In this engaging, clearly written volume, Daniel Kelemen synthesizes and elaborates a theoretical model that contributes to several literatures. As a study of the European Union, it stands at the logical endpoint of a growing trend toward the application of analytical tools drawn from conventional comparative politics. As an account of governmental institutions, the broad analytic narrative breaks new ground in sorting out the consequences of federalism. As an analysis of public policy, especially environmental policy, the book offers a new argument about the institutional sources of regulatory politics.

At the core of Kelemen's account lies a theory of what he calls “regulatory federalism.” By this he means the ways regulation develops under a government with two tiers of institutions. Synthesizing accounts of executive-legislative relations, national and subnational governments, and judicial institutions, the theory highlights two basic dynamics. The first resides in the hierarchical relations between the federal government and lower-level units. The second, termed by Kelemen the “politics of discretion,” takes place as governments at both levels, as well as courts and interested parties, jockey with one another to implement regulation.

In the development of a new sphere of regulation, these dynamics follow one of two paths. In systems in which power at the federal level is fragmented, the federal government employs detailed statutes to constrict the discretion of both the federal executive and the subnational governments in implementation. In the face of a relatively weak executive, courts step in and encourage litigation. In centralized federal systems, contrasting dynamics take place. The government enacts vague enabling statutes, assuring both the federal executive and subnational governments wide discretion. In the absence of legal grounds for intervention, courts defer more to the executive and litigation plays a minimal role. A series of broadly framed case studies focused on the development of environmental regulation since the postwar era demonstrate these alternative dynamics. Kelemen finds the first trajectory in the United States and the EU, and the second in Canada and Australia. In Germany, the path he discovers lies between his two main types.

As a comparative study of the institutional politics of regulation, The Rules of Federalism is in several ways an exemplary work. Rarely has a comparative framework done more to illuminate the properties of the European Union, or to put the case of the EU to work in the service of more general theoretical analyses of politics and policy. The theoretical synthesis also makes more general contributions to the comparative study of national political institutions as well as that of regulatory politics. The recent revival of work on federalism in comparative politics has remained confined mostly to its fiscal and electoral dynamics. In placing regulatory and legal dynamics front and center, Kelemen's analysis shows the politics of authority to be crucial as well. More narrowly tailored theories, such as those of John Huber and Charles Shipan or George Tsebelis, have already developed specific elements of Kelemen's theory. Yet his account demonstrates the potential of a more eclectic, less formalized institutional analysis to illuminate crucial interactions between multiple institutional elements. The analysis also takes a decisive step beyond descriptive comparison of regulatory styles toward historical institutional explanation of their sources.

The ambition and clarity of the argument, combined with these multiple innovations, help to expose a number of conceptual and methodological limitations. Even as Kelemen casts the account in terms that suggest a more general theory of regulatory development, both the analysis and the research design remain confined to federal systems. More attention to the politics of implementation and multilevel governance in unitary countries would have enabled a more convincing account of what is distinctive about regulatory federalism. In further limiting the comparative case analyses to selected issues in the single domain of environmental regulation, the author also restricts the empirical support for his theory. A brief chapter on other health and social regulation in the EU suggests similar dynamics in other sectors, but further comparative evidence remains necessary to bear this out. Students of the comparative political economy of regulation will also find little attention to alternative explanations beyond the formal institutional logics of Kelemen's own theory. Despite a regard for statutory texts that is all too rare among political scientists, he adduces little specific textual evidence to bolster crucial points about the comparative character of legislation.

The most striking and distinctive contention of the book lies in the author's insistence that regulation in the EU has now become essentially that of a federal state. Kelemen distinguishes this argument not only from the increasingly outmoded approaches of traditional international relations scholarship, but also from “supranational” accounts that portray the EU as a unique type of entity with more limited resemblances to nation-states (pp. 6–7). In developing this case, and in bolstering it with side-by-side comparisons to federal nation-states, Kelemen elaborates a point of view that should help recast debates about the nature of European integration. The case he makes is plausible as well as provocative. It also plays on significant ambiguities in the evidence. In choosing to focus his analysis on the environmental sector, for instance, he has selected an arena in which the EU has been unusually assertive. Within the environmental arena, moreover, his analysis stresses the detail of legislation with little attention to its effective scope or substance. If the detail of EU environmental directives often resembles that of domestic legislation and regulation under, say, the U.S. Clean Air Act, EU rules are less likely to establish comprehensive regulatory frameworks of the sort found in domestic rule systems.

The theoretical contributions and innovative comparative design of this study make it an important addition to the literature on comparative public policy and comparative federalism. Although it is unlikely to settle the vigorous ongoing debates about the nature of the EU, it offers a significant new perspective that is must reading for scholars working on the subject.