1. Regulation of new technologies
Henry H. Perritt, Jr.
Professor of Law
Chicago-Kent College of Law

2. Common issues How did the rules get made?
What's the content of the rules?
price
conduct
Product specifications?
Who enforces them?
Who second guesses them?

3. In a market economy, the “invisible hand” decides what is produced and who consumes it

4. The default political condition for private economic transactions is laissez-faire.

5. Lawmakers move away from this default position when they are convinced some type of market failure is occurring.
Two basic types of market failure
Barriers to competition
externalities

6. Barriers to competition
Natural monopolies
Artificial barriers
Intellectual property
Discrimination (Net Neutrality)
Refusal to allow use of interface standards

8. Externalities
Poison the neighbors’ children by dumping toxic chemicals in the creek
Scrimp on design, manufacture, or safety inspections so that the wing of an airliner comes off

9. Tools Prescriptive rules Common law liability
Regulatory responses usually are a mixture of both; consider
water pollution
air safety regulation
Insurers internalize tort liability

10. Making rules (legislating and administrative rulemaking)
Intellectual capital
Broad or specific?
Performance standards or engineering standards?
“No one may transmit a signal that interferes with another signal”
“No one may transmit a the signal with a power greater than m”

11. Licensing
No one may transmit a radio signal unless he has an appropriate license granted by the Federal Communications Commission.
No one may fly an aircraft unless he holds an airman certificate granted by the Federal Aviation Administration
Pros:
Rulemaking can become a part of the licensing process
Gives the regulator an additional sanction – license revocation or suspension
 Cons
More intrusion into marketplace
More regulatory infrastructure required

12. Licensing reach
No certificated airman may fly an aircraft unless it is airworthy
An aircraft is not airworthy without a plaque with 16 point type affixed to the cockpit door

13. Adjudication Applying the rules to the facts
No one may fly a drone between sunset and sunrise
I was flying at 5 o'clock in the afternoon.

14. Enforcement Fines Civil penalties License revocation
Other exclusion from the marketplace
Incarceration
Disgorgement
Forfeiture

15. Standing Private criminal complaints Private right of action
Agency adjudication
Agency goes to court
Civil action
Criminal prosecution
Justice Department

16. Level of government
Federal
State
County
Municipal
Mix & match