Hannah Jacobs Wiseman (Florida State University - College of Law) has posted Regulatory Islands on SSRN. Here is the abstract:
Subfederal laboratories are features of a federalist system, but a necessary condition of thoughtful experimentation is often missing. To conduct useful policy experiments, states and other subfederal actors should have baseline information: they need to understand the laws and regulations that other jurisdictions have tried. Despite the endless data available in the information age, many governments lack this seemingly simple information. Isolated “islands” of information exist within technical policy areas in particular — those that do not follow uniform codes and require some expertise to understand, like healthcare and hydraulic fracturing.
Two types of baseline information are vital for experimentation. Intrastate, detailed précis of a state’s regulatory approach are important, as they give other jurisdictions models to work from. Subfederal actors produce this information in only limited areas. From an interstate perspective, governments also need carefully-organized, formal comparisons of others’ approaches. Trade associations produce intra- and interstate data, but often informally and in a piecemeal manner for themselves. Associations of mayors and states and nonprofit groups also compare policies, but these groups’ positions might bias their data collection and reporting.
The resulting deficit of full, formal, and accurate information about the regulatory baseline limits the experimental upside of laboratories — informed, efficient, and innovative regulatory approaches. It also expands laboratories’ known downside: the costs to private actors of complying with different standards. This Article explores this problematic feature of federalism and the public choice and political economy factors that might drive it. It argues that when the federal government allows subfederal experimentation, it has a duty — and is in the best position — to work with subfederal institutions to produce and synthesize regulatory information. This will enable more informed experimentation and allow monitoring of policy gaps. At this juncture, the most critical role of the federal government in modern regulatory experiments is an informational one.