Nonenforcement and the Dangers of Leveraging
Last month I participated in a fascinating symposium hosted by the Center for Compliance Studies at Loyola University Chicago School of Law. The topic was “What is the Role of a Regulation if it is Not Enforced?”
As background, in 2017 I studied waivers and exemptions for the Administrative Conference of the United States. That research resulted in a series of recommendations on behalf of ACUS. (If you are interested, Jennifer Nou and I discussed those recommendations last week at the Regulatory Review.) While conducting that research, I started thinking about the danger of leveraging — which is the subject of my symposium paper that will be published in the Journal of Regulatory Compliance.
What is leveraging? Well, here is my paper’s abstract:
Nonenforcement discretion is often beneficial. Not only do agencies have limited resources, general prohibitions can be poor fits for specific situations. Hence, agency discretion to not to enforce the law often makes a great deal of sense. Unfortunately, such discretion can also be abused. This short symposium essay addresses one type of potential abuse: leveraging. An agency may forego enforcement in order to obtain ends that are beyond the mission Congress set for it and, in so doing, may pursue technical violations that would not otherwise be a priority in order to obtain greater leverage over a particular party. This essay first addresses leveraging as a concept, including when quid pro quo trades between regulators and regulated parties are appropriate. And second, it begins to sketch options to minimize the danger of leveraging. Although there is no easy fix, it may be possible to reduce the risk.
Thoughts, as always, are appreciated. (And thanks again to the folks in Chicago for inviting me to participate.)