Federal regulatory agencies and state common law courts play different but complementary roles in protecting citizens from the undesirable consequences of unregulated private markets. Congress created the regulatory agencies to provide ex ante protection by promulgating standards and establishing permit requirements applicable to private sector actors. Both permit requirements and regulatory standards often give targets of regulation a good deal of discretion in determining exactly how to comply. Nevertheless, agencies attempt to articulate the outer boundaries of legally permissible activities with some precision, because the government will ultimately bear the burden of proof in any subsequent enforcement action. State common law courts also craft rules for determining liability after a product or activity has caused harm, and in many cases those common law standards are designed to discourage socially undesirable behavior by forcing those who engage in it to compensate the victims. The broad standards that common law courts prescribe, such as the “reasonable person” test for negligence, are not stated with a great deal of precision, and their breadth and vagueness can leave prospective plaintiffs and potential defendants with little guidance as to whether a court will permit a jury to find that any particular product or activity violates the relevant standard.

Federal regulation and state common law litigation are both information-intensive exercises, imposing diverse burdens on regulators, litigants, and courts. Federal regulatory schemes typically impose threshold informational burdens but are far less comprehensive or consistent in tracking postaction developments.