Norming in Administrative Law

40 Pages Posted: 12 Mar 2018

See all articles by Jonathan S. Masur

Jonathan S. Masur

University of Chicago - Law School

Eric A. Posner

University of Chicago - Law School

Date Written: March 1, 2018

Abstract

How do regulatory agencies decide how strictly to regulate an industry? They sometimes use cost-benefit analysis or claim to, but more often the standards they invoke are so vague as to be meaningless. This raises the question whether the agencies use an implicit standard or instead regulate in an ad hoc fashion. We argue that agencies frequently use an approach that we call “norming.” They survey the practices of firms in a regulated industry and choose a standard somewhere within the distribution of existing practices, often no higher than the median. Such a standard burdens only the firms whose practices lag the industry. We then evaluate this approach. While a case can be made that norming is appropriate when a regulatory agency operates in an environment of extreme uncertainty, we argue that on balance norming is an unwise form of regulation. Its major attraction for agencies is that it minimizes political opposition to regulation. Norming does not serve the public interest as well as a more robust standard like cost-benefit analysis.

Keywords: administrative law, norms, custom, EPA, OSHA, banking, capital requirements, average of the best, eighth amendment, cost-benefit analysis, feasibility analysis

Suggested Citation

Masur, Jonathan S. and Posner, Eric A., Norming in Administrative Law (March 1, 2018). Duke Law Journal, Vol. 68 (2019, Forthcoming); University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 840; U of Chicago, Public Law Working Paper No. 656. Available at SSRN: https://ssrn.com/abstract=3132881

Jonathan S. Masur (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773.702.5188 (Phone)

HOME PAGE: http://www.law.uchicago.edu/faculty/masur/

Eric A. Posner

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0425 (Phone)
773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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