Deference to the Rulemaker, Not the Rule: The D.C. Circuit's Enabling Rejection of the SEC's Fixed Indexed Annuities Rule in American Equity Investment Life Insurance Co. v. SEC

Abstract

On July 12, 2010, the U.S. Court of Appeals for the District of Columbia, in American Equity Investment Life Insurance Co. v. SEC, vacated the Securities and Exchange Commission’s Rule 151A due to flaws in the SEC’s economic analysis of the rule. Rule 151A aimed to expand the SEC’s oversight to include purportedly “risky” hybrid annuity products— known as fixed indexed annuities—currently regulated by state insurance commissioners. In vacating the rule, however, the court actually embraced an expansive view of a federal agency’s authority to act in an area occupied by state regulation. This Comment argues that courts should avoid such deference when evaluating federal agency rules that threaten to encroach upon an area presumptively occupied by state law.