Academic journal article Harvard Journal of Law & Public Policy

"Agency Threats" and the Rule of Law: An Offer You Can't Refuse

Academic journal article Harvard Journal of Law & Public Policy

"Agency Threats" and the Rule of Law: An Offer You Can't Refuse

Article excerpt


Over the past several decades, scholars and practitioners have documented how regulatory agencies have increasingly relied on guidance, best-practice documents, policy statements, and other informal pronouncements to achieve regulatory ends. (1) Agencies often do so to avoid executive regulatory review and other accountability measures that ostensibly slow the regulatory process. (2) Much of the debate surrounding the use of informal regulatory mechanisms has focused on the extent to which such mechanisms improperly create new law outside the processes set forth in the Administrative Procedure Act. (3) What the literature on informal methods of rulemaking has ignored until recently, however, is policymaking through the issuance of completely unenforceable threats.

In a 2011 Duke Law Journal essay entitled Agency Threats, Professor Tim Wu sets forth a defense of bald-faced threats by agencies meant to achieve regulatory ends. As he put it:

   [T]he scholarly presumption is that rulemaking or formal
   adjudication is an intrinsically superior process for most
   agency action. The use of threats is considered an abuse of
   power, a means of avoiding judicial review, or perhaps just
   good old-fashioned laziness. The point of this Essay is to
   challenge that general presumption. Rule by threats, I argue,
   is, under certain circumstances, a superior means of regulatory
   oversight. (4)

Given the boldness of this claim and the eminence of its proponent, (5) the "agency threats" thesis deserves a response. Providing one is the aim of this short article. I conclude that not only is Wu's thesis wrong, but it is also dangerous. Part I of this article reviews Wu's essay, defining what constitutes an agency threat and when it is justified according to Wu. Part II critiques Wu's thesis by showing, among other things, that it is based on a false dilemma; that it assumes an unwarranted level of knowledge on the part of regulators; that it assumes--contrary to evidence--that regulators are good proxies for the public interest; and that it ignores the costs of eschewing the regulatory process. Part III concludes by concretely illustrating the real-world consequences of agency threats. It does so by presenting a case study of a toy manufacturer driven out of business by threats from the Consumer Product Safety Commission.


In defending the use of threats, Wu has a very specific type of agency action in mind, so it is important to define what exactly constitutes an "agency threat" according to him. Wu explains that by "regulatory threats" he means those statements that are "similar but not identical to the statutory category of 'interpretative rules,'" (6) and he specifically includes in his definition of agency threats "warning letters, official speeches, interpretations, and private meetings with regulated parties." (7) Wu further narrows what he means by agency threats by noting that "it is essential that the action not simply express opinions or report on an issue. Rather, the action must give at least some warning of agency action related to either ongoing or planned behavior. That distinction leaves out mere policy guidelines, studies, reports, and similar materials...." (8) The reason he leaves out "mere" guidelines and reports, Wu says, is that, to him, threats are much more akin to rules and adjudications because they "share the direct goal of specifying desired behavior." (9) In other words, threats are meant to compel specific behavior.

Wu explains that there are two types of agency threats: public and private. (10) Private threats are issued in warning letters or private meetings. (11) He gives the example of a "secret letter" that the Federal Trade Commission (FTC) sent to retailers of new "bamboo clothing," which the agency believed was not made from organic materials as claimed, but from artificial rayon. …

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