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Topic: Regulatory Negotiations The traditional
process of regulatory development is typically top-down. Government initiates, formulates
and proposes the rules. In centralized or closed systems, regulations are imposed; in more
open systems, businesses, groups or individuals may comment on the proposals in public
hearings, but with little possibility of making major structural and functional
modifications to the regulations. This process, while well-intentioned, often leaves
stakeholders feeling far removed from the process and disempowered. They may feel that
they have minimal voice in designing the regulations, standards and provisions that must
be obeyed, and, as a result, compliance may be low and enforcement costs high -- a
double-edged sword. Stakeholder
reactions to top-down regulatory development can have negative implications. If penalties
are increased to discourage noncompliance, businesses may migrate into a "shadow
economy," thereby fueling corruption, reducing tax revenues and evading the
regulatory regime altogether. In some societies, lengthy and costly litigation in the
courts is sometimes pursued by civil society groups to modify or eliminate imposed
regulations. Antagonistic and adversarial relations between regulatory agencies and the
regulated parties may ensue, resulting in delay or outright disregard for the
regulations intent. The lack of effective and frank dialogue between the regulators
and the regulated is usually blamed for these negative consequences. There is an
alternative approach to the traditional process of regulatory formulation and
implementation negotiated rulemaking or regulatory negotiation (reg-neg).
Negotiated rulemaking brings together affected stakeholder groups -- businesses,
organizations, and citizens -- with the relevant government agency and a neutral
mediator or facilitator to build a consensus on the features of a new regulation before
it is proposed officially by the agency. Regulatory provisions are developed as a
bottom-up participatory process of negotiation. Negotiated
rulemaking is a fully collaborative process, in which all interested groups are convened
in an "Advisory Committee." Key issues and concerns are identified, the
interests of all sides are compared and contrasted, negotiations take place, and
hopefully, agreements based on consensus are developed. In the United
States, negotiated rulemaking became an officially recommended approach to develop new
regulations by federal government agencies in 1990 when the Negotiated Rulemaking Act (5
U.S.C. 561-570) was passed by Congress. A September 1993 Executive Order from the White
House requires all federal agencies to consider applying negotiated rulemaking strategies
in future regulatory actions. However, the approach has been used informally by government
agencies since the 1970s. The Department of Labor, the Environmental Protection Agency
(EPA), and the Department of the Interior, are its principal proponents. By far, the EPA
has been the most frequent user of negotiated rulemaking. Over 50 federal negotiated
rulemaking cases have been documented between 1982 and 1995; many more applications have
been conducted in the United States at the state level . Examples of environmental
regulations developed using negotiated rulemaking in the United States include:
The experience with
negotiated rulemaking in the United States has produced several benefits:
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