Rethinking the Role of Agencies in Private Regulatory Enforcement

David Freeman Engstrom, Agencies as Litigation Gatekeepers, 123 Yale L. J. 616 (2013).

Over the past several decades, many scholars have weighed in on benefits and detriments of authorizing private parties to sue to enforce federal regulatory standards. They often take either of two opposing positions: Some argue that private enforcement is necessary to supplement underfunded and perhaps captured agency enforcement mechanisms; others contend that private enforcement undermines social welfare or even statutory goals by sacrificing officials’ prosecutorial discretion not to pursue cases that, while technically justified, would not further regulatory goals. Few scholars, however, have written about the trade-offs triggered by a choice between public and private enforcement.

In Agencies as Litigation Gatekeepers, David Engstrom views the issue as one of when and how agencies should control the use of private enforcement. He is not the first to write about vesting agencies with such gatekeeper functions. But, others who have written on the subject generally have done so within the context of a particular regulatory program or litigation regime. Agencies as Litigation Gatekeepers views the structure and control of private enforcement as a unique kind of regulatory problem that extends potentially to every regulatory program. Doing so allows the article to develop some theoretical insights into how private enforcement might be structured and how agencies might best further the use of private enforcement mechanisms.

Engstrom begins the article simply enough by reviewing the potential benefits and detriments of private enforcement. He then presents arguments why the blunt instruments of litigation reform are unlikely to mitigate the pitfalls of private enforcement without sacrificing many of its benefits. Based on these arguments, he concludes that “vesting administrative agencies with litigation ‘gatekeeper’ powers” is a preferable alternative. (P. 616.) This conclusion then frames the remainder of the article, in which Engstrom lays out a “taxonomy” of how agency litigation gatekeeping might be structured, and evaluates the potential benefits and problems of the various categories in his taxonomy.

Engstrom identifies five “dimensions” along which agency gatekeeping can be oriented. The first characterizes agency gatekeeping as “affirmative” versus “residual,” by which Engstrom means whether the agency will have explicit power to control private litigation, as opposed to mere exercise of residual powers such as intervention in a private enforcement action as an interested party or amicus. The second distinguishes between “retail” (i.e. case by case) and “wholesale” (across an entire program or class of private actions within a program) gatekeeping. The third asks whether the agency power is “binding” or “advisory,” the latter referring to an agency determination of the propriety of a private action that only has power to persuade the courts. The fourth addresses whether agency control is “passive” as opposed to “active,” essentially hinging on whether the agency can simply decree whether the private enforcement action may proceed without substituting itself actively in the action. Finally, the fifth dimension, which applies only to affirmative, binding gatekeeping, differentiates between agency “veto” and “license,” essentially based on the default ability of private entities to bring enforcement actions if the agency does not make an explicit determination.

To evaluate the different gatekeeper structures that result from various regions within Engstrom’s five gatekeeper dimensions, he reviews the functions the agency would need to perform to play its gatekeeper role in an ideal manner, and then discusses how some well-known imperfections in administrative processes—limits on institutional competence, regulatory capture, and undue political influence—might cause deviations from ideal gatekeeping. In doing so, Engstrom reveals an impressive knowledge of actual experiences in myriad contexts in which private regulatory enforcement plays a role. Engstrom’s taxonomy is too rich to allow me to even to summarize his entire analysis of how these imperfections might bear on litigation gatekeeping, but it is worth mentioning a few of his arguments and conclusions.

Engstrom finds wholesale gatekeeping less susceptible to regulatory pathologies than retail gatekeeping. He notes that wholesale gatekeeping is not particularly useful for enhancing the efficiency of private enforcement by winnowing out cases that are unlikely to prevail in court. But it is potentially valuable towards the ends of ensuring that private enforcement does not undermine fundamental statutory goals or compromise the public interest—ends to which, he contends, agency expertise and political accountability are well suited. He further concludes that capture, if it occurs at all, is not likely as great a problem for wholesale as opposed to retail gatekeeping. Engstrom does not discuss the problems of overly politicized wholesale gatekeeping, but given that such gatekeeping usually will be more salient and more likely to require the agency to resort to notice and comment rulemaking, transparency and accountability are likely to be greater for wholesale than retail gatekeeping. The downside of wholesale gatekeeping is that it is relatively indiscriminate in allowing an agency to differentiate meritorious claims from perverse ones (whatever metric one uses to evaluate merit). Overall, I read Agencies as Litigation Gatekeepers to strongly support wholesale gatekeeping in those contexts where the costs created by private actions are unlikely to vary with the particular factual circumstances of the case. Its view of the value of retail gatekeeping is much more guarded and dependent on the facts of any particular private enforcement suit.

The most significant value of Agencies as Litigation Gatekeepers, however, is not any precise prescriptions one might derive from its analysis. Rather, its value is in reconceptualizing the concerns raised by private enforcement as squarely falling within the ambit of matters that agencies might address. By its nature, the article is very general in its analysis, but it is certain to generate an interesting literature that applies, evaluates and expands on his taxonomy in particular regulatory contexts.

 
 
Discussion

1 comment
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    On April 23, 2014 at 1:21 pm, Nancy D. said:

    Professor Seidenfeld, regarding Administration Agencies and the role of gatekeeper, I am wondering if you could comment on the role that HHS has played in regards to their erroneous position that an Administration Agency has the authority to determine who is and is not religious enough to have their Religious Liberty secured and protected, and, while you are at it, could you also comment on the obscene fine that is clearly a violation of proportionality, that the HHS erroneously believes they can place on those persons who they believe do not have the right to have their inherent Right to Religious Liberty secured and protected? I will assume that an Administration Agency, in serving in the capacity of “Gatekeeper” is still obligated to respect The First and Eighth Amendments. Thank you in advance for your response.