Breaking open the dichotomy between goal-based and rule-based regulation: a discretion index for evaluating regulatee discretion

In recent decades, the call for regulatory innovation has increasingly become louder. Practitioners and academics press for more flexibility, less complexity, less regulatory burden, and more freedom and room for innovation for regulatees. One of the tools that is seen as potentially responding to these needs, is goal-based regulation (GBR). GBR describes the goal that regulatees should achieve, without specifying how they must achieve it. This is usually contrasted with rule-based regulation (RBR), which prescribes detailed instruments and behaviours. An important distinction between the two is how much discretion regulatees have on how to reach the regulatory goal: with GBR, regulatees have a lot of discretion, with RBR they have little discretion. While GBR has already received quite some scholarly attention over the last few years, much research on GBR only discusses ‘goal-based regulation’ as if it were a homogeneous phenomenon. However, most regulation is not purely goal-based or rule-based but rather takes some hybrid form. Hybrid forms of regulation leave some elements to the discretion of regulatees and restrict others. This paper aims to find a method for evaluating the discretion that regulation grants to regulatees in a way that allows us to identify various forms and degrees of GBR. It does so by combining insights from existing literature with a rule design analysis of Flemish environmental and welfare regulation. The result is a ‘discretion index’ that can be applied to determine how much discretion the regulation in any regulatory regime leaves to a particular regulatee. It allows for the categorisation of ‘hybrids’ as fundamentally GBR or RBR. And it enables the systematic mapping of developments and the identification of strategies for modulating GBR without losing its advantages.