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Regulation by Litigation

Regulation by Litigation

Copyright Date: 2009
Published by: Yale University Press
Pages: 296
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  • Book Info
    Regulation by Litigation
    Book Description:

    Federal and state regulatory agencies are increasingly making use of litigation as a means of regulation. In this book, three experts in regulatory law and theory offer a systematic analysis of the use of litigation to impose substantive regulatory measures, including a public choice-based analysis of why agencies choose to litigate in some circumstances.

    The book examines three major cases in which litigation was used to achieve regulatory ends: the EPA's suit against heavy duty diesel engine manufacturers; asbestos and silica dust litigation by private attorneys; and private and state lawsuits against cigarette manufacturers. The authors argue that litigation is an inappropriate means for establishing substantive regulatory provisions, and they conclude by suggesting a variety of reforms to help curb today's growing reliance on such practice.

    eISBN: 978-0-300-15251-7
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-x)
  4. 1 Introduction
    (pp. 1-15)

    The U.S. Environmental Protection Agency (EPA) sued every heavy-duty diesel-engine manufacturer and obtained major substantive regulatory concessions from the industry in settlements of lawsuits. A small number of personal-injury lawyers sued thousands of companies over asbestos exposure on behalf of hundreds of thousands of former workers and found themselves playing major roles in restructuring companies through bankruptcy proceedings. Forty-six state attorneys general sued every major cigarette company in the United States—with the assistance of many of the lawyers who pioneered the asbestos litigation—and imposed major regulatory provisions and the equivalent of a tax increase through settlement agreements. What...

  5. 2 The Regulator’s Dilemma
    (pp. 16-35)

    Factory smokestacks send air pollutants into the atmosphere; municipal sewage systems dump insufficiently treated sewage into rivers; drivers toss trash out of car windows; financial services companies’ stock brokerages tout the stocks of companies that use their investment banking services; and pharmaceutical firms market drugs with potential side effects. In each case, private activity can have an impact on people other than the person who made the decision to act. The factory owner may not bear the full costs of emitting the pollutant; the city government may not suffer all the costs of the water pollution its plant produces; the...

  6. 3 Modes of Regulation
    (pp. 36-54)

    When legislators and officials in regulatory agencies decide to regulate private-sector behavior, they must also choosehowthey will regulate.¹ They have three options. Should they impose a regulation through the rulemaking process? Negotiate a rule? Or bring suit and obtain changes in behavior as part of an injunction or settlement? Each of these choices generates a different set of political costs and benefits for the regulators and the regulated—and for the rest of society as well. And there likely will be differential effects within the affected groups as well as between groups. Using the public-choice model of behavior...

  7. 4 Heavy-Duty Diesel-Engine Litigation
    (pp. 55-92)

    If you drove down an American highway in the late 1960s or early 1970s and found yourself behind a tractor-trailer rig, you probably cursed the heavy black smoke that often belched from the truck’s exhaust. Through the 1970s, diesel engines suffered from incomplete combustion when accelerating or climbing hills, producing highly visible air pollution and annoying drivers of vehicles behind them. Today’s heavy-duty diesel engines are a different story, using a wide range of sophisticated technologies to dramatically reduce emissions of every major pollutant. The path from the black-smoke-belching trucks of the 1960s to the cleaner high-tech engines of today...

  8. 5 Dust Litigation
    (pp. 93-125)

    Private parties as well as government actors can regulate through litigation. As we discussed earlier, to be regulation, private litigation must go beyond suits by the injured for compensation and become a vehicle for forcing individuals or firms to change their behavior in the future, and must do so more directly than simply providing an incentive to choose one course of action over another.¹ It must directly involve outsiders, whether private parties or state actors, in ordering the affairs of private actors.

    Private litigation has done so in a number of instances, including through lawsuits over dust hazards since the...

  9. 6 Tobacco Litigation
    (pp. 126-159)

    There is no more far-reaching example of regulation-by-litigation than the November 1998 Master Settlement Agreement (MSA) between forty-six state attorneys general and the four major U.S. cigarette manufacturers.¹ The MSA ended more than five years of litigation by the states against Brown and Williamson Tobacco Corp., Lorillard Tobacco Company, Philip Morris, and R. J. Reynolds Tobacco Company. Using novel legal theories, the attorneys general, with the legal and financial assistance of entrepreneurial plaintiffs’ attorneys, sued for the recovery of state government (Medicaid) expenditures on health care caused by cigarette smoking. The suits were politically controversial (Mississippi’s governor sued his own...

  10. 7 What Have We Learned?
    (pp. 160-178)

    We have covered much ground since we introduced regulation-by-litigation and described the public-choice and economic logic we would use to illuminate the book’s three case studies. Along the way, we focused on the regulator’s dilemma, noting the difficulties regulators face when seeking to serve the public interest. We also discussed the choice of methods available to politicians and regulators. Making a decision to regulate is just the first step. Once embarked on a regulatory path, the decision maker must select the instrument to use. Will it be regulation-by-rulemaking? Will the regulator seek to negotiate a regulatory outcome? Or will the...

  11. Notes
    (pp. 179-242)
  12. References
    (pp. 243-266)
  13. Index
    (pp. 267-282)