Deference to the Rulemaker, Not to 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

On July 12, 2010, the U.S. Court of Appeals for the District of Columbia Circuit, 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 cost-benefit analysis. 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 regulate in an area historically reserved to the states. This Comment argues that courts should avoid such broad deference when evaluating federal agency rules that threaten to encroach upon an area presumptively occupied by state regulation.