Congress often instructs agencies to act in the “public interest,” but what does that mean? Does it mean anything at all? Professor Jodi Short tackles this in an important new article, In Search of the Public Interest. How one defines the term “public interest” matters, for as Short explains, it appears approximately 1,280 times in the U.S. Code. (P. 767.) Critics of the administrative state decry the term as vacuous—an indication of congressional abdication and unconstitutional delegation of legislative power. Proponents of the administrative state, on the other hand, view “public interest” standards as integral to sound regulatory schemes—a meaningful instruction to administrators that can help ensure Congress’s policy goals are achieved. The debate, which is often abstract and ideologically freighted, can seem intractable.
Short seeks to cut the Gordian Knot with an empirical analysis of how agencies have interpreted and applied “public interest” standards in the real world. She begins by offering a thorough yet concise overview of various theoretical approaches to defining the public interest, breaking them down into categories centered on substantive values, efficiency claims, and procedural arguments. This primer swiftly orients the reader to the contours of the broader debate, while providing a taxonomy for the subsequent analysis. The remainder of the article offers a real-world view of how a sampling of federal and state agencies have given the concept of the public interest content and effect.
The empirical analysis delves deep into the work of four agencies, including the Interstate Commerce Commission (ICC), the Federal Communications Commission (FCC), the Federal Energy Regulatory Commission (FERC), and the California State Water Resources Control Board (the Board). Although the statutes these agencies administer include multiple public interest provisions, Short undertook case studies in ones that are outcome-determinative in the agency’s process and have been subject to active litigation over a long period of time. This approach skews the sample toward adjudications in licensing and permitting regimes, but it also allows Short to evaluate trends in how robust discussion and application of the public interest have (or haven’t) changed over time. The inclusion of both federal and state agencies adds further dimension to Short’s analysis and findings.
Short uses qualitative coding methodology to analyze a sample of adjudicatory decisions from each regulatory context. She codes for the following:
(1) explicit definitions of the public interest state by the agency; (2) explicit claims made by the agency about the scope of its discretion under the public interest standard; (3) justifications made by parties and agencies about why a particular outcome is—or is not—in the public interest; (4) the agency’s treatment of these public interest justifications (i.e., whether it accepted them, rejected them, or raised them itself).
(Pp. 783-84.) For each of the regulatory contexts Short analyzes, she provides an overview of the applicable statute and its history before reporting the findings of her analysis.
There is so much to love about this article, but I particularly appreciate how Short’s careful study of agency decisions produces a nuanced picture of administrative action. Sampling the decisions makes the volume manageable. At the ICC, Short’s case study is in the agency’s implementation of the public interest standard for railroad mergers under the Interstate Commerce Act. Here, she samples 35 cases between 1923 and 1999. For the FCC, the focus is on the public interest standard for evaluating the transfer of licenses incident to merger under the Communications Act. This case study is based on a sample of 60 cases decided between 1943 and 2019. The FERC case study also centers on merger review, this time under the Federal Water Power Act, and entails a sample of 94 cases between 1937 and 2020. Finally, Short evaluates the California Water Board’s consideration of the public interest in allocating water rights. Here, the sample includes 87 decisions issued between 1927 and 2015.
As Short puts it, “[t]he study’s findings will surprise many and please few.” (P. 765.) Perhaps so. But they will fascinate all.
The findings shed light on how the studied agencies have defined “public interest,” but they do much more than just that. They reveal a tendency for these agencies to define the public interest explicitly and consistently, downplaying and even seeking to cabin the discretion that scholars so commonly associate with statutory public interest standards. Moreover, the agencies typically find content for the term in law rather than in personal or freewheeling judgments. That is, they define “public interest” based on the statutory and regulatory context, the common law, and the interpretations that emerge from judicial review. When the agencies change their approach, they generally do so in response to statutory amendments or new judicial decisions. In her study, Short finds not only the public interest, but also the rule of law.
What emerges from Short’s study of agency-level decisions is a compelling picture of how administration operates within the separation of powers. It’s a different picture—more complex, measured, and hopeful—than one might get by studying the same statutory provisions exclusively through judicial decisions. My sense from Short’s analysis is that the agencies are responsive first and foremost to the legislature, followed closely by the courts, with regulated parties a somewhat distant third. Moreover, the legislature and the courts do not merely constrain the agencies. Instead, they contribute to the administrative process, each in their own way, by producing material that the agencies use to develop law and policy through the day-to-day work of administration. The law produced by coordinate branches does not only limit: it empowers and enriches. The dialogic model of the separation of powers may be out of fashion these days, but one can see it at work in the regulatory contexts Short studies.
Short is careful to acknowledge that her study, though deep, is narrow. The federal case studies are few and probably more like each other than they are like many of the other “public interest” standards that Short does not study. “Yet, the fact that the agencies studied are not representative of the whole of the administrative state is both beside the point and precisely the point.” (P. 827.) Short puts her finger directly on the central tension of administrative law. This is a field defined by uniform, cross-cutting legal principles that must be drawn from the vast and varied expanse of the administrative state and applied to individual agencies in a way that furthers rather than impairs their unique functions. Scholars are better positioned than courts to attend simultaneously to the competing demands of uniformity and exceptionalism in administrative law. Short’s article contributes to the literature in many ways, not least of all by providing an exemplar of how to navigate this extraordinary challenge.
Jed H. Shugerman, Freehold Offices vs. "Despotic Displacement": Why Article II "Executive Power" Did Not Include Removal (Jul. 25, 2023) available at SSRN.
Originalist scholars have been hard at work to backfill justifications for the Roberts Court’s pronouncement in Seila Law of an indefeasible presidential power to remove executive branch officers (a prominent recent example is Aditya Bamzai and Saikrishna Bangalore Prakash, The Executive Power of Removal). Unable to point to constitutional language authorizing (much less requiring) presidential removal, purported originalists have located this power provisionally in Article II’s broad grant of “The executive Power” to the President based in part on the argument that executive power, as understood by the Founders, undeniably encompasses the power to remove executive officers at will.
Into this consequential debate wades Jed Shugerman, with Freehold Offices vs. “Despotic Displacement”: Why Article II “Executive Power” Did Not Include Removal. Shugerman persuasively demonstrates that there was no general rule of indefeasible executive removal power prior to and at the founding. Instead, there was a mix of office types—from cabinet-level officers who served at the pleasure of the king, to patronage offices usually held at the pleasure of the patron officer, to offices that were bought and sold as unremovable freehold property (a practice known as venality). The article itself is a tour de force, presenting extensive evidence to support this office hybridity claim and responding point-by-point to existing and anticipated counterarguments by unitary executive theorists. And it is but one installment in a larger project to debunk unitary/originalist claims about the President’s removal power (which also includes The Indecisions of 1789: Inconstant Originalism and Strategic Ambiguity and an extensive Appendix to this article cataloguing Unitary Executive Theorists’ misuse of historical sources). This brief post will touch on only a sliver of Shugerman’s intricate argument and extensive evidence, which I encourage all to read for themselves.
I was particularly interested in Shugerman’s account of venality—the practice of buying and selling offices as property. I must confess that I am no originalist. My eyes glaze over at the first mention of the First Congress. But Shugerman’s article caught my eye not only for its rejoinder to the pseudo-originalism of the Court’s recent appointment and removal jurisprudence, but also for its relevance to ongoing discussions of bureaucratic accountability.
At the core of the originalist case for unfettered presidential removal power is the empirical claim that English monarchs had the indefeasible prerogative to remove executive officials and that this power was universally assumed by the Founders to be part and parcel of the executive power. In this telling, silence about removal power in constitutional text, convention debates, and other Founding-era documents only reinforces the taken-for-granted nature of executive removal power. Thus, the story goes, when the Founders vested the executive power in the President, they surely took for granted that it included unfettered removal power. Apart from legitimate debate about whether the Framers intended to bestow royal prerogatives on the President, Shugerman takes more direct aim at the empirical premise of the originalist story. He demonstrates that removal was not a royal prerogative power and, moreover, it was not even a general or default practice of English “executive power,” nor would the Founders have understood it to be. In fact, this assumption is the product of modern originalists taking modern practices for granted as past norms.
While Shugerman is not the first to show a long history in England and America of offices held as property for a “term of years” and protected from removal, his account fills several important gaps and responds to the most serious critiques of prior scholarship. First, he documents that the practice of establishing offices as freehold property (for a term of years or for life) and inheritable was much more widespread than previously understood. He shows not only that the practice was systemic throughout Europe, but that it was particularly entrenched in English law as freehold property. This responds to critiques that prior scholarship identifying the existence of tenured offices provides only isolated and anecdotal evidence.
Second, responding to critiques that previously reported historical evidence of offices held as property was too remote in time from the founding to have influenced the Founders’ understanding of executive prerogatives, Shugerman shows not only that the general practice of venality persisted in eighteenth century England but that such “offices of profit” were a part of the Founders intellectual and day-to-day experience. Venality was not merely mentioned, but endorsed by enlightenment figures such as Montesquieu, who were studied and revered by the Founders. In The Spirit of the Laws, Montesquieu offers a defense of venality as antithetical to despotic states (“where the subjects must be placed or displaced in an instant by the prince”) but “good in monarchic states, because … it gives each one his duty, and it renders the order of the state more permanent.” (P. 20.)
Moreover, Shugerman shows that venal offices were a part of everyday life in colonial America, and that they existed at all levels of government. Purchasing officer commissions was standard practice in the British military that ruled the colonies. Indeed, it was a source of frustration for ambitious Americans like George Washington because it limited their access to military promotions. Proprietary colonies such as Maryland were governed by non-removable proprietors, who not only governed the colony but owned it and passed it like property to their heirs. There is evidence that colonists were broadly aware of the British practice of buying and selling offices and resented it. Scholars have identified venality, and the attendant abuse of venal offices, as a factor motivating the Revolution, and such practices make a brief appearance in the list of grievances catalogued in the Declaration of Independence.
While Shugerman acknowledges a trend away from venality occurring at the time of the Founding, he demonstrates that venality persisted alongside the emerging modern bureaucracy well into the nineteenth century. And although colonial Americans might have shared a distaste for venality, they surely did not share the universal assumption that problematic officials could be removed by their superiors at will. Importantly, Shugerman shows that Founding-era debates and records reflect a knowledge of this eclectic mix of office types and contain no evidence of an intention to depart from this background norm.
This raises the question how such an apparently corrupt system of offices-for-sale could have spread as widely and persisted for as long as Shugerman claims. He provides a fascinating explanation about the pre-modern logic of venality that will be of interest to those of us who think about state-building and bureaucratic accountability. To govern a vast nation in which the Crown’s control was concentrated in the capitol, the King had to identify qualified elites and persuade them to abandon alternative sources of wealth and power to become administrators. The sale of legally protected tenure in offices that came with a monopolistic system of fees, patronage, and franchising (many venal officers had the power to sell additional offices beneath them) provided the right mix of incentives. First, the sale of offices ensured that they would attract individuals with sufficient skills, industry, and accomplishment to have amassed the wealth to buy them. An imperfect proxy, to be sure, but a reasonable second-best in a pre-modern world where the systems of measurement and centralized management necessary to support meritocracy were impractical or non-existent. Second, the spoils of office—coupled with stability of tenure—were an attractive lure, especially to non-first-born sons of feudal elites.
Tenure protection was essential to the system because it ensured officeholders a return on their investment. Who would pay for something the King (or other superior officers) could alienate on a whim? The Crown recognized this and maintained this system of venality alongside a system of officers who served at the King’s pleasure. And this is precisely the point relevant to current debates about whether the President’s executive power entails a removal power. Although the King had, in practice, a removal power at pleasure, Shugerman shows that “[e]xecutive removal was not an assumed power, because it would have undermined the core system of exchange of offices-as-profitable-property, of offices-of-investment[.]” (P. 26.)
To be sure, there is much to critique in the theory of bureaucratic accountability that supported venality in its day. Yet, it is not clear that the theory of accountability underlying the Court’s insistence on unfettered presidential removal power is much sounder. Just like venality, the Court’s hyper-politicization of administrative offices presents rich opportunities for corruption; but now, individual investment and tenure in office no longer disincentivize corruption that might sully the officeholder’s property or counterbalance the chief executive’s power. As Jeremy Bentham neatly summarized, venality “may be called a corruption, but it serves as an antidote to a corruption more dreaded.” (P. 41.) Offices are still effectively bought and sold, today to wealthy campaign donors and political cronies who occupy them at the President’s whim. Unlike their wealthy forbears, these individuals have no incentive to preserve the value of the office they occupy. Their sole incentive is to aggrandize the President. This undermines the Roberts Court’s theory of bureaucratic accountability through presidential control and suggests the imperative to temper control with other accountability mechanisms.
In The Invisible Driver of Policing, which is forthcoming in the Stanford Law Review, Farhang Heydari brings the toothpaste tube theory to a new level in unveiling NHTSA’s displaced efforts at enhancing the safety of vehicle transportation. In sixty riveting pages, Heydari details how NHTSA—finding itself effectively blocked from regulating the powerful auto industry—shifted significant energies towards targeting the drivers themselves. Indeed, a whopping 80% of NHTSA’s budget is apparently dedicated to traffic enforcement. (P. 54.) Heydari then links a significant component of this enforcement to encouraging the use of “high traffic stops, ostensibly as a tack both to improve traffic safety and fight crime” (P. 2), transforming the agency into the “unexpected enabler of pretextual stops.” (P. 1.) To that end, NHTSA’s sponsored research “called for a 400-500% increase in traffic enforcement.” (P. 33.) Although Heydari’s article was intended to alert his fellow criminal law scholars to the prevalence of clandestine law enforcement by nonexpert governmental agencies (Pp. 52-55), his article is perhaps even more jolting for administrative law readers.
By Heydari’s account, over the last three decades, NHTSA’s energies have been significantly diverted from its central mission of advancing safety through regulation of the auto industry. (Pp. 14-17.) To be sure, NHTSA is still engaged in the intricate oversight of automotive safety and design. But starting in the 1990s, NHTSA began dedicating a large portion of its resources and attention to the very different objective of encouraging state and local police to find and punish aberrational drivers on the road. (P. 17.) Both initiatives are aimed at reducing roadway fatalities, but they are worlds apart in all other respects.
For administrative lawyers, The Invisible Driver of Policing raises a number of red flags, only a few of which I have the space to consider here. First, in contrast to the more familiar experiences with the toothpaste tube theory in administrative law, NHTSA’s shift from regulating industry and toward enforcement actions against drivers requires an entirely new and different type of agency expertise. Auto engineers at NHTSA will not be very useful in figuring out how to locate and sanction unsafe drivers. Indeed, by Heydari’s account, the retooling of NHTSA’s expert staff to bolster its enforcement program was far too narrow in scope. NHTSA apparently hired primarily former law enforcement officers rather than a more well-rounded set of enforcement experts (P. 39), and the enforcement experts in turn “trained tens of thousands of officers across the country” to increase traffic stops. (P. 2.)
Second, NHTSA also failed to develop metrics or collect data to assess whether its expenditures in law enforcement were actually improving the safety of roadways. (Pp. 28-31.) This failure to assess its program reduces public visibility and makes oversight of NHTSA’s work effectively impossible. As a result, we do not know whether NHTSA’s investments in law enforcement had any positive effect, a particularly worrisome outcome given the negative ramifications Heydari traces from the increased traffic stops. Moreover, this new focus on enforcement has likely diverted scarce resources away from the agency’s primary mission of regulating the auto industry. The toothpaste tube theory says as much. But without any data, we do not know the extent of these opportunity costs either.
Third, the most concerning takeaway from Heydari’s account is the fact that the displacement of the agency’s mission happened in plain view. There is no indication that NHTSA was either acting as a runaway agency or ignoring its political principals. In fact, Congress mandated NHTSA to take this new direction toward law enforcement twice, first in 1991 and again in 2006. (P. 17.) And, while political appointees at DOT and NHTSA were well situated to provide needed oversight and direction to NHTSA’s project and staffing decisions, Heydari’s analysis suggests they were generally asleep at the wheel (certainly individual drivers were ill-equipped to lobby them about NHTSA’s misplaced energies). (Pp. 39-40.) Thanks to Heydari’s sleuthing, we can even see—with the benefit of hindsight—a clear paper trail detailing each step in NHTSA’s decision to employ crime-fighting traffic stops as a major strategy to advance roadway safety. (Pp. 18-24.)
In the final section of the article, Heydari presents a mini-case study of how other agencies are similarly “refram[ing] . . . [regulatory] solution[s] in terms of criminal law enforcement.” (P. 55.) The Food and Drug Administration has targeted opioid addicts rather than drug manufacturers; the Federal Trade Commission prosecutes hackers and identity thieves as an alternative to imposing vigorous requirements on companies for security breaches; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives pursues charges primarily against illegal weapon owners as opposed to illegal dealers. (Pp. 43-51.) Each of these examples differ in important ways from NHTSA, as Heydari concedes, but they appear to follow a worrisome trend. Rather than regulate industry, the agencies focus on prosecuting individuals whose crimes result from that very same lack of preventative regulation.
So administrative law scholars are left with a puzzle—or maybe a train wreck. Is NHTSA’s regulatory displacement an aberration or the tip of the iceberg? To answer that question, we need big-picture views of other agencies whose programs drifted from their core expertise. But how do we learn more about what the agencies are doing without imposing more counterproductive red-tape requirements on beleaguered agencies? Maybe instead of targeting agencies, our attention should focus initially on Congress’ own incomprehensible lawmaking, which at least in the case of NHTSA precipitated its unlikely journey into law enforcement. But whatever the answer(s), gaining a better understanding of this kind of fundamental change in agency mission warrants more attention from administrative law scholars.
Daniel Sokol, Antitrust Merger Control as a Regulatory Sandbox, __ J. Corp. L. __ (forthcoming), available at SSRN (Apr. 4, 2023).
Daniel Sokol, Marissa Ginn, Robert J. Calzaretta, Jr. & Marcello Santana, Antitrust Mergers and Uncertainty, __ Bus. Law. __ (forthcoming), available at SSRN (Dec. 6, 2022).
In these two articles, Professor Sokol and his co-authors analyze recent changes in the methods the Federal Trade Commission (FTC) uses to review proposed mergers. Their findings are startling. The articles are required reading for anyone who is interested in antitrust law, administrative law, government regulation, or corporate law.
In his short essay Antitrust Merger as a Regulatory Sandbox, Sokol praises the antitrust merger control system under the Hart-Scott-Rodino Act as “an early attempt at a ‘regulatory sandbox,’” and criticizes developments of the Biden administration that reduce innovation and chill mergers. In Antitrust Mergers and Uncertainty, Sokol and his co-authors asked lawyers and economists who regularly advise firms about prospective mergers a series of questions about the ways in which the process has changed in the two years in which Chair Khan has headed the FTC.
By way of background, in 1976, Congress enacted the Hart-Scott-Rodino Act (HSR), which created a new system for determining whether a proposed merger or acquisition violates Section 7 of the Clayton Act.
Under the HSR, a firm that intends to merge with or acquire another firm must make a filing with the Justice Department and the FTC at least 30 days before the date of the proposed merger or acquisition. The Justice Department and the FTC meet periodically to allocate responsibility to implement the HSR between the agencies by sector of the economy. The agencies have 30 days in which to decide whether the proposed transaction would violate the Clayton Act. The statute authorizes extensions of the decisional deadline up to 30 days, but the parties to the proposed transaction often acquiesce in much longer extensions of the decisional deadline when the Justice Department or the FTC ask for additional time to evaluate a proposed transaction.
The HSR created a system of agency adjudication that is unlike any other. In other similar administrative contexts, an agency adjudication closely resembles a trial. The agency provides notice of its position and the reasons why it believes that a firm is violating the law. The firm then has an opportunity to respond. The agency and the firm present their conflicting evidence in a hearing conducted by an administrative law judge (ALJ). The parties file briefs, and the ALJ issues an opinion in which she explains her decision. Either party can appeal to the head of the agency. After considering the briefs of the parties on appeal, the agency head can either adopt the decision and reasoning of the ALJ or replace it with the agency’s contrary decision, along with a statement of the agency’s reasoning in support of its decision.
Each step in the normal process of agency adjudication is completely transparent. Every firm that is potentially affected by the agency’s decision and every potentially affected member of the public has complete access to the pleadings, the evidence, and the reasoning of the ALJ and the agency.
The HSR system of agency adjudication differs completely from the normal. Every step in the HSR decision-making process takes place behind closed doors. The process is completely opaque. The public has no way of knowing what transpired, except in the rare case in which the firm that proposes to engage in the transaction decides to complete the transaction after the agency has notified the firm of its decision that the transaction is illegal. In those few cases, the ensuing litigation creates a public record that provides the public with a window into the agency decision-making process that gave rise to the litigation.
Many scholars have long been critical of the opacity of the HSR adjudication process. Professor Sokol is not among those critics. In his words: “HSR combined with merger guidelines created a system of ex ante review with predictable rules and negotiation between merging parties and enforcers.” He emphasizes the role that merger guidelines have played in creating a healthy decision-making process: “Merger guidelines create transparency and greater predictability by identifying the core concepts that motivate the merger control system as well as to explain the legal and economic analytical framework that gets applied within merger control by the agencies.”
The merger guidelines are extremely detailed. They describe every step that the agency takes in the process of deciding whether a proposed transaction has the potential to reduce consumer welfare by reducing competition between firms in a market. According to Sokol, guidelines serve two valuable purposes.
First, they allow firms to predict with a high degree of confidence which of three actions the agencies will take with respect to a transaction the firm is considering. The FTC or the Justice Department determines that most of the thousands of proposed transactions are unlikely to have adverse effects on competition. In those cases, the agency quickly terminates the review process and notifies the firm of its decision to acquiesce in the transaction. In a much smaller number of cases, the agency notifies the firm that it needs additional data and must engage in detailed analysis of the proposed transaction to determine whether it is likely to have an adverse effect on competition.
In some fraction of those cases, the agency determines that the transaction is likely to have an adverse effect on competition and notifies the firm that it will seek an injunction to preclude the firm from completing the proposed transaction if the firm decides to attempt to complete the transaction. Until recently, the FTC prevailed in most of the cases in which it sought to stop a transaction that it found to be a violation of Section 7 of the Clayton Act.
Second, the guidelines provide a detailed description of the data that a firm must collect and the analyses that the firm must complete and submit to the agencies to allow them to decide whether to acquiesce in the transaction, to engage in a more detailed analysis of the transaction, or to disapprove of the transaction.
Sokol observes that the status quo is undergoing dramatic change. As he explains, “[t]he current regulatory antitrust sandbox system is under attack by the Biden antitrust agencies as part of a broader push to reduce total merger activity.” In January 2022, the new leadership at FTC and DOJ Antitrust, FTC Chair Lina Khan and Assistant Attorney General Jonathan Kanter, announced their intent to publish new guidelines that would significantly reduce the number of permissible mergers. Khan and Kanter have not yet taken that action, but it is obvious to all participants in the HSR decision-making process at FTC that it is not acting in ways that are consistent with the existing merger guidelines.
Khan has made it clear that she disagrees with virtually every characteristic of the guidelines, including the guidelines’ goals. She rejects the goal of maximizing consumer welfare, which the Justice Department and the FTC have pursued for the last 50 years. Instead, she has emphasized the need to protect competitors from large firms that charge low prices—a goal that the enforcement agencies and the Supreme Court disavowed 50 years ago. Khan cannot further her stated goals by applying the 2010 guidelines.
The conflict between Khan’s policy goals and the guidelines raises a critically important question. How does the FTC interpret Section 7 of the Clayton Act under Khan’s leadership, and what analytical steps will the FTC take to determine whether a proposed transaction is legal? That is the question that Professor Sokol attempted to answer, but his efforts were unsuccessful. The experienced lawyers and economists who regularly assist firms in navigating the HSR decision-making process at FTC had no difficulty determining that the FTC is not applying the guidelines, but they have no idea what goals the agency is attempting to further, what theories of harm it is attempting to explore, or why it is asking for the additional data that it requests.
Moreover, their experience with the process during the past two years causes them to believe that the FTC staff that participate in the HSR decision-making process also lack an understanding of the agency’s goals, theories of harm, or reasons for requesting additional data. When they ask staff members those questions the typical response is an apologetic admission of ignorance. The goals, theories of harm, and reasons for the requests for additional data may be known to the political leaders of the agency, but they have not been effectively communicated to the staff.
Here are two of the many concerns that Professor Sokol expresses as a result of his study:
When there is lack of clarity in the merger control process because the goals, process, and substantive analysis of merger control are not clear, this may delay or even undermine certain proposed mergers that benefit society, thereby creating economy wide problems.
[A] merger system that lacks intellectual clarity as to substance, transparency, and clear procedural rules also taxes the limited resources of antitrust enforcers that need to focus on actual problems that merger control identifies . . . .
I am confident that anyone who reads Professor Sokol’s articles will find ample evidence to support the concerns that he expresses.
Cite as: Richard J. Pierce, Jr., Confused Merger Policy at the FTC, JOTWELL (May 25, 2023) (reviewing Daniel Sokol, Antitrust Merger Control as a Regulatory Sandbox, __ J. Corp. L. __ (forthcoming), available at SSRN (Apr. 4, 2023) and Daniel Sokol, Marissa Ginn, Robert J. Calzaretta, Jr. & Marcello Santana, Antitrust Mergers and Uncertainty, __ Bus. Law. __ (forthcoming), available at SSRN (Dec. 6, 2022)), https://adlaw.jotwell.com/confused-merger-policy-at-the-ftc/ .
Daniel Farber, Inequality and Regulation: Designing Rules to Address Race, Poverty, and Environmental Justice, __ Am. J. L. & Equality __ (forthcoming 2023), August 1, 2022 draft available at SSRN.
In the last few years, law schools and law professors have given new attention to how questions of race can be interwoven into courses that are not explicitly about race. Much has been written about how to do so in both first-year and upper-level courses, and, from all reports, the law school classroom has meaningfully changed. My sense, though it is completely impressionistic and unscientific, is that the typical Administrative Law course may have changed less than many others. It seems fair to say, at least, that there has not developed a standard suite of topics that a professor wanting to integrate questions of race and racism might include. (Though for those interested, the 2020 Symposium on Racism in Administrative Law on the Notice & Comment blog is a very useful place to start.)
Daniel Farber’s Inequality and Regulation will be of enormous value to those looking for an entrée for discussing race and Administrative Law. Moreover, wholly apart from its relevance to the classroom, it is an important substantive contribution regarding the role of race, and of poverty, in regulatory policymaking. And it tackles these thorny topics in a highly readable fashion, with a minimum of jargon, obfuscation, and, relatively speaking, citations. (Were it in a student-edited Law Review, the editors would have been pretty grumpy about the above-the-line to below-the-line ratio. It may be one advantage of faculty-edited journals is a refreshing rejection of the citation addiction (or fetish).)
Farber sets the scene with a familiar descriptive account of the central role of cost-benefit analysis (CBA) in regulatory policymaking since the Reagan Administration, with some attention to the (in the grand scheme of things relatively minor) variations from president to president and Executive Order to Executive Order (EO). He then focuses in particular on the differing ways in which the EOs have treated unquantified benefits, equity, and distributional impacts. Since Bush II these have been acknowledged as legitimate considerations, receiving particular emphasis from Presidents Obama and Biden. But in practice they have received rather scant attention. Farber recounts a similar story with regard to Environmental Justice: formal attention, including in EO 12898 and Plan EJ 2014, with a much more modest actual policy impact.
Part III then addresses the role of economic inequality in regulatory policy. Farber joins others in rejecting the view held by “economic purists” that regulation should do nothing other than maximize net regulatory benefits, leaving issues of income distribution entirely to tax and spending programs. Indeed, he emphasizes that CBA as practiced by federal agencies reflects several equity-enhancing features. The most notable is the universal practice of quantifying benefits on the basis of an aggregate willingness to pay (WTP) figure. Given enormous differences in WTP based on age, race, and, most importantly, wealth, the value of a poor person’s life “should be” lower than that of rich person’s. But every agency uses a single number for the Value of a Statistical Life (VSL); all lives are of equal monetary value in a cost-benefit analysis, just like all lives are of equal value in a moral analysis. Farber attributes this approach to what he terms “harm egalitarianism”: “equal protection against equal harms.”
Having identified the core principle, Farber considers an alternative approach to accounting for economic inequality in regulatory policymaking. That would be to disaggregate WTP but, at the same time, more fully account for distributional impacts and the incidence of regulatory burdens. One method for doing would be “equity weighting,” i.e. assigning greater weight to dollars held by poorer people. Drawing on recent work by Daniel Hemel, among others, Farber rejects this approach. He does so primarily on practical grounds, but also because he is disconcerted by taking a powerful, but hidden, redistributive approach in regulatory analysis when the actual redistributive system (taxes and benefits) is not so aggressive.
So harm egalitarianism is the central concept of the article. Farber offers it as both descriptively accurate and normatively attractive. The principle of devoting equal resources to prevent equal harms is “implicit in current regulatory practice”; it “should play a central role in regulation”; and it is a requirement of “justice.” He would make it the dominant principle by which regulation takes account of equity and distributional concerns. Dominant, but not exclusive. Farber leaves the door open to a direct consideration of redistributive concerns, which might in some cases still be a “soft factor” in decision making.
Mentioning this possibility but not fully exploring it strikes me as a gap. Here is the problem. It is possible that a uniform VSL may harm poor people more than it helps them. It all depends on the incidence of costs and benefits. To the extent the costs of regulations using the uniform (and thus, for poor people, high) VSL are borne by poor people themselves, that compelled payment of more than the benefit is worth to them likely makes them worse off. As Cass Sunstein has put it, pithily: “Requiring poor people to buy Volvos is not the most sensible means of assisting them.” Farber’s redistributive “soft factor” suggests he is open to requiring “too much” safety but then subsidizing poor people’s purchase of that safety and/or taxing rich people to pay for it. But how, when, and how much that should happen are left unexplored.
The article then takes a doctrinal turn. Harm egalitarianism involves taking account of, and acting to avoid, the disparate impact (often racially disparate impact) of government policies that are facially neutral. Might doing so violate the equal protection clause? So far, the Supreme Court has not so held, and Farber concludes that such a result is imaginable but not likely. He also thinks most agencies most of the time have the statutory authority to take such concerns into account.
(Here let me diverge from the article briefly, like the workshop questioner who wants to discuss the article the presenter did not write. Farber does not investigate or assert the converse argument: that “equal protection against equal harms” might be not just permitted but required. At least three theories come to mind. First, it obviously resonates with equal protection principles. Indeed, as Farber’s use of the very term “equal protection” indicates, this constraint more clearly implicates equal protection than do many classifications subject to review under that clause. On the other hand, the intent requirement keeps us in rational-basis land; the “one step at a time” cases cut against grounding harm egalitarianism in the equal protection clause. Second, in relevant settings failure to take disparate impact on the poor and people of color would violate the Clinton Environmental Justice Executive Order. However, the EO, of course, is not judicially enforceable. Third, and most promising, there is a plausible argument that promulgating a regulation with a racially disparate negative impact would be arbitrary and capricious because the agency had failed to “consider the relevant factors.” What factors are “relevant” for purposes of arbitrary and capricious review is remarkably underexamined, but this seems like a potentially fruitful line of argument.)
Having defended agency consideration of the disparate impact of its own regulations, Farber acknowledges that it would raise different concerns if an agency designed regulations to remedy historical or structural injustices (an approach that would seem to go beyond “equal protection from equal harms”). Here, Farber anticipates more robust judicial and constitutional objections. Farber’s discussion is tentative. Such an action might be seen as, and swept aside with, affirmative action programs, which rest on a similar remedial theory. Yet the settings are different. Unlike, say, affirmative action in college admissions, this sort of agency action does not favor, or disadvantage, any individuals, is not zero sum, and would itself be facially neutral. The constitutional objection is “nonnegligible,” but would probably (and should) fail. Statutory objections might also arise. Their validity will depend on the statute, but clearly an agency would be on stronger statutory ground when levelling up protection of communities especially burdened by the regulated risks than it would if explicitly opting to reduce risk in communities of color rather than in white communities as a response to structural racism.
That last point leads into the final, and most concrete, section of the article, which discusses the ways in which risk modeling often already incorporates concerns over inequality and might do so more extensively. Here the “equivalent protection from equivalent harms” principle is operationalized. A risk assessment requires knowing not just the extent of exposure but the vulnerability of the exposed population. Vulnerability is a function of some factors having nothing to do with race and wealth, such as age. But it also turns on other exposures, poverty, poor health, and even, in some circumstances, race itself. All of these factors may make population A more vulnerable than population B, meaning that the risk (the harm) of an identical exposure is greater for the former than the latter. In such circumstances, “equivalent protection from equivalent harms” means prioritizing regulation to protect population A and/or regulating to ensure a lower exposure for population A than for population B. Current risk analyses do this to some extent, but the inputs, including in particular the size of the geographic units considered, could and should be more granular. With more reliable and fine-grained data on exposure and careful attention to differential exposures and vulnerability, regulatory analysis would avoid the potential legal pitfalls of explicit attention to economic and racial inequality while still achieving appropriately targeted protection for poor communities and communities of color.
Cite as: Michael E Herz, Harm Egalitarianism, JOTWELL
(April 26, 2023) (reviewing Daniel Farber, Inequality and Regulation: Designing Rules to Address Race, Poverty, and Environmental Justice, __ Am. J. L. & Equality __ (forthcoming 2023), August 1, 2022 draft available at SSRN), https://adlaw.jotwell.com/harm-egalitarianism/.
Dan [Billy Bob Thornton]: Well, our object collision budget’s a million dollars, that allows us to track about 3% of the sky, and beg’n your pardon sir, but it’s a big-*** sky. ***
President [Stanley Anderson]: What kind of damage are we…
Dan: Damage? Total, sir. It’s what we call a global killer. The end of mankind. Doesn’t matter where it hits. Nothing would survive, not even bacteria.
President: My God. What do we do?
In the 1998 disaster film, Armageddon, a Texas-sized asteroid is on track to smash into the Earth, finishing the job started by the asteroid that did in the dinosaurs. Fortunately, a NASA official, Billy Bob Thornton, finds an oil driller, Bruce Willis, who (SPOILER ALERTS!) digs a deep hole in the asteroid and blows it up, sacrificing his life but only after giving his blessing for his daughter, Liv Tyler, to marry Ben Affleck, whom Bruce Willis loves like a son.
Professor Michael Livermore’s thought-provoking essay, Catastrophic Risk Review, makes the case that there is a better way than killing Bruce Willis to avoid massive death and destruction from asteroid strikes: Put the Office of Information and Regulatory Affairs (OIRA) on the job.
Professor Livermore starts from the premise that our government does a poor job marshaling its resources to address catastrophic risks, “including those arising from advanced artificial intelligence, asteroid impacts, pandemics, weapons of mass destruction, and bioengineering.” (P. 6.) This unhappy state persists in part because a complex set of legal, political, and psychological reasons prevents control of low probability events carrying catastrophic risks from rising to the top of agency agendas. In setting these agendas, agencies must respond to the competing demands of Congress, the White House, the courts, and influential outside interests (e.g., Chamber of Commerce, Sierra Club). Agencies also tend to follow grooves established by internal agency culture. There is always something more pressing in the moment than responding to a one-in-a-million chance that an asteroid will in the next year or so vaporize a continent or that super-smart artificial intelligence might come to the realization that it doesn’t like people much.
Other factors that discourage agencies from tackling catastrophic risks include: Some catastrophic risks implicate the functions of many agencies, muddling lines of authority and discouraging action. Agencies with a finger in the climate change pie include EPA, DOE, DOA, FERC, NRC, NASA, and FEMA. (Pp. 16-17.) Some catastrophic risks, by contrast, are orphaned as no agency has clear authority over them. Professor Livermore cites artificial intelligence and bioengineering as examples. (P. 17.) Electoral politics presents a problem as American politicians and voters tend to ignore global costs incurred outside the United States. (Id.) Temporally speaking, they also are much more sensitive to immediate concerns rather than those that are unlikely to eventuate for thousands of years. And, let’s face it, the many billions yet unborn do not vote. (Pp. 18-19.) In addition, humans are not psychologically equipped to handle consideration of low probability events very well—which isn’t terribly surprising for a species that has spent most of its time on Earth wandering over savannah, hunting, gathering, and avoiding predators.
Professor Livermore believes that application of formal cost-benefit analysis (CBA) would identify means for mitigating catastrophic risks that create net benefits. This process, he readily admits, would raise methodological problems as formal CBA has trouble addressing harms that are unlikely to occur until far in the future. He notes, for instance, that “a trillion-dollar harm five hundred years from now, discounting to present value at a five percent discount rate, is a bit over twenty-five dollars.” (P. 5 n.2.)
In Professor Livermore’s view, however, the real barrier to applying formal CBA to mitigate catastrophic risks is institutional. Agencies need somebody—or some entity—to push control of catastrophic risks onto their agendas. Ideally, this entity would both have expertise in formal CBA and a measure of power, perhaps derived from an executive order and a close connection to the White House, to coordinate action across many agencies.
In other words, we need OIRA to help save us from asteroids (and pandemics, super-smart AI, bioengineering, etc.).
To this end, Professor Livermore proposes a draft executive order that charges OIRA with convening “a Catastrophic Risk Review Working Group to develop and initiate a government-wide assessment and review of catastrophic risks.” (P. 3.) Agencies would submit preliminary plans for addressing catastrophic risks to the Working Group, these plans would be subjected to public comment, and then the Working Group would issue recommendations for cost-beneficial legislative or regulatory actions designed to mitigate catastrophic risks. (Id.)
Allow me to confess that, in a half-educated way, I approach the topic of formal CBA with some skepticism. Its efforts to monetize are sometimes extremely strained (e.g., placing a value on reducing the incidence of prison rape). Discounting costs and benefits that will accrue far in the future presents difficult technical and ethical problems. The numbers that formal CBA generates create a scientistic appearance that tends to cover underlying value judgments. Of course, there is a huge literature that addresses these and many other controversies relating to formal CBA and centralized review by OIRA. A good-sized chunk of this literature has been written by Professor Livermore, a leading expert and proponent of the view that progressives, rather than run from CBA, should use it to support positive environmental, health, and safety protections.
I mention this skepticism only to throw into sharper relief that I think Professor Livermore’s proposal sounds terrific. I am sure that a survey of agency activity would reveal that many are taking positive actions to reduce catastrophic risks. In September 2022, for instance, NASA, as part of an effort to develop a planetary defense, slammed its DART vehicle into the asteroid Dimorphos, altering its orbit—which is awesome. But Professor Livermore’s essay makes a strong case that, given the incentives and constraints facing agencies, it is likely that they are leaving cost-beneficial mitigation strategies on the table. (A recent pandemic may be influencing my intuition here.) He also makes a strong case that OIRA is well positioned to play a coordinating role that could help solve this problem. Using formal CBA to identify strong candidates for catastrophic risk mitigation would, as Professor Livermore concedes, raise methodological problems. Still, it seems plausible that the best strategies might prove so obviously beneficial that methodological problems might fall by the wayside. Also, many progressives find formal CBA objectionable because they see it as a tool for blocking agency actions that, properly understood, are in fact beneficial for society. Use of formal CBA as Professor Livermore proposes would, by contrast, prompt positive actions rather than constrain them.
When it comes to understanding the political dynamics of agency rulemaking, the place to start is Rachel Potter’s book Bending the Rules: Procedural Politicking in the Bureaucracy, about which the Yale Journal on Regulation published a blog symposium in 2019. Through a mix of qualitative and quantitative methods, Potter explores how agency officials—both career civil servants and political appointees—play a role in the rulemaking process and leverage procedural rules to help advance their preferred policy outcomes.
It turns out, however, that this depiction of agency rulemaking omits an important category of rule drafters: government contractors. Fortunately for the field of administrative law, the Administrative Conference of the United States engaged Potter and Bridget Dooling to conduct a study of the role of private contractors in federal agency rulemaking. They interviewed some forty-five agency officials, contractors, and other experts. Rulemaking by Contract, which is forthcoming in the Administrative Law Review, presents the descriptive findings of their study and is well worth a close read. Here, however, I focus on their follow-up article, Regulatory Body Shops, which explores the normative implications of their findings in creative and important ways.
In Regulatory Body Shops, Dooling and Potter divide the world of rulemaking contractor relationships into three categories: “ministerial contractors, who perform administrative work; expertise contractors, who provide discrete scientific and technical inputs; and regulatory body shops, which are embedded into agencies, functioning like staff and encompassing many functions.” In Part II, they describe these three categories in detail and provide a helpful table (reproduced with permission) that summarizes the key characteristics of each type of contracting arrangement:
The Ministerial Contractor
The Expertise Contractor
The Body Shop
Type of Task
Administrative
Substantive
Substantive, but can also include Administrative
Number and Frequency of Task(s)
Any
Singular/Infrequent
Multiple/Frequent
Nature of Relationships
Any
Transactional/Short-Term
Embedded/Long-term
Internal Transparency
Medium
High
Low
External Transparency
Low
High
Low
Types of Rulemaking Contracting Arrangements
Dooling and Potter are less concerned about the problems inherent in the former two categories. As the title suggests, they focus on the much more problematic category of “regulatory body shops.” In Part III, they explore the potential risks of regulatory body shops (and the other two categories) regarding ethics, agency reasoned decisionmaking, and administrative capacity.
On the ethical front, they draw on Kathleen Clark’s work to emphasize the potential personal conflicts of interests, especially as private contractors are often not subject to the same extensive disclosure rules as federal government employees. As Dooling and Potter observe, “In the body shop, the embedded nature of the contractors gives them special access not only to the folkways and culture of the agency—something that our interviews suggest agencies value very much because it helps the contractors be effective—but also to inside knowledge about the agency and its planned actions.”
On the reasoned-decisionmaking front, they draw on Jon Michael’s book Constitutional Coup to underscore that some contractors might approach the deliberative process differently than career civil servants. Unlike civil servants, contractors might be, in Michaels’s words (Constitutional Coup at 117), “motivated to be hired, anxious to be retained, and eager to be assigned additional fee-generating responsibilities. They thus have every reason to internalize the agency chiefs’ political priorities.” The risk of less-engaged reasoning potentially affects both expertise contractors and regulatory body shops, but Dooling and Potter argue that the risks are much greater in regulatory body shops because “maintaining the contract and keeping ‘the boss’ (i.e., the agency) happy is likely to be a highly salient concern.”
On the administrative capacity front, Dooling and Potter see little short-term risk in using ministerial or expertise contractors to assist with discrete regulatory activities. Indeed, it often makes financial and practical sense on time-limited projects to outsource to experts and ministers instead of investing more in internal capacity that is only needed for a short period of time. But longer-term reliance on contractors, especially in a regulatory body shop manner, poses serious risks. It could reduce incentives for innovation within the agency as to longer-term improvements to agency processes and infrastructure. Relying on Suzanne Mettler’s book The Submerged State, Dooling and Potter argue that such long-term reliance could also undermine democratic principles, by communicating to the public the private firm’s involvement in the project but perhaps obscuring the federal agency’s role (or vice versa).
Not only are there transparency and accountability concerns. As Dooling and Potter explain, agency reliance on regulatory body shops “can also result in what we call a doom loop, where rather than using contractors as a short-term bridging strategy, agency reliance on contractors morphs into the de facto status quo. Using regulatory body shops may enable an agency to keep up appearances; to top agency leaders and congressional overseers the agency appears to be performing well and producing steady regulatory output. But, because the bureaucrat-contractor equilibrium is not always visible—even to overseers—what began as a capacity deficit within the agency becomes a self-fulfilling prophecy.”
After flagging some doctrinal risks of regulatory body shops in Part IV of the article (in particular, compromising procedural responsibilities and undermining claims for judicial deference), Part V explores how we should respond to the phenomenon of regulatory body shops. Dooling and Potter suggest that Congress or the Office of Management and Budget (OMB) could consider designating rule drafting as “inherently governmental,” which would limit participation to agency staff. OMB has already done so with respect to legislative drafting. They suggest that there should be additional contracting transparency, and they briefly suggest other ways that agencies can build capacity without having to rely on regulatory body shops. This article already covers so much ground in categorizing the contractor types and exploring the risks of each type, so it is understandable that Part V only begins the reform conversation. But hopefully their study for the Administrative Conference of the United States and these two articles will spark much more scholarly and real-world attention to the potential harms of regulatory body shops.
Regulatory Body Shops makes an important contribution to the literatures on agency rulemaking and privatization. Perhaps the most important contribution is that Dooling and Potter further complicate our understanding of privatization in administrative governance. Not all private contracting is inherently bad, and the risks vary across agencies and contractors. Disaggregating contractors into three categories with different functions, time horizons, and risk levels helps us identify and understand the risks and potential solutions. Their ability to disaggregate private contracting arrangements, to diagnosis risks, and to identify potential reforms no doubt benefits from their combined experience working in the federal government, including as policy analysts at the Office of Information and Regulatory Affairs.
There is so much to like (lots) about Regulatory Body Shops. I look forward to seeing how Dooling and Potter’s work in this space sparks further development in the field.
Cite as: Christopher Walker, Outsourcing Agency Rulemaking, JOTWELL
(February 14, 2023) (reviewing Bridget C.E. Dooling & Rachel Augustine Potter, Regulatory Body Shops, Duke L.J. (forthcoming), draft available at SSRN.
), https://adlaw.jotwell.com/outsourcing-agency-rulemaking/.
Readers of Jotwell’s administrative law section need no introduction to the major questions doctrine—either in its olderforms, or in its new and more muscular incarnation as a clear statement rule that requires that Congress speak in pellucid terms in order to authorize an agency to regulate a question of “major” significance. What some readers may not have noticed is that the stream of commentary on the new major questions doctrine has already burgeoned to such an extent that simply keeping up with it all is no small challenge. In his own recent contribution to this growing corpus, Professor Chris Walker recalled Justice Scalia’s Brand X dissent, which sardonically saluted the Court for creating “a wonderful new world … full of promise for administrative-law professors in need of tenure articles and, of course, for litigators.” But that list is far too short. The new major questions doctrine is also evidently “a wonderful new world” for podcasters, bloggers, essayists, and op-ed commentators—not to mention quite a fewadministrativelawprofessors who already have tenure (including me).
Professors Daniel Deacon and Leah Litman, in their impressive article The New Major Questions Doctrine, presented an early assessment of the doctrine within mere weeks (!) of the Term’s end. They begin by situating the doctrine against other tools available to courts to constrain the exercise of authority by administrative agencies: statutory interpretation and nondelegation doctrine. (Pp. 8-12.) They correctly detect an “evolution” (P. 13) in the Court’s approach to the major questions doctrine beginning with the Court’s decision in the case challenging the CDC’s imposition of a nationwide eviction moratorium. In that decision, in the subsequent challenge to the OSHA vaccine mandate, and in West Virginia v. EPA, the Court gradually shifted its application of the major questions doctrine, ultimately shaping it into a rule that “frames—and alters—the entire enterprise of statutory interpretation.” (P. 23.) As the Court left matters at the close of the last Term, the new major questions doctrine requires that statutory authorization to address a major question “jump off the page.” (P. 25.)
Can this doctrine be justified on the grounds that the doctrine serves to enforce the “values underlying the nondelegation doctrine?” (P. 29.) Not really: as they note, “the major questions doctrine, again at least as articulated thus far, does not itself prohibit agencies from exercising delegated authority under open-ended guidelines. It just requires Congress to specifically list potentially major things an agency might do pursuant to those open-ended guidelines.” (P. 30.) Thus, while the new major questions doctrine imposes “a significant practical limit on agencies’ authority,” it “does not avoid constitutional issues with broad or open-ended delegations to agencies.” (P. 30.) The authors tease out various ways in which the Court departed from textualism in the cases articulating the doctrine, ultimately likening its effects to a diluted variant of the absurdity doctrine that allows for a “resort to purposivism.” (Pp. 30-32.)
Many commentators on the new major questions doctrine have focused on the doctrine’s indeterminacy and its susceptibility to manipulation by courts. Deacon and Litman, however, devote considerable attention to its manipulability by entities other than courts—notably, by political parties and special interest groups. They contend that because the new major questions doctrine regards politically controversial rules as “major” rules, the doctrine permits “a motivated political party to functionally amend a statute through political opposition rather than through the legislative process.” (P. 38.) They make the provocative argument that this result sits uneasily with the structural constitutional principles enforced in INS v. Chadha and Clinton v. City of New York, both of which pivoted on the proposition that laws may not be amended without passing the hurdles of bicameralism and presentment. (Pp. 39-40.) They also stress that the new major questions cases have relied on Congress’s failure to enact legislation as a reason to reject regulatory measures that resemble the failed legislation. (Pp. 45-46.) This reliance, they argue, means that a party that controls just one house of Congress can block legislation and thereby increase the odds that a similar regulatory policy will be deemed “major.” Indeed, a minority party that controls only enough votes to filibuster legislation in the Senate may wield that power “to effectively amend existing legislation.” (P. 47.) And special interest groups that were on the losing end of the political process when a statute such as the Clean Air Act was enacted can now leverage the new major questions doctrine to get another bite at the apple in the courts. (P. 48.)
The paper does a lovely job of connecting the new major questions doctrine to broader debates about constitutional doctrine and its methodology. Building on Litman’s prior scholarship critiquing the “anti-novelty principle” at work in constitutional law cases, the authors argue that “regulatory novelty does not signal an agency’s (or anyone’s) views about the meaning of a statute,” for regulatory novelty may simply be a necessary response when an agency is faced with, and has to tackle, novel problems—such as, for example, a global pandemic or climate change. Similarly, they show, the slippery-slope-style reasoning that underpinned cases such as NFIB v. Sebelius and United States v. Lopez has now come to roost in the new major questions cases. (Pp. 51-52.) The odd consequence, they argue, is that the legality of what an agency is doing today will be measured not by the yardstick of the statutory text as written, but rather by the reach of what an agency might claim it wants to do in the future. The substantive consequence of the doctrine, predict the authors, will be to produce a kind of selective judicial deregulation of important subjects rather than to enhance Congressional resolution of major regulatory questions. The doctrine, they therefore charge, is “faux judicial minimalism” (P. 58), rather than genuine judicial modesty.
Throughout their wide-ranging paper, Deacon and Litman remind us that a doctrine that in form purports to be accomplishing one task—keeping agencies within the bounds of their statutory ambit—may, in substance, be doing something quite different: selectively deregulating private conduct, exacerbating political polarization, empowering minority rule, and inviting courts to engage in ad hoc determinations of political salience that they are ill-suited to adjudicate dispassionately. In articulating a clear statement rule ostensibly linked to “separation of powers principles,” the Court set out what seems to be a simple formal rule. But in its functional operation, and in its substantive effects, the doctrine wires together politics and ideology with law in a complex and combustible combination. Of course, the veneer of a formal rule has its benefits—at least to the institution applying the veneer. As Duncan Kennedy once reminded us in an entirely different context, “there will often be a great tactical advantage, for a court which wants to expand its power at the expense of another institution, in casting the norms it wants to impose in the rule form.” On reflection, maybe it’s not such a “wonderful new world,” after all.
Cite as: Mila Sohoni, Form And Substance In The New Major Questions Doctrine, JOTWELL
(January 12, 2023) (reviewing Daniel Deacon & Leah Litman, The New Major Questions Doctrine, 109 Virginia L. Rev. __ (forthcoming 2022), available at SSRN), https://adlaw.jotwell.com/form-and-substance-in-the-new-major-questions-doctrine/.
There has long been great debate about the extent to which the public should have access to government-held information that concerns private businesses. Primarily sought through requests made under the Freedom of Information Act (FOIA), this type of information is often claimed exempt from mandatory disclosure under FOIA’s Exemption 4, which covers trade secrets and confidential commercial or financial information obtained from a third party. But the state of the law has been evolving in an unsatisfactory way. For example, Sonia Katyal and Charles Graves have a recent searing critique of the over-application of the trade secrets doctrine generally, and as I reviewed a couple of years ago, Deepa Varadarajan brilliantly takes apart the justifications for the sweeping expanse of Exemption 4 specifically. Both pieces, and others, have pointed out the expansion of commercial secrecy beyond the traditional justification to protect competitive innovations. Calls for reform, such as this recently proposed legislation, have typically centered on cabining the trade secrets protections to apply more narrowly, thus rebalancing the interests in public transparency against those of business secrecy.
This line of scholarship is rich and worthy, but Christopher Morten’s outstanding forthcoming article, Publishing Corporate Secrets, finds a fresh third angle to the problem, rejecting the idea that line drawing is even necessary and embracing as a solution a middle ground between full disclosure and guarded secret keeping. Are you intrigued by the idea that the government might be able to publish important information without first deciding whether it constitutes a trade secret? Or that there is a way to publish trade secrets for the social good without competitors profiting from it? So was I. Read on.
To begin, Professor Morten does a particularly cogent job at describing a complex backdrop for the current problems related to government held corporate secrets. First, drawing on a rich literature on the day to day work of the administrative state (including Rory Van Loo’s terrific piece that I also previously reviewed!), Professor Morten explains how government’s regular functions necessarily involve the collection of business information. Even more so, he details how agencies have sweeping powers to force businesses to produce information. Agencies need not rely on voluntary compliance, cooperative agreements, or close relationships with business. Inspections, monitoring, enforcement, and premarket approval procedures provide avenues for agencies to require the production of information by the private market. Second, Professor Morten describes how very few agencies proactively publish or otherwise provide information gleaned from private business, even when it poses grave threat to public health or safety (think software information related to the Boeing 737 MAX after the first of two deadly airline accidents). And third, he efficiently and effectively documents why FOIA requests are failing to fill the necessary gap, the sweeping interpretations of Exemption 4 as well as the more mundane problems of FOIA administration.
But it is in his proposed solutions and their legal justifications that Morten breaks exciting new ground. He documents how agencies already largely have the power to disclose information even when it is admittedly at the core of protected information under the trade secrets doctrine. FOIA itself authorizes withholding of protected commercial information, but does not require its withholding. Similarly, while the Trade Secrets Act does criminalize the disclosure of protected information, it does so only when disclosure is not “authorized by law.” And the “law” that might authorize disclosure includes legislative rules issued by an agency. Thus, through its regulatory power, an agency can designate what commercial information it intends to publish. In some sense this workaround to the Trade Secrets Act has been hiding in plain sight. Chrysler Corp. v. Brown—the Supreme Court’s seminal case authorizing so-called “reverse FOIA” cases (suits to prohibit an agency from disclosing records)—itself analyzed whether a particular regulation overcame the Trade Secrets Act’s presumption of confidentiality. Morten rounds out the analysis by demonstrating why neither agencies’ enabling acts nor the Takings Clause of the Constitution typically present significant hurdles to publication, either.
So if the government can publish trade secrets, assuming appropriate procedural steps have been taken, should it? Here Morten’s answer gets even more interesting. It’s a qualified “yes.” Morten proposes that agencies create information “bounded gardens,” or selective disclosure regimes that allow certain users or uses to be granted access to otherwise secret information without that information being published to all if such publication would harm competitive interests. These gardens would be bounded by techniques such as information use applications, information use agreements, and technical limits on access. Morten usefully provides examples of extant government databases that implement these very strategies—albeit more often in the case where privacy interests, rather than corporate interests, are at stake—as evidence of their success.
I love that this article represents a fresh take on an old seemingly zero-sum game that pits the public interest against competitive injury. This moves the conversation out of that playing field and proposes in some ways a radically different approach, and yet grounded in extant law and practice. Moreover, it contributes to the literature on the importance of and strategies for increasing proactive disclosure by government agencies, a topic I explored in my recent book, Saving the Freedom of Information Act. As information overload increases, and FOIA backlogs abound, the government using its platform to provide information that it knows serves the public interest is increasingly important. Of course, Morten’s strategy is not an alternative to the sensible strategies to limit the overreach of trade secrets doctrine—we should absolutely do both. But in a quest to ensure government does not ratify harmful corporate secrecy, Morten’s proposal represents an innovative path forward.
Cite as: Margaret Kwoka, Against Government’s Reification of Business Secrecy, JOTWELL
(December 1, 2022) (reviewing Christopher J. Morten, Publicizing Corporate Secrets, 171 U. Pa. L. Rev. __ (forthcoming 2023), available at SSRN), https://adlaw.jotwell.com/against-governments-reification-of-business-secrecy/.
Adherents to the unitary executive theory, which posits that the Constitution grants the President complete and absolute control over the execution of the law, claim that their view is required by the text of the Constitution, especially Article II’s vesting clause which proclaims that the “Executive Power shall be vested in a President of the United States of America.” As Justice Scalia put it, “this does not mean some of the executive power, but all of the executive power.” In Scalia’s view, the separation of powers demands that the President must have the power even to prevent the prosecution of Executive Branch officials, including those who have engaged in serious job-related criminal misconduct that threatens to undermine the accountability of the Executive Branch. Adherents to the theory on the Supreme Court may be in the process of dismantling all checks Congress has placed on presidential control over the administration of the law, including, among others, limitations on removal of Officers of the United States, the discretion of agency experts, and the independence of independent agencies.
Even assuming that Justice Scalia’s heavily textualist form of originalism is an appropriate methodology for applying the Constitution, the unitary executive theory has never successfully accounted for what, in light of the theory, must be puzzling constitutional text. Examples include, the provision that grants the President the right to “require the Opinion, in writing, of the principal Officer in each of the executive Department,” the Constitution’s expression of the President’s role in carrying out federal law as a duty (not a power) to “take Care that the Laws be faithfully executed” and the Constitution’s assignment to Congress of the power “[t]o make all Laws which shall be necessary and proper for carrying into Execution…all other powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” As one of many possible examples of how this language undercuts the absolutist claims underlying the unitary executive theory, if the Constitution already establishes that the President personally possesses all possible executive power, why would we need a clause granting the President the power to compel department heads to answer his queries? Enter Blake Emerson’s excellent article The Departmental Structure of Executive Power: Subordinate Checks from Madison to Mueller.
In this article, Emerson demonstrates that the Constitution contemplates a departmentalized Executive Branch that “enable[s] but also channel[s] and constrain[s] the discretionary authority wielded by the President, as well as that of the principal officers he appoints.” His analysis is based on the premise that checks and balances are vital to preserving the rule of law and enabling just and responsive governance. We have been hearing for some time now about the virtues of the “internal separation of powers” as checks on arbitrary action by federal agencies, but Emerson’s article, in my view, provides the firmest constitutional grounding for tempering the President’s authority over the execution of the laws from within the Executive Branch. As Emerson puts it, “[d]epartments establish ‘subordinate distributions of power’ that internalize the checks and balances that exists between the legislative, executive, and judicial branches.”
While the emerging scholarly work on the internal separation of powers has focused largely on how agency structure creates checks and balances within agencies that ameliorate the potential consequences of the combination of governmental functions in a single entity, Emerson takes a step back and looks at the “constitutional architecture” that posits a role for departments as centers of power that can check the President and even the departments’ own principal (and political) officers. In a sense, Emerson’s analysis provides support for understanding that the “deep state” that President Donald Trump and his allies railed against as standing in the way of their efforts to remake the federal government is actually a feature of the constitutional design and a highly valuable one at that.
Beyond formalist, originalist understandings of the departmental design, Emerson explains the value that the departmental understanding provides in supporting the rule of law and rational, non-capricious government. As he puts it:
Though departments are created by statute and led by political appointees, they are not best understood as obedient servants of either Congress or of the President. Departments do not merely follow orders, they make orders orderly. They help to ensure that we are governed not by the will of particular officials but by fairly predictable, minimally rational, and suitably general norms.
While I find the normative aspect of the analysis more attractive and persuasive, I recognize that in the current legal/constitutional environment that fetishizes textualism and other forms of originalism, an argument’s power depends at least in part on its connection to a plausible originalist account, which Emerson ably provides. He understands that, in his words, “if a department is an empty placeholder, then the President and other officers’ discretion under the applicable legal norms would remain fully intact.” On the other hand, “if these departmental constraints originate from Congress or from some other actor or agency, then the President’s power is hemmed in by those actors, rather than by any form of self-limitation. Emerson provides a convincing account of a “Founding-era discourse” within which the Constitution’s references to departments, in both Article II and Article I’s Necessary and Proper Clause, signify departments as independent centers of normative power and discretion that would check abuses by other governmental actors, including the President and officials appointed to positions created and structured by Congress. In other words, departments were not understood to be devoid of independent significance in the governmental structure created by the Constitution. The so-called “headless fourth branch” of government is a feature, not a bug.
In a more normative vein, Emerson’s understanding is vital in light of the abuses of the Trump administration and the potential that a future populist insurgency might succeed in inflicting serious damage to our constitutional system. In what I think was a surprise to many of us, a significant segment of the people of the United States appear ready to accept severe limits on democracy and rational governance in exchange for government policies more to their liking on matters such as immigration, environmental protection, women’s right to choose, and foreign relations. Through his examination of history and contemporary struggles, Emerson reassures us that the Constitution provides tools, including the departmental structure of government, to resist this potential catastrophe. He cautions, however, that this bulwark against authoritarian government is not self-activating. Rather, it requires a commitment by government officials, judges, and the people, among others, to maintain it and protect the political system of the United States from those who would subvert it to their own ends. In the end, in a democratic nation, it’s the people, not the parchment, that produces results, for better or for worse.
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