REHABILITATING INTERSTATE COMPETITION - RETHINKING THE RACE-TO-THE-BOTTOM RATIONALE FOR FEDERAL ENVIRONMENTAL-REGULATION

An influential justification for placing responsibility for environmental regulation at the federal level is that otherwise states would engage in a socially undesirable ''race to the bottom,'' making their environmental standards too lax in an effort to attract and retain industry. After discussing the difficulties in empirically testing this theory, Professor Revesz shows that race-to-the-bottom arguments encounter no support in existing models of interjurisdictional competition. He then establishes that even if there were a race to the bottom over environmental standards, federal regulation would not be an effective response: faced with strict federal environmental standards, states concerned with attracting industry would relax regulatory controls in other areas. Professor Revesz concludes by showing that in the corporate-charter and bank-charter literatures, the race-to-the-bottom label has been used to identify issues distinct from those implicated in the term in the environmental context, and he offers a conceptual typology that elucidates the relevant distinctions.