Role of Private Parties in Public Governance

Role of Private Parties in Public Governance

The following piece is a part of NULR of Note’s “Bring Back The ‘90s” initiative, aimed at exploring the evolution of legal thinking over the past three decades. For more, click here.

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In Fragmenting the Unitary Executive, I explored the constitutionality of congressional delegations to private parties outside of the federal government.  The Supreme Court, pursuant to the Due Process Clause, had invalidated a few congressional delegations to private parties earlier in the century (see, e.g., Carter v. Carter Coal) but had not considered the issue since despite a modest increase in such congressional delegations, particularly to producer groups such as mushroom growers and dairy farmers. 

In the 1980s, the Supreme Court gravitated from a flexible, case-by-case resolution of separation-of-powers challenges to a more formal or structural approach.  In INS v. Chadha, the Court struck down the legislative veto on the formalistic ground that a veto was tantamount to a “law” and could therefore only be passed with the agreement of both Houses of Congress and the approval of the President (unless vetoed and overridden by 2/3 of each House).

In Bowsher v. Synar and Morrison v. Olson, the Court focused principally on the President’s appointment and removal authorities to gauge whether congressional initiatives that delegated authority to other bodies comported with the Article II interest in presidential accountability for the administration of delegated authority. According to the Court, the Constitution requires that administration of the law be sufficiently linked to the President in the public eye so that individuals can register their approval or disapproval at the ballot box. The Court did not ignore that the President is involved in very little day-to-day administration, but concluded that the presidential prerogatives of appointment and removal must be respected in order to maintain this constitutionally required accountability.  Academics widely condemned this inflexible approach to separation of powers. See e.g., Peter L. Strauss, Formal and Functional Approaches to Separation-of-power Questions – A Foolish Inconsistency?,72 Cornell L. Rev. 488 (1987); E. Donald Elliott, INS v. Chadha: The Administrative Constitution, the Constitution and the Legislative Veto, 1983 Sup. Ct. Rev. 125 (1983).

In light of the evolving jurisprudence, I considered whether congressional delegations to private parties comported with separation-of-powers principles. The Article concluded that, if the Court continued down the path charted in Bowsher and Morrison, congressional delegations to private parties—unless subject to close executive branch oversight—could not be reconciled with the President’s necessary control over those delegations through the appointment and removal powers.  Presidents typically neither appoint nor remove the private parties who discharge congressionally delegated responsibilities.

In the past thirty years, congressional delegations to private producer groups and technical experts have continued, although at a modest clip. The Court granted certiorari in several cases but resolved them without looking at the presidential control issues lying under the surface, focusing instead on the First Amendment issues that arise when the private conduct constitutes state action. See, e.g., United States vs. United Foods, Inc.; Dep’t of Transp. v. Ass’n of Am. Railroads. Moreover, academics attacked the salience of assessing such delegations through a prism of formal accountability given that private power is ubiquitous in our government even if not always obvious to the naked eye. Thus, we know little more now than we did thirty years ago about the leeway that Congress should receive when involving private parties in governmental administration.

The concern for formal presidential control over delegated authority to executive branch officials, however, has surprisingly become more entrenched in the past thirty years. The Court has considered a number of challenges to agency structure on the ground that Congress has not respected the centrality of the President’s appointment authority under Article II. In Freytag v. Commissioner, Ryder v. United States, Edmond v. United States, and Lucia v. SEC, the Court reiterated the critical role of the Appointments Clause in ensuring close presidential control over delegated authority. This term, the Court has agreed again to entertain an Appointments Clause challenge, this time over the Puerto Rican Oversight Board established by Congress to superintend the restructuring of Puerto Rico’s debt. Indeed, there are private members who serve on the Board.

Perhaps more surprisingly, the Court has also continued to train its gaze on the removal authority—a power that is not even explicitly in the Constitution—as a critical determinant of its separation-of-powers analysis. In Free Enterprise Fund v. Public Company Oversight Board, the Court devised a stringent test to assess the requisite executive branch control mandated by Article II. The Court held that that Congress cannot shield an inferior officer from at will removal if the appointing authority (other than the President) is not his or herself subject to plenary removal. This novel rule—holding that two levels of insulation from the President’s at will removal authority violates Article II—jeopardized the structure of countless federal agencies, as Justice Breyer noted in dissent. In particular, many today are concerned that the Court’s removal power obsession may jeopardize the quasi-independence of administrative law judges (ALJs) under the Administrative Procedure Act given that so many ALJs work for agencies whose heads, like the SEC Commissioners in Free Enterprise Fund, are shielded from at will removal. Moreover, this term, the Court has agreed on yet another challenge to agency structure, one which argues that congressional delegation to a single-member commission is unconstitutional unless the President can remove that officer at will. Thirty years ago, few would have anticipated the continued centrality of the removal authority to constitutional analysis of agency structure.

In short, the tension between the role of private parties in public governance and the President’s appointment and removal powers has not been resolved. Indeed, in the intervening time, the Court has doubled down on its formal approach to determining the presidential control over delegated authority that is constitutionally required. Whether that continued formal approach will prompt the Court to scrutinize anew the role of private parties in public governance remains to be seen.

Harold J. Krent serves as a Professor of Law at Chicago-Kent College of Law and is the author of Presidential Powers (N.Y.U. 2005).

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