Rev. , vol.106 , pp. 2168
    • Nash, J.R.1
  • 269
    • 58149392968 scopus 로고    scopus 로고
    • An empirical investigation into appellate structure and the perceived quality of appellate review
    • 1752, (same)
    • Jonathan Remy Nash & Rafael I. Pardo, An Empirical Investigation into Appellate Structure and the Perceived Quality of Appellate Review, 61 VAND. L. REV. 1745, 1752 (2008) (same).
    • (2008) Vand. L. Rev. , vol.61 , pp. 1745
    • Nash, J.R.1    Pardo, R.I.2
  • 270
    • 85050413703 scopus 로고    scopus 로고
    • Identitarian anxieties and the nature of inter-tribunal deliberations
    • 615-617 (discussing judicial deliberation)
    • See Adeno Addis & Jonathan Remy Nash, Identitarian Anxieties and the Nature of Inter-tribunal Deliberations, 9 CHI. J. INT'L L. 613, 615-617 (2009) (discussing judicial deliberation);
    • (2009) Chi. J. Int'l L. , vol.9 , pp. 613
    • Addis, A.1    Nash, J.R.2
  • 271
    • 0043245995 scopus 로고    scopus 로고
    • The effects of collegiality on judicial decision making
    • 1644-1670 (discussing judicial collegiality)
    • Harry T. Edwards, the Effects of Collegiality on Judicial Decision Making, 151 U. PA. L. REV. 1639, 1644-1670 (2003) (discussing judicial collegiality).
    • (2003) U. Pa. L. Rev. , vol.151 , pp. 1639
    • Edwards, H.T.1
  • 272
    • 77954748780 scopus 로고    scopus 로고
    • See Nash, supra note 193, at 2171 (characterizing judicial independence and judicial accountability as "competing demands upon the judiciary")
    • See Nash, supra note 193, at 2171 (characterizing judicial independence and judicial accountability as "competing demands upon the judiciary").
  • 273
    • 77954705466 scopus 로고    scopus 로고
    • Legal defeasibility in context and the emergence of substantial indefeasibility
    • (Jordi Ferrer & Giovanni B. Ratti eds., forthcoming 2010) (manuscript at 22-26, on file with the New York University Law Review) (discussing retroactive application of new rules in context of post-conviction habeas proceedings)
    • See Jonathan Remy Nash, Legal Defeasibility in Context and the Emergence of Substantial Indefeasibility, in ESSAYS ON LEGAL DEFEASIBILITY (Jordi Ferrer & Giovanni B. Ratti eds., forthcoming 2010) (manuscript at 22-26, on file with the New York University Law Review) (discussing retroactive application of new rules in context of post-conviction habeas proceedings).
    • Essays on Legal Defeasibility
    • Nash, J.R.1
  • 274
    • 67650361028 scopus 로고    scopus 로고
    • The implications of transition theory for stare decisis
    • 97-105 (describing common law rules regarding stare decisis)
    • See Jill E. Fisch, the Implications of Transition Theory for Stare Decisis, 13 J. CONTEMP. LEGAL ISSUES 93, 97-105 (2003) (describing common law rules regarding stare decisis).
    • (2003) J. Contemp. Legal Issues , vol.13 , pp. 93
    • Fisch, J.E.1
  • 275
    • 77954702107 scopus 로고    scopus 로고
    • See id. at 105-106 ("[A] merit-based analysis appears insensitive to the values inherent in the system of stare decisis.")
    • See id. at 105-106 ("[A] merit-based analysis appears insensitive to the values inherent in the system of stare decisis.").
  • 276
    • 84927454324 scopus 로고
    • Taking institutions seriously: Introduction to a strategy for constitutional analysis
    • 371-372 (describing courts' limited ability to regulate effectively due to information deficit and lack of control over agenda)
    • See, e.g., Neil K. Komesar, Taking Institutions Seriously: Introduction to a Strategy for Constitutional Analysis, 51 U. CHI. L. REV. 366, 371-372 (1984) (describing courts' limited ability to regulate effectively due to information deficit and lack of control over agenda).
    • (1984) U. Chi. L. Rev. , vol.51 , pp. 366
    • Komesar, N.K.1
  • 277
    • 0347740383 scopus 로고    scopus 로고
    • Established by practice: The theory and operation of independent federal agencies
    • For an overview of the theory and structure of independent agencies, 1135-1163
    • For an overview of the theory and structure of independent agencies, see generally Marshall J. Breger & Gary J. Edles, Established by Practice: the Theory and Operation of Independent Federal Agencies, 52 ADMIN. L. REV. 1111, 1135-1163 (2000).
    • (2000) Admin. L. Rev. , vol.52 , pp. 1111
    • Breger, M.J.1    Edles, G.J.2
  • 278
    • 77954723966 scopus 로고
    • The debate over independent agencies in light of empirical evidence
    • 218 (noting that independent agencies are more shielded from executive branch influence than are traditional executive branch agencies). While administrators of independent agencies do not enjoy life tenure, still they enjoy some degree of independence by virtue of their extended terms in office and limits on their removability
    • See, e.g., Geoffrey P. Miller, the Debate over Independent Agencies in Light of Empirical Evidence, 1988 DUKE L.J. 215, 218 (noting that independent agencies are more shielded from executive branch influence than are traditional executive branch agencies). While administrators of independent agencies do not enjoy life tenure, still they enjoy some degree of independence by virtue of their extended terms in office and limits on their removability.
    • (1988) Duke L.J. , pp. 215
    • Miller, G.P.1
  • 279
    • 77954753100 scopus 로고    scopus 로고
    • (Vanderbilt Univ. Law Sch. Pub. Law & Legal Theory Working Paper No. 10-01, Vanderbilt Univ. Law Sch. Law & Econ. Working Paper No. 10-102, available at, (arguing that rise of hybrid independent-executive mechanisms decreases independent agency freedom from presidential influence, but noting that decreased autonomy may also productively increase accountability)
    • Cf. Lisa Schultz Bressman & Robert B. Thompson, the Future of Agency Independence (Vanderbilt Univ. Law Sch. Pub. Law & Legal Theory Working Paper No. 10-01, Vanderbilt Univ. Law Sch. Law & Econ. Working Paper No. 10-102, 2010), available at http://ssrn.com/abstract=1546103 (arguing that rise of hybrid independent-executive mechanisms decreases independent agency freedom from presidential influence, but noting that decreased autonomy may also productively increase accountability);
    • (2010) The Future of Agency Independence
    • Bressman, L.S.1    Thompson, R.B.2
  • 280
    • 77954743332 scopus 로고    scopus 로고
    • Nash & Pardo, supra note 193, at 1765-1769 (arguing that, notwithstanding their lack of life tenure, bankruptcy judges nonetheless enjoy considerable degree of judicial independence)
    • Nash & Pardo, supra note 193, at 1765-1769 (arguing that, notwithstanding their lack of life tenure, bankruptcy judges nonetheless enjoy considerable degree of judicial independence).
  • 281
    • 77954730031 scopus 로고    scopus 로고
    • Buzbee supra note 186, at 1527 (finding that executive actors are subject to lobbying by interest groups on regulatory matters)
    • See Buzbee, supra note 186, at 1527 (finding that executive actors are subject to lobbying by interest groups on regulatory matters);
  • 282
    • 6444223263 scopus 로고
    • The purposes and limits of independent agencies
    • 259-260, (noting that statutory requirement of bipartisanship is designed to isolate independent regulatory agencies from political pressure)
    • Paul R. Verkuil, the Purposes and Limits of Independent Agencies, 1988 DUKE L.J. 257, 259-260 (noting that statutory requirement of bipartisanship is designed to isolate independent regulatory agencies from political pressure).
    • (1988) Duke L.J. , pp. 257
    • Verkuil, P.R.1
  • 283
    • 77954723966 scopus 로고
    • The independence of independent agencies
    • For commentary questioning the extent of the independence enjoyed by independent agencies, see generally Symposium
    • For commentary questioning the extent of the independence enjoyed by independent agencies, see generally Symposium, the Independence of Independent Agen cies, 1988 DUKE L.J. 215;
    • (1988) Duke L.J. , pp. 215
  • 284
    • 68049095441 scopus 로고
    • Specialized courts and the administrative lawmaking system
    • 1147-53, which argues that even specialized courts that review agency action may develop an agency bias. For discussion of protections designed to frustrate independent agency bias and to ensure political independence, see Breger & Edles, supra note 200, at 1188-1197
    • and compare Richard L. Revesz, Specialized Courts and the Administrative Lawmaking System, 138 U. PA. L. REV. 1111, 1147-53 (1990), which argues that even specialized courts that review agency action may develop an agency bias. For discussion of protections designed to frustrate independent agency bias and to ensure political independence, see Breger & Edles, supra note 200, at 1188-1197
    • (1990) U. Pa. L. Rev. , vol.138 , pp. 1111
    • Revesz, R.L.1
  • 285
    • 0004799427 scopus 로고
    • The federal trade commission
    • 86-87 (describing intention of many FTC lawyers to use their experience as means of obtaining lucrative private sector job after public service)
    • See, e.g., Richard A. Posner, the Federal Trade Commission, 37 U. CHI. L. REV. 47, 86-87 (1969) (describing intention of many FTC lawyers to use their experience as means of obtaining lucrative private sector job after public service).
    • (1969) U. Chi. L. Rev. , vol.37 , pp. 47
    • Posner, R.A.1
  • 286
    • 77954736181 scopus 로고
    • Military base closings: A study of government by commission
    • For example, consider the use of independent commissions to recommend military base closures. 333-340
    • For example, consider the use of independent commissions to recommend military base closures. See Natalie Hanlon, Military Base Closings: A Study of Government by Commission, 62 U. COLO. L. REV. 331, 333-340 (1991).
    • (1991) U. Colo. L. Rev. , vol.62 , pp. 331
    • Hanlon, N.1
  • 287
    • 77954719555 scopus 로고    scopus 로고
    • For discussion of independent agency accountability and autonomy as competing interests, see Breger & Edles, supra note 200, at 1198-1209
    • For discussion of independent agency accountability and autonomy as competing interests, see Breger & Edles, supra note 200, at 1198-1209.
  • 288
    • 77954739925 scopus 로고    scopus 로고
    • For recent scholarship advocating increased reliance on independent agencies, see Bressman & Thompson, supra note 201, at 3, which argues that reliance on independent agencies may allow presidential oversight "sufficient to satisfy political interests and to serve normative values," and Roberta S. Karmel, the Controversy over Systemic Risk Regulation, BROOK. J. INT'L L. (forthcoming 2010), available at http://ssrn.com/abstract=1540691, which argues that an independent agency should regulate systemic financial risk. Recent legislative proposals have also drawn upon independent agencies as valuable institutional actors
    • For recent scholarship advocating increased reliance on independent agencies, see Bressman & Thompson, supra note 201, at 3, which argues that reliance on independent agencies may allow presidential oversight "sufficient to satisfy political interests and to serve normative values," and Roberta S. Karmel, the Controversy over Systemic Risk Regulation, BROOK. J. INT'L L. (forthcoming 2010), available at http://ssrn.com/abstract=1540691, which argues that an independent agency should regulate systemic financial risk. Recent legislative proposals have also drawn upon independent agencies as valuable institutional actors.
  • 289
    • 77954697723 scopus 로고    scopus 로고
    • For discussion of the role of independent agencies in recent health care and global warming legislative proposals, see id. at 46-55. Note that some independent actors may be temporary (like a one-time commission to select which military bases to close), while others may be permanent (like the SEC). We advocate here a permanent agency; an agency with permanence can gather expertise over time. Cf. Adrian Vermeule, Intermittent Institutions (Harvard Law School Pub. Law & Legal Theory Working Paper Group, Paper No. 10-13 (2010), available at, (highlighting differences between temporary and permanent governmental institutions and explaining when each type of actor might be more appropriate)
    • For discussion of the role of independent agencies in recent health care and global warming legislative proposals, see id. at 46-55. Note that some independent actors may be temporary (like a one-time commission to select which military bases to close), while others may be permanent (like the SEC). We advocate here a permanent agency; an agency with permanence can gather expertise over time. Cf. Adrian Vermeule, Intermittent Institutions (Harvard Law School Pub. Law & Legal Theory Working Paper Group, Paper No. 10-13, 2010), available at http://ssrn.com/ abstract=1542104 (highlighting differences between temporary and permanent governmental institutions and explaining when each type of actor might be more appropriate).
  • 290
    • 77954727430 scopus 로고    scopus 로고
    • the type of expertise that would be relevant here is discussed infra notes 222-224 and accompanying text
    • the type of expertise that would be relevant here is discussed infra notes 222-224 and accompanying text.
  • 291
    • 77954754030 scopus 로고    scopus 로고
    • See, e.g., Verkuil, supra note 202, at 262-263 (noting that independent agencies develop expertise over time)
    • See, e.g., Verkuil, supra note 202, at 262-263 (noting that independent agencies develop expertise over time).
  • 292
    • 77954693623 scopus 로고    scopus 로고
    • note
    • This depends of course on the agency's organic statute, but most independent agencies possess this type of power (and there is no reason Congress could not confer it if necessary).
  • 293
    • 77954740732 scopus 로고    scopus 로고
    • The role of financial journalists in corporate governance
    • 354-355 (noting superlative regulatory expertise of SEC)
    • See, e.g., Michael J. Borden, the Role of Financial Journalists in Corporate Governance, 12 FORDHAM J. CORP. & FIN. L. 311, 354-355 (2007) (noting superlative regulatory expertise of SEC).
    • (2007) Fordham J. Corp. & Fin. L. , vol.12 , pp. 311
    • Borden, M.J.1
  • 294
    • 77954741065 scopus 로고    scopus 로고
    • Cf. Verkuil, supra note 202, at 267-272 (providing examples to show independent agencies are best used in functions that mirror appellate courts, not to administer set policies)
    • Cf. Verkuil, supra note 202, at 267-272 (providing examples to show independent agencies are best used in functions that mirror appellate courts, not to administer set policies).
  • 295
    • 77954739160 scopus 로고    scopus 로고
    • note
    • A prominent analogy to the separation of decisionmaking authority between entities for purposes of providing transition relief appears in the context of environmental risk regulation. There, "risk assessment" (the determination of whether a risk exists and its scope) is separated from "risk management" (the policy question of how to respond to the risk identified). See Jonathan Remy Nash, High-Speed Police Chases and the Constitutional Common Law of Risk Regulation (unpublished manuscript, on file with the New York University Law Review) (discussing environmental risk assessment and management). One justification for this separation is specialization: Risk assessment raises questions best addressed by experts in science, while risk management introduces questions best addressed by policy and economic experts. See id. at 7-8. Another justification is that separation of inquiry avoids the very real risk that policymakers would otherwise infect, and even overwhelm, the control of scientific experts over risk assessment. See id. at 8 (discussing how separation of risk management from risk assessment protects integrity of risk assessment). Put another way, the separation of risk management from risk assessment helps to ensure the propriety and validity of the entire process.
  • 296
    • 77954691271 scopus 로고    scopus 로고
    • See supra Part IV.A.1 (discussing circumstances in which transition relief will be necessary)
    • See supra Part IV.A.1 (discussing circumstances in which transition relief will be necessary).
  • 297
    • 77954717891 scopus 로고    scopus 로고
    • We return to the question of which outside actors will be best suited to this task infra Part IV.C.3
    • We return to the question of which outside actors will be best suited to this task infra Part IV.C.3.
  • 298
    • 77954723846 scopus 로고    scopus 로고
    • Nash Allocation and Uncertainty supra note 7 at 842-843 (arguing that grandfathered rights are popular because they disguise publicly unpopular cost-benefit calculus)
    • See Nash, Allocation and Uncertainty, supra note 7, at 842-843 (arguing that grandfathered rights are popular because they disguise publicly unpopular cost-benefit calculus).
  • 299
    • 77954729376 scopus 로고    scopus 로고
    • See id. at 843 (arguing that government choice of transition relief is driven by desire to create "perception of procedural fairness"). This concern, however, seems not to have stopped Congress from literally listing the number of free sulfur dioxide allowances being allocated to coal-fired power plants under the Clean Air Act sulfur dioxide trading program. That method of explicit allocation, however, persisted only under the initial, timelimited first phase of the trading program; the broader second phase allocates allowances by formula. Nash & Revesz, Markets and Geography, supra note 151, at 584-585
    • See id. at 843 (arguing that government choice of transition relief is driven by desire to create "perception of procedural fairness"). This concern, however, seems not to have stopped Congress from literally listing the number of free sulfur dioxide allowances being allocated to coal-fired power plants under the Clean Air Act sulfur dioxide trading program. That method of explicit allocation, however, persisted only under the initial, timelimited first phase of the trading program; the broader second phase allocates allowances by formula. Nash & Revesz, Markets and Geography, supra note 151, at 584-585
  • 300
    • 77954707482 scopus 로고    scopus 로고
    • See supra notes 21-23 and accompanying text (discussing circumstances where balance of social costs favors transition relief)
    • See supra notes 21-23 and accompanying text (discussing circumstances where balance of social costs favors transition relief).
  • 301
    • 77954738485 scopus 로고    scopus 로고
    • See supra notes 24-26 and accompanying text (noting suggestions of how transition relief may be used to incentivize socially desirable investments)
    • See supra notes 24-26 and accompanying text (noting suggestions of how transition relief may be used to incentivize socially desirable investments).
  • 302
    • 77954698816 scopus 로고    scopus 로고
    • note
    • Michael Graetz has argued that deciding who should receive transition relief is difficult because the effects of a change in the law may have an impact beyond simply the class of people directly affected by the law. See Graetz, supra note 59, at 77-78. As an example, Graetz explains that revision of air transportation regulations might "have financial effects on the investors, consumers and employees of air carriers, airframe manufacturers, and airport operators." Id. at 78. The fact that so many classes of societal actors might be affected may make it challenging, if not impossible, to apportion limited but appropriate transition relief. Presumably, an expert agency would handle such challenges better. and if indeed the task proves to be impossible, an expert agency would be best positioned to come to that conclusion as quickly as possible.
  • 303
    • 77954694385 scopus 로고    scopus 로고
    • See Nash, Allocation and Uncertainty, supra note 7 at 819-820 (describing reliance on regional fishery councils in development of fishing quota systems)
    • See Nash, Allocation and Uncertainty, supra note 7 at 819-820 (describing reliance on regional fishery councils in development of fishing quota systems).
  • 304
    • 77954735842 scopus 로고    scopus 로고
    • note
    • To the extent that compensation is used, the legislature or executive branch agency should set a cap on the total amount of available relief. Cf. Michael B. Gerrard, N.Y. Brownfields Program Buffeted by Legislature, Courts, N.Y. L.J., July 25, 2008, at 5 (describing how, where brownfields cleanup program authorized tax credits far in excess of actual cleanup costs, New York State's Department of Environmental Conservation "began making it difficult for sites to enter" program in order "[t]o guard the state's treasury from this uncapped exposure").
  • 305
    • 77954714307 scopus 로고    scopus 로고
    • note
    • In some sense, the use of an independent agency to decide these questions allows for retroactive effect without what Jacob Gersen and Eric Posner describe as the downsides of "Delay Rules," where retroactive legislation is too easily accomplished. Gersen and Posner explain that Delay Rules offer the benefit of allowing one session of the legislature to enact general legislation while deferring, and delegating to future legislators, specific actions. See Gersen & Posner, supra note 1, at 548. Gersen and Posner explain: Delay Rules facilitate monitoring of agents by the public and reduce the relative influence of interest groups over legislation. Delay allows slow and diffuse public attention to mobilize, reducing the advantage of well-organized groups in the legislative process. However, public attention is often short-lived. Once public attention wanes, private interests can lobby again . . . . Retroactivity, therefore, allows actors to evade some timing rules. The bias against retroactivity may support the democracy-enhancing facets of Delay Rules on the legislative process. Id. at 583 (citations omitted). Reliance upon independent agencies that are less subject to lobbying may allow for greater flexibility in having the government act retroactively without the attendant loss of benefits from Delay Rules that Gersen and Posner identify.
  • 306
    • 0346309024 scopus 로고    scopus 로고
    • Protecting the environment for future generations: A proposal for a "republican" superagency
    • See supra note 204 and accompanying text (discussing base closures). For discussion of the effective use of ad hoc commissions to address politically challenging issues- including base closures, 489
    • See supra note 204 and accompanying text (discussing base closures). For discussion of the effective use of ad hoc commissions to address politically challenging issues- including base closures-see Bradford C. Mank, Protecting the Environment for Future Generations: A Proposal for a "Republican" Superagency, 5 N.Y.U. ENVTL. L.J. 444, 489 (1996).
    • (1996) N.Y.U. Envtl. L.J. , vol.5 , pp. 444
    • Mank, B.C.1
  • 307
    • 77954744135 scopus 로고    scopus 로고
    • See supra notes 152-158 and accompanying text (discussing transition issues that transcend subject matter areas)
    • See supra notes 152-158 and accompanying text (discussing transition issues that transcend subject matter areas).
  • 308
    • 77954695430 scopus 로고    scopus 로고
    • Cf. S. REP. NO.97-275, at 6 (1982), as reprinted in 1982 U.S.C.C.A.N. 11, 16 (noting, with respect to creation of U.S. Court of Appeals for the Federal Circuit, that "the subject matter of the new court will be sufficiently mixed to prevent any special interest from dominating it")
    • Cf. S. REP. NO.97-275, at 6 (1982), as reprinted in 1982 U.S.C.C.A.N. 11, 16 (noting, with respect to creation of U.S. Court of Appeals for the Federal Circuit, that "the subject matter of the new court will be sufficiently mixed to prevent any special interest from dominating it").
  • 309
    • 77954729035 scopus 로고    scopus 로고
    • For discussion and criticism of this approach, see Logue, supra note 7, at 1176-1180
    • For discussion and criticism of this approach, see Logue, supra note 7, at 1176-1180
  • 310
    • 77954749467 scopus 로고    scopus 로고
    • Id. at 1179-1180 Accepting this impossibility, Logue goes on to propose that new tax laws should be applied prospectively, not from the date of enactment but from the date that they are originally proposed in Congress. Id. at 1180
    • Id. at 1179-1180 Accepting this impossibility, Logue goes on to propose that new tax laws should be applied prospectively, not from the date of enactment but from the date that they are originally proposed in Congress. Id. at 1180.
  • 311
    • 84937284526 scopus 로고
    • A glass half full a glass half empty: The use of alternative dispute resolution in mass personal injury litigation
    • 1615-18, 1623-1626 (citing examples of alternative dispute resolution to allocate limited Dalkon Shield- and asbestos-related injuries, and advocating greater use of such systems in mass tort litigation)
    • Cf. Deborah R. Hensler, A Glass Half Full, a Glass Half Empty: the Use of Alternative Dispute Resolution in Mass Personal Injury Litigation, 73 TEX. L. REV. 1587, 1615-18, 1623-1626 (1995) (citing examples of alternative dispute resolution to allocate limited Dalkon Shield- and asbestos-related injuries, and advocating greater use of such systems in mass tort litigation).
    • (1995) Tex. L. Rev. , vol.73 , pp. 1587
    • Hensler, D.R.1
  • 312
    • 0742271520 scopus 로고    scopus 로고
    • Recognizing the regulatory commons: A theory of regulatory gaps
    • 17-36, highlighting that assumption of single government regulator is incorrect and noting that multiplicity of potential regulators may impose costs
    • Cf. William W. Buzbee, Recognizing the Regulatory Commons: A Theory of Regulatory Gaps, 89 IOWA L. REV. 1, 17-36 (highlighting that assumption of single government regulator is incorrect and noting that multiplicity of potential regulators may impose costs).
    • Iowa L. Rev. , vol.89 , pp. 1
    • Buzbee, W.W.1


* 이 정보는 Elsevier사의 SCOPUS DB에서 KISTI가 분석하여 추출한 것입니다.