Why Agencies Punish
Minzner, Max, William and Mary Law Review
In addition to promulgating regulations, federal administrative agencies penalize entities that violate their rules. In 2010 alone, the National Highway Traffic Safety Administration imposed a statutory maximum $16.4 million penalty on Toyota, and the Securities and Exchange Commission recovered $535 million from Goldman Sachs, the largest civil penalty a financial services firm has ever paid. The academic literature proposes two major theories explaining why agencies might seek these monetary penalties. First, agencies might seek to deter misconduct by using civil penalties to raise the expected cost of regulatory violations above the cost of compliance. Alternatively, agencies might use civil penalties as one step in an escalating series of enforcement responses to recalcitrant behavior by a regulated entity. Both of these theories assume that agencies punish in order to induce compliance with agency regulations. In the language of the criminal law, agencies are assumed to be consequentialists. Agency descriptions of their penalty policies support this assumption. Agencies claim to focus on deterrence, not retribution, when setting penalties.
This Article argues that consequentialist theories fail to explain the actual civil penalty policies in place at a range of federal administrative agencies. Instead, agency penalty policies are largely designed to achieve retributive ends. In short, agencies are more interested in desert than deterrence. The presence of widespread retribution in agency punishment raises serious concerns about legitimacy and competence. Administrative agency punishment lacks the transparency and structural protections that legitimize retribution in the criminal context. Additionally, agency subject matter expertise is unlikely to extend far enough to implement retributive theories effectively.
TABLE OF CONTENTS INTRODUCTION I. CONSEQUENTIALISM AND CIVIL PENALTIES A. The Consequentialist Assumption: Why Academics Think Agencies Punish B. Intuitive Retributivism: Why People Punish C. Testing the Consequentialist Assumption: The Agencies 1. The Mine Safety and Health Administration 2. The Office of Foreign Assets Control 3. The Nuclear Regulatory Commission 4. The Federal Communications Commission D. Why Agencies Say They Punish II. CIVIL PENALTIES IN THE ADMINISTRATIVE STATE: THEORY AND PRACTICE A. Harm, Gain, and the Probability of Detection 1. The Theory 2. The Practice B. Mens Rea 1. The Theory 2. The Practice C. Prior History 1. The Theory 2. The Practice D. Defendant Size 1. The Theory 2. The Practice E. Conclusion III. IS AGENCY RETRIBUTION A REASON FOR CONCERN? A. Are Agencies Legitimate Retributivists? B. Are Agencies Capable Retributivists? CONCLUSION
Administrative agencies, the fourth branch of government, famously blend the functions of the other three. (1) Agencies write rules, adjudicate their meanings, and penalize violations. Scholars commonly assume that agencies have a straightforward goal when they punish: agencies penalize to induce compliance with their rules. Penalties aim to curb violations and prevent their reoccurrence. In the language of the criminal law, agencies are seen as consequentialists. Through their penalties, agencies seek to achieve positive social outcomes. For example, penalties might deter misconduct by raising the expected cost of violations above the cost of compliance, or might attempt to reinforce norms of compliance through punishment.
Criminal law, of course, also recognizes a second primary aim of punishment: retribution. The goal of retributivism is punishment itself--wrongdoers are punished because they deserve it, not to achieve some broader social end. Indeed, recent empirical work demonstrates that, for most people, retribution is the primary concern in their punishment decisions. …