NARRATOR: Thanks for joining this episode of the No. 86 lecture series, where we discuss Administrative Law, including the history of the administrative state and modern debates about its powers. Today’s episode features Professor Gary Lawson, a William Fairfield Warren Distinguished Professor at Boston University School of Law. He has published nine editions of an Administrative Law casebook and authored or co-authored a Constitutional Law casebook, five books on constitutional and legal theory and history, and nearly one hundred articles. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. PUBLIUS: Where do administrative agencies come from and where do they get their authority to act? GARY LAWSON: Every federal administrative agency comes from a statute, from a law enacted by Congress. No, zero, none administrative agencies are actually created by the Constitution of the United States. The Constitution assumes that there will be agencies. It speaks of heads of departments assuming there will be departments like a Department of War and a Department of State, but it doesn't create any of those departments. It even specifically mentions a treasury but doesn't create the treasury. It assumes that the legislature is going to create all of those departments at some point. The only institutions of government the Constitution creates are the president, the vice president, the Congress, and a Supreme Court consisting of at least one chief justice. That's it. Everything else has to come from a statute. Those statutes not only create the agencies; they also tell them what they can and can't do. Because of the way the statutes are written, the Department of Defense can't decide tomorrow that it really wants to regulate sulfur dioxide emissions from coal plants. It just can't do that because it doesn't have the statutory authority. The State Department can't decide it wants to change the classification of cocaine on the controlled substances registry. It doesn't have that authority. So everything that agencies are, everything that agencies do comes from a law, a statute including their budgets. PUBLIUS: Why do we need administrative agencies in the first place? GARY LAWSON: Let me start with the ideal answer about why you might want agencies. If you have any large organization -- let's say Pizza Hut -- the head of the organization, the CEO cannot make all of the decisions, isn't going to decide which suppliers to use, isn't going to make all of the pizzas in each of the outlets and wait on the customers. You're going to need an entire network of people, of subordinates to carry out the policies. In the ideal vision, administrative agencies are the Pizza Hut employees for the president. They're the subordinates who carry out the functions under the overriding policy direction of the president pursuant to all of the statutes enacted by Congress that designated those agencies as having certain powers. So from that standpoint, of course you absolutely must have administrative agencies. They don't have to be organized in a particular fashion. They don't have to be called anything in particular. You could have a foreign policy agency that was called something other than the State Department. None of those contingencies are necessary, but having some agency where you send people out to other countries and talk to them instead of shooting at them, yeah, you probably want to have something like that. That's the ideal type. In practice in the modern world particularly over the last century to a century and a half, the agencies have assumed a much larger function. They're not simply there as the subordinates to implement, to carry out the policies. Over a very large range, they are making the policies. They are promulgating rules that have the same function as statutes. They're deciding adjudicatory decisions that have the same function as court decisions, and in both of those forms of action, they're making national policy. Whether you need that depends, I suppose, on some wider questions about what it is that you want your government to do and through what mechanisms you want it to do it. PUBLIUS: That brings us to the big question - is agency rulemaking unconstitutional because these policies have the force of laws? I’d like to hear reasons both for and against agency rulemaking. Let’s start with the arguments in favor of it. GARY LAWSON: When agencies make rules, when they engage in the activity we call rule-making, they're doing something that looks very much like a legislature enacting a statute. The thing that comes out of that rule-making, our rule, functions in the legal world just like a statute with the same legal effect, but doesn't the Constitution create a particular body, Congress, in order to make laws? So if agencies are doing something that looks a whole lot like making laws, is there a Constitutional problem with having some body other than Congress doing that function? That is, in my humble opinion, the single most important basic profound question in all of administrative law because if the answer is yes, there's a Constitutional problem with that, virtually everything of consequence that happens in the modern administrative state is unConstitutional. Well not surprisingly, a lot of people resist that conclusion. There are really four kinds of arguments that people make for why it's okay for agencies to do this thing that looks a whole lot like a legislature enacting a law in the face of a Constitution that creates Congress to do that evidently. So let me just run through those four key arguments. The first denies that there is a textual Constitutional problem with agencies exercising that kind of power. Yes, it's true, the argument goes, that agencies are not Congress; they're executive bodies. It looks like those agencies, that executive body, might be exercising law-making authority, but there is no clause in the Constitution that openly says that they can't. If you think of Congress as delegating some of its legislative power to agencies, there's no non-delegation clause in the Constitution. You tick down it, there's nothing that says Congress may not delegate its legislative power. There isn't even a separation of powers clause in the Constitution. There's no provision that says something like "The legislature shall never exercise the executive or judicial power. The executive shall never exercise the legislative or judicial power. The judiciary shall never exercise the legislative or executive power, that it may be a government of laws and not of men." No provision like that. There is a provision like that. It's about a 90% accurate paraphrasing in the Massachusetts Constitution of 1780 which preceded the United States Constitution. Whole bunch of other state Constitutions in the 18th century had separation of powers provisions like that. The United States Constitution doesn't. So one part of the argument in favor of delegations is the Constitution wanted to prohibit it. Well the framing generation knew how to write a provision that would do that. Second argument which really is the foundation of modern case law on the subject says, this is a matter of necessity. You simply can't have the modern government that most people want to have without Congress punting a lot of its authority to administrative agencies. A third argument which you might hear in conjunction with the other two says essentially agencies are smarter than Congress. Think about the sorts of people who are in Congress. Think about the sorts of people who are likely to be in administrative agencies. Although smart people with their advanced Ivy League degrees and their long experience and their specialization, who's going to make better decisions? It's a straightforward argument from consequences. You're likely to get better decisions by leaving it to the people who know what they're doing rather than the politicians. There's even a fourth argument that suggests that delegating power to administrative agencies might counterintuitively be more democratic than leaving it to Congress. How can that be? Well suppose you're really interested in energy policy. Well if you vote for someone for Congress because of their energy policy, you're also getting their views on monetary policy, relations with North Korea, the War on Drugs, everything else that the national government deals with. What the administrative state does by delegating specialized functions to administrative agencies is it un-bundles a lot of the powers of the national government. So the people who really care about energy policy can go deal with the Federal Energy Regulatory Commission and the United States Department of Energy, and they don't have to worry about those agency's views on North Korea or the War on Drugs. They can just focus on what is important to them. PUBLIUS: Those are four compelling arguments in favor of the administrative state. Do you have an answer for each of those as to why administrative authority might be unconstitutional? GARY LAWSON: We start with the actual Constitution itself. It is true that there is no express non-delegation clause, no express separation of powers clause, but the way the United States Constitution is constructed, one wouldn't necessarily expect it for two reasons. First, the Constitution has a lot in common with a class of documents familiar to everybody in the 18th century called fiduciary instruments. That's just a word we use for any document in which somebody gives somebody else some power over their own affairs. Hire someone as your attorney; you're making them your agent and they're serving as what we call a fiduciary. They owe certain duties to you. Well the Constitution is essentially we the people, this entity identified in the preamble, conferring on institutions of the national government a bunch of powers to manage certain of we the people's affairs. If you think of the Constitution in those terms, one of the basic fundamental background principles of the law of agency, the law governing fiduciary documents, is whoever it is you give fiduciary powers to, they're supposed to exercise it themselves. You don't need to say that. You don't need to say "I'm designating you as my agent. I expect you to do the job and not pawn it off on someone else." That goes literally without saying. It's if you want them to pawn it off on someone else, you would have to say so. Second reason why you wouldn't necessarily expect the Constitution to contain an express non-delegation clause is it accomplishes that end through other means. The Constitution creates a new government out of thin air. All of those institutions of that new government get their authority, get their power to do things from the Constitution. That's what we call the principle of enumerated powers. We tend to think of it as enumerating powers for the government as a whole. That's not exactly right. The Constitution doesn't grant powers to the government, the national government. It grants powers to particular institutions of the national government: to Congress, to the president, to the courts. Those grants of power define what those institutions can do. Congress is given all legislative powers herein granted. It's not given executive power or judicial power. President is vested with the executive power, isn't given the legislative powers herein granted or the judicial power. So you reach the conclusion that these institutions can only do what they're supposed to do and not what they're not told to do simply from reading what it is that they're allowed to do. Those seem to me the very, very strong, I would even say overwhelming arguments in favor of the Constitution itself containing a principle against delegation of legislative authority. All right. Fast forward to modern times. What do we do about the practical arguments from necessity, from expertise, right? How do we handle those? Start with the argument from necessity. There's something to that. It's often overstated. If Congress was worried that it could not do its job simply on its own, it can enlist administrative agencies as guides. It can have administrative agencies promulgate rules as suggestions for legislation. Congress can even change its own rules of procedure to allow up or down votes on those proposals. Would that slow down somewhat the flow of law out of government? Probably. Would it prevent Congress from, in the words of the Supreme Court, doing its job? That depends upon what you view Congress's job as being. If you view Congress's job as legislating in accordance with Constitutional norms, Congress could do its job just fine. If you view Congress's job as producing what somebody thinks is a good idea regardless of what the Constitution prescribes, yeah, then I suppose then maybe there would be some necessity for delegation. Not sure why that's a credible account of what Congress's job is, but that's just me. Third argument is that agencies are likely to be better at what they're doing than Congress would be. That may depend on what it is that you think agencies are doing. If what you think agencies are doing is applying technocratic expertise to questions of practical science and application that have objectively right and wrong answers, yeah, there's a chance they're more likely to get that right than the politicians in Congress. If you believe that a good portion of what agencies do is dressed up in the mantle of science and expertise but is really simply making decisions about value and policy, it is not obvious why the advanced degrees from Ivy League schools count for much in terms of figuring out what's right and wrong. So it depends upon what you imagine the agencies to be doing. Then finally, the fourth argument about how it is that agencies might be more democratically responsive. I'm not expert on democratic theory. That's for political scientists. What I would observe is that the Constitution of the United States does not instantiate any particular academic pure theory of democratic responsiveness. It instantiates a very specific historically concrete model of democratic responsiveness. That is it prescribes a certain set of mechanisms and a certain set of institutions and that counts as what the Constitution considers democratic responsiveness. Could there be an academic theory that is in some way abstractly better than the theory of the Constitution? Sure. Could be. There are all sorts of reasons why one might prefer various academic models to the Constitution, but let's just be aware that that's what the argument involves. PUBLIUS: Unconstitutional or not, agencies frequently make rules with the force of law. Practically speaking, how is that done? GARY LAWSON: Once the agencies are actually making policy, how do they go about proposing those policies and then carrying them out? When agencies do things that have legal effect, they do it through one of two modes. We call those rule-making and adjudication. When agencies engage in rule-making, they do something that looks a lot like a legislature enacting a law. They come out with a norm of general conduct that has legal effect. When agencies adjudicate, they do things that look a whole lot like a court deciding a case. They take a particular dispute, they find facts, they reach legal conclusions about those facts, and they enter an order which looks a lot like a judicial judgment. So those two modes of agency action, rule-making and adjudication, are analogous to legislation and judging. Those are the ways that agencies can come out with legally binding outcomes. They can do all sorts of things that don't have any formal legal consequences. They can investigate. They can think. They can analyze. They can propose. None of those actions change anyone's legal rights and responsibilities. They're predicates for the stuff that does, but the things that actually change people's rights and responsibilities are rule-making and adjudication. There are some agencies where Congress, by law, has specified that they have to do certain things a certain way. Most of the time, most agencies can choose whether they want to make rules or adjudicate cases. Sometimes they don't have that choice. Examples - when then the Environmental Protection Agency or the Occupational Safety and Health Administration set health or pollution rules, they have to do it by rules because Congress has said so in the statutes. There are other agencies like the National Labor Relations Board, the Federal Trade Commission that have mostly chosen to set their policies on labor law and trade law through deciding particular cases. They don't have to do it that way. Under their statutes, they could do it either through rules or through adjudications. They have just historically chosen primarily to do that through adjudications. So there are very complicated questions often of policy as much as of law about exactly what modes of proceeding an agency will use, but they can make policy through either one. NARRATOR: Thank you for listening to this episode of the No. 86 Lecture series. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class! TRANSCRIPT - VERBATIM FOR YOUTUBE Thanks for joining this episode of the No. 86 lecture series, where we discuss Administrative Law, including the history of the administrative state and modern debates about its powers. Today’s episode features Professor Gary Lawson, the Philip S. Beck Professor at Boston University School of Law. He has authored six editions of a textbook on administrative law, co-authored two books on aspects of Constitutional history, and authored or co-authored more than seventy scholarly articles. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. Where do administrative agencies come from and where do they get their authority to act? Every federal administrative agency comes from a statute, from a law enacted by Congress. No, zero, none administrative agencies are actually created by the Constitution of the United States. The Constitution assumes that there will be agencies. It speaks of heads of departments assuming there will be departments like a Department of War and a Department of State, but it doesn't create any of those departments. It even specifically mentions a treasury but doesn't create the treasury. It assumes that the legislature is going to create all of those departments at some point. The only institutions of government the Constitution creates are the president, the vice president, the Congress, and a Supreme Court consisting of at least one chief justice. That's it. Everything else has to come from a statute. Those statutes not only create the agencies; they also tell them what they can and can't do. Because of the way the statutes are written, the Department of Defense can't decide tomorrow that it really wants to regulate sulfur dioxide emissions from coal plants. It just can't do that because it doesn't have the statutory authority. The State Department can't decide it wants to change the classification of cocaine on the controlled substances registry. It doesn't have that authority. So everything that agencies are, everything that agencies do comes from a law, a statute including their budgets. Why do we need administrative agencies in the first place? Let me start with the ideal answer about why you might want agencies. If you have any large organization -- let's say Pizza Hut -- the head of the organization, the CEO cannot make all of the decisions, isn't going to decide which suppliers to use, isn't going to make all of the pizzas in each of the outlets and wait on the customers. You're going to need an entire network of people, of subordinates to carry out the policies. In the ideal vision, administrative agencies are the Pizza Hut employees for the president. They're the subordinates who carry out the functions under the overriding policy direction of the president pursuant to all of the statutes enacted by Congress that designated those agencies as having certain powers. So from that standpoint, of course you absolutely must have administrative agencies. They don't have to be organized in a particular fashion. They don't have to be called anything in particular. You could have a foreign policy agency that was called something other than the State Department. None of those contingencies are necessary, but having some agency where you send people out to other countries and talk to them instead of shooting at them, yeah, you probably want to have something like that. That's the ideal type. In practice in the modern world particularly over the last century to a century and a half, the agencies have assumed a much larger function. They're not simply there as the subordinates to implement, to carry out the policies. Over a very large range, they are making the policies. They are promulgating rules that have the same function as statutes. They're deciding adjudicatory decisions that have the same function as court decisions, and in both of those forms of action, they're making national policy. Whether you need that depends, I suppose, on some wider questions about what it is that you want your government to do and through what mechanisms you want it to do it. That brings us to the big question - is agency rulemaking unconstitutional because these policies have the force of laws? I’d like to hear reasons both for and against agency rulemaking. Let’s start with the arguments in favor of it. When agencies make rules, when they engage in the activity we call rule-making, they're doing something that looks very much like a legislature enacting a statute. The thing that comes out of that rule-making, our rule, functions in the legal world just like a statute with the same legal effect, but doesn't the Constitution create a particular body, Congress, in order to make laws? So if agencies are doing something that looks a whole lot like making laws, is there a Constitutional problem with having some body other than Congress doing that function? That is, in my humble opinion, the single most important basic profound question in all of administrative law because if the answer is yes, there's a Constitutional problem with that, virtually everything of consequence that happens in the modern administrative state is unConstitutional. Well not surprisingly, a lot of people resist that conclusion. There are really four kinds of arguments that people make for why it's okay for agencies to do this thing that looks a whole lot like a legislature enacting a law in the face of a Constitution that creates Congress to do that evidently. So let me just run through those four key arguments. The first denies that there is a textual Constitutional problem with agencies exercising that kind of power. Yes, it's true, the argument goes, that agencies are not Congress; they're executive bodies. It looks like those agencies, that executive body, might be exercising law-making authority, but there is no clause in the Constitution that openly says that they can't. If you think of Congress as delegating some of its legislative power to agencies, there's no non-delegation clause in the Constitution. You tick down it, there's nothing that says Congress may not delegate its legislative power. There isn't even a separation of powers clause in the Constitution. There's no provision that says something like "The legislature shall never exercise the executive or judicial power. The executive shall never exercise the legislative or judicial power. The judiciary shall never exercise the legislative or executive power, that it may be a government of laws and not of men." No provision like that. There is a provision like that. It's about a 90% accurate paraphrasing in the Massachusetts Constitution of 1780 which preceded the United States Constitution. Whole bunch of other state Constitutions in the 18th century had separation of powers provisions like that. The United States Constitution doesn't. So one part of the argument in favor of delegations is the Constitution wanted to prohibit it. Well the framing generation knew how to write a provision that would do that. Second argument which really is the foundation of modern case law on the subject says, this is a matter of necessity. You simply can't have the modern government that most people want to have without Congress punting a lot of its authority to administrative agencies. A third argument which you might hear in conjunction with the other two says essentially agencies are smarter than Congress. Think about the sorts of people who are in Congress. Think about the sorts of people who are likely to be in administrative agencies. Although smart people with their advanced Ivy League degrees and their long experience and their specialization, who's going to make better decisions? It's a straightforward argument from consequences. You're likely to get better decisions by leaving it to the people who know what they're doing rather than the politicians. There's even a fourth argument that suggests that delegating power to administrative agencies might counterintuitively be more democratic than leaving it to Congress. How can that be? Well suppose you're really interested in energy policy. Well if you vote for someone for Congress because of their energy policy, you're also getting their views on monetary policy, relations with North Korea, the War on Drugs, everything else that the national government deals with. What the administrative state does by delegating specialized functions to administrative agencies is it un-bundles a lot of the powers of the national government. So the people who really care about energy policy can go deal with the Federal Energy Regulatory Commission and the United States Department of Energy, and they don't have to worry about those agency's views on North Korea or the War on Drugs. They can just focus on what is important to them. Those are four compelling arguments in favor of the administrative state. Do you have an answer for each of those as to why administrative authority might be unconstitutional? We start with the actual Constitution itself. It is true that there is no express non-delegation clause, no express separation of powers clause, but the way the United States Constitution is constructed, one wouldn't necessarily expect it for two reasons. First, the Constitution has a lot in common with a class of documents familiar to everybody in the 18th century called fiduciary instruments. That's just a word we use for any document in which somebody gives somebody else some power over their own affairs. Hire someone as your attorney; you're making them your agent and they're serving as what we call a fiduciary. They owe certain duties to you. Well the Constitution is essentially we the people, this entity identified in the preamble, conferring on institutions of the national government a bunch of powers to manage certain of we the people's affairs. If you think of the Constitution in those terms, one of the basic fundamental background principles of the law of agency, the law governing fiduciary documents, is whoever it is you give fiduciary powers to, they're supposed to exercise it themselves. You don't need to say that. You don't need to say "I'm designating you as my agent. I expect you to do the job and not pawn it off on someone else." That goes literally without saying. It's if you want them to pawn it off on someone else, you would have to say so. Second reason why you wouldn't necessarily expect the Constitution to contain an express non-delegation clause is it accomplishes that end through other means. The Constitution creates a new government out of thin air. All of those institutions of that new government get their authority, get their power to do things from the Constitution. That's what we call the principle of enumerated powers. We tend to think of it as enumerating powers for the government as a whole. That's not exactly right. The Constitution doesn't grant powers to the government, the national government. It grants powers to particular institutions of the national government: to Congress, to the president, to the courts. Those grants of power define what those institutions can do. Congress is given all legislative powers herein granted. It's not given executive power or judicial power. President is vested with the executive power, isn't given the legislative powers herein granted or the judicial power. So you reach the conclusion that these institutions can only do what they're supposed to do and not what they're not told to do simply from reading what it is that they're allowed to do. Those seem to me the very, very strong, I would even say overwhelming arguments in favor of the Constitution itself containing a principle against delegation of legislative authority. All right. Fast forward to modern times. What do we do about the practical arguments from necessity, from expertise, right? How do we handle those? Start with the argument from necessity. There's something to that. It's often overstated. If Congress was worried that it could not do its job simply on its own, it can enlist administrative agencies as guides. It can have administrative agencies promulgate rules as suggestions for legislation. Congress can even change its own rules of procedure to allow up or down votes on those proposals. Would that slow down somewhat the flow of law out of government? Probably. Would it prevent Congress from, in the words of the Supreme Court, doing its job? That depends upon what you view Congress's job as being. If you view Congress's job as legislating in accordance with Constitutional norms, Congress could do its job just fine. If you view Congress's job as producing what somebody thinks is a good idea regardless of what the Constitution prescribes, yeah, then I suppose then maybe there would be some necessity for delegation. Not sure why that's a credible account of what Congress's job is, but that's just me. Third argument is that agencies are likely to be better at what they're doing than Congress would be. That may depend on what it is that you think agencies are doing. If what you think agencies are doing is applying technocratic expertise to questions of practical science and application that have objectively right and wrong answers, yeah, there's a chance they're more likely to get that right than the politicians in Congress. If you believe that a good portion of what agencies do is dressed up in the mantle of science and expertise but is really simply making decisions about value and policy, it is not obvious why the advanced degrees from Ivy League schools count for much in terms of figuring out what's right and wrong. So it depends upon what you imagine the agencies to be doing. Then finally, the fourth argument about how it is that agencies might be more democratically responsive. I'm not expert on democratic theory. That's for political scientists. What I would observe is that the Constitution of the United States does not instantiate any particular academic pure theory of democratic responsiveness. It instantiates a very specific historically concrete model of democratic responsiveness. That is it prescribes a certain set of mechanisms and a certain set of institutions and that counts as what the Constitution considers democratic responsiveness. Could there be an academic theory that is in some way abstractly better than the theory of the Constitution? Sure. Could be. There are all sorts of reasons why one might prefer various academic models to the Constitution, but let's just be aware that that's what the argument involves. Unconstitutional or not, agencies frequently make rules with the force of law. Practically speaking, how is that done? Once the agencies are actually making policy, how do they go about proposing those policies and then carrying them out? When agencies do things that have legal effect, they do it through one of two modes. We call those rule-making and adjudication. When agencies engage in rule-making, they do something that looks a lot like a legislature enacting a law. They come out with a norm of general conduct that has legal effect. When agencies adjudicate, they do things that look a whole lot like a court deciding a case. They take a particular dispute, they find facts, they reach legal conclusions about those facts, and they enter an order which looks a lot like a judicial judgment. So those two modes of agency action, rule-making and adjudication, are analogous to legislation and judging. Those are the ways that agencies can come out with legally binding outcomes. They can do all sorts of things that don't have any formal legal consequences. They can investigate. They can think. They can analyze. They can propose. None of those actions change anyone's legal rights and responsibilities. They're predicates for the stuff that does, but the things that actually change people's rights and responsibilities are rule-making and adjudication. There are some agencies where Congress, by law, has specified that they have to do certain things a certain way. Most of the time, most agencies can choose whether they want to make rules or adjudicate cases. Sometimes they don't have that choice. Examples - when then the Environmental Protection Agency or the Occupational Safety and Health Administration set health or pollution rules, they have to do it by rules because Congress has said so in the statutes. There are other agencies like the National Labor Relations Board, the Federal Trade Commission that have mostly chosen to set their policies on labor law and trade law through deciding particular cases. They don't have to do it that way. Under their statutes, they could do it either through rules or through adjudications. They have just historically chosen primarily to do that through adjudications. So there are very complicated questions often of policy as much as of law about exactly what modes of proceeding an agency will use, but they can make policy through either one. Thank you for listening to this episode of the No. 86 Lecture series. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class!