Administrative Arm-Twisting in the Shadow of Congressional Delegations of Authority

Abstract:     
This article evaluates an important but rarely discussed type of informal agency activity denominated "arm-twisting," defined as the use of threats by an administrative agency to impose a sanction or withhold a benefit in hopes of encouraging voluntary compliance with a request that the agency could not impose directly on a regulated entity. The article first describes the variety of arm-twisting techniques available to federal regulators, in contexts ranging from licensing and government contracting to product recalls and settlements of enforcement actions. In each of these settings, agencies enjoy significant leverage overregulated entities, allowing federal officials to extract nominally voluntary concessions. Agencies may threaten to deny licenses, refuse to enter into procurement agreements, disseminate adverse publicity, or impose other sanctions against uncooperative parties, and, in at least some cases, such threats allow agencies to pursue extrastatutory goals, seemingly incontravention of the limits on their delegated authority. The article then draws comparisons to arm-twisting in other contexts, including land use exactions and criminal plea bargaining. Finally, after considering the unconstitutional conditions doctrine as well as judicial constraints on plea bargaining and administrative consent decrees, the article suggests a series of possible substantive and procedural safeguards aimed at minimizing the risk of overreaching by federal regulatory officials. Because the problem often is not amenable to judicial control, greater agency self-restraint and congressional oversight may offer the only realistic prospects for curbing improper uses of administrative arm-twisting.

JEL Classifications: K23, L59

Accepted Paper Series