COMPLIANCE AND ENFORCEMENT

Introduction

It is necessity which makes laws and force which makes them observed.

-Voltaire

There are thirteen independent agencies of the Federal Government that are commonly known as "regulatory" agencies or commissions. So familiar that they are often called only by their acronyms -e.g. CAB, EPA, FCC, SEC-these agencies constitute the main instrument of government regulation of business in the United States. Other departments and agencies may be concerned with the same areas of commerce and industry, but only the regulatory agencies issue mandatory administrative rules with which businesses must comply. The rule-making authority of these thirteen bodies, and the programs they undertake to enforce those rules, distinguish these agencies from all others.

Price and wage controls are perhaps the most pervasive method of regulating business and commerce that any government can attempt. Since the agencies of the Economic Stabilization Program administered mandatory regulations from 1971 to 1974, the rules and enforcement programs they undertook might naturally be compared to those of the established regulatory agencies. Without nipping those comparisons in the bud by noting that the stabilization agencies were technically located in the Executive Office of the President, and so nominally not "independent" (in fact, they were functionally independent for all regulatory purposes), a look at the enforcement approach of established agencies can serve as a starting point from which to examine enforcement of stabilization rules.

Black's Law Dictionary defines "enforce" as: "To put into execution; to cause to take effect; to make effective . . ." (Dozier v. City of Gatesville, Tex. Civ. App. 51 S.W.2d 1091). The implication. is that any rule that is unenforced is ineffective. Of course, if the application of a rule met with nothing but complete and spontaneous compliance, there would be no need for enforcement-for meting out punishment to violators. But in that case, the rule itself would be needless. Logically, rules that are thought to be necessary demand enforcement. If an agency's attempt to inspire compliance with its

rules were limited to verbal exhortation, its efficacy could be doubted from the outset. The words of Thomas Fuller, a 17th century English historian, can hardly be improved upon: "Law cannot persuade where it cannot punish."

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To Fuller's maxim might be added a corollary: law will not persuade where it does not punish. Perhaps the principal criticism of regulatory agencies in the last twenty years has been that they have not been sufficiently "tough" in enforcing the rules they have written. One seminal academic study of the agencies concluded in 1955 that they had shown "a tradition of relatively weak enforcement." Fifteen years later, several of Ralph Nader's reports on regulatory commissions concluded that effective enforcement programs did not exist, and that the philosophy of voluntary compliance is no substitute for penalizing violators where violations are found. The President's Advisory Council on Executive Reorganization, in its 1971 report A New Regulatory Framework: Report on Selected Independent Regulatory Agencies, criticized the methods of administration employed by the agencies, and suggested ways of streamlining and consolidating functions that influence enforcement.

The constant theme of all this criticism of the regulatory bodies is that an agency should decide early in its existence that a strong enforcement program is necessary, and that it should establish a separate entity within its organization to administer that program. The other, more specific shortcomings which are customarily notedcase backlogs, too few or inadequately trained investigators, litigation attenuated by delays or poor evidence, lack of management accountability—are peripheral to the central lesson: the crux of effective regulation is effective enforcement. If, as Oliver Wendell Holmes said, "regulation means the prohibition of something," then someone should be stopped from a prohibited act if the regulation is to have any meaning.

The description of compliance and enforcement in the Economic Stabilization Program which follows in these pages does not purport to judge the effectiveness of enforcement for price and wage controls between 1971 and 1974. All the problems of organization and management that are discussed under "Compliance Methodologies," and all the weaknesses of compliance strategy that are outlined under "Compliance Policies," are discussed because this narrative does intend to be an honest reflection of important events and issues which affected compliance and enforcement of stabilization rules. If there are lessons to be learned from such a narrative, then all to the good. But the pitfall in venturing an ostensibly definitive evaluation of a program's merits is the possibility that the wrong criteria or measurements of success might be used.