The promise and limits of negotiated rulemaking: evaluating the negotiation of a regional air quality rule.

• Author: Selmi, Daniel P.

1. INTRODUCTION II. THE REGULATORY BACKGROUND OF THE NEGOTIATION A. Emissions from Electroplating and Anodizing B. Regulation of Toxic Air Emissions 1. California Regulation 2. South Coast District Regulation 3. Federal Regulation 4. The Calculus of Further Regulation III. THE PARTIES TO THE RULEMAKING: A CHARACTERIZATION A. The Metal Plating Industry B. The Regulating Agency. C. The Environmental Groups IV. REGULATORY NEGOTIATION: A BRIEF SUMMARY V. THE PATH OF THE NEGOTIATION A. The Initial Perspectives 1. The Industry's Perspective 2. The Environmentalists' Perspective 3. The Staffs Perspective 4. The Facilitator's Perspective B. The Final Outcome of the Negotiations C. The Path to Consensus 1. The Factors Promoting Compromise 2. The Features of the Compromise a. Interests and Framework b. The Core Agreement c. The Search for Pollution Prevention d. The Closure Method. 3. The Outcome In Perspective: Goal Attainment. VI. EVALUATING THE NEGOTIATIONS: SEVEN INDICATORS A. The Role of Information: Gathering and Exchange 1. The Debate on the Availability of Information 2. The Effective Exchange of Information 3. Affording Technical Assistance to Parties B. Expanding the Universe of Outcomes 1. Shaping Options That Respond to Interests 2. Benefit Creation 3. The Limits of Benefit Distribution 4. Paradigm-Shifting Solutions C. The Effect of Public Agency Institutional Arrangements 1. The Decisiveness of Commitments 2. The Structure of Agency Decisionmaking D. The Scale of the Negotiation: Time and Resources 1. Time as a False Indicator. 2. Resource Constraints E. The Role of Civility and Trust 1. The Benefits of a Cooperative Environment 2. Outcomes from Cooperation: An Example F. The Threat of the Unilateral Alternative G. The Tractability of the Dispute VII. CONCLUSION I. INTRODUCTION

   For almost 25 years the possibility of utilizing negotiation as a means of breaking deadlocks over administrative rulemaking has attracted the attention of academic commentators. (1) Even after all this time, however, the prospects for negotiated rulemaking remain very much subject to debate. (2) Proponents see negotiated rulemaking as providing a variety of benefits, including a non-adversarial, creative approach to environmental problem solving. They view negotiation as facilitating improved outcomes that are less likely to result in litigation. (3) Some envision negotiated rulemaking as part of a much larger trend toward either a "contractarian" (4) or "pragmatic" approach to administrative lawmaking. (5)

   In contrast, opponents of negotiated rulemaking primarily raise concerns relating to the integrity of the administrative process. The overarching criticism is that bargained agreements between government and private interests will be treated as elements of public law rather than as private contracts. (6) Some also claim negotiated rulemaking fails to meet the two prominent efficiency goals promoted for it: preventing litigation and saving time in the regulatory process. (7)

   Traditionally, the literature on negotiated rulemaking has largely centered on case-by-case evaluations. Many are "first-person" accounts by participants, often in the context of rulemakings undertaken by federal agencies. The participants analyze and describe their reactions to the process, and many of these evaluations have been favorable to negotiated rulemaking. (8) Others, however, criticize these studies as too narrow and as not providing a systematic comparison of negotiated rules with non-negotiated rules. (9) Critics also label some of the favorable case studies as focused only on the successful negotiations and note that they typically are not written by independent observers. (10)

   At least partially in response to this body of criticism, academics have begun to employ empirical research as a tool for reaching more general conclusions about whether negotiated rulemaking achieves the benefits it advertises. (11) These empirical studies have tried to compare outcomes by relying on interviews and questionaires filled out by participants in those regulatory negotiations. (12) However, as was the case with the previous debates over negotiated rulemaking, the literature is in sharp conflict. (13) Two recent empirical studies found broad benefits in negotiated rulemaking, (14) while another concluded that the suggested benefits of negotiated rulemaking are overstated. (15)

   The recent trend toward empirical research is a natural and welcome evolution in the study of negotiated rulemaking. Sufficient experience with regulatory negotiation now exists to begin drawing tentative conclusions about its overall efficacy. Nonetheless, case-specific studies of regulatory negotiations still can serve important purposes. By focusing on a specific negotiation, such studies shed light on whether and how the interaction among the parties to a negotiated rulemaking is different from the interaction in a normal notice and comment rulemaking. Case-specific studies also can illumine whether the negotiation format fosters the exercise of creativity beyond that found in the usual administrative process. Moreover, broad based empirical comparisons of negotiated rulemakings face significant barriers. For example, the data base--the actual number of negotiated rulemakings--is not large, despite the lengthy period of time negotiated rulemaking has been in use.

   This article is an in-depth evaluation of a negotiated rulemaking that culminated in the adoption of a rule limiting emissions of chromic acid from metal plating facilities. The rulemaking was carried out by a large regional air pollution control agency in Southern California, the South Coast Air Quality Management District. (16) The negotiators agreed upon the most stringent measure regulating toxic emissions from metal plating in the United States. (17)

   Unlike many of the other case-specific studies authored by actual participants in the negotiation, this article views the negotiation process from a more neutral perspective. The air quality agency engaged the author to act as an impartial observer of the negotiation and to attend all meetings. At the conclusion of the negotiation, the author would recommend to the agency whether future use of negotiated rulemaking was warranted. (18) The access allowed for a close look at the various parties' motivations and strategies during the negotiation. (19) It also brought a clear understanding of how the negotiation process affected the evolution of the proposed rule.

   The methodological framework for this article is to evaluate the negotiation against seven factors commonly cited in the literature as related to the benefits or demerits of regulatory negotiation. These seven factors are: 1) the role of information, 2) the expansion of the universe of outcomes, 3) the effect of public agency institutional arrangements, 4) the scale of the negotiation, 5) the role of civility and trust, 6) the threat of a unilateral alternative, and 7) the tractability of the dispute. For example, proponents cite creativity in expanding the possible set of traditional litigation outcomes as a benefit of negotiated rulemaking. After evaluating the negotiated rulemaking in question, this article concludes that it exhibited a significant level of creativity. Solutions found during the negotiation process would likely not have occurred within the procedural limitations of the normal rulemaking process.

   The article also serves an additional, quite separate purpose. To date, the academic literature has centered almost entirely on the use of regulatory negotiation by federal administrative agencies. The literature has given little attention to whether the dynamics, benefits, and drawbacks of this process remain unchanged if it is used at the state or even lower level of government. (20)

   The article concludes that the location of this rulemaking, at the regional level of government, brought to light limitations in regulatory negotiation that are not present at the federal level. For example, the rulemaking occurred within a much broader regulatory context in which the Environmental Protection Agency (EPA) and the State of California were actively considering changes to the regulation of chromium emissions. This regulatory background includes a legal structure in part intended to limit the discretion of state and local air pollution agencies, suggesting that in some cases, regulatory negotiation as a tool does not offer the same promise at the state and regional level that it does at the federal level.

   Parts II and III of this article set forth the regulatory background and introduce the parties to the negotiation. These parts include both the legal framework for the negotiation and the previous regulatory actions by the regional air quality agency, the State of California, and EPA. After a brief summary of the regulatory negotiation process itself in Part IV, Part V of the article examines the ebb and flow of the metal plating negotiation, emphasizing the factors that promoted consensus and the features of the negotiation's core compromise. Part VI evaluates the metal plating negotiations against seven tenets of negotiation prevalent throughout the academic literature. It concludes that the negotiation largely conformed to the expectations of those who promote the benefits of negotiated rulemaking. This evaluation also identifies several features of the negotiation that differed markedly from traditional environmental notice and comment rulemaking.

2. THE REGULATORY BACKGROUND OF THE NEGOTIATION

   1. Emissions from Electroplating and Anodizing

      Chromium electroplating fixes chrome on products such as automobile parts. (21) Plating is an electrolytic process in which a part is submerged in a bath containing chromium anhydride (commonly called chromic acid). (22) Large amounts of hydrogen gas, and smaller amounts of oxygen gas, are freed during chromium electroplating due to the relatively low...