Nicholas R. Parrillo, A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s
, 131 Yale L.J.
(forthcoming 2021), available at SSRN
Not so long ago, teaching the nondelegation doctrine in Administrative Law class was straightforward. Assign students an excerpt from Whitman v. American Trucking Association. Maybe add a bit of Justice Scalia’s dissent in Mistretta. Discuss the emptiness of the intelligible-principle principle. Everyone in class agrees that, whether you like it or not, a nondelegation doctrine that can accommodate delegations to act in the “public interest” or set “fair and equitable” prices does not do very much to limit the scope of the modern regulatory state.
But change has been in the air for several years—as most clearly demonstrated by Gundy v. United States (2019). As readers of this website will likely recall, the Court in Gundy addressed a nondelegation challenge to the Sex Offender Registration and Notification Act (SORNA), which requires sex offenders to register before completing their sentences of imprisonment. Barring time travel, this requirement would have been hard to apply to persons who had completed their sentences before SORNA’s enactment. To deal with them, SORNA delegated to the Attorney General the authority to “specify the applicability” of registration requirements and to “prescribe rules for registration.” Justice Kagan, writing for a controlling plurality, found sufficient constraints in SORNA’s text, purpose, and history to reject the nondelegation challenge. Just as about a century’s worth of the Court’s precedents might lead one to expect.
Justice Alito, concurring, expressed willingness to reexamine the nondelegation doctrine in a future case if a majority proves willing to do so, but thought singling out SORNA would otherwise be a bit “freakish.”
Justice Gorsuch, in a dissent joined by the Chief Justice and Justice Thomas, condemned the intelligible-principle principle as a liberty-destroying “misadventure” that “has no basis in the original meaning of the Constitution, in history, or even in the decision from which it was plucked.” He explained that delegations of rulemaking authority to agencies to govern private conduct are permissible in just three circumstances. First, if Congress makes the policy decisions, agencies can “fill up the details.” Second, Congress can impose conditional rules that come into force only if an agency later finds some triggering fact to be true. Third, Congress does no harm when it “delegates” authority to the other branches that they already possess under the Constitution.
Take Gundy, mix in Justice Kavanaugh and maybe Justice Barrett, and we appear to have a solid majority of the Court interested in overhauling the nondelegation doctrine in a way that is at least consistent with the conclusion that much agency regulation of private conduct is unconstitutional.
In response to this prospect, three leading scholars of administrative law have recently produced two major law review articles that deploy originalist arguments to debunk the nondelegation doctrine. Professors Julian Mortenson and Nicholas Bagley, based on a wide-ranging survey of Anglo-American legal thought before and after 1789, conclude that “the overwhelming majority of Founders didn’t see anything wrong with delegations as a matter of legal theory.” (Delegation at the Founding, 121 Columbia L. Rev. (forthcoming 2021)) Turning to practice, they identify numerous delegations of generous grants of discretionary rulemaking authority to administrative authorities from the very early years of the Republic. In their view, squaring this history with a meaningful nondelegation doctrine requires too many gerrymandered exceptions to be remotely persuasive. Delegation at the Founding, which does not pull any punches, has already generated a great deal of discussion in law reviews and the blogosphere. For one of several rejoinders, you might check out, Ilan Wurman’s Nondelegation at the Founding, forthcoming in the Yale Law Journal.
The other major salvo, and the subject of the remainder of this jot, is Professor Nicholas Parrillo’s splendid article with the really long title, A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, which will be published next year in the Yale Law Journal. This article, too, examines early congressional legislation to shed light on whether the original understanding of the Constitution demands a nondelegation doctrine with sharp teeth. Rather than go for the magisterial sweep in the fashion of Mortensen and Bagley, however, Parrillo instead goes for the deep dive, exploring for over one hundred pages the discretionary powers that Congress granted to administrators to implement a tax on real estate that Congress imposed in 1798.
To explain why this 1798 tax is so important, Professor Parrillo notes that proponents of a strong nondelegation doctrine often try to explain away early congressional delegations by arguing that they fall into exceptions that allow more constitutional room for rulemaking. For instance, greater administrative discretion is permissible for foreign and military affairs because they fall within the natural domain of the executive in any event. Also, Congress can grant rulemaking discretion to administrative authorities to determine how to allocate benefits, services, and privileges. On this view, the nondelegation doctrine does, however, bar Congress from delegating to administrative authorities the power to promulgate “coercive regulation[s] of private rights and private conduct.” (P. 9.)
One way to combat the nondelegation doctrine in this limited form is to contend, as Mortensen and Bagley do, that the exceptions represent an implausible effort to save the doctrine from the evidence of history. Another way is to find early congressional delegations that in point of fact did grant agencies coercive power over private rights. And, in the form of the 1798 federal real estate tax, Professor Parrillo has found just such a delegation.
He explains that, in its first decade, Congress relied on import duties and excise taxes to fund the federal government. In 1798, however, Congress needed another revenue stream to help pay for a military buildup. In the Lay and Collect Act, Congress therefore imposed a direct tax of 2 million dollars, which it apportioned across the states according to their populations. (P. 22.) This tax fell, in the first instance, on slaveowners, who were to pay a tax of 50 cents per slave. The remainder of the states’ quotas were to be covered first by a progressive tax on houses and then, if necessary, by a flat tax on land. (Pp. 22-23.)
The Lay and Collect Act instructed that taxes on real estate should be calculated according to the terms of the Valuation Act. This statute, which Congress had enacted just a week earlier, provided that real estate should be valued at its “worth in money.” (P. 22.) As Professor Parrillo deftly explains, the extreme vagueness of this standard was intentional.
The Valuation Act divvied up states into tax districts. Each district got a federal tax commissioner who had been nominated by the President and confirmed by the Senate. Together, the commissioners of a given state formed its federal tax board. There were 94 commissioners in all. They appointed, on a conservative estimate, over 2100 principal and assistant assessors to aid them in their work. For those keeping score at home, that’s a bigger administrative apparatus than the Post Office had at the time. (P. 27.)
To enable the boards to carry out their functions, Congress delegated significant rulemaking powers to them. For instance, the Valuation Act gave each board authority to “establish all such regulations, as to them, or a majority of them, shall appear suitable and necessary, for carrying this act into effect; which regulations shall be binding on each commissioner and assessor, in the performance of the duties enjoined by, or under this act.” (P. 27 (quoting Valuation Act).) The boards’ “greatest” rulemaking power, however, enabled them to ensure fair allocation of the tax burden across districts by revising all the valuations in a district at once by rule. To this end, boards “had the power to raise or lower the tax assessments of thousands of property owners all at once, by any percentage amount, so long as the change ‘shall appear to be just and equitable.’” (P. 30 (quoting Valuation Act).)
“Just and equitable.” That sure sounds like a lot of regulatory discretion.
After explaining the structure, operation, and powers of the federal tax boards, Professor Parrillo explores:
- The informational and methodological difficulties of real estate valuation in the 1790s—and the wide discretion that the boards necessarily had in carrying out mass-revision rulemakings as a result;
- The political and contentious nature of the boards’ authority to allocate tax burdens across different geographic areas with different economic interests (e.g., determining assessments for coastal areas versus backcountry);
- The binding nature of the boards’ mass revisions, which were “final and absolutely binding on taxpayers” with no avenue for judicial review (P. 15); and
- The wide and bipartisan acceptance of the boards’ powers—and the notable absence of constitutional objections to them in connection with the 1798 tax or to similar taxes that Congress imposed in later decades.
Professor Parrillo has, by poring over centuries-old records of an almost forgotten tax and placing them in historical context, produced a truly impressive piece of legal scholarship. His Critical Assessment should play an indispensable role in the post-Gundy evolution of the nondelegation doctrine.
(Also, did I mention it has 695 footnotes?)
Kathryn E. Kovacs, Constraining the Statutory President
, __ Wash. U. L. Rev.
__ (forthcoming), available at SSRN
There’s a legal black hole at 1600 Pennsylvania Avenue where there shouldn’t be—or so argues Professor Kathryn Kovacs in a spirited new article, Constraining the Statutory President. A “legal black hole,” as Adrian Vermeule defined it, exists when statutes or legal rules create a zone in which the rule of law, including the constraints of administrative procedure and the checks of judicial review, cannot penetrate. And, as Vermeule pointed out, the Court created just such a black hole in Franklin v. Massachusetts by flatly excluding the President from the ambit of the Administrative Procedure Act: “the President is not an agency within the meaning of the APA.” Franklin is probably not what most people would call a “fixed star in our constitutional constellation.” But it is now a fixed “black hole” in the (administrative) constiution—a holding subsequently reaffirmed by the Court, abided by lower courts, left undisturbed by Congress, and treated as a given by many scholars.
Kovacs dissents from this acceptance of Franklin. Her article is one of a noteworthy set of recent articles that have examined presidential power and the constraints that should be imposed upon it. This boomlet of scholarship has addressed, among other topics, frameworks for judicial review of presidential orders, the importance of presidential fact finding, and the internal White House process of crafting presidential proclamations, directives, and orders. Speaking on a more conceptual plane, one new article offers a comprehensive defense of the thesis that the “duality” of the Presidency—i.e., that the President is both a mortal man and a public office—is a “defining ambiguity” of public law.
Kovacs’s subject is a different Presidential “duality.” At times, the President acts as the constitutional President—for example, when he vetoes a bill or nominates a justice. At other times, the President acts as if he were an agency—for example, when he issues proclamations or orders under color of statutory authority. When the President acts like an agency, Kovacs argues, then he ought to be treated like an agency. (Pp. 7, 49.) The Statutory President, she contends, should comply with the same administrative procedural and substantive requirements with which Congress’s other statutory delegates (i.e., ordinary agencies) must comply when they issue rule-like regulatory commands.
Franklin now blocks that possibility, but Kovacs argues that Franklin was both wrong and harmful: wrong as a matter of text, legislative history, and constitutional structure, and harmful as a matter of policy and administrative law values. The APA did not expressly exclude the President from its capacious definition of agency—and, she argues, if the APA’s drafters did think that the President wasn’t an agency, then that is because they couldn’t and didn’t anticipate how much consequential regulatory action modern presidents are liable to produce. (P. 35.) Kovacs notes that reversing Franklin would leave a wide swath of presidential action outside the scope of APA review, including many actions involving treaties, tariffs, or military affairs. (Pp. 29-30.) But in other regulatory realms, including in the domain of some immigration policymaking, the APA’s constraints would apply. All in all, Franklin should be reversed by the Court, she concludes. (P. 36.) And if the Court does not do so, Kovacs urges that Congress take action, either by amending the APA to legislatively override Franklin (P. 60) or by refraining from entrusting more power to the unconstrained actor at the apex of the executive branch. (Pp. 60-61.)
What turns on the President being an “agency” within the meaning of the APA? Savvy lawyers today are often able to frame their suits to evade Franklin—for example, by seeking nonstatutory review or by suing a subordinate officer. But Kovacs is not satisfied by such routes around Franklin; she would prefer to deep-six it altogether. To Kovacs, the stakes appear high: “Failing to curb the Statutory President,” writes Kovacs, “will further enable our nation’s descent into authoritarianism.” (P. 9.) On the other hand, she argues, imposing administrative procedural constraints upon the President would promote a suite of virtues and values familiar to administrative law, among them greater deliberation, enhanced political accountability, more robust public participation, and increased transparency. (Pp. 37-46.)
One important element of Franklin was Justice Scalia’s concurrence in that case. Kovacs correctly observes that Scalia “believed that [Massachusetts] lacked standing” (P. 14), but his opinion said a bit more than just that. Scalia offered a full-throated rejection of the proposition that any federal court could enjoin the President in the performance of his official actions. Indeed, Scalia rebuked the notion that a federal court could issue even a declaratory judgment that runs directly against the President: to his mind, it was a sad commentary on the degraded state of legal understanding that the district court in Franklin “entered this order against the President without blinking an eye.”
If the President had been held to be an agency within the meaning of the APA in Franklin, then obviously many more such decrees against Presidential agency action would have been in the offing—orders that (on Scalia’s view) would have been not just unconstitutional, but embarrassingly unconstitutional. Writing for a slim 5-4 majority in the relevant portion of Franklin, Justice O’Connor accommodated that concern by reading the APA as excluding the President on constitutional avoidance grounds. But O’Connor also hedged about the consequences of that holding by expressing the Court’s confidence “that the President and other executive and congressional officers would abide by” a district court’s “authoritative interpretation . . . even when though they would not be directly bound by such a determination.” If that assumption is unwarranted, then that would provide another reason to question Franklin’s outcome.
The chief reward of Kovacs’ article lies in its focused exploration of the road left untaken in Franklin. Additional rewards lie in the interesting nuggets she has scattered throughout her discussion. For example, as Kovacs notes, the Court decided Franklin in an unusually short span of time—just over three months elapsed between the initial notice of appeal and the decision. And I learned for the first time from Kovacs that Franklin has caused a circuit split to “hatch” between the D.C. Circuit and the Federal Circuit concerning the availability of nonstatutory review. (P. 21.) Finally, I always enjoy reading about instances in which the sitting Justices litigated a particular position in their earlier careers as government lawyers or in private practice—and, as it happens, Franklin was argued for the United States by one John G. Roberts, Esquire. (P. 12.)
Today, of course, whether the Court would decide this issue differently may depend in part on the vote of the former government lawyer—Chief Justice Roberts—who successfully argued the Franklin appeal. For that and other reasons, persuading the Court to reverse Franklin may be an uphill fight. And, as Kovacs recognizes, the prospect of a Congressional override of Franklin “seems like a long shot” as well. (P. 60.) If the end result would seem to be that Franklin, warts and all, is likely to remain a fixture in the firmament of our administrative law, then that should perhaps not come as a surprise. As any physicist (not to mention Adrian Vermeule) could tell you, it’s not easy to fill up a black hole.
Deepa Varadarajan, Business Secrecy Expansion and FOIA
, 68 UCLA Law Review
__ (forthcoming, 2021), available at SSRN
The breadth of exemptions to mandatory disclosure of government records under the Freedom of Information Act (FOIA) has long been criticized. The exemptions for national security, the agency privileges, and privacy are among those that have rightly come under fire. Even Congress has tried to rein in some of the most sweeping of these exemptions with recent amendments to the statute itself, capping the applicability of one exemption, the deliberative process privilege, to records less than twenty-five years old. But FOIA usually stands alone. Rarely is there an analogous body of law to learn from or to which it compares.
Deepa Varadarajan’s terrific forthcoming article, Business Secrecy Expansion and FOIA, demonstrates that FOIA’s trade secrets exemption is an exception. Varadarajan traces the history of trade secrets litigation back to its common law origins, documenting its steadfast march toward an ever-broader understanding of what constitutes a trade secret. Now, she explains, trade secrecy law protects any information of commercial value not generally known in the industry and which the owner has taken measures to protect.
In parallel, however, Varadarajan explains that FOIA jurisprudence stubbornly took a narrower view when interpreting the exemption for “trade secrets” and “confidential” commercial information. The “trade secrets” prong was limited to information tied to a production process (like formulas, plans, or devices), and the “confidential commercial information” provision was limited to information the release of which would cause substantial competitive injury. While information that firms voluntarily provided to the government qualified as exempt from disclosure under a broader interpretation, the generally narrower definition led to litigation successes in obtaining a wide variety of records regarding, for example, government contracting, private prisons, and more.
That is, the narrow construction prevailed until the Supreme Court’s decision last year in Food Marketing Institute v. Argus Leader Media. (Disclosure: I was amicus curiae in FMI.) Varadarajan artfully describes how FMI discarded the stricter FOIA standard in favor of aligning FOIA with modern trade secrets litigation. In effect, it rendered exempt from the FOIA disclosure mandate any information submitted by a firm that the firm does not routinely share and provided to the government under an assurance of privacy.
While details of how this standard is applied are being hashed out in the lower courts now, I was struck by Varadarajan’s central observation about the relationship between this development and trade secrets litigation. Not only does it move FOIA towards modern trade secrecy, she theorizes critically important ways in which it may make FOIA’s exemption cover even more business information than is protected by trade secrecy. Since trade secrets litigation is typically brought against former employees, there are certain inherent limits to how it might apply. To begin, it cannot be applied to limit employees from using their general professional knowledge and skills and it cannot apply to that which is generally known within the industry (even if not known in the general public). In addition, and maybe even more importantly, it is limited to that which has some actual commercial value to the trade secret owner. Yet none of those limitations appear in the FMI standard under FOIA or would arise in litigation between a member of the public and a government agency.
Varadarajan’s work is important in several respects, not the least of which is exposing the relationship between trade secrets litigation and the application of the trade secrets exemption under FOIA. Beyond that, she describes how government-held trade secrets are precisely the ones that should be more narrowly defined. After all, these claims are used to keep hidden from public view the activities of private companies performing essential government functions—everything from private prisons to algorithms used in law enforcement to pricing in publicly provided healthcare services. As more and more functions are privatized, this exemption grows in size. It may shield from the public information that is critical to FOIA’s oversight and accountability aims.
She ends with a compelling case that there are real paths forward, even after FMI. While various legislative fixes she proposes might be the obvious starting point, there are also interesting litigation strategies that can be employed. For example, her suggestion of using the 2016 amendment to FOIA requiring agencies to apply exemptions only when there is a “foreseeable harm” from release of the records could be interpreted to alter the substantive standard for trade secrecy claims.
Even more promising, she proposes government contracting terms that impose clear disclosure requirements, thereby negating any claim that the firm expected or was promised secrecy or was closely guarding that information. This sort of built in transparency on the front end has gained traction more broadly, and agency officials I have spoken with have sometimes referred to this concept as “FOIA-ready” record keeping, or other times “transparency by design.” The idea is if we make records in releasable forms at the outset, we can open more of the government to the public.
Varadarajan is exactly right when she writes that the relationship between trade secrecy and FOIA’s commercial exemption “has thus far gone unnoticed.” But her outstanding contribution provides the foundation that is greatly needed by scholars and advocates to imagine commercial secrets beyond the FMI decision.
David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey & Mariano-Florentino Cuéllar, Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies
, Report for the Administrative Conference of the United States
(2020), available at SSRN
The use of artificial intelligence is on the rise at federal agencies, and administrative law scholars aren’t paying enough attention. In a forthcoming article, Ryan Calo and Danielle Citron question whether this increasingly “automated administrative state” presents a legitimacy crisis. After all, legislatures delegate broad law-implementation authority to administrative agencies because of regulators’ “ability to accrue expertise and the prospect of flexible and nimble responses to complex problems.” Yet these agencies are increasingly subdelegating such implementation authority to “systems in which they hold no expertise, and which foreclose discretion, individuation, and reason-giving almost entirely.” Despite these concerns, Calo and Citron ultimately do not demand a deconstruction of the automated administrative state. Instead, they argue that “agencies should consciously select technology to the extent its new affordances enhance, rather than undermine, the [expertise] rationale that underpins the administrative state.”
The Calo-Citron article deserves its own Jot. But it also raises a more fundamental question: How automated is the federal administrative state today? Although some work has documented the use of artificial intelligence and machine learning (AI/ML) at a handful of federal agencies, we had lacked a system-wide study. Recognizing this deficiency, the Administrative Conference of the United States commissioned an all-star group of scholars to comprehensively examine this regulatory landscape. In February, those scholars—David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey, and Mariano-Florentino Cuéllar—issued their 122-page report, entitled Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies.
There is so much to like *lots* in this report—too much to cover in this short Jot. But I’ll flag a few highlights.
Part I of the report takes inventory of AI/ML across the federal bureaucracy. To do so, the researchers—including the report authors and a large team of law students, political scientists, and computer scientists—focus on the 142 most significant federal agencies. They find that 45% (64 agencies) have embraced AI/ML to some degree. As depicted in Figure 2 of the report, the most common use of AI/ML is for “regulatory resource, analysis, and monitoring,” followed by (in order) enforcement, public services and engagement, internal management, and adjudication. Roughly half of AI/ML use cases (84 of 157) were developed in house. Part I also breaks down the data by agency, subject matter, and implementation stage, among other things. A 43-page online appendix provides even more granularity, including details on all 157 use cases identified at these agencies. In reviewing the findings, I was struck by the fact that most agencies (though not all) experimenting with AI/ML have substantial resources. Many under-resourced agencies, such as agencies focused on immigration and veterans affairs, don’t seem to be doing much AI/ML innovation. I’ll return to this observation later.
After presenting the big picture in Part I, Part II details eight fascinating case studies into how federal agencies have utilized AI/ML. The case studies were not chosen at random, but as illustrations of how agencies utilize AI/ML in various regulatory settings. To illustrate agency enforcement practices, the report has case studies on the Securities and Exchange Commission and Customs and Border Protection. On regulatory analysis, it presents case studies on two pilot programs at the Food and Drug Administration. The report includes three case studies on citizen engagement—at the Consumer Financial Protection Bureau, the Federal Communications Commission, and the U.S. Postal Service.
On administrative adjudication, the report presents case studies on the Social Security Administration and the U.S. Patent and Trademark Office. As Cary Coglianese and Lavi Ben Dor have observed, federal agencies—compared to Article III federal courts—seem much more willing to embrace and experiment with AI/ML when adjudicating. Such experimentation in adjudicating individual claims may seem particularly concerning to many observers. The report explores how the Social Security Administrative has tried to improve the quality of administrative adjudication through the use of AI/ML—by clustering appeals by issue to be decided by specialized appellate adjudicators, by accelerating appeals based on predicted likelihood of success, and by leveraging natural language processing for quality assurance. Similarly, in its case study of informal adjudication at the U.S. Patent and Trademark Office, the report explores how the agency has utilized AI/ML with respect to patent classification, patent prior art search, trademark classification, and prior trademark search. In the patent prior art search context, for instance, the agency developed an in-house tool called Sigma. Yet it ultimately did not implement Sigma agency-wide because the pilot program revealed that the tool “improve[d] efficiency only for examiners with a computer science background.”
Each case study could be the subject of a standalone law review article. Indeed, for scholars looking for research agenda ideas in this area (or law students for student note topics), check out the implications section of each case study, which flags some of the most pressing issues related to that use of AI/ML.
The final part of the report (Part III) zooms back out to examine several cross-cutting implications of the report’s findings. The authors focus on six categories of implications and recommendations:
(1) building internal capacity;
(2) transparency and accountability;
(3) bias, disparate treatment, and disparate impact;
(4) hearing rights and algorithmic governance;
(5) gaming and adversarial learning; and
(6) the external sourcing challenge.
Similar to the case studies in Part II, these half-dozen implications categories could each be the subject of a full-length article. Consider, for instance, the first category of building internal capacity. The report recognizes that federal agencies generally face a “make-or-buy” decision when it comes to incorporating AI/ML in their regulatory activities. The procurement and development of AI/ML will continue to be a challenge for federal agencies. Outsourcing development has important advantages, as those outside of the agency likely have much deeper expertise in developing these AI/ML tools. Yet, as the report underscores, subject-matter expertise can be critical in developing the AI/ML, such that outsourcing the entire process to outside groups would be problematic.
Outsourcing in some circumstances may also be in tension with core values of administrative governance. As Calo and Citron argue, AI/ML developments at federal agencies should be
oriented toward the furthering of substantive commitments and values, such as access, quality, and self-assessment. They are not designed simply to save costs (and in the process undermine procedural commitments without garnering more efficiency) but rather to enhance the capabilities of the administrative state itself—both agencies and officials—to engage in more effective and fair governance. In general, they would not outsource agency functions requiring expertise and discretion to third parties whose software and hardware deliver neither. These efforts have potential to enhance the justification of the bureaucratic state by, ideally, generating knowledge, enhancing expertise, tailoring outcomes, and increasing responsiveness—the purported reasons Congress created agencies to carry out its will in the first place.
Not surprisingly, the report authors strongly recommend internal development even when an agency procures AI/ML from outside the agency. This internal development includes: (1) increasing technical infrastructure and data capacity; (2) developing staff capacity and competency; (3) investing in AI/ML strategy and “regulatory sandboxes”; and (4) incorporating “accountability and transparency by design.” The remaining implications categories in Part III similarly explore how AI/ML should be developed across the administrative state to address some of the dangers of automating regulatory activities.
A critical challenge to developing AI/ML internally, as I hinted above, is that federal agencies face significant budget constraints. Buying off-the-shelf solutions may thus be more tempting for agencies with limited resources, yet such outsourcing often carries greater risks from a Calo-Citron legitimacy perspective. And some agencies that may benefit the most from AI/ML innovations face greater budgetary challenges than others, such that buying AI/ML is not even possible. In the final implications category, the report wisely observes that make or buy are not the only options. Federal agencies can also borrow. These approaches include collaborating with outside non-commercial entities to develop AI/ML, sponsoring AI/ML innovation competitions, and collaborating with other administrative agencies. This borrowing category deserves much more attention in the literature and in the real world. Indeed, we may find similar parallels and helpful lessons from the history of military software procurement, as my colleague Bryan Choi explores in Software as a Profession, where the government pursued such a hybrid development and procurement strategy.
Government by Algorithm is a massive contribution to the administrative law literature, and it lays the foundation for an ambitious research agenda for this emerging subfield of administrative law. The report could not have come at a better time, as federal agencies turn more and more to AI/ML to regulate.
Cite as: Christopher Walker, AI Agents in Federal Agencies
(September 4, 2020) (reviewing David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey & Mariano-Florentino Cuéllar, Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies
, Report for the Administrative Conference of the United States
(2020), available at SSRN), https://adlaw.jotwell.com/ai-agents-in-federal-agencies/
What happens when Congress enacts a permanent commitment to pay for some ongoing activity, but then fails to appropriate the funds necessary to do so? Until recently, this phenomenon was almost unheard of. But contemporary examples abound. For example, Congress failed to fund different two different provisions of the Affordable Care Act that had committed the federal government to pay insurers through the “risk corridors” program and through “cost-sharing reductions”; failed to fund tribes who had elected under the Indian Self-Determination and Education Act to provide services that had previously been provided by the federal government; and failed to fund the Children’s Health Insurance Program, a complex cooperative federalism program that is deeply entrenched, albeit in different ways, in states’ health care coverage for children. These examples either reflect or generate inter-branch conflict, implicating the executive branch, and often courts, in what may at first glance seem to be simply an intra-legislative breakdown.
We need a vocabulary to identify and describe this phenomenon and a framework through which to understand and assess it. Matthew Lawrence’s new article Disappropriation does just that.
Disappropriation, as Lawrence defines it, is “legislative failure to appropriate funds necessary to honor a government commitment in time to honor that commitment.” Disappropriation results from “the dissonance between Congress’s legislative power and its appropriations power.” In other words, Congress can enact laws committing the federal government to pay for something, but unless it also designates a source of funds, it has not provided an actual appropriation, as required by the Appropriations Clause.
Sometimes, Congress enacts legislation that harmonizes these powers, providing both a commitment to pay and an ongoing permanent appropriation. Think, for example, of Social Security and Medicare. Other times, however, Congress enacts legislation that reflects dissonance between these powers, committing the government to pay but depending for funding on the annual appropriations process. Food stamps and Medicaid, as “appropriated entitlements,” fall into this category.
When the dissonance between Congress’s legislative and appropriations powers results in a disappropriation, or even comes close to it, negative consequences can ensue. For example, those relying on the government’s anticipated payments can face devastating financial losses, with a particularly burdensome disparate impact on less well-capitalized smaller businesses and individuals without the means to survive the delay associated with a legal or political battle over payment. The rule of law also suffers, in that the executive branch is forced to violate a statutory command because it is without the means to do so. Disappropriation can also result in a problematic kind of delegation, where the executive branch is left to pick and choose how to dole out whatever minimal funds exist to support the commitment in the absence of an intelligible principle, because the law never contemplated this kind of executive discretion.
At the same time, as Lawrence points out, strategic exploitation of dissonance between Congress’s legislative and appropriations powers can result in a threat of disappropriation that may have salutary consequences. While permanent commitments shift inter-branch powers towards the executive branch to implement those commitments, annual appropriations pull some of the power back towards Congress. This fact may strengthen Congress’s oversight function. For example, Congress can use the threat of disappropriation to extract executive commitments to produce documents or testify in committee. The threat of disappropriation can also empower blocks in Congress other than party leadership, so that issues of importance to other groups (members of the minority, committees) can rise to salience.
Is there a way to prevent the negative consequences of dissonance that result from an actual disappropriation while retaining the benefits that accrue from strategic exploitation of the threat of disappropriation? Lawrence suggests that there is a category of rules that does just this: rules that “promote durability (the likelihood that a policy will stay in place and so its capacity to engender reliance) but not entrenchment (the difficulty of changing policy for a majority that wishes to do so).” The key, he argues, is to prevent “bargaining failure,” where a disappropriation results because of either “uncertainty surrounding the impact of legislative action or inaction” or “private information about the consequences of disappropriation.”
In light of this goal, he proposes that courts adopt an interpretive presumption against disappropriation of unambiguous legal commitments; welcome lawsuits by civil servants to enforce disappropriation as a superior alternative to resolving questions about legislative standing; offer expedited declaratory (rather than injunctive) relief when there is a dispute about whether a disappropriation has occurred; and “seek to minimize interference with the political branches and reduce uncertainty surrounding the potential impacts of future disappropriations” when considering claims for damages in any individual disappropriations case. Lawrence’s careful analysis of each of these suggestions provides a critical tool for courts and litigants in thinking through the long-term, systemic implications of different paths for resolving discrete legal controversies.
Lawrence’s contribution is a welcome addition to the growing body of administrative law scholarship on federal funding. In a world where inter-branch disputes increasingly involve money—building a wall at the southern border with funds that far exceed Congress’s appropriations, placing a hold on aid to Ukraine while asking for investigations of political rivals, limiting oversight over Coronavirus relief—insights like the ones Lawrence offers in this excellent article are vital.
In Dimensions of Delegation, Cary Coglianese provides a principled account of the U.S. Supreme Court’s nondelegation jurisprudence. Specifically, he reconciles the seemingly idiosyncratic Schechter Poultry case with subsequent applications of the nondelegation doctrine by theorizing a multi-dimensional model of delegated power. In so doing, he provides a template for rethinking nondelegation as a matter of doctrine, rather than as a matter of political theory or political economy, as it is so often treated by partisans on both sides.
I long have puzzled over the jurisprudential treatment of Schechter Poultry. The Supreme Court has refused to overrule the case but yet has declined to follow it. More cryptically, even detailed discussions of nondelegation precedent, such as Justice Gorsuch’s recent romp in Gundy v. United States, fail to discuss important nuances of the case—including the fact that the National Industrial Recovery Act of 1933 (NIRA) contained explicit criteria for when the President could approve a code of fair conduct that would easily pass the modern “intelligible principle” test. The NIRA required that three criteria be met before the President could endorse a code of fair competition: (1) the trade association that proposed the code was “truly representative” of the regulated industry; (2) the code was not “designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them”; and (3) the code would “tend to effectuate the policy of this title.” While this standard leaves the president with broad discretion to choose which codes to approve, it can hardly be suggested that it constrains executive discretion less than delegations subsequently endorsed by the Court without a nod to Schechter Poultry—up to and including the statutory charge to many agencies to discharge their delegated authority in the “public interest.”
Instead of wrestling with the doctrinal difficulties this poses, the Court has attempted to reconcile Schechter Poultry with later and more capacious understandings of permissible delegation based on two distinctions. First, the provision of the NIRA challenged in Schechter Poultry conferred authority on the President to regulate the “entire economy.” Whitman v. American Trucking, 531 U.S. 457, 474 (2001). Second, the challenged provision allowed this authority to be exercised “on the basis of no more precise a standard than stimulating the economy by assuring ‘fair competition.’” Id. I have always found both distinctions dubious. After all, the Clean Air Act regulations challenged in Whitman have sweeping impacts on the entire economy, as do regulations under many other broad statutory delegations to agencies that have been upheld by the Court—for instance to restructure securities markets (American Power & Light Co. v. SEC, 329 U.S. 90 (1946)) or to regulate communications broadcast over the nation’s airwaves (National Broadcasting Co. v. United States, 319 U.S. 190 (1943)). And “fair competition” is no less precise a standard than the “public interest.”
Coglianese makes sense of all this by shifting the lens through which we view delegations. He starts by returning to constitutional first principles: the thing that Congress may not delegate to another branch is its vested legislative authority. The novel contribution of the article is to develop a new way of ascertaining when delegated authority is, indeed, legislative, and thus may not be delegated. Coglianese argues that we should conceptualize legislative authority much like we conceptualize property: as a bundle of sticks, or “distinct features which together are constitutive of that authority.” Applying this approach, it becomes clear that the intelligibility of the principle constraining delegated discretion—the current touchstone of the nondelegation doctrine—is but one of the sticks in the bundle comprising legislative authority. Even when delegated authority is not guided by clear statutory standards, it may be circumscribed on other dimensions. The constitutionality of a delegation thus depends on an assessment of all these dimensions.
Coglianese’s close reading of nondelegation precedent reveals that the constitutional permissibility of statutory delegations of authority to the executive branch is not—and never has been—solely about the intelligibility of the principle guiding the administrator’s discretion. Rather, it has been about the overall “shape” and “size” of the authority a statute grants to an executive officer and whether this coincides with the “shape” and “size” of a legislative power granted to Congress by the Constitution.
Coglianese argues that courts have assessed the “shape” and “size” of a delegated authority by reference to six key characteristics, or “six degrees of delegation.” Consistent with the reigning intelligible principle test, one dimension is the statutory basis for decision-making by the administrator, or the extent to which clearly stated standards guide the administrator’s discretion in exercising delegated authority. Coglianese’s analysis surfaces five additional dimensions that have been relevant to the Court’s nondelegation analysis. First, the Court has noted the nature of the statutorily authorized action—specifically, whether the statute authorizes the agency to take enforcement actions or make binding rules. Second, the Court has attended to the range of regulated targets, for instance, whether the delegated authority is over a single industry or a broader swath of the nation’s economy. Third, the Court has considered the scope of activities the agency is authorized to regulate, for example, limiting air pollution or regulating the fairness of business practices of any kind. Fourth, the Court has been interested in the degree of sanctioning power delegated to the agency, including both the magnitude of penalties the agency is authorized to impose and whether they may be imposed directly on private businesses or individuals. Finally, the Court has considered the extent of required process an agency must observe and the extent of constraint this imposes on the agency’s ability to exercise its delegated authority. Where a statutory delegation of authority falls on each of these dimensional spectrums determines whether it is legislative in nature and thus constitutionally impermissible.
Coglianese’s multi-dimensional approach goes a long way to providing a doctrinally coherent account of the Court’s nondelegation jurisprudence. It helps explain, for instance, why the NIRA’s delegation of authority to approve codes of fair competition is more constitutionally problematic than, for instance, the statutory delegation of authority to the FCC to allocate broadcast spectrum in the “public interest.” While the NIRA standards guiding code approval are arguably more “intelligible” than the “public interest” standard governing the FCC, the NIRA delegation of authority falls comparatively short on the other dimensions of delegation. The NIRA covered an unlimited range of regulatory targets, while the FCC regulates a single industry. The NIRA allowed the authorization of codes governing an unbounded range of business practices, while the FCC regulates a more limited set of practices by its regulated community. NIRA authorized criminal penalties for violation of approved codes, while the FCC has much more limited enforcement powers. Under the NIRA, the President’s code approval decisions were unconstrained by any formal procedures, while the FCC is constrained by numerous procedural requirements, including administrative adjudication in many cases.
Beyond its immediate aims, Coglianese’s multi-dimensional approach also provides a useful way of thinking through the “major questions” thicket that the Court has allowed to grow up around its ambivalent streams of nondelegation and deference jurisprudence. Indeed, Justice Kavanaugh explicitly linked the nondelegation doctrine and the “major questions” doctrine in a recent statement respecting denial of certiorari in Paul v. United States. After praising Justice Gorsuch’s “scholarly analysis of the Constitution’s nondelegation doctrine” in Gundy, Justice Kavanaugh suggested that perhaps there should be a “nondelegation principle for major questions.” Coglianese’s approach explains why this would be just as myopic as the “intelligible principle” test: whether a delegation authorizes an agency to address “major questions” focuses exclusively on one dimension of delegated authority—scope—without considering holistically the other dimensions that give a delegation its shape and size and determine whether it impermissibly coincides with legislative power. To be sure, under Coglianese’s approach, the scope of delegated authority is relevant to determining whether an impermissible delegation of legislative power has occurred. However, sweeping delegations of authority over major questions may nonetheless be constitutional if they are constrained on other dimensions, including clear statutory standards and rigorous decision-making procedures.
In sum, Coglianese provides the first principled account of the widely misunderstood nondelegation doctrine as a doctrine. This is a welcome corrective to the present debate, characterized by histrionic appeals to resurrect the “Constitution in exile” and dire warnings about the gutting of the administrative state. His approach invites partisans on all sides to look past the political rhetoric and to take nondelegation doctrine seriously if it is to be revived.
Editor’s note: For another review of Dimensions of Delegation, also published today, please see: Richard Pierce, Reinvigorating the Non-Delegation Doctrine, JOTWELL (June 24, 2020).
Cary Coglianese’s article, Dimensions of Delegation, is timely. The Court has invoked the non-delegation doctrine as the basis to invalidate a statute only once 85 years ago. The only statute that the Court has ever invalidated based on application of the non-delegation doctrine actually delegated extraordinarily broad power to private participants in markets rather than to an agency. During the past year, however, five Supreme Court Justices have made it clear that they are open to the possibility of relying on the non-delegation doctrine as the basis to hold statutes unconstitutional. Even many scholars who have long opposed attempts to reinvigorate the non-delegation doctrine have become more receptive to that possibility in today’s conditions.
A recent online symposium published by The Regulatory Review illustrates the state of the debate. Jonathan Adler and Chris Walker introduced the symposium with their excellent essay: “Delegation and Time.” They made the point that the increasing inability or unwillingness of Congress to amend broadly worded statutes that confer regulatory power on agencies has created a situation in which agencies are forced to apply statutes that are so old that they were drafted when no one could have anticipated the uses to which they are now being put. Thus, for instance, the FCC is using the Communications Act of 1934 as the basis to regulate the internet and the EPA is using the Clean Air Act of 1970 as the basis to take the actions required to mitigate climate change. The result increasingly is a series of agency actions that Congress never contemplated and that might not be consistent with the values of the Congress that enacted the old statute, the present Congress, or the people.
Other contributors to that symposium identified the hundreds of statutes that confer seemingly unlimited “emergency” powers on the President as candidates for application of a newly invigorated non-delegation doctrine. President Trump has relied on the National Emergencies Act of 1976 as the basis for his reallocation of the funds that Congress refused to appropriate to build a wall along the southern border. Senator and Presidential candidate Sanders has stated his intention to rely on the “emergency” powers conferred on the President in various statutes to support expenditure of trillions of dollars to mitigate climate change.
The Regulatory Review is published by the Penn Program on Regulation. That program is run by Cary Coglianese, the author of “Dimensions of Delegation.” Before the Justices take any action to follow through on their stated intention to reinvigorate the non-delegation doctrine, they should study with care both the symposium that Professor Coglianese’s Center published and his article.
Professor Coglianese makes two related points in the article. First, courts and scholars have traditionally framed the non-delegation debate with reference to a single dimension. They should focus instead on six dimensions of the constitutional problem that can be created by broad delegations of power. Second, if the non-delegation doctrine is understood as a response to a multi-dimensional constitutional problem, it is easy to identify ways in which courts have long addressed the problem and can continue to address the problem effectively.
Professor Coglianese begins by explaining how courts and scholars have traditionally decided whether a statutory delegation of power is constitutional by focusing exclusively on the presence or absence of an “intelligible principle” that a court can enforce to keep the agency’s exercise of discretion within boundaries set by Congress. He argues persuasively that courts should also consider the nature of the action the agency has taken, the extent of the power that Congress has delegated to the agency, the scope of the activities that the agency has been authorized to regulate, the nature and degree of sanctions that the agency is empowered to impose, the quality and quantity of the reasoning and evidentiary support for the agency action, and the nature and extent of the process the agency used to make the decision to act.
Professor Coglianese then devotes eighteen pages to a detailed discussion of the many ways in which courts have long enforced the non-delegation doctrine once we recognize that it has many dimensions. He urges courts and scholars to abandon the simplistic and futile search for an “intelligible principle” that limits agency exercises of discretion. He argues that courts can ensure that Congress and agencies act in ways that are consistent with the Constitution by continuing to apply the many administrative law doctrines that respond effectively to the multi-dimensional nature of the potential constitutional problem that can be created by broad delegations of power to agencies.
Editor’s note: For another review of Dimensions of Delegation, also published today, please see Jodi Short, 6 Degrees of Delegation, JOTWELL (June 24, 2020).
The cooperation of public and private actors to achieve public goals is not new. More than 80 years ago, Louis Jaffe lauded the longstanding and substantial involvement of private groups in the regulatory sphere. The scope, range, and legal significance of coordination between the public and private spheres have expanded since then. Modern governance is a complicated web of relationships between public and private actors, command and cooperative structures, and hard law versus soft guidance. A robust academic literature assigns different labels to this phenomenon: privatization, public/private partnerships, and new governance, to name just a few.
By necessity, these arrangements entail the exercise of policymaking discretion by private actors, to varying degrees depending upon the scenario. The result is a diffusion of governmental power that neither Congress nor the courts are likely to roll back substantially. With The New Gatekeepers: Private Firms As Public Enforcers, Rory Van Loo identifies and explores yet another way in which government relies on private actors—by looking to large corporations to serve as “enforcer firms” or “gatekeepers” ensuring compliance with federal law.
Van Loo begins his analysis with a survey of “prior narratives of third-party private regulation.” Private firms independently monitor other firms for compliance with the law in order to protect their own interests: e.g., banks monitoring their borrowers for illegal activity that might impair the value of collateral, or insurance companies monitoring their insureds for legal noncompliance that might trigger insurance payouts. Self-regulatory organizations like the New York Stock Exchange police the actions of their members to protect the reputation of their industries. Legislatures pass laws imposing vicarious liability and information disclosure requirements, authorizing citizen suits, and protecting or even rewarding whistleblowers to encourage private enforcement of the law. Legislators and agencies also mandate private enforcement when they require certification from accredited, third-party inspectors before a business can operate.
Van Loo argues that the scholarly literature lacks “an examination of mandates that explicitly direct regulated entities to serve as enforcers.” To fill that void, he offers case studies based on “[t]he ten largest companies operat[ing] in four main industries: information technology, banking, pharmaceuticals, and oil,” asserting that these case studies “demonstrate how administrative agencies, after receiving authority from Congress, have delegated” enforcement authority to these private actors.
For the technology sector, Van Loo points to FTC third-party oversight orders against Amazon, Facebook, Google, and Lenovo, for example requiring Facebook to audit the security and privacy practices of app developers for the purpose of protecting consumer data privacy. For the banking sector, Van Loo documents CFPB lawsuits, and subsequent settlement agreements, holding banks like JP Morgan Chase and Wells Fargo responsible for the deceptive acts or practices of third-party call centers, debt collectors, software developers, and real estate lawyers with which the banks do business, thereby forcing the banks to police the behavior of those third parties. For the pharmaceutical industry, Van Loo identifies an expansive regime of FDA regulations, guidance statements, and warning letters explicitly requiring drug companies to maintain quality control units “responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company,” thus requiring the drug companies’ to monitor not only the “output” but also the “inputs”—i.e., materials and ingredients—of those third-party contractors.
In summary, according to Van Loo, “[f]ederal regulators have established an expectation that today’s largest companies regulate independent contractual parties for legal violations” and, thus, “serve as a new breed of gatekeepers because the regulated entities must now decide whether to give the third parties market access based on regulatory considerations.”
Van Loo next turns his attention to the ways in which large corporations perform this new regulatory role. In particular, he describes a system of private regulation through contract drafting. At the suggestion (or instruction) of federal agencies, enforcer firms incorporate into written agreements with third-party contractors their own expectations regarding compliance with regulatory requirements, as well as penalties for noncompliance. Federal regulators in turn monitor the efforts of the enforcer firms to monitor third-party compliance those contractual requirements and the law more generally. In this way, the federal government deputizes and delegates enforcement authority to a small number of large, private corporations.
Turning to concerns about this new regulatory tool, Van Loo argues that conscripting private corporations to serve as enforcer firms represents “greater federal intervention into corporate governance and operations [that allows] a large number of federal agencies to shape the firm’s relationships, contracts, board activities, and liability.” He notes further that, in some instances, government efforts to force private corporations into the enforcer firm role have extended to imposing potential legal liability upon individual corporate officers and directors for the actions of third-party contractors as well.
Irrespective of whether one favors or disfavors more government involvement in corporate activity, Van Loo posits unintended consequences and economic tradeoffs. Mandated third-party governance by large corporations will alter corporate structures by incentivizing those firms to stop outsourcing functions to third parties and instead to bring more activities back in-house or to purchase third-party service providers outright. The compliance departments of large corporate firms have grown dramatically in recent decades, expanding the regulatory state bureaucracy and resources dedicated to regulatory compliance substantially; Goldman Sachs employs twice as many compliance personnel as the CFPB, and Facebook’s compliance reviewers far outnumber the total employees of the FTC, Facebook’s main regulator. Yet, we have little evidence to evaluate whether or under what circumstances enforcement firms are an effective and efficient regulatory compliance tool.
Van Loo raises practical concerns about overlapping jurisdiction, strategic shirking, cosmetic box checking, and other efficacy issues. Moreover, accountability is a problem. Government agencies may monitor the regulatory enforcement activities of large corporations, but courts have few mechanisms and seemingly little role to play in holding enforcer firms accountable for their actions in this regard.
Van Loo’s article comes at a potentially pivotal time in administrative law jurisprudence and scholarship. We are in the midst of the latest round of debate over whether the regulatory state has become too powerful and needs to be curtailed by the courts. In Lucia v. SEC and Seila Law LLC v. CFPB, the Supreme Court has taken up issues concerning the constitutionality of how agencies are structured. The last year has seen opinions in Gundy v. United States and United States v. Paul representing a majority of the Justices signaling concerns about congressional delegations of legislative power to agencies and the desire to adopt a more robust nondelegation doctrine to curtail such actions. Yet, at this moment of national discussion and debate, and notwithstanding a robust and longstanding academic literature on the topic, the extensive delegation of regulatory power from agencies to nongovernmental actors has received much less attention. Perhaps Van Loo’s article will spark further discussion.
When a President who campaigned on a deregulatory platform assumes office, the question immediately arises whether, in light of the unlikelihood of significant statutory assistance by Congress, the new administration will be able to achieve substantial deregulation on its own. In most contexts, agencies looking to ease regulatory burdens have essentially two options: they can engage in a reappraisal of the regulatory record (like the Reagan administration’s failed attempt to rescind the passive restraint requirement for new automobiles), or they can reinterpret the statute or statutes underlying a regulatory program (such as the same administration’s successful reform of the regulation of “stationary sources” of air pollutants), or both.
In the most exotic permutation of the latter method, employed more by the Trump administration than any previous administration, agencies have occasionally argued that their predecessors lacked statutory power to regulate as they did, leaving them no legal choice but to abandon a prior administration’s regulatory program. In Agency Statutory Abnegation in the Deregulatory Playbook, William Buzbee describes, analyzes, and dissects this “statutory abnegation” strategy, and persuasively illustrates that it has been and is likely to remain unsuccessful without major changes to basic principles of administrative law.
Buzbee provides a clear and succinct definition of statutory abnegation: “Acting against a backdrop of unchanged statutory law, an agency reexamines its powers under that law. In a break from past agency power claims and, usually, related actions, the agency newly declares that it no longer has authority it previously asserted. This is an act of agency ‘abnegation’—self-denial of authority—because, without any statutory or judicially mandated change, the agency is denying itself statutory power previously claimed.” (P. 1518.) Examples of statutory abnegation that Buzbee describes include the EPA’s conclusion, under the George W. Bush administration, that it lacked previously asserted statutory authority to regulate greenhouse gases and among many from the Trump administration, its repudiation of the EPA’s Clean Power Plan based exclusively on its view that the CPP “exceed[ed] the EPA’s statutory authority.”
The major impediment to the statutory abnegation strategy is judicial review. Buzbee begins by showing that familiar doctrines of judicial deference to both agency policy decisions and agency interpretations of the statutes they administer might lead an administration to expect that when agencies proclaim that they lack statutory authority to regulate, courts would defer and the agencies would win. This turns out, however, to be a pipe dream. As Buzbee persuasively concludes, “[B]are statutory-abnegation claims often weaken agency power over targets of regulation, reduce agency discretion, are doctrinally disadvantageous, and appear destined in most instances for eventual judicial rejection.” (P. 1514.)
Why judicial rejection? Buzbee illustrates quite effectively that an administration’s deregulatory fervor is likely to be met by reviewing courts doing what they have always done: namely, require agencies to offer well-considered, rational judgments that take into account “the science, data, empirical assessments, and old and new legal reasoning relevant to evaluating the policy shift.” (P. 1515.) These considerations are the bread and butter of judicial review, and administrations ignore them at their peril. Instead, abnegation arguments have often been founded upon “slender legal reasoning, paid little attention to statutory criteria, avoided past rationales, and shown little or no engagement with on-the-ground impacts of the old and new policy choices.” (P. 1515.) As Buzbee so eloquently concludes, “well-established doctrine appropriately rewards actions reflecting respect for multiple sources of political accountability. As courts have found, presidential edicts are inadequate justifications for inexpert agency rollbacks that dodge full engagement with congressional requirements, do not analyze underlying science and data, and fail to grapple with past reasoning and regulatory contestation.” (P. 1563.) For courts to approve the Trump administration’s abnegation arguments, courts would have to abandon these bedrock aspects of administrative law.
Why then, Buzbee wonders out loud, have agencies in the Trump administration been employing “bare statutory abnegation” in so many instances? Although the question invites speculation, Buzbee offers what I find to be a plausible and persuasive account: Presidents and their appointees may be more interested in scoring political points than in actually achieving substantial deregulation. That the Trump administration has been challenging agency action at a record pace may be less salient to the administration’s supporters than dramatic announcements of new deregulatory initiatives such as the repudiation of the Obama administration’s Clean Power Plan, the toughening of criteria for student loan forgiveness, and the rescission of programs extending deferred action on deportation to “dreamers” (undocumented immigrants who arrived in the United States as children). Further, making new rules based on statutory interpretation is likely to be quicker and easier than rulemaking based on a detailed factual and technical record, allowing the administration to score its political points much more quickly.
One virtue of Buzbee’s article is that it anticipates virtually every consideration relevant to understanding and evaluating the statutory abnegation strategy. I want to focus on three of the issues Buzbee discusses. First, Buzbee shows that the Trump administration may have fallen into the same trap that befell the Reagan administration when it rescinded the passive restraint requirement—the temptation to conceive of deregulation as like an agency decision not to act in the first place, which would be reviewed under an exceedingly deferential standard of judicial review. It is black letter administrative law that deregulation by rulemaking is subject to the same standard of judicial review as is applied to agency adoption of a new rule increasing regulatory burdens. Second, one of the most confusing aspects of the Chevron doctrine may also be at work here—the notion that courts do not defer to agency decisions on “pure questions of statutory interpretation.” When an agency’s entire justification for a deregulatory action is that a statute unambiguously requires it, courts are tempted to assume their traditional role as the final arbiters of statutory meaning, i.e. the ever-expanding Chevron step one. Finally, Buzbee establishes that the Fox Television decision that governs judicial review of agency policy changes is excruciatingly ambiguous on the justification required to validate a significant policy change, leading agencies to believe, perhaps erroneously, that they will receive great deference whenever they change course.
In sum, this article is a great read, highly interesting, relevant and enlightening—just what I look for in a Jot-worthy law review article.
The field of Administrative Law typically focuses on federal agencies, but there are tens of thousands of state and local agencies that administer the law on matters of tremendous consequence. As Nestor Davidson recently put it, the field’s “myopic federal focus obscures a massive, submerged, and surprisingly vibrant domain of administration that exists at the local-government level.” Thinking about these other levels of administration can both illuminate the actual workings of important policy areas and prompt fruitful reflection on recurring administrative-law questions.
Maria Ponomarenko’s thought-provoking new article, Rethinking Police Rulemaking, accomplishes both of these worthy goals. One significant species of local administration, she reminds us, is policing. There are close to 18,000 law enforcement agencies across the country, and they make a range of policy choices of great consequence, including regarding the use of force, stop and frisk, enforcement priorities, and “the persistent creep of the surveillance state.” In Rethinking, Ponomarenko brings fresh perspective to debates over how to oversee police agencies. In particular, she challenges a longstanding idea that an administrative-law mainstay, notice-and-comment rulemaking, is the most promising solution for holding police more accountable.
In one sense, the vintage of this debate reveals that policing has not been overlooked as a species of state and local administration at all; scholars have been discussing the use of notice-and-comment rulemaking for agencies since the 1960s. Yet as Ponomarenko observes, rulemaking is just one tool in the administrative law toolbox. And “despite more than five decades of scholarship devoted to making the case for police rulemaking, there has been very little attention paid to how rulemaking would actually work in practice.” In Rethinking, Ponomarenko gives us reason to believe that rulemaking is a poor fit for policing’s ills and provides a sketch of more promising solutions.
The article begins by synthesizing the substantial existing literature on police rulemaking—both its origins and a more recent “rulemaking renaissance.” Ponomarenko then identifies four types of problems that beset the rulemaking idea. First, and “perhaps the biggest challenge,” police departments are not required to make rules and have little incentive to adopt them. Unlike other rulemaking agencies, which adopt rules to make it easy to govern the public, police enforce rules made by others; they lack authority to alter or even formally clarify the law themselves. The rules we care about for police are the rules they make to govern themselves. And for many reasons, police agencies lack incentives to adopt internal rules on challenging topics (like enforcement discretion, which would likely draw undesired attention).
All of that suggests that if we want police rulemaking, legislatures will have to mandate it. But that leads to a second set of challenges: how could legislatures isolate the policy choices that should be made through a rulemaking process? It’s coherent to talk about rules for decisions that involve concrete steps, like the adoption of new surveillance technologies. But most of the problems associated with policing, like the use of enforcement discretion or force, are part of gradually evolving practices for which it will be hard to specify either the trigger for rulemaking or the desired content of ensuing rules. Third, and related, it may be difficult for legislatures to determine the types of decisions that would benefit from public input, given that most of the prime topics for police rulemaking are internal rules (which, at the federal level, would typically be exempt from the Administrative Procedure Act’s notice-and-comment process).
Finally, and to my mind most fundamentally, Ponomarenko argues it is just not clear that rulemaking will provide the accountability benefits its proponents seek. The problem areas in policing contain few digestible “referendum moments” conducive to public input. Even on discrete questions, the public is at a significant information disadvantage when trying to assess what sorts of police rules will generate desired policy outcomes in communities. A Department of Justice , for example, ultimately concluded that the New Orleans Police Department’s lax secondary employment policy led to poor police service—but that connection is far from self-evident to a lay person. This discussion may resonate for administrative law scholars beyond the policing context, as we consider how much of the critique is not unique to policing. Rethinking’s take on the realistic limitations of public input, for one, resonates with existing concerns about rulemaking itself.
Part III of Rethinking considers alternatives to rulemaking to address governance problems in police departments. At least for large jurisdictions, Ponomarenko proposes “regulatory intermediaries” like police commissions or inspectors general. Building on the agency design literature, Ponomarenko posits that such intermediaries might help to solve the problems of incentives, information, and representative legitimacy that impede police accountability at present. Indeed, a few large cities have Inspectors General for police agencies in recent years.
One particularly praiseworthy aspect of Ponomarenko’s account is her clarity regarding what we know and what we don’t about administrative interventions. Like her analysis of rulemaking, her examination of regulatory intermediaries embraces the complexity and tradeoffs that such interventions might entail. While generally supporting the intermediary approach, she notes that cities that have established regulatory intermediaries have done so without a clear theory of what they should achieve, and that “the reality is that we know far too little about what it would in fact take for such an entity to be effective.” To build such knowledge, Ponomarenko suggests a research agenda for the study of police intermediaries that would assess their ability to (1) generate useful information about shortfalls in police practices; (2) supply the missing incentives to address those shortfalls; and (3) engage with affected stakeholders in reaching decisions.
One final insight in the piece is worth noting. Inspectors general and the like may not be realistic in small jurisdictions. There, Ponomarenko suggests that solutions might come from the state level. States already play a role in regulating policing—commissions on Police Office Standards and Training already set minimum standards for police training—and statewide entities could be given more active roles. A statewide audit bureau, for example, could mirror the work of inspectors general in jurisdictions where it wouldn’t make sense to have one. She grants that “states have not been particularly hospitable grounds for police reform,” but reminds us that prescriptions must be comparative, and “ordinary local politics has not been particularly conducive to effective regulation of policing either.”
Rethinking Police Rulemaking is an important read not just for policing scholars, but also for administrative law and state and local government scholars. For administrative law scholars, the piece’s fresh analysis of the potential and limitations of both rulemaking and regulatory intermediaries deserves attention. For state and local government scholars, the piece provides a deep dive into the available remedies for governance dilemmas that extend beyond policing. Spanning all of these fields, Ponomarenko’s article is an insightful, generative contribution, and I liked it a lot.