Document Type

Article

Publication Date

2018

Abstract

The virtues and effects of federalism continue to generate political, judicial and scholarly ferment. While some federalism partisans champion exclusivity and separation, others praise the more common political choice to retain federal and state regulatory overlap and interaction. Much of this work, however, focuses on government learning or rule clarity, giving little or no attention to how different federalism choices can heighten or hedge risks of regulatory failure and policy reversal. These debates play out with unusual fervor and with high stakes in battles over climate change regulation. Despite broad agreement that any effective climate policy intervention must include national action, disagreement reigns regarding the retention of state authority. Prominent policymakers, industry voices, and scholars have championed a single regulator and clean authority delineation as the answer to the challenges of climate change. They characterize state climate policies as a weak or even harmful alternative, especially if overlapping or intertwined with a federal role. A global challenge like climate change does intuitively seem to be a quintessential setting for a single, comprehensive regulator, especially if addressed through marketutilizing regulation. This intuition, however, only makes sense under an idealized view of politics and regulatory efficacy. This Article introduces the concept of federalism hedging—namely retention of concurrent federal and state authority due to its benefits and especially protective effects, even in an area ideally regulated by a single national regulator— then disaggregates sometimes blurred but related strains in federalism analysis. It illuminates federalism hedging dynamics through a theoretical and historical case study of climate regulation and federalism choice. This Article argues that where effective regulation is dependent on innovations and applies in areas characterized by rapid change in regulatory design, markets, and technology, such regulatory design choices—especially regarding federalism allocations of authority—should not be based on optimistic assumptions of steady progress and easy implementation. Effective regulatory structures should hedge risks, with special attention to linked political and economic dynamics. Regulation that retains room for both federal and state involvement and overlap can provide room for regulatory learning and adjustment, catalyze commitment and corrective efforts, while still fostering beneficial regulatory and market entrenchment and resulting stability through a web of similarly directed regulation.

Publication Citation

Wisconsin Law Review, Vol. 2017, No. 6, Pp. 1037-1113.

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