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Adverse Publicity by Administrative Agencies in the Internet Era

84 Pages Posted: 23 Feb 2013 Last revised: 18 Sep 2013

Nathan Cortez

Southern Methodist University - Dedman School of Law

Date Written: November 10, 2011

Abstract

Nearly forty years ago, Ernest Gellhorn documented the potentially devastating impact that can occur when federal agencies issue adverse publicity about private parties. Based on his article, the Administrative Conference of the United States (ACUS) recommended that courts, Congress, and agencies hold agencies to clear standards for issuing such publicity. In the decades since, some agencies have adopted standards, but most have not. And neither the courts nor Congress has intervened to impose standards. Today, agencies continue to use countless forms of publicity to pressure alleged regulatory violators and to amplify their overall enforcement powers — all without affording due process or other procedural safeguards that attach to more formal actions.

This Article renews the call for standards given four developments since 1973. First, agencies now have even more incentives to issue adverse publicity and eschew more formal statutory enforcement actions. Second, new media give agencies more ways to issue adverse publicity, for example, by making announcements via their websites, Facebook, or Twitter. Third, new media make it easier for audiences to misread or mischaracterize an agency’s message. Finally, hyper-responsive capital markets now process adverse publicity more swiftly and hastily, multiplying the potential for damage.

In light of these developments, and after reviewing agency practices and litigation since 1973, this Article revisits the earlier recommendations. It calls for agencies to constrain themselves with published standards, for Congress to recognize that publicity used as a sanction is “final agency action,” and for courts to review adverse publicity for an “abuse of discretion.” Agencies should retain wide discretion to communicate with the public, but should be held accountable if they abuse that discretion. To counterbalance this restraint on agencies, Congress should enhance their statutory enforcement powers and resources, so that agencies do not need to rely on extrastatutory tactics like adverse publicity.

Keywords: administrative law, new media, social media, agency enforcement, publicity, threats

Suggested Citation

Cortez, Nathan, Adverse Publicity by Administrative Agencies in the Internet Era (November 10, 2011). 2011 BYU Law Review 1371; SMU Dedman School of Law Legal Studies Research Paper No. 124. Available at SSRN: https://ssrn.com/abstract=2222765

Nathan Cortez (Contact Author)

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States
(214) 768-1002 (Phone)

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