Student Post: Thoughts on Regulatory Scheme

It seems to make sense that a regulatory scheme should reflect the ultimate goal of the regulation. However, oftentimes, a single industry is subject to a myriad of different regulations encompassing a wide variety of policy goals. Environmental regulations, which usually seek to produce a specified product in a way that minimizes impact on the surrounding environment, interact with price regulations, which seek to prevent companies from overcharging their consumers. These regulations may be intermingled with trade regulations seeking to promote such goals as creating jobs or preventing restraints on competition. Of course, there may be many other regulations effecting a particular industry. The interplay of the competing goals of varying regulations makes it difficult to predict the outcomes of a single regulation with any real certainty. This says nothing of factoring in the effects of a single industry being subject to the regulatory regimes of multiple regulatory agencies which are likely competing to ensure the best result for their pet goal.

What to do about this problem then? Under current circumstances, I feel that it is important for the government to prioritize its policy goals and to give regulatory powers to the agencies according to that list of priorities. This assumes that interagency cooperation would not be a problem, and that lower priority agencies would not attempt to undermine the work of those agencies given a higher priority status. This is far from given. 

Another approach would be to merge all regulatory agencies into a single regulatory agency. Congress would construct a regulatory scheme for the industry, and the single regulatory entity would apply regulations according to that scheme. In this approach, if keeping consumer prices low is of paramount importance, then the regulatory agency would have the power to relax environmental regulations on the industry (or to allow members of the industry to sell materials in a way that may restrict competition) so that the end product can be passed to consumers at an ideal price. Conversely, if environmental protection is the primary goal, then the company may be allowed to pass increased regulation costs onto consumers through higher prices. This type of regulatory regime would require a massive overhaul of the government on the federal level. It would also require a balancing of state and federal interests. In the end, this approach could also be desirable because a single agency would be able to respond more quickly to circumstances requiring a change in the regulatory scheme. 

Ultimately, even the best and most robust regulatory schemes may suffer from unforeseen events. Markets crash, consumer demand can fluctuate, and disasters can cut production and cause environmental catastrophe. Whether through increased agency prioritization and cooperation, or consolidation of regulatory agencies, regulators must become more agile in their responses to unforeseen stimuli to improve the outcomes of regulation.