Regulation by Enforcement

University of Southern California Law Review, forthcoming

42 Pages Posted: 4 Apr 2023

See all articles by Chris Brummer

Chris Brummer

Georgetown University Law Center; Institute of International Economic Law (IIEL)

Yesha Yadav

Vanderbilt University - Law School

David T. Zaring

University of Pennsylvania - Legal Studies Department

Date Written: March 30, 2023

Abstract

An increasingly common response by regulators to what they view as undesirable market trends or challenges has been a sharp turn towards litigation to introduce novel legal theories and frameworks that could have been the product or subject of legislative or administrative rulemaking. The decision to do so has been met by calls claiming such administrative action to be unfair, and in some instances, illegal.

This Article revisits the New Deal origins of regulation by enforcement, and its more recent incarnations, and explains that as a legal matter, regulators generally enjoy discretion as to whether to make policy through rulemaking, adjudication, or by filing a lawsuit in federal court. However, there are some exceptions to this principle, as well as some reasons to believe that new doctrinal developments hostile to agency adjudications could reduce the discretion of agencies to choose their policymaking tool, especially where their actions are understood to be naked attempts to grab turf or circumvent democratic norms embedded in the Administrative Procedure Act. In this Article, we analyze the incentives facing agencies when choosing to regulate by enforcement, consider some of the new risks, and lay out a framework for thinking about when agencies should regulate by rule, and when they should regulate by enforcement.

Keywords: Enforcement, Regulation, Agencies, Administrative Law, Antitrust, Cryptocurrencies, Securities, Derivatives, Financial Regulation

Suggested Citation

Brummer, Christopher J. and Yadav, Yesha and Zaring, David T., Regulation by Enforcement (March 30, 2023). University of Southern California Law Review, forthcoming, Available at SSRN: https://ssrn.com/abstract=4405036

Christopher J. Brummer

Georgetown University Law Center ( email )

Washington, DC 20057
United States

HOME PAGE: http://www.law.georgetown.edu/faculty/brummer-chris.cfm

Institute of International Economic Law (IIEL) ( email )

Georgetown University Law Center
600 New Jersey Avenue, NW
Washington, DC 20001
United States

HOME PAGE: http://iielaw.org/member/chris-brummer-2/

Yesha Yadav (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

David T. Zaring

University of Pennsylvania - Legal Studies Department ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

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