Jacob E. Gersen & Matthew C. Stephenson, Over-Accountability
, 6 Journal of Legal Analysis
185 (2014), available at SSRN
Many an administrative law article ends with a simple and appealing recommendation: “just add accountability!” Accountability, along with institutional expertise and democratic legitimacy, is one of the key yardsticks that frames evaluations of the legal rules and institutions of the regulatory state. Why might judicial deference to agency interpretations of statutes be desirable? Because agencies are more politically accountable than courts. Why might privatization be worrisome? Because corporations are less accountable than agencies. Accountability, like motherhood and apple pie, is something we can all safely get behind.
Or is it? In Over-Accountability, Jacob Gersen and Matthew Stephenson look at the downsides of augmenting the accountability of political institutions. Lots of ways exist to add accountability to governmental decision-making: one could have more elections, or concentrate power in a “unitary” executive, or reduce the power of politically unaccountable Article III courts. As the authors point out, these and other such accountability-enhancing moves might actually have a surprising and perverse consequence: they might exacerbate bad behavior by the government.
The basic problem, as Professors Gersen and Stephenson explain it, is a consequence of a simple principal-agent dynamic. Agents (say, the Mayor of New York or the head of the FDA) want to look like good agents to their principals (say, the citizens of New York or the President), because the agents want the principals to retain them as their agents in the future. Under certain conditions, the agent’s desire to appear good may cause the agent to adopt a course of action that will convince the principal that it is a good agent, even if the agent knows that that course of action is not actually in the principal’s best interest. Put another way, an agent will sometimes have the perverse incentive to make decisions that it knows to be contrary to the principal’s best interests in order to avoid resembling a bad agent; because the principal is relatively less informed than the agent, the principal can’t tell the difference.
The authors explain that this basic overaccountability dynamic can manifest in a variety of ways. To signal their competence, agents can pander (take action that “cater[s] excessively” to the public); they can posture (take bold action to look good to the public); or they can be persistent (act stubbornly, so that the public doesn’t perceive them to have made a mistake). To signal their lack of capture, agents can act in way that is populist (in a way that unduly burdens a minority or interest group); conversely, to signal their lack of bias, agents can act in way that is politically correct (in way that markedly illustrates an absence of animus towards some given group). In a lively and clear fashion, the article marries its analysis of formal models of such behavior with concrete examinations of how these varieties of overaccountability might emerge in different legal contexts, from debates over affirmative action to the sentencing behavior of elected state court judges.
The article’s second part, on mitigating overaccountability, is equally interesting. In it, the authors point out that there are three strategies for coping with the phenomenon of overaccountability: (1) do nothing; (2) reduce or eliminate accountability; and (3) add oversight from other agents who might be able to monitor or constrain the primary agent for overaccountability problems. Some of the potential responses they analyze—e.g., relying on judicial review by politically insulated courts—will be familiar moves. But other potential responses—randomly timing elections, for example, or reducing the principal’s ability to know which agent was responsible for a particular choice, or “altering the laws and institutional structures that govern the media and other watchdog organizations” so as to weaken their ability to report on government action—are so facially dystopian (at least to me) that it was delightful to see them drily catalogued as among the potential avenues for getting to a system that has the right quantity of accountability “on net.”
This is one of the great rewards of this paper—it forces one to see what was once familiar in an entirely new way. If you are someone who has made use of the “workhorse concept” (p.186) of accountability (as I have done), Professors Gersen and Stephenson will make you want to look that “workhorse” in the mouth.
Cite as: Mila Sohoni, Too Much of a Good Thing
(February 1, 2016) (reviewing Jacob E. Gersen & Matthew C. Stephenson, Over-Accountability
, 6 Journal of Legal Analysis
185 (2014), available at SSRN), https://adlaw.jotwell.com/too-much-of-a-good-thing/
Connor Raso, Agency Avoidance of Rulemaking Procedures
, 67 Admin. L. Rev.
1 (2015), available at SSRN
It is puzzling. Administrative agencies continue to produce thousands of rules each year in the face of an accumulation of procedural requirements that administrative law scholars say have ossified rulemaking and even led some agencies to retreat from rulemaking altogether.
How can this be? How can federal regulatory output be “rising steadily for decades” notwithstanding procedures that have created a supposedly “confusing labyrinth through which agencies seeking to adopt rules must grope”? As someone who has long been puzzled by the seeming contradiction between expectations and reality, I liked reading Connor Raso’s recent article, Agency Avoidance of Rulemaking Procedures, because it offers a persuasive, even if partial, answer to a core conundrum about rulemaking, along with thoughtfully-analyzed, supportive empirical evidence.
To see how much there is to like about Raso’s study, the reader will need to be familiar with the concept known as rulemaking ossification. For decades, administrative law scholars have lamented ossification and the corresponding loss of an earlier era of simple rulemaking. They have believed that agencies, besieged by procedural steps and intrusive, uncertain judicial review, have come to be nearly as burdened by so-called informal rulemaking as they had previously been with its more formal adjudicatory counterparts.
Rulemaking has purportedly grown slow and cumbersome. And yet, despite the nearly universal acceptance of the view of an ossified regulatory process, empirically-oriented scholars such as Anne Joseph O’Connell, Susan Yackee and Jason Yackee, and me have shown quite clearly that agencies continue to produce a large number of rules even in a supposed era of rulemaking retreat.
Again, how can this be? If agencies have retreated from rulemaking, or even if rulemaking has just slowed down substantially, then this should mean fewer rules, not a continued outpouring. Rulemaking’s puzzle persists. How do we solve it? This is where Raso’s interesting new study comes in. He shows that rulemaking procedures in practice are not as burdensome as they seem because agencies are able to avoid certain procedural steps. In other words, what looks to be layer upon layer of procedures on the books does not equate to heavy procedural burdens in action.
Consider that Raso finds that:
- In more than 92% of federal rulemakings from 1996-2012, agencies did not produce the analyses that the Regulatory Flexibility Act (RFA) requires for rules that will have a “significant economic impact on a substantial number of small entities.” Sixty-two percent of “major rules”—those that by definition should have the most substantial impacts—also lacked these analyses.
- In more than 99% of rulemakings during the same period, agencies did not produce written statements that the Unfunded Mandates Reform Act (UMRA) requires for rules that would impose annual private sector costs greater than $100 million. Even about 80% of all major rules lacked these statements. (“Major rules” are defined as those that would have $100 million in annual economic impacts, which encompass both benefits as well as costs.)
- Agencies even avoided the defining feature of informal rulemaking—its notice and comment requirements under the Administrative Procedure Act (APA)—in nearly 52% of the proceedings completed during this same period.
Such seemingly widespread avoidance behavior arises, according to Raso, because of exceptions and ambiguities in the procedural “requirements” themselves. It is not necessarily the case that agencies are violating the law. On the contrary, by their very terms administrative law statutes often contain exceptions; they are not intended to apply to each and every rule. As already noted, RFA and UMRA only apply to rules with certain kinds of expected impacts (although Raso suggests that agency avoidance occurs even with high-impact rules). The APA also contains express exceptions to its notice-and-comment requirements, such as a catch-all exception for “good cause.” Especially with vague terms like “good cause,” procedural standards and exceptions sometimes admit room for interpretation. Raso suggests that agencies at times exploit ambiguities to claim that they have no obligation to follow a procedure they would rather not follow.
Raso is certainly not the first to call attention to agency avoidance of rulemaking requirements. But with this latest study of his, and with another study of his, he has clearly done more than anyone else to document systematically the extent to which procedural requirements are not applying to—or are at least not being applied to—a substantial number of agency rulemakings.
In this respect, Raso’s contribution may well be viewed as compatible with a recent defense Richard Pierce has made of the ossification thesis. In contrast with earlier scholarship, Pierce argues there is no general ossification of rulemaking; rather, he argues, there exists only an ossification of a subset rulemakings that “raise controversial issues where the stakes are high.”
Pierce’s qualification marks an important shift in nearly twenty years of legal scholarship about rulemaking’s ossification, which from the earliest days appeared to have been about rulemaking generally and not just a subsample of the most difficult rulemakings. For example, Jerry Mashaw and David Harfst, in their widely admired research on rulemaking at the National Highway Traffic Safety Administration (NHTSA), compared NHTSA’s “total rulemaking output” before and after the agency’s loss in the courts.
But we need not dwell on how much of a retreat or concession Pierce appears to have made because, even on its face, it is not clear what a narrowing of ossification’s domain accomplishes in terms of solving the basic puzzle. Agencies, after all, continue not just to produce a large number of rules, but also to produce many rules with great economic impact. The rules adopted in the Obama Administration, for example, have been estimated to generate notably greater costs and benefits than those adopted in the preceding Bush Administration. In the absence of evidence that the economic impacts of regulation have systematically declined, skepticism about ossification, even in its qualified sense, would seem to be justified.
Moreover, if procedurally-induced ossification applies only to rules that, in Pierce’s words, “raise controversial issues where the stakes are high,” then we have to struggle mightily to accept that the “long time” and “extensive commitment of agency resources” that these rules appear to demand—in other words, their ossification—stems from procedural hurdles and judicial review rather than their controversial, high-stakes nature. Heightened controversy and high stakes, after all, matter greatly in slowing down or impeding decisions in any institutional setting, even those lacking in rulemaking’s procedural hurdles and judicial oversight.
Of course, Raso does not sort out how much rulemaking may be delayed by controversy, by procedures, or by an interaction of both—nor does he pretend to. Rather he argues, appropriately, for “a more nuanced empirical analysis of how rulemaking procedures may plausibly contribute to ossification.” This means scholars should not be too quick to overstate the extent to which adding new procedures will seriously impede agencies from regulating.
A central part of Raso’s nuanced account centers on litigation risk, so in this respect his work may seem to resonate well with proponents of the ossification hypothesis. Raso argues that agency avoidance decreases as the threat increases of successful litigation against agencies on procedural grounds. For each of the statutes under examination—the APA, RFA, and UMRA—Raso admirably seeks to go beyond anecdotes and identify the number of reported cases raising issues of procedural compliance as well as tally up the percentage of agency losses in these cases. He concludes that the litigation risk associated with procedural compliance with the APA is “moderate,” while the litigation risks under RFA and UMRA are “little.” These characterizations seem to correspond in roughly inverse fashion to the levels of avoidance Raso reports: 52% of rules do not follow notice and comment under the APA, compared with 92% and 99% of rules lacking analyses called for under the RFA and UMRA, respectively.
Raso’s conclusions are intuitively appealing and his evidence suggestive. Of course, the precise relationship between litigation and avoidance is not necessarily so easy to nail down. Despite data on tens of thousands of rules and hundreds of lawsuits, Raso’s litigation risk theory is essentially tested with only a “sample” size of three, the cases of the APA, RFA, UMRA. Moreover, his characterization of litigation risk as “little” or “moderate” is highly qualitative. Raso does report that courts entertained claims of procedural noncompliance with RFA in 72 cases, which “constituted less than one-third of 1% of the 24,787 finalized rules listed in the Unified Agenda during this period” (.002). But then, the 156 APA procedural avoidance cases in this same period seem extremely “little” too, amounting to less than two-thirds of one percent of all the rules (.006). Raso also tells us that, among this tiny fraction of APA cases, the agency prevailed 67% of the time. Even though qualitatively the courts’ reasoning in the APA cases may have seemed somewhat less predictable, the line separating “little” litigation risks and “moderate” ones appears to be a very fine one indeed.
Virtually any thoughtful and innovative empirical study, like Raso’s is, will raise questions and invite further analysis. Some more puzzles await further exploration. For example, even though Raso refers to a study showing that the EPA and FCC face the highest litigation risk, he reports that these agencies have surprisingly different APA avoidance rates: 15% for the FCC and 45% for EPA. (His treatment of litigation risk also never controls for the underlying potential number of lawsuits, a limiting factor in understanding actual risk, and it relies on those cases that resulted in reported decisions, not also those resulting in settlements.) Moreover, despite the adoption of amendments to the RFA in 1996 that authorized judicial review of agency avoidance of the statute’s procedural requirements, the rate at which most agencies conducted “reg-flex” analyses basically remained constant over time.
Still, what is refreshing about Raso’s approach is the careful, dispassionate way he marshals data to tackle an important question. We could benefit from more research like this throughout the field of administrative law. Raso also offers a valuable lesson about the power of procedures: as with a metal chain, they will only be as strong as their weakest link—or their most flexible exception. In addition to his empirical findings, Raso provides his readers with an especially thoughtful account of the jurisprudential and political challenges in achieving legal precision in procedural exemptions, and he further explains how the ambiguities in many procedural statutes contribute to inconsistent judicial outcomes.
If Raso is right that litigation risk is key to explaining compliance with rulemaking procedures, this should matter greatly in contemporary debates over regulatory reform. Most critics of the House-passed Regulatory Accountability Act (RAA) have fixated on its benefit-cost requirements and the ways it would impose still more formal procedures on an already procedurally-burdened regulatory state. Yet following Raso’s focus on litigation risk, critics of the RAA might instead wish to call more attention to the provision it contains which would impose both the opportunity for immediate judicial review as well as additional procedural obligations whenever an agency invokes an exception to notice-and-comment requirements to issue an interim rule. That provision in the RAA, perhaps more than any other one, could well be what most determines whether the bill, if ever signed into law, would deliver the benefits its advocates promise—or would result in the costs its opponents fear.
Then again, the relationship between procedural change and administrative behavior remains far from well understood. After all, as I already noted, the addition of a statutory provision authorizing judicial review of exceptions to RFA requirements apparently made very little difference in decreasing agency avoidance under that statute. Raso suggests that part of the explanation may stem from case law under the RFA that remains, after nearly two decades, still “lenient, undeveloped, and ambiguous.” We cannot be sure that the RAA, if it ever became law, would not succumb to similar slippage. Political scientist Stuart Shapiro’s research even suggests that procedural regulatory reforms never work as intended.
Overall, Raso’s recent article serves as another reminder that administrative law operates in a highly complex, dynamic organizational and political environment. It really shouldn’t be surprising that things are not always as they should seem, at least not if expectations are based on simplistic conceptions of the behavioral effects of administrative procedures. Perhaps in the end, the real puzzle to be solved is why so many lawmakers, advocates, and scholars continue to place so much confidence in their beliefs about how rulemaking procedures will affect regulatory outcomes, whether for good or for ill.
Cite as: Cary Coglianese, Rulemaking’s Puzzles
(December 16, 2015) (reviewing Connor Raso, Agency Avoidance of Rulemaking Procedures
, 67 Admin. L. Rev.
1 (2015), available at SSRN), https://adlaw.jotwell.com/rulemakings-puzzles/
Agencies routinely interpret statutes while drafting rules. Yet very little is known about how agency rule drafters approach statutory interpretation when writing rules. In a fascinating article that was recently published in the Stanford Law Review, Professor Christopher J. Walker shines some much needed light into this area.
Walker’s article is modeled off of important empirical work Lisa Bressman and Abbe Gluck previously conducted that studied congressional drafters’ knowledge of and use of different administrative law doctrines and interpretive tools. Rather than focusing on congressional drafters as Bressman and Gluck already have done, Walker’s article focuses on how agency rule drafters approach statutory interpretation when writing rules. Walker’s article reports the findings of a detailed 195-question survey that he administered online over a five-month period to agency rule drafters who work at seven executive agencies (Agriculture, Commerce, Energy, Homeland Security, Health & Human Services, Housing & Urban Development, and Transportation) and two independent agencies (the Federal Communications Commission and the Federal Reserve). Walker sent the survey to 411 agency officials within these agencies, and 128 responded, resulting in a 31 percent response rate. All of the survey respondents were career civil servants rather than political appointees.
As Walker himself admits (pp. 1014-15), the generalizability of his survey results may be limited for a variety of reasons, including the mix of agencies included in the survey. Yet, even if Walker’s findings merely present a descriptive picture of how the 128 survey respondents approach agency rule drafting, Walker’s detailed findings are well worth a close read. They provide an illuminating look into the agency rule drafters’ knowledge of and use of different interpretive tools, including substantive and semantic canons of construction, legislative history, and administrative law doctrines. Walker’s findings, for example, reveal the following: 94% of the agency rule drafters who responded to the survey reported knowledge of Chevron and 90% reported using Chevron as an interpretive tool; 62% reported knowledge of the canon of constitutional avoidance and 28% reported using constitutional avoidance as a tool of statutory interpretation; and only 19% reported using dictionaries as a drafting tool.
Of all of Walker’s findings, I was most interested by his findings relating to agencies’ involvement in the legislative process—largely because his findings in this arena are useful in assessing longstanding application of principal-agent theory to the regulatory state. In the context of studying federal agencies’ involvement in the legislative process, Walker found significant involvement by agencies: “Nearly eight in ten [of the rule drafters who responded to the survey] (78%) indicated that their agency always or often participates in a technical drafting role for the statutes it administers (with another 15% indicating sometimes).” (p. 1037) Yet Walker found that personal participation rates in the legislative process by agency rule drafters themselves were much lower; only “29% always or often participate in technical [legislative] drafting with 29% more saying sometimes.” (p. 1037) As Walker notes, this difference between agency participation and agency rule drafter participation in the legislative process may well have to do with agencies’ organizational choices that call on different staffs to do legislative versus regulatory work.
Notably, any legislative-regulatory separation within agencies’ organizational structures did not prevent the agency rule drafters from recognizing the relevance of legislative history: 76% of survey respondents agreed that, “in general, legislative history is a useful tool for interpreting statutes.” (p. 1038). Yet, when viewed through the lens of the principal-agent theory, this kind of structural separation between agencies’ legislative and regulatory staffs would seem to make it difficult for agencies to draw on their expert insights about legislative meaning and legislative purpose when drafting rules. Walker quite astutely points this out (p. 1047), inviting future scholarly investigation in this area. Hopefully other scholars’ will accept Walker’s invitation and will explore whether structural choices within agencies might either help or hinder an agency’s ability to act as a faithful agent of Congress when drafting rules. These kinds of structural questions need additional scholarly attention moving forward, and Walker is to be thanked for beginning to shine some light into this previously dark corner of the regulatory world.
Last Term the Court gave administrative law scholars a lot to digest. Writing for the Court, the Chief Justice in King v. Burwell reinvigorated the major questions doctrine as a Chevron Step Zero inquiry, Justice Scalia in Michigan v. EPA ruled that the EPA must consider costs when a statute says to take action that is “appropriate and necessary,” and Justice Sotomayor in Perez v. Mortgage Bankers abolished the D.C. Circuit’s Paralyzed Veterans doctrine. The separate writings were perhaps even more intriguing. In Mortgage Bankers, Justices Alito, Scalia, and Thomas all indicated some appetite to revisit Auer deference. In Mortgage Bankers and the Amtrak case, Justice Thomas questioned the modern administrative state on separation of powers and nondelegation grounds, and then wrapped up the Term in Michigan v. EPA arguing that Chevron deference itself raises serious separation of powers concerns (and Justice Scalia may have suggested something similar in Mortgage Bankers).
These decisions all deal with foundational principles in administrative law. One decision, however, also grapples with the fringe: Department of Transportation v. Association of Railroads. At issue there was a congressionally created corporation—Amtrak—and its congressionally delegated authority to engage in joint rulemaking with a more traditional federal agency, the Federal Railroad Administration. The D.C. Circuit had held that Congress could not delegate regulatory power to Amtrak because it was a private corporation (at least for rulemaking purposes). The Supreme Court reversed, holding that Amtrak is a government entity for constitutional rulemaking delegation purposes.
The Amtrak case reminds us that our classic conception of administrative law often ignores the fringes. As Anne O’Connell details in Bureaucracy at the Boundary, which was published last year in the University of Pennsylvania Law Review, the fringes of administrative law are oft neglected in the literature and in the classroom. These government entities vary in form and function, ranging from Amtrak and the U.S. Postal Service (USPS), to Freddie Mac and Fannie Mae, to the Government Accountability Office and the U.S. Sentencing Commission. They differ substantially from classic executive agencies or even the somewhat more modern “independent” regulatory commissions and boards over which the Executive exercises far less control. Yet, as Professor O’Connell exhaustively documents, they play an important and substantial role in the modern regulatory state.
There is so much to like about this article. For example, Professor O’Connell notes that these boundary agencies are not necessarily a modern invention, as the USPS is the second oldest agency of the federal government—though it wasn’t transformed from an executive agency to an “independent establishment” until 1970. Similarly, some agencies are created at the center and drift to the boundaries, and vice versa; agency structure can be quite dynamic over time. (Indeed, if Mehrsa Baradaran had her way, the USPS would adopt its Inspector General’s proposal to provide financial services to the unbanked or underbanked populations in the United States.) In this short review, I’ll focus on two of the article’s main contributions to our understanding of fringe administrative law.
First, Professor O’Connell takes a fresh look at how agencies are created, in light of the “boundary agency” phenomenon yet with the traditional focus on political control and agency competence. Her two-dimensional model (Figure 1 below, click for a larger copy), reproduced with permission below, does a lot of work to help us take into account the fringes of administrative law:
Professor O’Connell then maps onto this control-competence model the normative values of social welfare and democratic legitimacy to illustrate the trade-offs at play when governing via boundary agencies. To be sure, her contribution to the theory of boundary agencies lies predominantly in the positive arena—the focus on control and competence—but her brief foray into the normative theories should spark further discussion and research.
Second, the article provides a terrific survey of the legal implications of boundary agencies, ranging from the constitutional concerns of separation of powers, nondelegation, and appointment and removal to the statutory concerns under the Administrative Procedure Act and Freedom of Information Act, and finally to the “governance mechanisms” such as Presidential oversight, the budget process, and agency litigation authority. Part of her conclusion, which the Court also reinforced in the Amtrak case this Term, is that the boundary agencies can be considered federal agencies for certain constitutional or statutory provisions and not federal agencies for others.
Another conclusion she reaches, which the current Court has arguably not reached, is that the existence of boundary agencies supports a more functionalist approach to structural constitutional interpretation. In Professor O’Connell’s words (at page 900), “The prevalence of boundary organizations therefore suggests that formalist jurisprudence, if adopted more extensively, could radically transform the administrative state.” Indeed, we may see these issues emerge in the Amtrak case itself, as the Court remanded the case to the D.C. Circuit noting that “substantial questions respecting the lawfulness of [Amtrak’s regulatory efforts]—including questions implicating the Constitution’s structural separation of powers and the Appointments Clause, U. S. Const., Art. II, §2, cl. 2—may still remain in the case.” (Slip op. at 2.)
This article is part of Professor O’Connell’s larger, ambitious project to encourage administrative law scholars (and students) to look at how administrative law actually operates in practice. For instance, as I blogged about here over at the Yale Journal on Regulation, Professor O’Connell has another terrific article, entitled The Lost World of Administrative Law, which she coauthored with Dan Farber and which the Texas Law Review published last year. In that article, Farber and O’Connell argue that we must look beyond the APA and the classic Supreme Court decisions; we must study presidential review of proposed agency action, multi-agency coordination, and agency action that is effectively insulated from judicial review—to name just a few examples.
In her response to their article, Lisa Heinzerling noted that “Farber and O’Connell have opened up a valuable conversation about how much of classical administrative law we should keep—and how much we have already lost.” The same praise applies to O’Connell’s Bureaucracy at the Boundaries: this is a must-read piece for all administrative law scholars to better understand the boundaries of the modern regulatory state. Indeed, I’m not alone in giving such high praise as just last week the American Bar Association recognized Bureaucracy at the Boundary as the best work of administrative law scholarship published in 2014. Now if only we could better incorporate this fringe administrative law in administrative law scholarship and curricula.
Sharon Jacobs, The Administrative State's Passive Virtues, 66 Admin. L. Rev. 565
(2014), available at SSRN
The federal bureaucracy has long been accused of torpor. Administrative agencies, we are oft told, take years to do much of anything. Whether this supposed-sluggishness is because of intentional institutional design, judicial review, administrative preference, or the inherent conservativeness of bureaucracy is unclear. In recent years, moreover, the core descriptive claim that agencies are too slow and do too little has been significantly undermined. Nevertheless, positive accounts of administrative delay are rare and under-theorized. Sharon Jacobs’s The Administrative State’s Passive Virtues is a long overdue updating and application of Bickel’s notion of the passive virtues in the context of courts, as applied and developed for the Administrative State.
To oversimplify a bit, Bickel argued that given the counter-majoritarian nature of courts in the United States, judicial actors can, do, and should utilize justiciability doctrines to avoid or defer deciding certain difficult or politically controversial cases. This practice of avoiding certain decisions was said to be desirable because it avoided potential attacks from the other branches or citizens and allowed the other branches with a better democratic pedigree to decide difficult political issues. Though well-known and rhetorically powerful, Bickel’s passive virtues suffered a mix of acute and chronic intellectual beatings. But Bickel’s ghost remains a powerful trope in modern constitutional law and Jacobs’s point is not that Bickel was right about courts. Rather, it is that agencies have similar structural characteristics to courts in the ways that motivate Bickel and that we lack a theory or really even a concept of administrative passive virtues. Until now.
To wit, agencies have a significantly discretionary docket; agencies lack the democratic pedigree of Congress or the President; agencies often suffer political backlash from their policies; and perhaps more than courts, agencies risk funding loss if they stray too far from the preferences of their political principals. Through a series of administrative passivity case studies on the Environmental Protection Agency, the Fish and Wildlife Service, and the Federal Energy Regulatory Commission, Jacobs argues that agencies can, do, and should rely on passive tools. Agencies utilize the timing and extent of regulation to preserve their institutional power and legitimacy.
Analytically, Jacobs identifies three subsets of passivity: (1) decisions not to decide, like the EPA’s decision before Mass. v. EPA not to decide whether GHG emissions from motor vehicles endanger public health and welfare; (2) step-by-step regulation in which agencies resolve some issues in a Rule but leave others that could have been decided for another day; (3) administrative minimalism, which involves a constellation of practices guided by the lodestar of choosing less ambitious solutions to avoid decisions with more problematic practical consequences (e.g., FWS’s avoidance of listing decisions for potentially endangered species in the face of a hostile Congress in the mid-1990’s). The case studies are chock full of useful insights; identifying the issue and constructing a vocabulary and framework for analyzing them are significant contributions on their own.
As the paper notes, sometimes agencies utilize passivity for undesirable or nefarious reasons, what is often called agency shirking. Suppose Jacobs is right that sometimes agency passivity—what we might call shrugging is grounded in desirable institutional reasons that might enhance social welfare.
An initial puzzle is why shrugging works as a strategy for agencies. The benefit of strategic shrugging to an agency depends on deferral having a different political meaning or resonance than declining or deciding. That is, when an agency says “we will defer a decision” that is less politically costly, generating less social opposition, then when an agency says “yes” or “no.” Off-hand, this could be right, but is not clear why a mobilized interest group who desires administrative action would not be just as upset by “not-right-now” as “no.” In those cases, deciding not to act does not avoid political controversy, just as deciding to act would not avoid political controversy.
For a different set of agency decisions, the political costs of action (to the agency) are surely asymmetric. That is, one policy choice risks generating lots of political opposition, while the other policy choice risks generating less or no opposition. An implicit assumption of the Jacobs article is that the asymmetric political costs case is relatively common and that the asymmetries map onto the “action/activity” vs. “inaction/passivity” categories, such that action risks political opposition and inaction does not. This seems possible, but I am left uncertain as to whether or why this is so.
Nevertheless, suppose it is true. For a reviewing court, or indeed for legislators, or the President, or the public, the problem is how to distinguish good shrugging from bad shirking. Although one often finds articles trailing off a bit when it comes to how to address a challenge like this, Jacobs displays keen instincts and sharp insights. Her discussion of recent arbitrary and capricious review, as applied to agency passivity, is very useful and I learned enormously from it.
Jacobs urges, in short, that agencies should be more forthright about their reasons for passivity and courts should be deferential when reviewing them. This does not really solve the shirking v. shrugging problem, but perhaps the problem is no more severe in the passivity context than in the activity context. That is, the task of judicial review is always to try to distinguish good reasons for agency action from bad reasons for agency action, and there is no reason to think courts will be less good at it when evaluating passivity than when evaluating activity.
But the real question is not whether courts can do so, but whether courts will do so. Bickel’s positive account was that courts defer difficult decisions because it is in their institutional interest to do so. Jacobs urges that agencies will behave in this way because it is in their institutional interest to do so. But is it in the courts institutional interest to review passively administrative agency passivity? And without being too cutesy about it, what are the systemic effects of passive judicial review of passive agency action?
If judicial review is a corrective to agency bias, whether in the direction of overreach or underreach, then a somewhat more active doctrine of judicial review might be desirable even if agency passivity is often laudable. More to the point, the very reasons that Bickel suggested courts would use the discretionary docket to protect their institution do not suggest courts will passively review agency passivity. The political costs to the courts of insisting an agency “do something” are often lower than the political costs of saying “you must do this” or “you may not do that.” If so, then one is left wondering if it is in the judicial review of agency passivity that it is least likely courts will themselves embrace the passive virtues.
The recent paper that has most provoked my thinking about administrative law is not a paper about administrative law at all, it is a paper about corporate governance. The Corporate Governance Obsession, by Mariana Pargendler is an account and a critique of the turn to corporate governance as a means of addressing social and economic issues that were once predominantly the concern of government regulation. By “corporate governance” Pargendler means the internal decision-making processes of corporations—in particular, the balance of power among shareholders, boards of directors, and managers. The article makes the case that internal corporate governance structures increasingly provide both the explanation for and a one-size-fits-all solution to pressing issues in policy arenas as diverse as systemic financial risk, income inequality, gender discrimination, labor rights, and environmental protection.
Why should administrative lawyers care? Because, she argues, corporate governance approaches to these issues are cannibalizing regulatory approaches that externally impose rules to influence the substance and outcomes of corporate conduct. Policy debate on the central social and economic issues of the day is no longer (or at least no longer exclusively) about how regulators should design and implement rules to shape the substance of corporate conduct in the public interest, but rather about how corporations should organize their own internal decision-making processes to address issues of public concern. This means that while we administrative lawyers occupy ourselves with our own obsessions—for instance the finer points of deference doctrine and regulatory review—the corporate governance obsession is chipping away at the substantive regulatory policies that made these issues relevant in the first place.
Pargendler provides several examples of this phenomenon. For instance, in the aftermath of the global financial crisis, legislators and commentators could not agree on the role that financial deregulation had played in causing the crash (had it gone too far? not far enough?), but a broad consensus emerged blaming corporate governance arrangements like options-driven compensation and lack of board oversight. The policy result: a regulatory regime that encourages compensation disclosures and board independence, but that places few substantive constraints on how financial institutions do business. Similarly, debate about an issue as fundamental to the nation’s social and economic fabric as rising income inequality has focused not on how tax and transfer policies affect income distribution, but rather on the ill effects of excessive executive compensation. This diagnosis of the problem has generated policy prescriptions like greater independence for board compensation committees and “say on pay” initiatives to give shareholders a voice on executive pay—entirely ignoring the inconvenient fact that the majority of Americans (and the overwhelming majority of poor Americans) own no stock. Gender inequality has become another unlikely object of the corporate governance obsession. As courts continue to narrow anti-discrimination law at the behest of corporate defendants, regulators have turned to corporate governance solutions to promote gender equity by encouraging companies to place more women on boards of directors (where they currently hold less than 20% of the seats).
Pargendler explains these developments largely as a function of deregulation and rising distrust in government. In this political climate, she says, corporate governance solutions enjoy wide support because they speak simultaneously to the reformist impulse of progressives and the conservative impulse to leave problem-solving to the private sector. For their part, corporations have enthusiastically embraced their role as shadow governments, both as a means of evading unwanted government regulation and as a means of legitimizing their increasing power in society. As one prominent Fortune 500 executive put it, companies take their obligations to govern very seriously, because when they fail to do so passably, “the terms of debate shift from how companies can best govern themselves to how regulators should govern them.” Further, by adopting institutional roles and organizational structures typically associated with democratic governments and demonstrating their attention to issues of public concern, corporations have created a sense of accountability that has legitimized their broad influence over social and economic life.
This corporate legitimation project echoes administrative law’s own longstanding legitimation project. Administrative agencies, with their questionable constitutional pedigree and their consolidation of broad governmental powers in the absence of any direct accountability to the electorate, have been variously justified based on their expertise, their control by the judiciary, and their relationship to the democratically-elected branches of government. In recent years, a consensus has emerged that agencies are sufficiently entwined with, similar to, or controlled by the elected branches (particularly the president) to drink from the font of democratic legitimacy. Unfortunately, this account utterly failed to anticipate what might happen if that font ran dry. While tethering agencies to the elected branches might have given them a measure of legitimacy as a matter of administrative law doctrine and constitutional theory, this strategy did little to politically legitimize the work that agencies do and the crucial role they play in governing.
Ironically, corporations have laid claim to the New Deal reformers’ original justification for agencies: that they are efficient and effective vehicles for governing a complex society through the application of practical experience and technical expertise to policy problems. The curious insight of The Corporate Governance Obsession is that like agencies before them, corporations too feel compelled to justify themselves not merely as useful and competent, but as democratically legitimate. This raises a host of questions about what legitimate governance means as corporations take on increasingly prominent roles in governing. These are paradigm-shifting questions that administrative law will be called upon to answer. To do so, we may need to abandon some of our own disciplinary obsessions and start thinking more broadly and deeply about how the corporate governance obsession is changing the very foundations of the administrative state.
I thought I had a good general understanding of the confirmation process until I read Professor O’Connell‘s enlightening study. Some of the findings were about what I expected. Thus, for instance, both the rate at which nominees fail to be confirmed and the time required for confirmation have increased significantly between 1981 and 2014. The failure rate was 26.4% in the George W. Bush Administration and 28.0% in the Obama Administration, compared with an average failure rate of 4.4% to 10% during the period 1885 to 2008. The average confirmation time was 127.1 days in the Obama Administration, compared with an average confirmation time of 88.5 days over the 33-year period of the study. The results of the high rate of failure and the lengthening delays are disconcerting. At any point in time, between 15% and 25% of senior agency positions are vacant.
As I would have predicted, the failure rate was four times higher in the last year of an Administration than in the first year of an Administration. Also as predicted, the 2013 reduction in the number of Senate votes required to enable an up or down vote on a judicial nominee from 60 to 50, at a time when the President’s party had a majority in the Senate, reduced both the number of failed nominations for judgeships and the average time until a nominee for a judgeship was confirmed.
Many of Professor O’Connell’s findings differed significantly from my expectations, however.
Thus, for instance, even after the 2013 change in the filibuster rules, the confirmation process was considerably slower than in the prior periods in which it took sixty votes to end debate. Moreover, the average to time required to confirm a nominee to an agency position actually increased after the change in the filibuster rule.
I was also surprised by the apparently minor role that partisan politics plays in the confirmation process. 26% of nominees fail to be confirmed when the White House and the Senate were controlled by different parties, but almost as many–21%–failed when the White House and the Senate were controlled by the same party. Similarly, the average time to confirmation was only four days longer when the White House and the Senate were controlled by different parties than when both were controlled by the same party.
One of Professor O’Connell’s findings is of particular interest to those of us who are members of the faculty of a law school in the Washington metropolitan area. Nearly 30% of nominees to agency positions live in the D.C. metropolitan area at the time of their nomination. Professor O’Connell links this phenomenon to the marked increase in the time required for confirmation. Many people are reluctant to be nominated when they expect to have to travel to and from the D.C. area many times over a several month period. Of course, the time required to be nominated has also increased significantly, so a prospective nominee from California or Florida can expect to spend almost a year flying to and from meetings with the White House and members of the Senate. That finding helps to explain why my law school has received many applications for faculty positions from chaired professors at schools outside the area in recent years. Whether or not we hire the applicant, he is usually nominated for an agency position within a year of his application to join our faculty.
Professor O’Connell’s study has scores of more detailed findings that raise many questions that should attract the attention of scholars. Thus, for instance, why are nominees to be members of Commissions or Boards rejected by the Senate five times as often as nominees for cabinet positions? This paper fulfills both of the goals of good scholarship: It answers many important questions, but it raises far more questions that legal scholars and political scientists need to explore. I would urge anyone who is interested in public law and the political process to put it on her “must read” list.
Adrian Vermeule, 'No' (Review of Philip Hamburger,
Is Administrative Law Unlawful?)
, Texas L.Rev.
(forthcoming), available at SSRN
Last year, the University of Chicago Press published “Is Administrative Law Unlawful?” by Philip Hamburger, the Maurice and Hilda Friedman Professor of Law at the Columbia University School of Law. A book by a named professor at a top-ten school published by a respected academic publisher with a provocative title would seem to be a must-read book for adlaw aficionados. His conclusion is that administrative law is unlawful, root and branch, because it is unlawful for administrative agencies to issue any rule or order that binds private parties. This is more than provocative; it is radical. Radically wrong. So wrong, one might wonder how it came to be published, and in any case so wrong that no one would take it seriously. Not so fast. In March, Justice Thomas cited it extensively in his concurrence in Department of Transportation v. Ass’n of American Railroads, 2015 WL 998536 (2015) to support his conclusion that the Passenger Rail Investment and Improvement Act of 2008 is an unconstitutional delegation of legislative authority, concluding:
We have too long abrogated our duty to enforce the separation of powers required by our Constitution. We have overseen and sanctioned the growth of an administrative system that concentrates the power to make laws and the power to enforce them in the hands of a vast and unaccountable administrative apparatus that finds no comfortable home in our constitutional structure.
In his review of the book, Adrian Vermeule, the John H. Watson Professor of Law at Harvard Law School, steps up to be the Dr. Van Helsing to drive the stake through the heart of this vampire. He minces no words:
The book makes crippling mistakes about the administrative law of the United States; it misunderstands what that body of law actually holds and how it actually works. As a result the legal critique, launched by five-hundred-odd pages of text, falls well wide of the target.
And that’s just the beginning.
As an initial matter, Vermeule notes that despite the title Hamburger does not in the book’s 600+ pages clearly define what he means by “law” or “lawful.” Hamburger does not mean that agencies are violating their statutory mandates, nor even that the statutes authorizing agency rulemaking and adjudication are unconstitutional under any reading of any Supreme Court decision. Indeed, it’s not clear Hamburger means “law” in any legal sense. He writes:
“[T]he legal critique of administrative law focuses on the flat question of unconstitutionality, and . . . this is not enough. Such an approach reduces administrative law to a question of law divorced from the underlying historical experience and thus separated from empirical evidence about the dangers [sic].
So what does he mean by “unlawful.” Vermeule concludes with good reason that Hamburger is referring to what Hamburger perceives to have been the stance of English common-law courts during the reign of the Stuarts in the 1600s regarding the struggle between the king and parliament. The bulk of the book involves a detailed history of this period and of the use and abuse of the so-called royal “prerogative.” The royal prerogative was the king’s claimed ability to make law in certain circumstances, and the victory of parliamentary supremacy by the 18th century essentially condemned the royal prerogative. It is Hamburger’s argument that the modern administrative state has recreated the discredited “prerogative” and placed it in the President’s hands. This, given English history, makes administrative law unlawful.
Vermeule does not attempt to rebut Hamburger’s historical narrative, although he suggests that it may not be as clear as Hamburger suggests. What he does demonstrate, however, is that Hamburger never effectively connects this historical narrative to the founding fathers but rather assumes that the English background was somehow implicitly included in our Constitution. And more importantly he demonstrates that Hamburger totally fails to understand modern administrative law, not a subject he teaches or does research in, and therefore completely misses the distinctions between the royal prerogative and modern agency action. In the English struggle over the royal prerogative, the common-law courts according to Hamburger determined that the king could not make law that bound subjects; this legislative power was reserved to parliament. From this Hamburger deduces that agencies cannot make rules that bind private persons, because then they would be exercising legislative authority, and they cannot issue orders that bind private persons, because that would be exercising judicial authority. Thus, administrative law is unlawful.
Vermeule explains, however, that agencies do not claim to exercise any “prerogative,” that is, inherent power to make law, as was the case of the king during the reign of the Stuarts. Indeed, it is hornbook administrative law that agencies do not possess any inherent power; they only have the power granted to them by statute. Hamburger would reply that Congress cannot grant agencies the power to bind private persons, because to do so would be the subdelegation of legislative authority to agencies or placement of judicial authority in agencies, both of which, he would say, are prohibited by the Constitution. According to English law at the time, delegatus non potest delegare – the delegate cannot delegate. Because the Constitution delegated the lawmaking and judicial powers to the Congress and Judiciary respectively, those powers cannot be exercised by anyone else. Executive power, at least domestically, Hamburger argues, is limited to going to a court to enforce the law or giving orders to its own employees (or to non-subjects); it has no power to exercise coercive authority over subjects.
Vermeule is willing for the sake of argument to acccept Hamburger’s description of “what the deep principles of Anglo-American constitutional history actually are (assuming arguendo that such principles exist.” Instead he attacks the disconnect between those principles and modern administrative law as it exists. He focuses on three topics: delegation, taxation, and separation of powers. As to delegation (or subdelegation as Hamburger characterizes it), Vermeule repeats the black letter law that Congress indeed cannot delegate legislative power, but it can make laws for agencies to execute that may require interpretation or the exercise of discretion, so long as there are “intelligible principles” to guide that interpretation or discretion. Now one may argue that the Court has failed to police adequately those intelligible principles, but Vermeule’s point is that Hamburger would not allow any exercise of discretion or interpretation. Where Hamburger would read any such ability out of the executive power, Vermeule argues that it is the nature of the “executive power” to be able to fill in the details of legislation. It is not just an argument from necessity but that “to execute a law inevitably entails giving it additional specification, in the course of applying it to real problems and cases.” Moreover, one might add, and so it has always been and will always be. Thus, agencies are not exercising any subdelegated legislative power; they are exercising executive power.
As for taxation, while Hamburger reserves a special place for the evils of delegating the power to tax, Vermeule points out once again that Congress does not delegate the power to tax to agencies, but it does occasionally authorize an agency to set the level of a tax imposed by Congress on the basis of standards contained in the statute. Vermeule cites to Skinner v. Mid-America Pipeline, 490 U.S. 212 (1988), in which a unanimous Court “examined the text and structure of Article I, and the history of legislation from ‘[Congress’] earliest days to the present,’ and found no reason to treat taxation differently” from any other congressional authorization to agencies. That case cannot be found in Hamburger’s book.
Hamburger explains the value of the separation of powers in terms of sequencing and specialization. He writes that it “forc[es] the government to work through specialized institutions with specialized powers . . . forcing it to work in a sequence of legislative, executive and judicial power.” The problem with the administrative state is that:
Rather than follow the Constitution’s orderly stages of decisionmaking, an agency can blend these specialized elements together — as when it legislates through formal adjudication [sic], or secures compliance with its adjudicatory demands by threatening severe inspections or regulation.
Vermeule counters this by noting that:
The institutionally specialized process of lawmaking that Hamburger likes, with its sequence of legislative, executive and judicial action, is itself the source of the combined functions that Hamburger abhors. Agencies exercise combined functions when, and only when, an institutionally specialized decision, an exercise of lawmaking through sequenced and separated powers, has concluded that they should, and enacted a statute to that effect.
More importantly, however, Vermeule points out that while agencies to some extent do combine these functions, they do so under particular constraints precisely intended to guard against the evils that otherwise might flow from a combination of functions. And it is these constraints that Hamburger almost entirely overlooks, relying on simplistic overstatements. In short, Hamburger never really addresses administrative law as it actually operates.
Vermeule suggests that Hamburger’s book might be viewed simply as “interestingly wrong, in an unbalanced sort of way, . . . interesting, if only because it is so hagridden by anxiety about administrative law.” Unfortunately, however, Vermeule concludes that the book is “merely disheartening.” Or worse,
No, the Federal Trade Commission isn’t much like the Star Chamber, after all. It’s irresponsible to go about making or necessarily-implying such lurid comparisons, which tend to feed the tyrannophobia that bubbles unhealthily around the margins of popular culture, and that surfaces in disturbing forms on extremist blogs, in the darker corners of the Internet.
It’s especially irresponsible to go around saying that the administrative state is “unlawful,” whatever that may mean, without understanding what administrative law says, and seemingly with little idea about what exactly is being attacked — little idea about the intellectual architecture that underpins administrative law, and that many generations of the legal profession have labored to build up.
Indeed, Hamburger seems to fall back on ad hominem arguments, saying that American administrative law abandoned the constitutionalism of English common law in favor of French and German legal theory, leading to the “Prussification” of our society, whatever that means. But how is that? English law today essentially has no separation of powers between the executive and legislature, something completely antithetical to American constitutionalism, whereas, for example, continental systems generally reject the American concept of adjudication by administrative agencies in favor of specialized courts. In short, each developed “democratic” nation has its own form of government, but they all have in common a bureaucracy that has the power to make law pursuant statutory authorization with judicial review of such laws to safeguard liberty.
So, Hamburger’s book is bad scholarship. Most bad scholarship ends up in the circular file and quickly forgotten, but regrettably that is not the likely result for Hamburger’s book. Because it plays into the hands of those who tear down the administrative state for their own ideological or selfish reasons, it will be praised and cited as the new wisdom. As Vermeule says:
The effect of such books, if accepted, is to quietly delegitimate the administrative state, to tear out its intellectual struts and props while leaving the building itself teetering in place — a dangerous game. The indirect and long-run effect of Hamburger’s thesis on the intellectual culture of the legal profession, and perhaps even of the broader public, might be pernicious and worth opposing, even if there are no direct and short-run effects.
Vermeule’s analytical rebuttal of Hamburger’s thesis is convincing, but it is not the stake in the heart of the beast. This is not because of any fault by Vermeule, but because the appeal of Hamburger’s thesis ultimately is not analytical, but emotional. Those who cite it most loudly are unlikely to have plowed through its 600 pages of dense history and hysterical rants. They will cite it because they want to believe that the administrative state is somehow un-American. Trying to rebut that belief is like trying to convince climate-change deniers. It may be impossible, but it must be attempted. Vermeule has given us an admirable first start.
Margo Schlanger’s article, Intelligence Legalism and the National Security Agency’s Civil Liberties Gap, is an important contribution to both administrative and national security law. She explains in illuminating detail how the NSA, the hub of so much controversial electronic surveillance activity, is not a rogue enterprise, but deeply enmeshed in and committed to a complex regime of legal compliance. The question she poses is why so elaborate a compliance system is seemingly ineffective in advancing civil liberties values more robustly. Her argument is thematically related to an earlier and equally thoughtful paper, Offices of Goodness: Influence Without Authority in Federal Agencies (reviewed here), which likewise explored the difficulties for administrative agencies in honoring overarching values that are relevant to their programs, but which may appear as orthogonal to a particular agency’s specific primary objectives. (Think about the Department of Transportation promoting park land conservation or the Army Corps of Engineers protecting endangered species.)
Professor Schlanger argues that, within the NSA, the applicable legal rules are insufficient to induce a proper balance between the likely security gains from a particular surveillance initiative and the privacy and civil liberties risks and costs entailed in that initiative. Constitutional restrictions won’t produce the optimal balance between costs and benefits because the scope of constitutional rights doesn’t turn on that balance. Policy is not a major factor driving constitutional interpretation concerning the scope of individual privacy rights, especially where courts may not fully grasp the privacy implications of programs under review. (And, of course, private lawsuits are likely to exert little leverage over the intelligence community because the state secrets doctrine will insulate many government practices from effective—or any—judicial challenge.)
Statutes don’t fill the normative gap because the relevant provisions, chiefly embodied in the Foreign Intelligence Surveillance Act (FISA), as amended, are procedural, not substantive. There is no statutory requirement for a careful calibration of surveillance versus privacy.
FISA’s minimization requirements— “rules ‘designed to protect, as far as reasonable, against the acquisition, retention, and dissemination of nonpublic information which is not foreign intelligence information’ that ‘concern[s] unconsenting United States persons’” —do have the impact of subjecting the NSA to a degree of judicial oversight via the Foreign Intelligence Surveillance Court (FISC) that is unusual for a federal agency. These rules, however, are likewise procedural. They do not entail a case-by-case assessment of whether the government is risking more privacy than is necessary to achieve a valid security goal or whether the anticipated privacy and civil liberties risks and costs associated with a particular program are too great to justify the projected set of security gains.
Professor Schlanger’s worry, however, is not simply that law does not do the normative work that ought to accompany the design of surveillance programs. She worries that the ethos of intelligence legalism actually crowds out the normative evaluation that is necessary to achieve optimal surveillance policy. The devotion of so much time and effort and staffing to legal compliance induces a kind of complacency about underlying policy wisdom. She writes: “Legalism legitimates liberty-infringing programs. And its relentless focus on rights and compliance and law (with a definition of law that includes regulation, executive orders, court orders, etc.) has obscured the absence of what should be an additional focus on interests, or balancing, or policy.”
What Professor Schlanger means by intelligence legalism has three elements. First, surveillance planning is governed by substantive rules that are treated as laws demanding compliance, not initiative-by-initiative policy judgment. Second, judicial enforcement of the rules is narrowly limited. There is thus little oversight by authorities who do not feel some kind of deep allegiance to the agency program. Finally, the implementation of the applicable rules empowers lawyers to make the key legitimating decisions, which, in turn, heightens the importance of reasoned justification why proposed courses of action satisfy the procedural rules—but not policy analysis justifying or challenging any particular surveillance initiative. This legal activity, which involves a sizable contingent of lawyers spread among a labyrinth of offices, is most likely, in Schlanger’s judgment, “to move an organization towards [a] kind of nearly symbolic compliance than to effect any more significant constraint on executive activity, particularly with respect to a program important to the President.”
What the intelligence community needs, she argues, is some way of institutionalizing within the executive branch an effective means of insuring that policy makers confront the “Should we?” question, not just the “May we?” question when gathering private information in the name of national security. She reviews and applauds current efforts along these lines, such as the authorization within the NSA, as well as in the Office of Management and Budget and National Security Council staff, of individuals charged with advocating for privacy and civil liberties. She approves recommendations for the conduct of privacy and civil liberties impact assessments for various programs, as well as privacy-and-liberty-focused program reviews by the Intelligence Community’s Inspector General. She is hopeful also for positive impacts if some form of adversarial process were introduced to the FISC, through the creation of some kind of official advocate empowered to challenge the government’s applications for surveillance warrants.
There is yet much more food for thought in Professor Schlanger’s article than can be easily summarized in any brief précis—her lengthy and detailed description of what she calls the NSA’s “compliance and oversight ecosystem” is itself of enormous value. Especially thoughtful, however, is Professor Schlanger’s nuanced analysis of the subtle contextual factors likely to shape the success (or lack of it) of any of the institutional design improvements she champions. She has revealed why, regardless of good intentions, it will be tough to move from “ensuring that the NSA’s activities comply with the rules system that exists” to “assessing,” on an ongoing institutional basis, “whether the rules are appropriate, or whether conduct that is compliant with the rules might nonetheless be ill advised.”
Those of us who write in administrative law often get stuck in the ruts created by the categories set out in the Administrative Procedures Act—especially rulemaking, adjudication and judicial review. Therefore, it is refreshing and often path breaking when an article appears that delves into an important aspect of administrative action that cuts across those ruts rather than following them. That is all the more true when the article is as well executed as The Permit Power Revisited: The Theory and Practice of Regulatory Permits in the Administrative State by Eric Biber and J.B. Ruhl.
Nominally, The Permit Power Revisited is a response to a piece Richard Epstein wrote, almost twenty years ago, lambasting administrative permitting as a “racket” rife with agency abuse. But the article does not so much respond to that piece; rather it lays out what the permit power encompasses and how agencies use it to fill gaps that otherwise would exist in regulatory schemes. In doing so, The Permit Power Revisited categorizes permits along a continuum and demonstrates how judicious choice of permitting along that continuum can contribute to effective and responsive regulation.
Biber and Ruhl define a permit as administrative action allowing particular conduct that would otherwise be prohibited. Using this definition they begin their inquiry into the role of permits by placing them on a line between administrative exceptions (general administrative classifications of conduct that is permitted) and prohibitions (general administrative classifications of conduct that is prohibited). They then distinguish between two types of permits—general and specific. General permits are very close to exceptions—for example they may allow an entity to engage in conduct simply by registering its intent to do so with the agency. Specific permits focus on the precise situation of the actor, and grant permission after a detailed examination of the specific facts that ensure that permitting the specific conduct is warranted.
The authors are clear to recognize that actual permits fall somewhere on the continuum between the two archetypes they describe. In fact they provide five characteristics that distinguish between permit programs that are general and specific in nature. Most significantly, they note that the distinction between a permit program that is general in nature and one that is specific is usually of greater significance than the distinction between each archetype and the non-permit action with which it abuts. Having set out these ideal types of permits, the authors illustrate how various agencies use permits effectively to administer regulatory programs, paying special attention to the Army Corps of Engineers’s use of both general and specific permits under section 404 of the Clean Water Act to regulate dredging and filling of waters of the United States.
The guts of The Permit Power Revisited is its discussion of the potential benefits that permits can provide. Biber and Ruhl identify six such benefits: permits as barriers to entry; permits as tools for revealing or developing information; permits as tools for tailoring regulation to specific circumstances; permits as political tools, permits as enforcement tools, permits as constraints on administrative discretion, and permits as means of easing administrative burdens. They proceed to describe how choices between permits that are more general or specific can further those benefits more effectively, while reducing opportunities for agency abuse. The final part of the article argues that, because general permits are better suited to distributed activity by many, when each person’s activity causes limited social harm that nonetheless adds up to significant levels, we should look to increase the use of general permits in the future.
Biber and Ruhl understand that the theory of permits, and the application of that theory to suggest normative improvements in the structure of regulation, is a vast topic well beyond the purview of any article to cover comprehensively. The Permit Power Revisited, however, provides a good start. Its distinction between general and specific permits goes a long way toward providing the road for evaluating the promise of permit programs to improve regulation. I did not agree with all of its analysis of the benefits that can be provided by general and specific permit programs. In particular, I found its discussion of specific permits as a barrier to entry a bit off base. Rather than providing a signal of activities that generate sufficient private benefit to warrant incurring the costs of specific permitting, as Biber and Ruhl argue, I think those costs are better viewed as a tax on activity that generates external social costs. As a Pigouvian tax, the costs should be tied to the external social harm not to the level of private benefit generated. What is more, the costs would be better imposed as a tax, rather than as an increase in transaction costs, which creates social waste rather than a transfer of wealth. But I am picking nits here. The more important point is that Biber and Ruhl have pointed in the right direction by describing the breadth of permit programs and their promise to allow more efficient and responsive regulation. By doing so they have more than responded to Epstein’s oversimplified excoriation of permit programs. They have shown not only that permits can provide sound means of regulating, they have suggested how to assess permit programs to try to get the most out of them with the least chance of inefficiency or abuse.