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Law Portal

A regulation is a legal restriction promulgated by government administrative agencies through rulemaking supported by a threat of sanction or a fine. This administrative law or regulatory law is in contrast to statutory or case law.

Regulation mandated by the government or state attempts to produce outcomes which might not otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. Regulations rarely produce complete outcomes or prevent outcomes completely but they generally do modify what would otherwise take place. Common examples of regulation include attempts to control market entries, prices, wages, pollution effects, employment for certain people in certain industries, standards of production for certain goods and services.

The economics of imposing or removing regulations relating to markets is analysed in regulatory economics.

Regulation as a legal term

A regulation as a legal term is a rule created by an administration or administrative agency or body that interprets the statutes setting out the agency's purpose and powers, or the circumstances of applying the statute.

A regulation is a form of secondary legislation which is used to implement a primary piece of legislation appropriately, or to take account of particular circumstances or factors emerging during the gradual implementation of, or during the period of, a primary piece of legislation.

Other forms of secondary legislation are statutory instruments, statutory orders, by-laws and rules. Some of these (but not all of them) need to be referred back before being implemented, to the primary legislative process.

Type of regulation

Regulation can occur for various reasons and therefore can be classifed in several broad categories:

Generally speaking regulations have costs for some and benefits for others. Efficient regulations may only be said to exist where on average their total benefits exceed their total costs.

• Market failures - regulation due to inefficiency. Intervention due to a classical economics argument to market failure.
  • Risk of monopoly
  • Collective action, or public good
  • Inadequate information
  • Unseen externalities
• Collective desires - regulation about collective desires or considered judgements on the part of a significant segments of society
• Diverse experiences - regulation with a view of providing opportunities for the formation of diverse preferences and beliefs
• Social subordination - regulation aimed to reduce social subordination of various social groups
• Endogenous preferences - regulation's purpose is to affect the development of certain preferences on an aggregate level
• Irreversibility - regulation that deals with the problem of irreversibility – the problem in which a certain type of conduct from current generations results in outcomes from which future generations may not recover from at all.
• Interest group transfers - regulation that that results from efforts by self-interest groups to redistribute wealth in their favor

International experience

United Kingdom

An example in Britain is that there is primary, central government legislation covering the operations of local government, such as devolution. These functions include education, social services, leisure or provision.

In that primary legislation there are provisions to allow local authorities to legislate for themselves, within reason and under proper process, on a range of matters in their areas of responsibility. This allows the law to be effectively applied with appropriate flexibility and taking account of local factors. These are often best known by the local authority concerned.

Regulations also assist the primary legislative process, the national parliament, to avoid the potential bottleneck of the detailed implementatin of all the laws it produces in all the varying cirumstances throughout the land or throughout the process of their implementation.

France

In French law, the difference between statute law, adopted by the legislative branch and regulation is of paramount importance when it comes to adoption, amendment or judicial review. The French constitution reserves a number of topics for statute law; in normal times, the executive branch may take decisions on such matters only if it has been specifically authorized by a statute to do so as secondary legislation through decrees, or if it has been specifically and rarely authorized by the legislative branch to do so as primary legislation through ordinances. On all other matters, the executive branch is solely responsible for issuing primary legislation through decrees. Secondary or tertiary legislation may come in the form of arrêtés.

All legislation and regulation issued by the executive, including ordinances not ratified by the legislative branch, is subject to judicial review by the administrative courts, such as the Conseil d'État.

European Union

EU regulation has a general scope, and is obligatory in all its elements and directly applicable in all Member States of the European Union. Any local laws contrary to the regulation are overruled, as EU Law has supremacy over the laws of the Member States. New legislation enacted by Member states must be consistent with the requirements of EU regulations. For these reasons regulations constitute the most powerful or influential of the EU legislative acts.

Other forms of legislative acts of the European Union (EU) are directives, decisions, recommendations and opinions.

See also

• Rulemaking
• public affairs
• Delegated legislation
• Public choice theory

External links

• Article in 'Globalization and Health' on the regulation of food marketing to children
• A glimpse into some United Kingdom deregulatory procedures
• Regulation updates service on the UK government Business Link website
• The Mercatus Center at George Mason University has a Regulatory Studies Program

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