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: We tend to think of administrative agencies as being a modern invention but agencies in some form have always been a part of our governmental system, like the Treasury Department. Can you give us a brief history of administrative agencies and the development of administrative law? GARY LAWSON: Federal administrative law has developed over a series of periods or eras. For roughly the first 100 years of the country, into the end of the 19th Century, there really wasn't anything that was called administrative law. It wasn't a distinct field of study. There were administrative agencies, the Department of War, the Department of State, the Department of the Treasury. It's really since the end of the 19th Century that we've seen an expansion in the role of administrative agencies, and that has led to the rise of administrative law. Those expansions have happened in fits and starts. They've all been driven by particular historical forces, and they've each been accompanied by changes in the thinking not just about what government should do, but how government should do it. Let me start with what's sometimes called the Progressive Era, let's say, from 1880 into the 1920s. During that period you absolutely saw an expansion in the conception of what the national government should be doing. The national government began entering, in a big way, regulation of economic entities, regulation of transportation, regulation of the banking industry, the creation of the Federal Reserve, centralizing control over the money supply, regulation of food and drugs, regulations of broadcasting as broadcasting starts to enter. All of this is done through the vehicle of administrative agencies. As the conception of the national government gets more activist during this period, you also had shifts in what institutions of government were seen as the best vehicles for this regulation. The progressive era saw the celebration of expertise, people with advanced degrees, people with experience, people who are really smart. They're the ones who you want in charge of this. You don't want Congress figuring out how to regulate the railroads. You want Congress to create a body of experts who will sit down in a room, get together, think about it, and they'll figure out how to regulate the railroads. Same thing with broadcast licenses. You don't want Congress figuring out who's going to get the broadcast licenses. You need an expert agency to figure out who's going to get the broadcast licenses. As the scope of government expands during this period, it's only natural that people would turn to supposedly expert administrative agencies as the vehicles for doing it. That's really the birth of administrative law because now you have enough agencies out there doing enough important things to worry about, and because they're now performing important functions, people started to think carefully about which functions should they be performing, and which the legislature be performing? The conclusion was the legislature should set the general goals, should fix the ends, decide we're going to build bridges, for example, and then you turn it over to the experts to figure out how the bridges get built, with a minimum of both legislative and judicial interference. After all, if the legislature doesn't know what's going on, courts don't know any better. Leave it to the experts to figure out how to build the bridges. Your next big shift comes with the New Deal in the 1930s. There you have yet another quantum leap in involvement of the national government and economic affairs, now regulating labor markets, agriculture, pretty much every aspect of industry. Large jump from the more segmented transportation, broadcast license, banking, food and drug, regulation of the Progressive Era. You also had a shift in how to go about that. The New Deal model said, "Well, if the agencies are the smart ones who can figure out how to build the bridges, maybe they're also the smart ones who should figure out whether we should be building bridges in the first place instead of building, let us say, bomb shelters." The shift was to agencies, not just as expert implementers of legislative policies, but as the ones who actually formulate the policies. The ideal statute on that model is a statute that creates an agency, gives it a lot of power, hands it a budget, and then gets out of the way, keeps the legislature out of the way, keeps the courts out of the way, let the experts figure out what to do and how to do it. We still have, as part of our legacy, much of that New Deal structure as part of our law today. The next major move comes several decades later in the 1960s. Yet another quantum leap in the scope of federal governmental power, through the massive expansion of the welfare state in the great society, and the environmental movement, which gets the national government involved in cross industry, economy-wide regulation of air and water pollution, product safety, workplace safety, a whole new group of agencies coming in, plus expansion of the authority of the existing agencies. By this time however, when we get to the 1960s, there's a very different conception about what functions it makes sense to give to these agencies. The celebration of agency expertise to the point of viewing them as the right bodies to figure out what to do, as well as how to do it, by the 1960s had fallen into disfavor. Everyone from free market economists to Ralph Nader and his organization was suspicious of agencies. They all thought that the agencies were essentially going to be taken over by powerful economic interests, who would then use the agencies to serve their own ends at the expense of consumers, the broader public, and the like. Unlike the 1930s, when the point was to separate agencies from both political and judicial control, let them do their thing, 1960s you were going to grant power to the agencies, but only subject to controls, both political controls and judicial controls. A lot of our modern administrative law comes out of that time period. A lot of our institutions of administrative review, how courts look at the work product of agencies, come from that time period. Since then, for roughly the last 40 to 45 years, administrative law has been fairly stable. There are obviously ebbs and flows about what the national government is doing. There are differences as you go from, let's say, the Bush administration, to the Obama administration, to the Trump administration. What we have not seen in the last 4 1/2 decades is a paradigm shift, something that fundamentally transforms the way people think about the scope of the national government or about the appropriate role of administrative agencies. Administrative law has enjoyed a kind of stability over the last 40 to 50 years. PUBLIUS: Even given the relative stability of the law, it seems like administrative agencies and their jurisdictions keep growing. Why do administrative agencies exercise so much power? GARY LAWSON: As the scope of activity of the national government expands, it's perhaps not inevitable that most of that power would be exercised by administrative agencies. You can imagine a world in which some of that power is exercised by Congress. Some of it is exercised by courts, but it's not surprising that the bulk of that expanded federal power is exercised by administrative agencies. As a result of that, agencies are probably the single most important power center in American life. They exert more effective control over what people do on a daily basis than Congress, the courts combined. How you view enhanced administrative agency control over people's lives probably depends upon what you value. How much do you value individual freedom? How much do you value prosperity, and do you think that agency control enhances or hampers the pursuit of prosperity? Are there other goals that you think are important to pursue? How important is it that other people are forced to behave in a way that you think is appropriate. If you think, for example, that all of humanity is going to die in the next 10 years unless everybody stops driving SUVs and eating hamburger, you're going to have a particular view about certain agency action that you might not share if you have a different set of predictions or priorities. PUBLIUS: It’s true that people don’t usually question the existence of agencies - they only concern themselves about whether they like the rules being promulgated. Is there a legal difference between rules and statutes? GARY LAWSON: When agencies engage in rule making, what they do looks very much like what Congress does when it passes a law. The thing that emerges from that process, the rule, has the same legal effect as a statute. It's enforceable in court, it can create criminal penalties, civil penalties, can preempt State Law. All of the things that a statute can do, a rule can do. What's the difference? Well, there's a very large difference in the process, the procedure by which those different legal norms are produced. Congress produces laws. The Constitution, in Article One, Section Seven, specifies a process by which those laws are made. They must be approved in exactly the same form, by two distinct houses of Congress; the House and the Senate. . . .After those two different bodies vote, it then goes to the President, who can veto the Bill. It doesn't become a law unless the President approves. Or if the President vetoes, you gotta go back to Congress and get super majorities; two-thirds votes in each of the two houses of Congress for something to make a law. So that process is very cumbersome. It's designed to bring into play at least three bodies with different constituencies: The House, The Senate, The President. There are a lot of what political scientists call veto points built into that process. A lot of ways to derail legislation on its way to becoming law. It can be stopped in The House, it can be stopped in The Senate, it can be stopped in committees, it can be stopped at the level of the President. Each of those ways of stopping something from becoming law is a veto point. So the legislative process specified by The Constitution deliberately builds a lot of those in. It's supposed to be difficult to enact a law. And you're only supposed to be able to get a law enacted if there is a fairly broad consensus about it. And because of the composition of The House and The Senate, to get a full majority of each, you would need something resembling a geographical nationwide consensus. It's possible for regional interests to roll the process, but it's designed to create that. Now, shift to agency rule making. Agency rule making loses those constitutional veto points. For an agency to promulgate a rule, all you need is a majority of the agency. If there's a single head of the agency, that's one person. If it's a multi-member commission of let's say five people, you need three of them. You don't need the approval of The House and The Senate and The President with all of those veto points. You don't have to go through committees. So a lot of the possible roadblocks to enacting something into law set up by The Constitution for the legislative process are not there in the agency rule making process. On the other hand, there are certain procedures or hoops that agencies have to jump through that Congress does not. Administrative agencies engaged in rule making that's going to result in these rules that look and actually like statutes, by statute have to jump through a whole bunch of hoops. They do have to provide advanced notice of what they're doing. They have to give people an opportunity to explain why what they're doing is s bad idea. Once they do it, they have to explain what they did. Once Congress enacts a law, it doesn't have to write an essay explaining why the law it passed is such a great idea. When administrative agencies promulgate rules, they have an essay requirement that comes with it. They have to write a long, detailed explanation that is going to be looked at by a court, to make sure that they haven't skipped any steps in their reasoning. Just like on a math test, agencies have to show their work. So there are procedural obstacles to agency rule making that don't exist for actual law making, but they're different kind of procedures. They're not the procedures identified in The Constitution for the promulgation of legally binding norms. But substantively, once all the hoops have been jumped through, once all of the procedures have been followed, an agency rule is just as potent a legal instrument as a statute. PUBLIUS: Assuming that a rule has been passed through all of the normal procedures, do agencies have the authority to legally enforce a rule themselves? GARY LAWSON: Once an agency jumps through all the necessary hoops to promulgate a legally valid rule, the rule is consistent with the statute, or at least not so inconsistent with the statute, that a court will strike it down, the agency has used all of the necessary procedures, the agency has explained why it adopted the rule, it's written the essay the courts demand that it write, valid rule. Once out there, that rule functions legally exactly like a Congressional statute. If there are criminal penalties attached, violation of the rule can trigger criminal penalties. It can result in civil penalties, sometimes fines of $1 million a day in cases of some of the environmental regulations. Those agency rules can preempt state laws. Laws enacted by state legislatures inconsistent with federal agency rules, fall just as those state laws fall before congressional statutes in the event of conflict. If agencies make law through adjudicatory decisions, rather than rules, those adjudicatory decisions can have what we call res judicata effect in federal court, just like other court decisions can. That is matters that are necessarily resolved by the agency and its adjudication, those can't be argued again, even if you move from the agency, executive officials, to a court, Article 3 Judges. Valid agency rules, valid agency orders have the same legal effect as things that come out of Article 1 Institution of Congress, the Article 3 Institution of the Courts. A great deal turns on what it takes for administrative agencies to jump through all of the necessary hoops to get these rules and orders out there. That's why we have long courses on administrative law. These things matter. 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. We tend to think of administrative agencies as being a modern invention but agencies in some form have always been a part of our governmental system, like the Treasury Department. Can you give us a brief history of administrative agencies and the development of administrative law? Federal administrative law has developed over a series of periods or eras. For roughly the first 100 years of the country, into the end of the 19th Century, there really wasn't anything that was called administrative law. It wasn't a distinct field of study. There were administrative agencies, the Department of War, the Department of State, the Department of the Treasury. It's really since the end of the 19th Century that we've seen an expansion in the role of administrative agencies, and that has led to the rise of administrative law. Those expansions have happened in fits and starts. They've all been driven by particular historical forces, and they've each been accompanied by changes in the thinking not just about what government should do, but how government should do it. Let me start with what's sometimes called the Progressive Era, let's say, from 1880 into the 1920s. During that period you absolutely saw an expansion in the conception of what the national government should be doing. The national government began entering, in a big way, regulation of economic entities, regulation of transportation, regulation of the banking industry, the creation of the Federal Reserve, centralizing control over the money supply, regulation of food and drugs, regulations of broadcasting as broadcasting starts to enter. All of this is done through the vehicle of administrative agencies. As the conception of the national government gets more activist during this period, you also had shifts in what institutions of government were seen as the best vehicles for this regulation. The progressive era saw the celebration of expertise, people with advanced degrees, people with experience, people who are really smart. They're the ones who you want in charge of this. You don't want Congress figuring out how to regulate the railroads. You want Congress to create a body of experts who will sit down in a room, get together, think about it, and they'll figure out how to regulate the railroads. Same thing with broadcast licenses. You don't want Congress figuring out who's going to get the broadcast licenses. You need an expert agency to figure out who's going to get the broadcast licenses. As the scope of government expands during this period, it's only natural that people would turn to supposedly expert administrative agencies as the vehicles for doing it. That's really the birth of administrative law because now you have enough agencies out there doing enough important things to worry about, and because they're now performing important functions, people started to think carefully about which functions should they be performing, and which the legislature be performing? The conclusion was the legislature should set the general goals, should fix the ends, decide we're going to build bridges, for example, and then you turn it over to the experts to figure out how the bridges get built, with a minimum of both legislative and judicial interference. After all, if the legislature doesn't know what's going on, courts don't know any better. Leave it to the experts to figure out how to build the bridges. Your next big shift comes with the New Deal in the 1930s. There you have yet another quantum leap in involvement of the national government and economic affairs, now regulating labor markets, agriculture, pretty much every aspect of industry. Large jump from the more segmented transportation, broadcast license, banking, food and drug, regulation of the Progressive Era. You also had a shift in how to go about that. The New Deal model said, "Well, if the agencies are the smart ones who can figure out how to build the bridges, maybe they're also the smart ones who should figure out whether we should be building bridges in the first place instead of building, let us say, bomb shelters." The shift was to agencies, not just as expert implementers of legislative policies, but as the ones who actually formulate the policies. The ideal statute on that model is a statute that creates an agency, gives it a lot of power, hands it a budget, and then gets out of the way, keeps the legislature out of the way, keeps the courts out of the way, let the experts figure out what to do and how to do it. We still have, as part of our legacy, much of that New Deal structure as part of our law today. The next major move comes several decades later in the 1960s. Yet another quantum leap in the scope of federal governmental power, through the massive expansion of the welfare state in the great society, and the environmental movement, which gets the national government involved in cross industry, economy-wide regulation of air and water pollution, product safety, workplace safety, a whole new group of agencies coming in, plus expansion of the authority of the existing agencies. By this time however, when we get to the 1960s, there's a very different conception about what functions it makes sense to give to these agencies. The celebration of agency expertise to the point of viewing them as the right bodies to figure out what to do, as well as how to do it, by the 1960s had fallen into disfavor. Everyone from free market economists to Ralph Nader and his organization was suspicious of agencies. They all thought that the agencies were essentially going to be taken over by powerful economic interests, who would then use the agencies to serve their own ends at the expense of consumers, the broader public, and the like. Unlike the 1930s, when the point was to separate agencies from both political and judicial control, let them do their thing, 1960s you were going to grant power to the agencies, but only subject to controls, both political controls and judicial controls. A lot of our modern administrative law comes out of that time period. A lot of our institutions of administrative review, how courts look at the work product of agencies, come from that time period. Since then, for roughly the last 40 to 45 years, administrative law has been fairly stable. There are obviously ebbs and flows about what the national government is doing. There are differences as you go from, let's say, the Bush administration, to the Obama administration, to the Trump administration. What we have not seen in the last 4 1/2 decades is a paradigm shift, something that fundamentally transforms the way people think about the scope of the national government or about the appropriate role of administrative agencies. Administrative law has enjoyed a kind of stability over the last 40 to 50 years. Even given the relative stability of the law, it seems like administrative agencies and their jurisdictions keep growing. Why do administrative agencies exercise so much power? As the scope of activity of the national government expands, it's perhaps not inevitable that most of that power would be exercised by administrative agencies. You can imagine a world in which some of that power is exercised by Congress. Some of it is exercised by courts, but it's not surprising that the bulk of that expanded federal power is exercised by administrative agencies. As a result of that, agencies are probably the single most important power center in American life. They exert more effective control over what people do on a daily basis than Congress, the courts combined. How you view enhanced administrative agency control over people's lives probably depends upon what you value. How much do you value individual freedom? How much do you value prosperity, and do you think that agency control enhances or hampers the pursuit of prosperity? Are there other goals that you think are important to pursue? How important is it that other people are forced to behave in a way that you think is appropriate. If you think, for example, that all of humanity is going to die in the next 10 years unless everybody stops driving SUVs and eating hamburger, you're going to have a particular view about certain agency action that you might not share if you have a different set of predictions or priorities. It’s true that people don’t usually question the existence of agencies - they only concern themselves about whether they like the rules being promulgated. Is there a legal difference between rules and statutes? When agencies engage in rule making, what they do looks very much like what Congress does when it passes a law. The thing that emerges from that process, the rule, has the same legal effect as a statute. It's enforceable in court, it can create criminal penalties, civil penalties, can preempt State Law. All of the things that a statute can do, a rule can do. What's the difference? Well, there's a very large difference in the process, the procedure by which those different legal norms are produced. Congress produces laws. The Constitution, in Article One, Section Seven, specifies a process by which those laws are made. They must be approved in exactly the same form, by two distinct houses of Congress; the House and the Senate. . . .After those two different bodies vote, it then goes to the President, who can veto the Bill. It doesn't become a law unless the President approves. Or if the President vetoes, you gotta go back to Congress and get super majorities; two-thirds votes in each of the two houses of Congress for something to make a law. So that process is very cumbersome. It's designed to bring into play at least three bodies with different constituencies: The House, The Senate, The President. There are a lot of what political scientists call veto points built into that process. A lot of ways to derail legislation on its way to becoming law. It can be stopped in The House, it can be stopped in The Senate, it can be stopped in committees, it can be stopped at the level of the President. Each of those ways of stopping something from becoming law is a veto point. So the legislative process specified by The Constitution deliberately builds a lot of those in. It's supposed to be difficult to enact a law. And you're only supposed to be able to get a law enacted if there is a fairly broad consensus about it. And because of the composition of The House and The Senate, to get a full majority of each, you would need something resembling a geographical nationwide consensus. It's possible for regional interests to roll the process, but it's designed to create that. Now, shift to agency rule making. Agency rule making loses those constitutional veto points. For an agency to promulgate a rule, all you need is a majority of the agency. If there's a single head of the agency, that's one person. If it's a multi-member commission of let's say five people, you need three of them. You don't need the approval of The House and The Senate and The President with all of those veto points. You don't have to go through committees. So a lot of the possible roadblocks to enacting something into law set up by The Constitution for the legislative process are not there in the agency rule making process. On the other hand, there are certain procedures or hoops that agencies have to jump through that Congress does not. Administrative agencies engaged in rule making that's going to result in these rules that look and actually like statutes, by statute have to jump through a whole bunch of hoops. They do have to provide advanced notice of what they're doing. They have to give people an opportunity to explain why what they're doing is s bad idea. Once they do it, they have to explain what they did. Once Congress enacts a law, it doesn't have to write an essay explaining why the law it passed is such a great idea. When administrative agencies promulgate rules, they have an essay requirement that comes with it. They have to write a long, detailed explanation that is going to be looked at by a court, to make sure that they haven't skipped any steps in their reasoning. Just like on a math test, agencies have to show their work. So there are procedural obstacles to agency rule making that don't exist for actual law making, but they're different kind of procedures. They're not the procedures identified in The Constitution for the promulgation of legally binding norms. But substantively, once all the hoops have been jumped through, once all of the procedures have been followed, an agency rule is just as potent a legal instrument as a statute. Assuming that a rule has been passed through all of the normal procedures, do agencies have the authority to legally enforce a rule themselves? Once an agency jumps through all the necessary hoops to promulgate a legally valid rule, the rule is consistent with the statute, or at least not so inconsistent with the statute, that a court will strike it down, the agency has used all of the necessary procedures, the agency has explained why it adopted the rule, it's written the essay the courts demand that it write, valid rule. Once out there, that rule functions legally exactly like a Congressional statute. If there are criminal penalties attached, violation of the rule can trigger criminal penalties. It can result in civil penalties, sometimes fines of $1 million a day in cases of some of the environmental regulations. Those agency rules can preempt state laws. Laws enacted by state legislatures inconsistent with federal agency rules, fall just as those state laws fall before congressional statutes in the event of conflict. If agencies make law through adjudicatory decisions, rather than rules, those adjudicatory decisions can have what we call res judicata effect in federal court, just like other court decisions can. That is matters that are necessarily resolved by the agency and its adjudication, those can't be argued again, even if you move from the agency, executive officials, to a court, Article 3 Judges. Valid agency rules, valid agency orders have the same legal effect as things that come out of Article 1 Institution of Congress, the Article 3 Institution of the Courts. A great deal turns on what it takes for administrative agencies to jump through all of the necessary hoops to get these rules and orders out there. That's why we have long courses on administrative law. These things matter. 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!