Regulatory law practitioners and scholars focus much of their attention on legal transitions. Since the mid-1980s, the prospect of governmental liability for private harms imposed by regulatory change has attracted the attention of leading scholars in a variety of contexts, including changes to corporate securities and tax laws (Ahdieh, 2004; Fisch, 1997; Kaplow, 1986; Symposium, 2003; Van Alstine, 2002). For more than a decade, transition issues have dominated discussions of the legal implications of deregulation for industries such as electric power and telecommunications.

In the context of economic regulation, it is now conventional to frame the transition issue as a “deregulatory taking” – a novel term used to describe potential legal claims against the government requiring financial liability for deregulatory policies that upset the settled expectations of private firms. In the leading treatise on the topic, Deregulatory Takings and the Regulatory Contract, J. Gregory Sidak and Daniel F. Spulber (1997) (who seem to have coined the term “deregulatory takings”) make an explicit link between deregulatory takings and the regulatory contract to argue in favor of governmental compensation for regulatory change in the electric power and telecommunications contexts. If positioned within an incomplete contracts framework, deregulatory takings presents an occasion to evaluate the appropriate default rule for courts to apply in filling in gaps in the regulatory bargain as they consider the harms imposed by regulatory transitions. Understanding regulation as a bargain, however, does not commit or limit courts to the role of discovering and enforcing implicit contracts.