AGENCY DISCRETION AND ADVANCES IN REGULATORY THEORY - FLEXIBLE AGENCYAPPROACHES TOWARD TIME REGULATED COMMUNITY AS A MODEL FOR THE CONGRESS-AGENCY RELATIONSHIP

Beginning from recent developments in incentives-based regulation in e nvironmental and other contexts, the authors argue that government ide ally should hold regulated communities accountable for achieving resul ts while freeing them to develop and choose among unlimited means of a ccomplishing those results. This departure from traditional ''command- and-controI'' theories of regulation is rooted in the notion that, pro perly directed, market forces will drive regulated communities to achi eve equal (or even superior) results at the least possible cost. The a uthors move beyond the now widely-advanced incentives-based regulatory theory to argue that comparable thinking might well be applied in the relationship between Congress and the federal administrative agencies and departments. Specifically, they criticize the conventional wisdom that agencies have unconstrained discretion, arguing instead that man y agency choices (and particularly choice of regulatory method) are in fact tightly controlled by organic and program-implementing legislati on. On the other hand, Congress generally ignores potential outcome- o r performance-based controls that might cabin discretion in a manner t hat does not limit the flexible and efficient adaptation of methods to particular circumstances. The authors argue that this property of the Congress-agency relationship is analogous to the most unfortunate cha racteristics of traditional command-and-control regulation. The author s argue that a Congress-agency relationship similar to the regulator-r egulated relationship propounded in incentive-based theories-freedom m ethod, accountability for results-would lead to more effective and cos t-effective regulation. The opportunity to develop such incentives sch emes is especially ripe at this time; significant public interest and political attention is focused on civil service and regulatory reform issues. To properly encourage performance and good governance, though, the new approach must peg these incentives to a clear system of agenc y performance standards focused on the cost-effective achievement of l egislative and programmatic objectives.