A New Look at Old Money

Taxing wealth—including inherited wealth—is a hot topic, making headlines and generating heated debate. Should millionaires and billionaires face an annual wealth tax, as championed by Senators and former presidential candidates Elizabeth Warren and Bernie Sanders? Should we strengthen the existing estate tax, as former presidential candidate Kamala Harris urged? Or, as opponents argue, are both annual wealth and once-a-generation wealth transfer taxes unfair and impractical? What makes this debate so intractable is not only that the public as a whole is divided on these issues, but that also many individual Americans hold simultaneous beliefs about wealth, opportunity, fairness, desert, and family that seemingly contradict each other. This Article cuts through that debate by proposing a novel solution for inheritance taxation that reconciles these deeply held beliefs with the benefits of wealth transfer taxation.

Our current estate tax treats the self-made millionaire the same as an heiress who has not earned a cent when they pass their fortunes on to their heirs. But this is misguided. Drawing on recent work on the psychology of taxation, this Article makes the case for an innovative inheritance tax system that taxes old money more heavily than new. This approach would allow individuals to bequeath wealth that they have earned—but not wealth that they have inherited—free of tax. Known as a Rignano tax, this proposal harnesses the finding that many Americans “silo” beliefs about wealth, holding seemingly contradictory beliefs that differ in part based on whether wealth is earned or inherited. By leveraging these findings and building on experience with the existing transfer tax system, this Article elaborates and advances a set of specific and concrete design recommendations for a Rignano tax.

This comprehensive analysis of a Rignano tax—the first in the law review literature—complements philosophical work that advocates for such a tax but does not address key design and policy questions. Further, it contributes to tax scholarship by advancing our understanding of the relationship between a tax’s normative goals and structural design choices. And for both advocates and opponents of the estate tax, it offers a nuanced and fair exploration of the debate surrounding inheritance taxation as well as a potential resolution of the enduring stalemate over taxing wealth.

Her voice is full of money.

—F. Scott Fitzgerald, The Great Gatsby1F. Scott Fitzgerald, The Great Gatsby 120 (Scribner Library 2018) (speaking about Daisy Buchanan, who represents “old money”).

They were new money, without a doubt: so new it shrieked. Their clothes looked as if they’d covered themselves in glue, then rolled around in hundred-dollar bills.

—Margaret Atwood, The Blind Assassin2Margaret Atwood, The Blind Assassin 242 (Quality Paperbacks Direct London 2000).

  Introduction

Compare Tom, who builds a multi-million-dollar business from the ground up, with Mary, an heiress who inherits millions and never earns a cent. Both want to leave their fortunes to their children. Although our current estate tax treats Tom and Mary the same, this approach is misguided. It ignores that not only is the public as a whole divided on the issue of taxing wealth transfers,3Joseph Thorndike, Why Do People Hate Estate Taxes but Love Wealth Taxes, Forbes (Oct. 30, 2019), https://www.forbes.com/sites/taxnotes/2019/10/30/why-do-people-hate-estate-taxes-but-love-wealth-taxes [https://perma.cc/YC8R-QZLD] (recounting results from recent polls). but many individual Americans hold simultaneous beliefs about wealth, opportunity, desert, fairness, and family that seemingly contradict each other. Many believe, for example, both that working hard and saving in order to help one’s children is as American as apple pie and that it is unfair for some children to begin life with a substantial head start.4Stefanie Stantcheva, Understanding Tax Policy: How Do People Reason?, 136 Q.J. Economics 2309 (2021).

As a result, the debate over taxing wealth—including inherited wealth—is at a longstanding impasse.5Michael J. Graetz & Ian Shapiro, Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth 51–73 (2005); Anne L. Alstott, Equal Opportunity and Inheritance Taxation, 121 Harv. L. Rev. 469, 502 (2007); Mark L. Ascher, Curtailing Inherited Wealth, 89 Mich. L. Rev. 69 (1990); Lily L. Batchelder, What Should Society Expect from Heirs? The Case for a Comprehensive Inheritance Tax, 63 Tax L. Rev. 1, 62 (2009); Ari Glogower, Taxing Inequality, 93 N.Y.U. L. Rev. 1421 (2018); Edward J. McCaffery, The Uneasy Case for Wealth Transfer Taxation, 104 Yale L.J. 283, 291–92 (1994); James R. Repetti, Democracy, Taxes, and Wealth, 76 N.Y.U. L. Rev. 825, 828–50 (2001). Influential legislators including Senators and former presidential candidates Elizabeth Warren and Bernie Sanders champion annual wealth taxes on ultra-millionaires, while opponents passionately contend that even once-a-generation taxes on wealth transfers are unfair and impractical, calling them “expropriation” and “an especially cruel injury.”6Ludwig von Mises, Planning for Freedom, and Sixteen Other Essays and Addresses 32 (Libertarian Press 3d ed. 1974); Loren E. Lomasky, Persons, Rights, and the Moral Community 270 n.19 (1987). This Article cuts through that debate and reconciles those competing beliefs by proposing a novel inheritance tax system that taxes old money more heavily than new. This innovative approach—known as a Rignano tax7Scholars refer to this structure as a Rignano tax because Eugenio Rignano—writing over 100 years ago—is thought to be the first to discuss this type of inheritance tax system. Eugenio Rignano, The Social Significance of the Inheritance Tax (1924). —would allow Tom to bequeath wealth that he has created free of tax, while taxing Mary, who simply inherited her wealth.

Drawing on recent work on the psychology of taxation, this innovation harnesses the finding that many Americans “silo” beliefs about wealth, holding seemingly contradictory beliefs that differ in part based on whether wealth is earned or inherited. A Rignano tax thus reconciles the benefits of wealth transfer taxation with deeply held beliefs about fairness, desert, private property, and family. Because these beliefs—which legal philosophers Liam Murphy and Thomas Nagel call “everyday libertarianism”8Liam Murphy & Thomas Nagel, The Myth of Ownership: Taxes and Justice 34–36 (2002). and which economist Steven Sheffrin terms “folk justice”9Steven M. Sheffrin, Tax Fairness and Folk Justice ix–x (2013).—generally differ from those of policymakers and academics, they are often ignored. Recent work on the psychology of taxation suggests that this is a mistake.10See, e.g., Sheffrin, supra note 9, at ix–xi; Zachary Liscow, Redistribution for Realists, 107 Iowa L. Rev. 495, 499–500 (2022). Policymakers who ignore these beliefs do so at their own peril, often undermining their own normative aims.

But taking these beliefs into account does not mean abandoning wealth transfer taxation altogether. People frequently hold views about fairness and morality in different domains that appear to contradict each other, a concept that Zachary Liscow terms “policy silos.”11Liscow, supra note 10. A pro-life advocate, for example, may also support the death penalty; someone who opposes redistributive taxation may favor transportation policy that helps the poor. Crucially, evidence indicates that many Americans “silo” beliefs about wealth, holding seemingly contradictory beliefs that depend in part on whether wealth is earned or inherited.

These insights suggest a way out of the morass bogging down the debate over inherited wealth. Supporters of inheritance taxes should not dismiss out-of-hand public attitudes about hard work, thrift, and family, but instead harness the concept of policy silos. By allowing individuals to make tax-free transfers of wealth that they themselves have earned—but not wealth that they have merely inherited—a Rignano tax acknowledges the very real, deeply held value that the public places on hard work, entrepreneurship, and notions of desert while also addressing concerns about inherited wealth.12See, e.g., Paul Krugman, Opinion, Elizabeth Warren Does Teddy Roosevelt, N.Y. Times (Jan. 28, 2019), https://www.nytimes.com/2019/01/28/opinion/elizabeth-warren-tax-plan.html [https://perma.cc/6Y6Y-NY3A].

Although the idea of taxing old money more heavily than new has long fascinated philosophers of all stripes,13These include socialist Eugenio Rignano, liberal egalitarian Daniel Halliday, and libertarian Robert Nozick. See Rignano, supra note 7; Daniel Halliday, The Inheritance of Wealth: Justice, Equality, and the Right to Bequeath (2018); Robert Nozick, The Examined Life: Philosophical Meditations (1989). philosophical literature leaves key design and policy questions unanswered. This Article answers those questions, offering the only comprehensive analysis in the law review literature of a Rignao tax. It first justifies a Rignano tax as a normative matter, delving more deeply into both expert and lay arguments for and against taxing wealth and recent work on the psychology of taxation. Its key normative insight is that a Rignano tax balances the goals of wealth transfer advocates (such as enhancing equality of opportunity and minimizing dynastic transfers of unearned power) with those of opponents of such taxes (such as rewarding desert, hard work, and family). By acknowledging both the pros and cons of taxing wealth transfers, a Rignano tax can succeed politically where other proposals fail.

What remains to be resolved are important questions of design and administration. Charting new ground in the literature on Rignano taxes, this Article builds on experience with the existing transfer tax system to elaborate and advance a set of specific and concrete design recommendations for a Rignano tax. These are:

Base: Imposing a tax on gifts and bequests received by an individual when that wealth is the subject of a second transfer;

Rate: Levying a rate of 0% on first-generation transfers and 40% on other transfers;

Valuation: Using the risk-free rate of return to determine what portion of a gift or bequest is second-generation wealth;

Frequency: Taxing generation-skipping transfers;

Tracing: Using a first-in-time approach to allocate second-generation wealth;

Trusts: Treating distribution as the relevant date for both imposing the tax and “starting the clock” for determining future growth; and

Transition Rules: Treating one-sixth to one-third of existing wealth as inherited.

Together, these recommendations build upon the insights of the psychology literature to craft an inheritance tax system that balances how the public actually thinks about taxation with the goals of inheritance tax supporters. Taxing heirs instead of transferors harnesses the insight that people silo beliefs about wealth, distinguishing between inherited and earned wealth. It also lessens the pull of moral mandates about double taxation and hard work. At the same time, it reflects the moral intuitions shared by most supporters of inheritance taxation. For example, many of the concerns raised by inherited wealth—such as equality of opportunity—are best measured by how much wealth a given person inherits, not how much total wealth an individual bequeaths without regard to how that wealth is divided among beneficiaries.

Imposing a zero rate on initial transfers of earned wealth likewise diminishes the attraction of the double taxation and hard work arguments. It also minimizes the threat that people often feel when systems of which they are a part—such as the family or an economy that rewards hard work and entrepreneurship—are undermined. By suggesting a rate of forty percent for later transfers, it acknowledges that repeated wealth transfers raise normative

concerns without breaching the fifty percent threshold that is especially salient in tax debates.

Other recommendations address valuation and liquidity concerns to increase administrability and decrease opposition triggered by those difficulties. For example, even though most normative considerations suggest taxing trust beneficiaries when their interests vest, this Article proposes taxing them at distribution. At that point, accurate valuations—and not just estimates—can be made, and liquidity concerns disappear. This acknowledges the instinct many people have that taxing “paper gains” is unfair. And using the risk-free rate of return to determine what portion of an inheritance’s growth is earned versus unearned provides a simple, easy to administer method for distinguishing what portion of a second transfer is old money versus new.

A Rignano tax thus charts a course through the competing beliefs held by both supporters and opponents of inheritance taxation. Although implementing one will require some additional complexity and recordkeeping, these burdens are not insurmountable. Several European countries tax some bequests more heavily than others depending on the relationship between the transferor and transferee.14OECD Tax Policy Studies, Inheritance Taxation in OECD Countries 7 (2021). And for the last decade or so, our current system has successfully allowed one spouse’s estate tax consequences to turn on the value of the other spouse’s property as well as actions taken by the predeceased spouse’s executor at his or her prior death. This suggests that tying a recipient’s tax burden to the actions of the transferor is feasible. Administrative concerns therefore do not derail a Rignano tax’s carefully charted course. What remains is a workable inheritance tax system that can gain traction with the public where other proposals fail.

This Article proceeds as follows. Section I offers an overview of the current estate and gift tax system and common alternatives. Section II explores the arguments for and against taxing wealth transfers. Section III describes the justifications for a Rignano tax, and Section IV details what implementing a Rignano tax would entail. Section V concludes by assessing how well a Rignano tax balances competing intuitions concerning inherited wealth and concludes that the Rignano tax is worth pursuing notwithstanding the potential complexities that attach to its design and implementation.

I. An Overview of Wealth Transfer Taxation

Taxing wealth transfers is a longstanding feature of our federal tax system. Our current estate tax dates from 1916, when Congress imposed a tax ranging from one percent on estates over $50,000 to ten percent on estates over $5,000,000.15See Joint Comm. on Tax’n, History, Present Law, and Analysis of the Federal Wealth Transfer Tax System, JCX-52-15 (March 16, 2015). Adjusted for inflation to 2025 dollars, these figures are roughly $1,560,000 and $155,760,000, respectively. See Bureau of Labor Stat., CPI Inflation Calculator, U.S. Dep’t of Lab., https://www.bls.gov/data/inflation_calculator.htm [https://perma.cc/ESR2-E45E] [hereinafter CPI Inflation Calculator]. To prevent individuals from avoiding the tax by making lifetime gifts instead of bequests, Congress permanently added a gift tax a few years later.16Joint Comm. on Tax’n, History, Present Law, and Analysis of the Federal Wealth Transfer Tax System, JCX-52-15 (March 16, 2015). This system is “unified,” meaning that it taxes an individual’s gratuitous transfers once they cumulatively exceed a per-transferor exemption amount, whether those transfers are gifts or bequests.17The taxes are structured as excise taxes on the transfer of wealth by gift or bequest, instead of a tax directly on wealth, to avoid potential constitutional concerns. See infra Section II.A.4. For simplicity, this Article refers to this unified structure as the “estate tax.”

Due to changes in the exemption and rates, the tax’s bite has fluctuated dramatically over the past two decades.18See Joint Comm. on Tax’n, supra note 15, at 39. As recently as the year 2000, the top rate was 55 percent; by 2013, it had dropped to 40 percent, where it remains.19See id., at 12. As rates were dropping, the exemption was increasing. Between 2000 and 2017, it grew from a comparatively small $675,000 to over $5,000,000,20Id. and in 2017, the Tax Cuts and Jobs Act temporarily doubled the exemption to $10,000,00021Tax Cuts and Jobs Act, Pub. L. No. 115-97, §11061, 131 Stat. 2091 (2017). (adjusted for inflation to $13,990,000 in 202522Rev. Proc. 2024-40.). Although the exemption was scheduled to return to a benchmark of $5,000,000 in 2026, legislation in the summer of 2025 permanently increased it to $15,000,000, adjusted for inflation, starting in 2026.23One Big Beautiful Bill Act, Pub. L. No. 119-21 (2025). Given the exemption’s size, the estate tax affects only a tiny sliver of the population. In 2020, roughly 4,100 estates were required to file an estate tax return,24An estate must file a return if the gross estate is over the exemption amount. Filing a return, however, does not equate to actually paying any estate tax. An estate over the exemption amount can avoid tax by using the marital or charitable deduction to reduce the size of the taxable estate to under the exemption amount. How Many People Pay the Estate Tax?, Tax Pol’y Ctr’s Briefing Book (May 2020), https://www.taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax [https://perma.cc/XZD7-XDHY]. and of those, only about 1,900 actually owed any estate tax—less than 0.1 percent of the estimated 2,800,000 decedents that year.25Id. Even in 2001, when the exemption was a much smaller $1,000,000, the tax affected relatively few decedents. Out of over 2,400,000 deaths that year, only 109,600 decedents were required to file an estate tax return and only 50,500—just over two percent—owed any estate tax. Author’s calculation based on id. and Elizabeth Arias, Robert N. Anderson, Hsiang-Ching Kung, Sherry L. Murphy & Kenneth D. Kochanek, Deaths: Final Data for 2001, 52 Nat’l Vital Stat. Reps. (Sept. 18, 2003). Despite the small number of taxable returns, the tax raises a non-trivial amount of revenue—roughly $16 billion in 2020.26See How Many People Pay the Estate Tax?, supra note 24. Interestingly, the amount of revenue has not decreased as fast as the number of taxable estates has decreased, which suggests that exempting additional transfers from tax (as a Rignano tax would) would not necessarily eviscerate the tax’s revenue-raising capacity.27Id. at tbl. 1.

A few features of the estate tax merit mention. First, it focuses on the transferor. This contrasts with recipient-focused taxes, such as the inheritance or accessions tax schemes that are more common abroad.28OECD, supra note 14. In an accessions tax, a recipient is taxed cumulatively once the total amount of gifts and bequests received over his or her lifetime exceeds an exemption amount. Inheritance taxes also focus on the recipient but impose a discrete tax on each transfer that often turns on the relationship between the transferor and recipient. Other than the marital and charitable deductions, the estate tax does not distinguish among recipients. Consider Anna, whose wealth totals $15,000,000. She is taxed the same whether she transfers her fortune to one child or splits it among ten cousins.

Second, individuals may make a number of tax-free transfers. Most importantly, each individual has a single lifetime exemption amount—currently $13.99 million—which applies to her cumulative wealth transfers.29Rev. Proc. 2024-40. Assume that Anna gifts her daughter $10 million during life and later dies with an estate of $5 million. The lifetime gift uses up most of her exemption amount, leaving only $3.99 million of it left for later transfers. At her death, $3.99 million of her estate will be shielded from tax by the rest of her exemption amount, and the remaining $1.1 million of her estate will be taxed. She does not get a new exemption for her bequests. In addition, the annual exclusion allows each individual to exclude the first $19,000 transferred to each recipient each year from the above calculations.30Id.; I.R.C. § 2503(b)(1). Anna can give as many people as she likes—her whole Tax I class, perhaps—$19,000, and the gifts are simply ignored. Anna can do this year after year, and the gifts do not use up any of her exemption amount. Further, there are unlimited deductions for marital31I.R.C § 2056 (estate tax marital deduction); I.R.C § 2523 (gift tax marital deduction). and charitable transfers.32I.R.C § 2055 (estate tax charitable deduction); I.R.C § 2522 (gift tax charitable deduction). If Anna bequeaths her entire estate to her spouse, her taxable estate is zero. She does not need to use her exemption amount, and it rolls over to her spouse for later use. Likewise, if Anna bequeaths her $15,000,000 to charity, her taxable estate is zero. In this case, however, her unused exemption simply disappears.

Third, the generation-skipping transfer tax precludes families from minimizing their total tax burden by “skipping” generations. If Anna bequeaths her estate to her daughter Bonnie, who in turn bequeaths the wealth to Anna’s granddaughter Chloe, the estate tax is imposed twice. But if Anna skips Bonnie and bequeaths her wealth directly to Chloe, the estate tax is imposed only once. To equalize the tax burden in these situations, the generation-skipping tax imposes a tax on transfers that “skip” generations.

Finally, this system is separate from the income tax. Gifts and bequests received are not included in a recipient’s income, regardless of size.33Rev. Proc. 2024-40. Later income tax consequences to the transferee depend on whether the transfer is a gift or bequest.34I.R.C § 1015. Assume that Anna buys stock for $100 and transfers it to Bonnie when it is worth $1,000. If the transfer is a gift, Bonnie takes Anna’s basis for income tax purposes and will pay tax on the $900 unrealized gain upon disposition.35I.R.C § 1015. If Anna bequeaths the stock to Bonnie, Bonnie takes a fair market value basis of $1,000.36I.R.C § 1014. For a critique of this rule and a comprehensive set of proposed alternatives, see Calvin H. Johnson, Cut Negative Tax out of Step-Up at Death, 156 Tax Notes 741 (2017); Calvin Johnson, Step-Up at Death but Not for Income, 156 Tax Notes 1023 (2017); and Calvin Johnson, Gain Realized in Life Should Not Disappear by a Step-Up in Basis, 156 Tax Notes 1305 (2017). The $900 gain that accrued in Anna’s hands disappears.

A transferor-focused estate tax is just one possible way of taxing wealth transfers. Numerous OECD countries, including Belgium, France, Germany, Japan, Spain, and Switzerland, impose either accessions or inheritance taxes that focus on beneficiaries.37OECD, supra note 14. Although the two terms are often used interchangeably, they are technically distinct.38See, e.g., Alstott, supra note 5, at 502 (using both “accessions tax” and “inheritance tax” to refer to a cumulative accessions tax, and “annual inheritance tax” to refer to an annual inheritance tax). The former taxes the recipient based on the total amount of gifts and bequests received during her lifetime, while the latter taxes the beneficiary on such receipts annually.39Id. Inheritance tax rates often vary based on the relationship between the donor and beneficiary, with transfers between close relatives taxed more lightly than transfers between more distant relatives and unrelated individuals. Finally, both accessions and inheritance tax systems generally exempt transfers between spouses.

An alternative to taxing gifts and bequests through a separate estate, inheritance, or accessions tax system is to change their income tax treatment. Most obviously, gifts and bequests could be included in income, just like salary or lottery winnings.40I.R.C § 61(a) (compensation); I.R.C § 74 (prizes).Although this is fairly rare, Latvia and Lithuania do this, and Lily Batchelder’s “comprehensive inheritance tax” is essentially an income inclusion scheme.41Specifically, Batchelder proposes that once cumulative gifts and bequests received exceed an exemption amount of $1.9 million, they be included in income and taxed at the beneficiary’s ordinary rate plus 15%. Batchelder, supra note 5, at 62.

Another option is to use carry-over basis for bequests as well as gifts so that when transferees sell, they will pay tax on any gain that accrued to the donor regardless of whether the transfer is a gift or bequest (returning to Anna and Bonnie, Bonnie would pay tax on the $900 gain that accrued in Anna’s hands in both circumstances). The U.S. has briefly experimented with carry-over basis twice before—once in 1976 (although it was repealed before going into effect) and again in 2010 (that year, estates could choose between the regular estate tax or a system without an estate tax but with carry-over basis).42Richard Schmalbeck, Jay A. Soled & Kathleen DeLaney Thomas, Advocating a Carryover Tax Basis Regime, 93 N.D. L. Rev. 109, 111–12 (2017); What is the difference between carryover basis and a step-up in basis?, Tax Pol’y Center (Jan. 2024), https://taxpolicycenter.org/briefing-book/what-difference-between-carryover-basis-and-step-basis.And finally, gifts and bequests could be treated as realization events to the donor that trigger tax on unrealized appreciation at the time of transfer.43Joseph M. Dodge, A Deemed Realization Approach Is Superior to Carryover Basis (and Avoids Most of the Problems of the Estate and Gift Tax), 54 Tax L. Rev. 421, 431 (2001); Lawrence Zelenak, Taxing Gains at Death, 46 Vand. L. Rev. 361 (1993). The United Kingdom44Capital Gains Tax: What You Pay It On, Rates and Allowances, Gov.UK, https://www.gov.uk/capital-gains-tax/gifts [https://perma.cc/M7CS-S24A]. and Australia45Tax On Gifts and Inheritances, Australian Taxation Office (Aug. 14, 2024), https://community.ato.gov.au/s/article/a079s0000009GnFAAU/tax-on-gifts-and-inheritances. treat gifts as realization events. Canada takes this approach at death, and former President Biden and numerous Senators have proposed that the U.S. follow suit.46Jane G. Gravelle, Cong. Rsch. Serv., IF11812, Tax Treatment of Capital Gains at Death (2021). In theory, one could both change the income tax treatment of gifts and bequests and impose a separate wealth transfer tax, but in the real world, they tend to be treated as either/or propositions due to political concerns.

II. The State of The Debate over Estate Taxes

Taxing wealth transfers is extremely controversial. As the foregoing history demonstrates, opponents have successfully pursued legislation that has drastically weakened the estate tax over the past two decades. In spite (or perhaps because) of this political history, taxing wealth transfers (as well as wealth itself) remains popular with a substantial portion of the public.47See Thorndike, supra note 3. Supporters of wealth transfer taxation focus on egalitarian and welfarist justifications, while opponents generally rely on libertarian arguments. This Article’s goal is not to evaluate the strengths and weaknesses of those arguments in depth, which an extensive body of work does elsewhere. Instead, it is to provide an overview of this debate so that readers can better understand how people think about the estate tax so that they can evaluate the attractions of a Rignano tax.

A. Arguments in Favor of Wealth Transfer Taxation

  1. Equality of Opportunity

Perhaps the most popular argument for taxing wealth transfers stems from the principle of equality of opportunity.48See, e.g., Alstott, supra note 5, at 470; Ascher, supra note 5, at 87–89; Barbara H. Fried, Compared to What? Taxing Brute Luck and Other Second-Best Problems, 53 Tax L. Rev. 377, 385–95 (2000); Michael J. Graetz, To Praise the Estate Tax, Not to Bury It, 93 Yale L.J. 259, 274–78 (1983); McCaffery, supra note 5, at 291–92; Eric Rakowski, Can Wealth Taxes Be Justified?, 53 Tax L. Rev. 263, 264–65 (2000) [hereinafter Rakowski, Wealth Taxes]; Eric Rakowski, Transferring Wealth Liberally, 51 Tax L. Rev. 419, 430 (1996) [hereinafter Rakowski, Transferring Wealth]. This ideal holds that each individual—regardless of arbitrary characteristics such as race or gender—should have an equal shot at pursuing her vision of the good life, while still bearing responsibility for her decisions.49Will Kymlicka, Contemporary Political Philosophy: An Introduction 58 (2d ed. 2002); Alstott, supra note 5, at 476–77. Although most Americans subscribe to this ideal, see, e.g., Bruce Ackerman & Anne Alstott, The Stakeholder Society 1 (1999); Marjorie E. Kornhauser, Choosing a Tax Structure in the Face of Disagreement, 52 UCLA L. Rev. 1697, 1728 (2005), the meaning of the principle is contested. See infra Section II.B.1. In tax and legal scholarship, the most common instantiations require “redistribution from those with greater means and opportunities to those with less.”50Rakowski, Wealth Taxes, supra note 48, at 265.

These “liberal egalitarian” theories51In legal scholarship, the two most commonly invoked liberal egalitarian theories are Rawls’s democratic equality and resource egalitarianism (sometimes called “luck egalitarianism”). Many readers are likely familiar with Rawls’s difference principle, which forms a key part of his conception of democratic equality. See John Rawls, A Theory of Justice 63 (rev. ed. 1999). For more on resource egalitarianism, see also Kymlicka, supra note 49, at 53; Rakowski, Transferring Wealth, supra note 48, at 430; Miranda Perry Fleischer, Equality of Opportunity and the Charitable Tax Subsidies, 91 B.U. L. Rev. 601, 624–32 (2011). rest on two arguments. First, the financial circumstances of birth impact one’s ability to develop one’s talents. An intelligent child born to poor parents generally does not have the same educational opportunities as one born to wealthy parents.52Harry Brighouse, Justice 48 (2004); Rawls, supra note 51, at 62–63; Alstott, supra note 5, at 486. Well-off parents can afford private school tuition or a house in a high-quality school district,53Ann Owens, Inequality in Children’s Contexts: Income Segregation of Households with and Without Children, 81 Am. Socio. Rev. 549, 565–67 (2016); Emily Badger, The One Thing Rich Parents Do for Their Kids That Makes All the Difference, Wash. Post (May 10, 2016), https://www.washingtonpost.com/news/wonk/wp/2016/05/10/the-incredible-impact-of-rich-parents-fighting-to-live-by-the-very-best-schools [https://perma.cc/BTG3-UQWR]. tutors, and challenging after-school programs. Parents of athletes pay for private coaches, travel teams, and expensive summer camps. Well-off children do not have to work to help pay the rent but can instead spend time on their studies and resume-building activities like internships. And once a child is grown, wealthy parents can provide seed money for a business, pay for graduate school, or cover the down payment on a house. Second, these circumstances are arbitrary. A child does not choose to be born into a rich or poor family, just as she does not choose her race.

Equal opportunity therefore requires some ex ante equalization of resources so that a poor child with an IQ of 150, Mozart’s musical genius, or a keen business sense has the same shot at success as a richer child. In theory, taxing wealth transfers both reduces their size (in turn diminishing the advantages of being born into a rich family) and creates revenue to fund redistribution to those with fewer opportunities.54As many have acknowledged, a recipient-focused inheritance tax would better reflect these principles. See, e.g., Alstott, supra note 5, at 485–89; Ascher, supra note 5, at 71, 87–91; Miranda Perry Fleischer, Divide and Conquer: Using an Accessions Tax to Combat Dynastic Wealth Transfers, 57 B.C. L. Rev. 913 (2016); Murphy & Nagel, supra note 8, at 157, 160; David G. Duff, Taxing Inherited Wealth: A Philosophical Argument, 6 Can. J.L. & Juris. 3, 26–27 (1993). For a detailed exploration of an inheritance tax reflecting these ideals, see Alstott, supra note 5.

  1. Dynastic Power

A related justification is to minimize the intergenerational transmission of power.55As with equality of opportunity concerns, however, the current estate tax only loosely addresses these principles because it focuses on transferors instead of transferees. See, e.g., Ascher, supra note 5, at 87–99; Louis Eisenstein, The Rise and Decline of the Estate Tax, 11 Tax L. Rev. 223, 235–36, 258–59; Fleischer, supra note 54, at 918–20; Repetti, supra note 5, at 828–50. As our founders recognized, rejecting hereditable power is one of our fundamental values.56See, e.g., 1 Thomas Jefferson, The Works of Thomas Jefferson 58 (Paul Leicester Ford ed., 1994). Yet great wealth often brings economic and political power over others.57Miranda Perry Fleischer, Charitable Contributions in an Ideal Estate Tax, 60 Tax L. Rev. 263, 278–79 (2007). Those favoring wealth transfer taxes on these grounds point to the following.

First, money enables one to make substantial political donations. Donors become de facto gatekeepers and agenda setters, influencing who more easily stays in the race and which issues gain prominence.58Thomas Christiano, Money in Politics, in The Oxford Handbook of Political Philosophy 241, 244–45 (David Estlund ed., 2012). Substantial contributions plausibly increase access to elected officials59As Donald Trump explained in 2016, “I give to everybody. When they call, I give. And you know what, when I need something from them two years later, three years later, I call them. They are there for me.” See Jill Ornitz & Ryan Struyk, Donald Trump’s Surprisingly Honest Lessons About Big Money in Politics, ABC News (Aug. 11, 2015), https://abcnews.go.com/Politics/donald-trumps-surprisingly-honest-lessons-big-money-politics/story?id=32993736 [https://perma.cc/Y6M5-ACBR]. This instinct is both widely held and confirmed by some recent empirical work. See Joshua L. Kalla & David E. Broockman, Campaign Contributions Facilitate Access to Congressional Officials: A Randomized Field Experiment, 60 Am. J. Pol. Sci. 545, 546–50 (2016); Laura I. Langbein, Money and Access: Some Empirical Evidence, 48 J. Pol. 1052, 1060 (1986). But see Michelle L. Chin, Jon R. Bond & Nehemia Geva, A Foot in the Door: An Experimental Study of PAC and Constituency Effects on Access, 62 J. Pol. 534 (2000). as well as influencing legislative behavior.60See, e.g., Tara Siegel Bernard, A Citizen’s Guide to Buying Political Access, N.Y. Times (Nov. 18, 2014), https://www.nytimes.com/2014/11/19/your-money/a-citizens-guide-to-buying-political-access-.html [https://web.archive.org/web/20240507101251/https://www.nytimes.com/2014/11/19/your-money/a-citizens-guide-to-buying-political-access-.html]; Amy Melissa McKay, Fundraising for Favors? Linking Lobbyist-Hosted Fundraisers to Legislative Benefits, 71 Pol. Rsch. Q. 869, 869–76 (2018). Empirical evidence on this point is mixed, however. Cf. Christiano, supra note 58, at 244 with Kalla & Broockman, supra note 59, at 546–48; McKay, supra, at 869–70, 871–75. Large contributors often obtain influential positions such as ambassadorships or bureaucratic posts.61Ryan M. Scoville, Unqualified Ambassadors, 69 Duke L.J. 71, 73 (2019); Christiano, supra note 58, at 247. Having a lot of money also makes it easier to run for office. Consider recent presidential candidates Tom Steyer622020 Presidential Race: Tom Steyer, OpenSecrets (Mar. 22, 2021), https://www.opensecrets.org/2020-presidential-race/candidate?id=N00044966 [https://perma.cc/W8LE-3BXC]. and Michael Bloomberg632020 Presidential Race: Michael Bloomberg, OpenSecrets (Mar. 22, 2021), https://www.opensecrets.org/2020-presidential-race/candidate?id=N00029349 [https://perma.cc/3KHB-PXT5]. See also Michael Barbaro, Bloomberg Spent $102 Million to Win 3rd Term, N.Y. Times (Nov. 27, 2009), https://archive.nytimes.com/cityroom.blogs.nytimes.com/2009/11/27/bloomberg-spent-102-million-to-win-3rd-term [https://perma.cc/X5P5-TRN9]. On criticisms that Bloomberg bought his way into contention, see, e.g., Lisa Lerer, Michael Bloomberg Is Open to Spending $1 Billion to Defeat Trump, N.Y. Times (Jan. 11, 2020), https://www.nytimes.com/2020/01/11/us/politics/michael-bloomberg-spending.html [https://perma.cc/KKA2-8TW3]; Nathan J. Robinson, A Republican Plutocrat Tries to Buy the Democratic Nomination, Current Affs. (Feb. 9, 2020), https://www.currentaffairs.org/news/2020/02/a-republican-plutocrat-tries-to-buy-the-democratic-nomination [https://perma.cc/6Q9Y-GSHT]. as well as President Donald Trump.64Jeremy W. Peters & Rachel Shorey, Trump Spent Far Less than Clinton, but Paid His Companies Well, N.Y. Times (Dec. 9, 2016), https://www.nytimes.com/2016/12/09/us/politics/campaign-spending-donald-trump-hillary-clinton.html [https://perma.cc/F7W2-BWC2] (although roughly 80% of Trump’s funding came from donors, he still spent $65 million of his own money); 2020 Presidential Race: Donald Trump, OpenSecrets (Mar. 22, 2021), https://www.opensecrets.org/2020-presidential-race/candidate?id=N00023864 [https://perma.cc/5T8P-XMDS]. Closer to home, numerous candidates in U.S. Senate and House races65See Top Self-Funding Candidates, OpenSecrets (Mar. 6, 2019), https://www.opensecrets.org/elections-overview/top-self-funders?cycle=2018 [https://perma.cc/A2QX-EQJX]; Fredreka Schouten, Trump Effect? Candidates Plow Record Amounts of Their Own Money into Congressional Bids, CNN Pol. (Nov. 5, 2018), https://www.cnn.com/2018/11/05/politics/self-funding-candidates-record-midterms/index.html [https://perma.cc/54U7-GBQ5] (In 2018, 61 self-funders spent almost $213 million, surpassing 2012 record of $166.3 million spent by self-funders). and state and local elections66See, e.g., Anthony Cotton, In an Era of Self-Funded Campaigns, Amendment 75 Aims to Even the Odds, Colo. Pub. Radio (Nov. 1, 2018), https://www.cpr.org/show-segment/in-an-era-of-self-funded-campaigns-amendment-75-aims-to-even-the-odds [https://perma.cc/58H3-5TBL]; Matt Friedman, $10M Spent to Self-Fund State Legislative Campaigns Over 30 Years, Analysis Shows, Politico (Sept. 29, 2015), https://www.politico.com/states/new-jersey/story/2015/09/10m-spent-to-self-fund-state-legislative-campaigns-over-30-years-analysis-shows-093323 [https://perma.cc/Y52S-G89B]. have also spent plentiful sums of their own.

Money also allows one to influence public opinion,67Christiano, supra note 58, at 247–49. most directly through unlimited, anonymous contributions to Section 501(c)(4) social welfare organizations that can advocate for and against candidates, lobby, and conduct issue advocacy. The wealthy can shape the media’s news and editorial coverage through advertising purchases68See James R. Repetti, Democracy and Opportunity: A New Paradigm in Tax Equity, 61 Vand. L. Rev. 1129, 1158 & n.138 (2008). or from owning media companies directly.69Think of the Sulzbergers (the New York Times); the Grahams (the Washington Post); and the Murdochs (Fox News, the Wall Street Journal, and various British and Australian outlets). See Sydney Ember, A.G. Sulzberger, 37, to Take Over as New York Times Publisher, N.Y. Times (Dec. 14, 2017), https://www.nytimes.com/2017/12/14/business/media/a-g-sulzberger-new-york-times-publisher.html [https://perma.cc/C5WW-FFK4]; Robert Barnes & David A. Fahrenthold, The Grahams: A Family Synonymous with the Post and with Washington, Wash. Post (Aug. 5, 2013), https://www.washingtonpost.com/politics/the-grahams-a-family-synonymous-with-the-post-and-with-washington/2013/08/05/94f26d04-fe1a-11e2-96a8-d3b921c0924a_story.html [https://perma.cc/P96S-K24D]; Jonathan Mahler & Jim Rutenberg, How Rupert Murdoch’s Empire of Influence Remade the World, N.Y. Times (Apr. 3, 2019), https://www.nytimes.com/interactive/2019/04/03/magazine/rupert-murdoch-fox-news-trump.html [https://perma.cc/VWQ9-63GG]. And finally, the ability to influence policy (both directly and indirectly) also accompanies wealth.70See, e.g., Michael Walzer, Spheres of Justice: A Defense of Pluralism and Equality 121 (1983). Threats to relocate businesses, cancel events, or abandon planned openings or expansions can influence elected officials eager to protect local economies, even when the policies in question are not directly business-related.71See, e.g., Cindy Carcamo, Arizona Gov. Jan Brewer Vetoes So-Called Anti-Gay Bill, L.A. Times (Feb. 26, 2014), https://www.latimes.com/nation/nationnow/la-na-nn-arizona-gay-brewer-20140226-story.html [https://perma.cc/K9NA-FYNY]; Dan Levin, North Carolina Reaches Settlement on ‘Bathroom Bill,’ N.Y. Times (July 23, 2019), https://www.nytimes.com/2019/07/23/us/north-carolina-transgender-bathrooms.html [https://perma.cc/THP2-PFCD]. Business leaders are often consulted for advice by policymakers,72Christiano, supra note 58, at 247. be it through informal conversations or official advisory councils.73See, e.g., Anita Kumar, Trump Hands US Policy Writing to Shadow Groups of Business Execs, Mia. Herald (Aug. 7, 2017), https://www.miamiherald.com/news/politics-government/article165742702.html [https://web.archive.org/web/20170807124254/https://www.miamiherald.com/news/politics-government/article165742702.html] ( “Presidents of both parties have long deployed advisory groups to help develop policy, occasionally running into criticism for failing to disclose more.”); Local Advisory Boards and Commissions, Mun. Rsch. & Serv. Ctr. Wash, https://mrsc.org/explore-topics/engagement/volunteers/advisory-boards [https://perma.cc/93L5-23LT] (offering examples and model practices for citizen advisory boards). Such councils are especially common for schools and neighborhood development issues. See, e.g., Business Advisory Councils in Ohio Schools, Ohio Dep’t Educ., https://www.lresc.org/Downloads/Business-Advisory-Council-Operating-Standards_2025.pdf?v=-244 [https://perma.cc/P762-NXWH]; Business Advisory Council, Wooster City Sch. Dist. https://www.woostercityschools.org/community/business-advisory-council [https://perma.cc/2XLV-L49D]; Gary Rivlin, A Mogul Who Would Rebuild New Orleans, N.Y. Times (Sept. 29, 2005), https://www.nytimes.com/2005/09/29/business/a-mogul-who-would-rebuild-new-orleans.html [https://perma.cc/2BG2-VXM9] (discussing the influence of businessmen during post-Katrina decisions); Edward Wyatt, Panel of Politicians Is to Advise in Rebuilding, N.Y. Times (Feb. 1, 2002), https://www.nytimes.com/2002/02/01/nyregion/panel-of-politicians-is-to-advise-in-rebuilding.html. And more directly, such leaders are often named to policy-making positions that require special knowledge precisely because of the skills and expertise that made them successful. Lastly, the traits that bring business success often enable business leaders to naturally become civic leaders.74Repetti, supra note 68, at 1158; Pete Carlson, Developing More and Better Regional Business-Civic Leaders, Brookings (Aug. 28, 2015), https://www.brookings.edu/articles/developing-more-and-better-regional-business-civic-leaders [https://perma.cc/6M9J-566E].

Wealth can also mean having economic power over others, especially in areas where a few families dominate economic life. Although the days of official company towns are long-gone, some influential families still control much of the employment opportunities in certain communities—for example, the Kohler family in Wisconsin.75Andrew Weiland, Deloitte Reveals Its Annual List of Wisconsin’s Largest Privately-Held Companies, BizTimes (Sept. 27, 2022, 2:52 PM), https://biztimes.com/deloitte-reveals-its-annual-list-of-wisconsins-largest-privately-held-companies [https://perma.cc/J4JK-CZT9]; Kohler Family, Forbes (Feb. 8, 2024), https://www.forbes.com/profile/kohler [https://perma.cc/4P5J-FFVS].Elsewhere, residents might depend on a small set of firms for groceries, housing or other needs, such as cars. Decisions about what food to stock and at what prices, whether to raise rents or wages, expand or close a firm, and the like directly impact residents’ lives.76For more examples, see Fleischer, supra note 57, at 280–81. Handing the family business (or controlling chunks of publicly traded companies) down to one’s heirs is therefore tantamount to handing them economic power over others.

  1. Inheritances and Ability to Pay

A third justification for taxing wealth transfers proceeds from the principle that political institutions should maximize welfare.77In the legal and economic literature, welfarism is the predominate approach to the normative analysis of taxes and transfers. See Sarah B. Lawsky, On the Edge: Declining Marginal Utility and Tax Policy, 95 Minn. L. Rev. 904, 910–11 (2011). For more about welfarism, see, e.g., Kymlicka, supra note 49, at 10; Murphy & Nagel, supra note 8, at 51; Rawls, supra note 51, at 20. For the most complete analysis of the welfarist justification for taxing wealth transfers, see Batchelder, supra note 5. This argument equates welfare with utility and assumes that individuals have identical utility functions that decline as wealth and income increase.78Batchelder, supra note 5, at 11–12. Redistribution from an individual with more income or wealth to an individual with less thus increases overall utility. The catch is that taxing higher-income (or higher-wealth) individuals may lead to reduced labor and investment, decreasing overall welfare. The optimal tax literature thus argues that the ideal solution would be to tax ability, which cannot be minimized the way one can choose to work less.79Id. at 12. But since ability cannot be directly observed, the next best is to tax income as a proxy.80Id. at 12–13.

Starting from this premise, some theorists argue that gifts and bequests received also reflect well-being and ability and should be taxed as proxies therefore.81Id. at 2, 13. The reasoning is two-fold. If you are comparing two individuals with identical labor income, ignoring the fact that one receives a large inheritance is nonsensical—just as ignoring any other inflow, such as winning the lottery, would be. Second, the receipt of gifts and bequests is linked to a variety of “nonfinancial inherited assets and traits that powerfully affect earning ability.”82Id. at 23. These theorists generally reject the standard optimal tax account that taxing capital (which an estate tax does) creates too many economic distortions on three grounds.83See, e.g., N. Gregory Mankiw, Matthew Weinzierl & Danny Yagan, Optimal Taxation in Theory and Practice, 23 J. Econ. Persps. 147, 159–61 (2009); George R. Zodrow, Should Capital Income Be Subject to Consumption-Based Taxation?, in Taxing Capital Income 49, 49–81 (Henry J. Aaron et al. eds., 2007). This view, however, is not uniform. See, e.g., Peter Diamond & Emmanuel Saez, The Case for a Progressive Tax: From Basic Research to Policy Recommendations, 25 J. Econ. Persps. 165, 177–83 (2011). First, they argue that this account overestimates the share of bequests made for reasons that are responsive to tax versus those that are not responsive. For example, someone who is saving to fund a comfortable retirement or for medical and long-term care as they age, and who “accidentally” leaves whatever is left to their heirs, will not really be influenced by taxation. Second, they contend that observed declines in wealth accumulation that correlate to transfer taxes are plausibly attributable to tax avoidance or increased lifetime gifting rather than reduced savings.84Estimates of the impact of transfer taxes on savings and capital accumulation is mixed, but some recent work suggests a roughly ten percent decrease in savings for the very wealthiest individuals. David Joulfaian, The Federal Estate Tax: History, Law, and Economics 102–07 (2019). For reviews of empirical work on this question, see id. at 101–33; Batchelder, supra note 5; Wojciech Kopczuk, Taxation of Intergenerational Transfers and Wealth, in Handbook of Public Economics 329, 329–90 (Alan J. Auerbach et al. eds., 2013). Lastly, these theorists note that most studies ignore recipients, who often work less after receiving an inheritance.

  1. A Wealth Transfer Tax as a Periodic Wealth Tax

The foregoing arguments focus on the significance of transferring wealth. In contrast, a second set of justifications focuses on its very existence. But because political and administrative hurdles render taxing wealth itself difficult (if not impossible), taxing wealth transfers is an indirect solution.85One hurdle is that the Constitution prohibits direct taxes, and the traditional wisdom holds that a wealth tax is a direct tax. See, e.g., Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 4–6; Calvin H. Johnson, Apportionment of Direct Taxes: The Foul-Up in the Core of the Constitution, 7 Wm. & Mary Bill Rts. J. 1, 4–5, 72 (1998); Joseph M. Dodge, What Federal Taxes Are Subject to the Rule of Apportionment Under the Constitution?, 11 U. Pa. J. Const. L. 839 (2009); Ari Glogower, A Constitutional Wealth Tax, 118 Mich. L. Rev. 717 (2020); Daniel Hemel & Rebecca Kysar, Opinion, The Big Problem with Wealth Taxes, N.Y. Times (Nov. 7, 2019), https://www.nytimes.com/2019/11/07/opinion/wealth-tax-constitution.html [https://web.archive.org/web/20191107111051/https://www.nytimes.com/2019/11/07/opinion/wealth-tax-constitution.html]. A second difficulty of taxing wealth directly is administrative. An annual wealth tax requires annual valuations, which historically have been costly, complicated, and encouraged the use of techniques that artificially deflate value. This perception remains, although recent work suggests these concerns might be overstated. David Gamage, Ari Glogower & Kitty Richards, How to Measure and Value Wealth for a Federal Wealth Tax Reform, Roosevelt Inst. (Apr. 1, 2021), https://rooseveltinstitute.org/wp-content/uploads/2021/03/RI_WealthTax_Report_202104.pdf [https://perma.cc/4VX6-S4WB]. For more on these concerns, see Miranda Perry Fleischer, Not So Fast: The Hidden Difficulties of Taxing Wealth, 58 Nomos: Wealth 261 (2017). By taxing wealth only once a generation, the estate tax minimizes these concerns.

Wealth Inequality and Democratic Concerns. A first justification for taxing wealth is to protect our democratic institutions.86Glogower, supra note 5, at 1444–45; Repetti, supra note 68, at 1154–60. There is a strong link between money and political influence, and people have different amounts of money.87Christiano, supra note 58; Daniel P. Tokaji, Vote Dissociation, 127 Yale L.J. F. 761, 771–74 (2018). In 2016, almost one-third of families with incomes over $150,000 made a political donation, compared to 7% of families with incomes under $30,000. Adam Hughes, 5 Facts About U.S. Political Donations, Pew Rsch. Ctr. (May 17, 2017), https://www.pewresearch.org/short-reads/2017/05/17/5-facts-about-u-s-political-donations [https://perma.cc/J673-6TQZ]. Disproportionate spending is especially pronounced among the ultra-wealthy: In 2012, for example, the top 0.01% earned about 5% of all income yet accounted for roughly 40% of all campaign contributions. Adam Bonica, Nolan McCarty, Keith T. Poole & Howard Rosenthal, Why Hasn’t Democracy Slowed Rising Inequality?, 27 J. Econ. Persps. 103, 111–12 (2013). As a result, many argue that money muddles the ideal that “the political system should . . . treat[] all citizens as free and equal participants.”88Christiano, supra note 58, at 241; see also Tokaji, supra note 87. These concerns are distinct from those discussed in Section III.A.2. That discussion focused on the ways in which money plausibly provides political influence; this focuses on the harms from the resulting unequal influence. One concern is that the preferences of constituents with money will be prioritized over those without.89See, e.g., Christiano, supra note 58, at 245; Glogower, supra note 5, at 1442; Repetti, supra note 68; Tokaji, supra note 87, at 763, 769–74. A growing body of evidence suggests that policymakers are more responsive to the views of the former;90Bonica et al., supra note 87, at 118 (summarizing evidence); Nicholas O. Stephanopoulos, Political Powerlessness, 90 N.Y.U. L. Rev. 1527, 1577–79 (2015) (same); Tokaji, supra note 87, at 772 (same). But see Dylan Matthews, Remember that Study Saying America Is an Oligarchy? 3 Rebuttals Say It’s Wrong., Vox (May 9, 2016), https://www.vox.com/2016/5/9/11502464/gilens-page-oligarchy-study [https://perma.cc/5B6X-UW6Q]. this phenomenon has been observed at both the state91Patrick Flavin, Income Inequality and Policy Representation in the American States, 40 Am. Pol. Rsch. 29, 46 (2012); Elizabeth Rigby & Gerald C. Wright, Whose Statehouse Democracy? Policy Responsiveness to Poor Versus Rich Constituents in Poor Versus Rich States, in Who Gets Represented 189 (Peter K. Enns & Christopher Wlezien eds., 2011). and federal level,92See Larry M. Bartels, Unequal Democracy: The Political Economy of the New Gilded Age, 253, 252–82 (2008); Martin Gilens, Inequality and Democratic Responsiveness, 69 Pub. Op. Q. 778, 786–89 (2005). across a range of policies,93Flavin, supra note 91, at 46; Rigby & Wright, supra note 91; Bartels, supra note 92, at 267. and especially when the two sets of views diverge.94Bonica et al., supra note 87, at 118; Gilens, supra note 92, at 789. This is both fundamentally at odds with a core tenet of democracy,95Christiano, supra note 58, at 245–46, 252 (“The interests of most people are not treated as worthy of much consideration. This seems to me to violate the most fundamental principle animating democracy . . . .”); Robert A. Dahl, Polyarchy: Participation and Opposition 1 (1971) (“[A] key characteristic of a democracy is the continuing responsiveness of the government to the preferences of its citizens, considered as political equals.”). and creates a second harm by distorting the deliberative process.96Christiano, supra note 58, at 246. If the system ignores information about the preferences of a large chunk of society, policymakers may lack all the information necessary to make fully-informed decisions. This vacuum also prevents the deliberative system from benefiting from a diversity of viewpoints.97Id. at 252. A similar yet distinct harm from overweighting the preferences of the affluent is inefficiency. Here, the concern is that neither the harms to the non-affluent from policies favored by the wealthy nor the benefits from policies favoring the non-affluent will be taken into account. As a result, the true costs of a

variety of policies are obscured, potentially resulting in indirect redistribution to the affluent.98Id.

Economic Externalities from Wealth Concentrations. A similar justification for taxing wealth is that large wealth concentrations harm the economy.99See, e.g., Repetti, supra note 68, at 1149. This argument contradicts a common view that inequality encourages growth because it motivates lower-income individuals to work harder and because the wealthy have both the capacity to make capital investments and a higher propensity to save. Id. Although short-run studies are mixed, several long-run studies suggest that highly unequal concentrations of wealth are negatively correlated with economic growth.100Id. at 1148–49. Several plausible explanations exist, but two appear most likely.

First, high levels of inequality might lead to underinvestment in education and health. Poorer families often face borrowing constraints that encourage young adults to enter the workforce rather than continue with schooling that increases skills and later income. In turn, fewer resources will be available to pass on to the next generation, compounding the cycle.101Roberto Perotti, Growth, Income Distribution, and Democracy: What the Data Say, 1 J. Econ. Growth 149, 152, 177–82 (1996) A complex link between wealth, fertility, and education may also exist. Wealthier families tend to have fewer children, leading to greater investment in each one; the opposite is generally true for less-wealthy families.102Id. at 153, 177–82. At the societal level, societies with higher levels of inequality may invest less in educational opportunities for the less well-off.103See, e.g., Ichiro Kawachi, Bruce P. Kennedy, Kimberly Lochner, Deborah Prothrow-Stith, Social Capital, Income Inequality, and Mortality, 87 Am. J. Pub. Health 1491, 1497 (1997).

Somewhat similarly, high levels of inequality might decrease societal investment in health care.104Id. at 1491. And on the micro-level, having a relatively low income or social status might negatively impact an individual’s health, which imposes costs in terms of lost human capital and diverted financial resources.105Id. Second, unequal concentrations of wealth are linked to social unrest and diminishing social cohesion, both of which can also contribute to slower economic growth in a number of ways.106Id. It is plausible that in highly unequal societies, individuals engage in more rent-seeking, which misallocates resources. Inequality also contributes to sociopolitical instability, which both disrupts normal market and economic activities (think

of labor strikes) and creates an environment of political and legal uncertainty.107Perotti, supra note 101, at 151, 173–77.

Owning Wealth and Ability to Pay. A final justification for taxing wealth is that simply holding it reflects ability to pay. Consider two people who each have $75,000 of labor income. If one also has several million dollars in the bank, shouldn’t that change our assessment of whether the two have an equal ability to pay tax?108This question has become especially acute in recent years, as numerous entrepreneurs have minimal salary income yet have massive amounts of wealth. In 2019, for example, Amazon’s Jeff Bezos earned a salary of $81,840. Numerous other tech founders and CEOs, including Larry Page (Google), Sergey Brin (Google), Jack Dorsey (Twitter), Larry Ellison (Oracle) and Mark Zuckerberg (Meta), have all drawn salaries of roughly $1 in recent years. David Goldman, Jeff Bezos Made $81,840 Last Year. He’s Still the Richest Person in the World., CNN Bus. (Apr. 11, 2019), https://www.cnn.com/2019/04/11/tech/jeff-bezos-pay/index.html [https://perma.cc/ECH4-PANT]; Rachel Gillett & Marissa Perino, 13 Top Executives Who Earn a $1 Salary or Less, Insider (July 22, 2019), https://www.businessinsider.com/ceos-who-take-1-dollar-salary-or-less-2015-8 [https://perma.cc/8JVC-S755]. After all, the mere existence of wealth enhances one’s financial capacity.109Glogower, supra note 5, at 1439–40. It also brings comfort, security, and status, all of which are intrinsically valuable and plausibly make it easier to generate even more wealth.110Id. at 1442. Second, recall the welfarist ideal that tax burdens should track ability or endowment, and that income is the best proxy. Due to the realization requirement, our income tax system does not tax all economic income as it accrues. Some therefore propose taxing wealth periodically to capture the same measure more fully.

B. Arguments Against Wealth Transfer Taxation

While advocates of wealth transfer taxes tend to rely on arguments that reflect egalitarian and welfarist ideals, opponents generally ground their criticisms in libertarian and libertarian-adjacent arguments about efficiency, property rights, and the appropriate role of government. These can be a bit hard to categorize because scholarly opposition to wealth transfer taxes is scant in comparison to scholarly support. Most of the arguments made by everyday estate tax supporters are also fleshed out with care by academics. This is less true, however, for many of the opinions held by everyday estate tax opponents. Nonetheless, we can sort these critiques into roughly two groups.111For a more in-depth exploration of many of these arguments, see Miranda Perry Fleischer, Death and Taxes: A Libertarian Reappraisal, 39 SOC. PHIL. & POL’Y 90 (2023). The first set opposes wealth transfer taxes because they have differing normative visions of the role of government, a just distribution of resources, and fairness. The last set focuses on the efficiency of wealth transfer taxes to argue that they are themselves harmful.

  1. Equality of Opportunity Revisited

The argument that equality of opportunity requires redistributing resources from rich to poor is contested.112For more on the various conceptions of equality of opportunity, see Alstott, supra note 5; Fleischer, supra note 51, at 624–32. Another interpretation of equal opportunity, known as “careers open to talents” or “the merit principle,” instead focuses on open competition.113Brighouse, supra note 46, at 48 (2004) (“ ‘[C]areers open to talents’ states that no-one should be discriminated against at the point of hiring . . . except on grounds strictly relevant to their likely performance in the position.”); Alstott, supra note 5, at 486 (“[E]very job should go to the most qualified person, regardless of morally irrelevant attributes like race, gender, and so on.”); see also Rawls, supra note 45, at 62. On this view, resources are irrelevant to one’s ability to compete for jobs, school admissions and scholarships, and the like; what counts is whether all individuals have a chance as a formal matter to compete.114Alstott, supra note 5, at 486 (“ ‘[C]areers open to talents’ . . . requires only that people be permitted equal access to jobs for which they are qualified.”). This ensures that positions are awarded based on merit to the most talented, instead of to the less talented due to arbitrary and unrelated characteristics like race or sex. Advocates of the merit principle often point to rags-to-riches stories such as media personality Oprah Winfrey, clothing designer Ralph Lauren, and Starbucks CEO Howard Schultz as proof that formal nondiscrimination sufficiently ensures a level playing field. If one interprets equal opportunity in this manner—as many Americans do—then one would naturally oppose any tax designed to redistribute wealth or income on equality of opportunity grounds, including a wealth transfer tax.

  1. Rejecting Declining Marginal Utility and Progressivity

Many similarly contest the various arguments relating to the declining marginal utility of wealth and income. Some oppose the estate tax because they believe that redistribution to maximize welfare is beyond the proper scope of government, even if they accept the premise of declining marginal utility.115Richard A. Epstein, Taxation in a Lockean World, 4 Soc. Phil. & Pol’y 49, 68 (1986). Others question the assumption itself.116Richard A. Epstein, Can Anyone Beat the Flat Tax?, 19 Soc. Phil. & Pol’y, 140, 143, 169 (2002). Richard Epstein emphasizes, for example, that dollars are not ends unto themselves, but rather means. As he writes, “The decline in the marginal utility of an additional steak after you have already eaten one may be very high. But wealth is convertible into any number of different goods, so in each case the decline in utility has to be measured by referring to the utility of the most desired good as yet unpurchased.”117Id. And there’s some evidence supporting this view,118For example, Epstein points to the long hours that many wealthy people work and argues that “[t]hese hours of work cumulatively suggest . . . a high marginal utility to wealth, just like ordinary members of the population.” Id. at 169. including work suggesting that although utility likely declines as income rises in the lower range, it then increases with income in the middle range before declining again, creating an S-shaped curve.119See Sarah B. Lawsky, On the Edge: Declining Marginal Utility and Tax Policy, 95 Minn. L. Rev. 904, 929–39 (2011).

A related set of critiques reflects the normative dispute over whether the overall tax system should impose progressive or proportionate tax burdens.120Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain 303–05 (1985); Von Mises, supra note 6, at 32. Supporters of progressivity favor taxes that target the wealthy—such as estate taxes—as a way to increase the progressivity of the overall tax system.121See, e.g., Lily L. Batchelder, Leveling the Playing Field between Inherited Income and Income From Work Through an Inheritance Tax, Brookings Comment. (January 28, 2020),

https://www.brookings.edu/articles/leveling-the-playing-field-between-inherited-income-and-income-from-work-through-an-inheritance-tax [https://perma.cc/A3JF-BYNA]; Jennifer Bird-Pollan, Why Tax Wealth Transfers?: A Philosophical Analysis, 57 B.C. L. Rev. 859, 880 (2016); Paul L. Caron, The One Hundredth Anniversary of the Federal Estate Tax: It’s Time to Renew our Vows, 57 B.C. L. Rev. 823 (2016); Duff, supra note 54, at 9; Graetz, supra note 48, at 270.
Opponents of progressivity naturally oppose such taxes, favoring proportionate taxes for several reasons.122See, e.g., Epstein, supra note 120, at 303 (“[P]rogressive transfer taxes are subject to the same objections as progressive income taxes. . . .”). Some accept the ideal that tax burdens should track one’s ability to pay but reject the assumption that declining marginal utility requires imposing higher tax rates on the wealthy—the “equal sacrifice” argument. If utility does not decline, then taxing everyone at the same rate imposes an equal sacrifice, negating the need for progressive rates.123See, e.g., Walter J. Blum & Harry Kalven, Jr., The Uneasy Case for Progressivity, 19 U. Chi. L. Rev. 417, 473–79 (1952) (attacking the desirability of progressivity in general); Friedrich A. Hayek, The Constitution of Liberty: The Definitive Edition 442, 435–36 (Bruce Caldwell ed., U. Chi. Press 2011) (1960); Epstein, supra note 116, at 169.

Others reject the ability-to-pay principle, instead arguing that taxes should reflect how much one benefits from the societal infrastructure (the “benefit” theory). As Friedrich Hayek explains, “since almost all economic activity benefits from the basic services of government, these services form a more or less constant ingredient of all we consume and enjoy and that, therefore, a person who commands more of the resources of society will also gain proportionately more from what the government has contributed.”124Hayek, supra note 123. Richard Epstein analogizes the state to a partnership, highlighting that partnerships default to the “pro rata division of gains and losses derived from any common venture,” which ensures that “every individual [is] made better off to the same degree, that is, receive the same rate of return on his proportionate investment in social infrastructure.”125Epstein, supra note 116, at 147.

  1. Private Property Rights

A third normative objection is that estate and inheritance taxes unjustly interfere with private property rights.126Epstein, supra note 120, at 304. Supporters of strong private property rights, ranging from John Locke127John Locke, Second Treatise of Government 19–30 (C. B. Macpherson ed., Hackett Publ’g Co. 1980) (1690). and John Stuart Mill128John Stuart Mill, Principles of Political Economy 226 (1848). to Robert Nozick129See Robert Nozick, Anarchy, State and Utopia 150–53, 157–58, 168 (1974). and Richard Epstein, overwhelmingly argue that if someone justly acquires property, she has the right to transfer that property however she likes, including by making gifts and bequests.130As legal scholar Richard Epstein explains, this includes “dispositions during life, by gift or by sale, and it includes dispositions at death. . . .” Epstein, supra note 120, at 304. In contrast, many left libertarians assert that private property rights end at death and that a decedent’s property should revert to common ownership. See, e.g., Hillel Steiner, An Essay on Rights 249–60 (1994). Because estate and inheritance taxes interfere with this right, they are not simply unjust, but uniquely unjust. As philosopher Loren Lomasky argues, they are “an especially cruel injury because [they] deprive[] the dead of one of their last opportunities for securing the goods that they value.”131Lomasky, supra note 6, at 270. On this account, choosing to make a gift or bequest expresses the identity of the donor in a way that selling property does not. It is a sign of her affection for the recipient, as well as her values.132Nozick, supra note 13. Just as other intimate family matters relating to the expression of values—such as which holidays to celebrate and whether to go to church—should be immune from state interference, so too should gratuitous transfers. Moreover, gifts and bequests take place in the private realm of the home and neither avail themselves of the market infrastructure nor represent a voluntary entrance into the public sphere. In contrast, most taxable activity—like selling labor or property—represents a voluntary entry into the public sphere whereby one willingly consents to the burdens of taxation in exchange for using the market infrastructure. Perhaps, then, the intrusive burden of taxing gifts and bequests (e.g., tracking, valuing, and reporting) in the private sphere should be given more weight than the burden from taxing transactions in the public marketplace.

  1. Double Taxation

Many also view the estate tax as double taxation.133Kyle Pomerleau, The Estate Tax Is Double Taxation, Tax Found. (Nov. 2, 2016), https://taxfoundation.org/estate-tax-double-taxation [https://perma.cc/5Y9F-GB5Y]. Although this critique is extremely common among members of the public, policymakers and scholars tend to be dismissive of it as betraying a misunderstanding of the broader tax system. They first note that because of the realization requirement,134Imagine that Hannah buys stock in a biotech startup for $1,000 that increases in value to $100,000. Because of the realization requirement, she is not taxed on the $99,000 appreciation until and unless she later sells the stock. And if she never sells, and dies owning the stock, Section 1014 allows her heirs to pretend that the stock’s value at her death was their purchase price. As a result, her heirs do not have to pay tax on that $99,000 appreciation either. many wealthy individuals have never paid income tax on the increase in value of their investments.135See, e.g., Graetz & Shapiro, supra note 5, at 81–82; Karen C. Burke & Grayson M.P. McCouch, Turning Slogans into Tax Policy, 27 Va. Tax. Rev. 747, 751–52 (2008).Studies suggest that untaxed appreciation comprises an average of 32% of smaller estates (a few million dollars) to 55% of large estates (those in the $100 million range).136Chye-Ching Huang & Chloe Cho, Ten Facts You Should Know About the Federal Estate Tax, Ctr. on Budget & Pol’y Priorities (Oct. 30, 2017), https://www.cbpp.org/research/ten-facts-you-should-know-about-the-federal-estate-tax [https://perma.cc/TGN7-EK8G]. To some extent, then, estate tax supporters are correct that opponents wielding the double taxation argument either misunderstand this point or overstate their case.

But what about wealth that has already been taxed, such as labor income invested in assets such as taxable savings accounts? Estate tax opponents are correct that an estate tax taxes this twice.137American College of Trusts and Estates Counsel, Report by the ACTEC Tax Policy Study Committee on Proposals to Tax the Deemed Realization of Gain on Gratuitous Transfers of Appreciated Property 5 (2019). And to many, that just seems unfair on a gut level, despite various counterarguments. One counter is that the same income is often taxed multiple times to the same person; think of income, payroll, and sales taxes. Another counter is that recipients of gifts and bequests do not include them in income. Therefore, taxing gifts and bequests simply matches up the number of people that benefit from the property with the number of times it is taxed. If Hannah gives Iris a gift of $1,000, many argue that taxing both of them makes sense since each benefits from the funds. Hannah could have spent that $1,000 on fancy cheese, but instead chose to give the money to Iris, and she enjoys the warm glow that comes with making a gift. And Iris has $1,000 to spend as she sees fit.138This argument views parents and children as separate. If one views families as a unit, then the family itself only benefits once from the $1,000. Although this argument may have some credence for gifts to minor children, the U.S. tax system generally treats parents and adult children as separate economic units.

But many transfer tax opponents contest that Hannah benefits when she makes a gift to Iris the same way that she benefits when, for example, she pays Iris to paint her house. In their view, Hannah has transferred the ability to benefit from the funds to Iris. Since only one person—Iris—ends up benefitting, only one person should be taxed. Since Hannah was already taxed via the income tax, it makes no sense either to impose a separate transfer tax or require Iris to include the transfer in income.139Paying alimony or child support is analogous. The payor earns the income and is taxed, and then transfers that income to the recipient, who is not taxed. In that situation, few contest that only one person is benefiting from the funds—the recipient—and it therefore makes no sense to impose a tax on both parties to the transaction. Pomerleau, supra note 133. Setting aside the issue of appreciated property, we can see that the double taxation argument comes down to a normative view about the definition of income. If Hannah benefits from making a gift just as she benefits from having her house painted, there is no double taxation. But if one believes that Hannah gives up her ability to benefit and passes it to Iris, then taxing gifts and bequests is double taxation. As with arguments about equality of opportunity and progressivity, this simply comes down to reasonable disagreements about normative priors.

  1. Efficiency and Administrative Concerns

A final set of arguments highlight efficiency and administrative concerns. For some, these concerns alone are sufficient to oppose the estate tax, even if they otherwise sympathize with its goals; for others, these concerns buttress normative critiques.

Economic Incentives. At heart, transfer taxes are taxes on savings by donors.140Joulfaian, supra note 84, at 102; Cong. Budget Off., Understanding Federal Estate and Gift Taxes 1 (2021), https://www.cbo.gov/system/files/2021-06/57129-Estate-and-Gift-Tax.pdf [https://perma.cc/6NEC-BGAH]. As such, opponents contend that they punish savers and reward spenders by raising the price of saving relative to spending.141See supra Section II.A.3. This reaction seems intuitive to many laypeople, and is arguably backed up by two recent economic analyses finding a correlation between higher estate taxes and lower wealth accumulations at death—a reduction in wealth at death of roughly 10% for the very wealthiest taxpayers.142Joulfaian, supra note 84, at 102–07; Batchelder, supra note 5, at 7. Estate tax supporters respond as follows. First, they emphasize the limitations of these studies, noting that the results are “fragile” or that overall empirical support for this argument is “inconclusive.” Batchelder, supra note 5, at 7; Cong. Budget Off., supra note 140, at 4. Second, they interpret these studies as showing that “wealth transfers decline[] only slightly in response to wealth transfer taxes” and that “donors do not appear to save substantially less.” Batchelder, supra note 5, at 7 (emphasis added). Some theorists–such as economists who deploy optimal tax analysis—thus argue that transfer taxes decrease overall welfare by shrinking the size of the pie available for redistribution.143But see supra Section II.A.3 for responses to this argument. Professor Ed McCaffery offers a twist on this argument, arguing that the estate tax exacerbates inequalities of opportunity by encouraging lifetime consumption and early spending.144McCaffery, supra note 5. And many everyday people simply recoil at the idea of a tax that seems to single out behavior (working hard, saving, and frugality) that our society deems virtuous.

Harm to Small Businesses and Family Farms. A related critique—one that strongly resonates with the public—is that the estate tax harms small businesses and family farms. To that end, estate tax opponents frequently recount stories of families who allegedly have been or will be forced to sell farms and small businesses to pay the tax.145For an in-depth account of how repeal advocates harnessed this argument, see Graetz & Shapiro, supra note 5, at 51–73. (The story of Lester Thigpen, an African-American tree farmer from Mississippi who was the grandson of slaves, is a prime example.)146Thigpen, who feared that he’d have to sell his farm to pay the estate tax, testified before Congress, met with numerous Congressmen, and was featured in numerous stories about the estate tax during the repeal push of the late 1990s. It turns out, however, that Thigpen’s estate would not have been taxable, even at the much lower exemption levels at the time. Id. at 62–66. Opponents also emphasize the costs that families must incur to plan for the tax, such as purchasing insurance to provide liquidity and paying advisors to help minimize potential taxes.

To the ire of estate tax supporters, however, many (if not all) of these stories are unproven. Namely, many of the individuals profiled by estate tax opponents would not have been subject to the tax, even at its pre-EGTRRA levels. And according to Michael Graetz, neither the American Farm Bureau nor New York Times reporter David Cay Johnston could find any farms that had actually been sold to the pay tax after a search in the late 90s.147Id. at 126. Nevertheless, the possibility (however remote) that a family farm or small business could be harmed troubles many Americans. Moreover, many estate tax opponents overlook that this possibility becomes more likely were exemption levels to drop, and rates to increase, as they advocate.

Avoidance Costs. Another efficiency-related concern is that the tax raises little revenue while encouraging wasteful tax planning that renders the tax essentially voluntary.148Richard A. Epstein, Justice Across the Generations, 67 Tex. L. Rev. 1465, 1475–76 (1989). In 2020, for example, the estate and gift taxes together raised only $17.6 billion—roughly 0.1% of gross domestic product.149Cong. Budget Off., supra note 140, at 1. Meanwhile, millions—possibly billions—of dollars150Estimating the total spending on estate tax minimization and avoidance is difficult. In 1998, the Joint Economic Committee estimated that “the costs of complying with the estate tax laws are roughly the same magnitude as the revenue raised.” Joint Econ. Comm., 105th Cong., The Economics of the Estate Tax 30 (1998). In contrast, Professor Richard Schmalbeck, writing in 2001, argued that most families subject to the estate tax at that time spent only a few thousand dollars minimizing transfer taxes. Richard Schmalbeck, Avoiding Federal Wealth Transfer Taxes, in Rethinking Estate and Gift Taxation 113 (William G. Gale et al. eds., 2001). For an overview of these techniques, see U.S. Senate Comm. on Finance, Estate Tax Schemes: How America’s Most Fortunate Hide Their Wealth, Flout Tax Laws, and Grow the Wealth Gap (2017), https://www.finance.senate.gov/imo/media/doc/101217%20Estate%20Tax%20Whitepaper%20FINAL1.pdf [https://perma.cc/F4F6-UN32]. are spent each year on avoidance activities that involve complicated legal structures.151As the Joint Committee on Taxation writes, “[i]ncurring these costs, while ultimately profitable from the donors’ and donees’ perspectives, is socially wasteful because time, effort, and financial resources are spent that lead to no increase in productivity. Such costs represent an efficiency loss to the economy in addition to whatever distorting effects Federal transfer taxes may have on other economic choices such as saving and labor supply.” Joint Comm. on Tax’n, supra note 15, at 37. Because of the availability of these structures to well-advised families, many view the estate tax as a “voluntary” tax that only the less-sophisticated, semi-wealthy pay, while the truly wealthy avoid it.152For a critical discussion of this argument, see Paul L. Caron & James R. Repetti, The Estate Tax Non-Gap: Why Repeal a “Voluntary” Tax?, 20 Stan. L. & Pol’y Rev. 153 (2009) Here, opponents of the estate tax see another reason to reject it, while supporters see a reason to strengthen it.

Administrative Costs. A related critique is the cost and difficulty involved in administering the estate tax. Some opponents estimate that taxpayers spend almost $20 billion annually complying with the tax,153Scott Hodge, The Compliance Costs of IRS Regulations, Tax Found. (June 15, 2016), https://taxfoundation.org/compliance-costs-irs-regulations [https://perma.cc/8WDV-8RZ8]. although supporters of the tax dispute this figure. One contributor to high compliance costs is valuation difficulties.154Fleischer, supra note 85, at 276. While the assets of many middle- and upper-middle class individuals such as lawyers and doctors are fairly easy to value–cash, brokerage and retirement accounts, publicly-traded stock, and straightforward real estate like suburban houses—the same is not true for the wealthy. One estimate suggests that roughly half the assets owned by the wealthiest 1% of American families are hard to value, including unique real estate, closely held stock, noncorporate business assets, farm assets, private equity and hedge funds, art, limited partnership interests, and other miscellaneous assets.155David Kamin, How to Tax the Rich, 146 Tax Notes 119, 123 (2015). Moreover, taxpayers can engage in a number of complicated transactions to artificially minimize the value of normally easy-to-value assets like stock.156Fleischer, supra note 85, at 279–81. To opponents, the fact that valuation is costly, time consuming, and imprecise is another reason its limited revenue is not worth the cost.

III.  Settling the Debate with a Rignano Tax

As Section II shows, the debate over estate taxation is complex, implicating both normative values and empirical questions. The recent weakening of the tax suggests that opponents are winning this debate, to the great frustration of estate tax supporters who repeat the following laments: If only the public understood that the tax affects a mere sliver of the population and how few family farms and small businesses are impacted by it. If only the public knew that the tax’s burden likely falls on heirs, who have not in fact done anything to earn the wealth in question. If only opponents could see that the estate tax is not double taxation, due to the realization requirement and the step-up in basis. If only the public appreciated the harms of inequality.157See, e.g., Sheffrin, supra note 9, at 14; Graetz & Shapiro, supra note 5, at 83–84; Joel Slemrod, The Role of Misconceptions in Support for Regressive Tax Reform, 59 Nat’l Tax J. 57 (2006).

Estate tax advocates thus keep recycling the same tactics. One approach is to try to correct the public’s factual misperceptions about double taxation, the impact on family farms and small businesses, and how many estates are hit by the tax.158For example, some evidence suggests support for outright repeal drops somewhat when people learn how many people will actually be subject to the tax. Sheffrin, supra note 9, at 149; Graetz & Shapiro, supra note 5, at 118–30. Another is to argue that taxing the recipient instead of the transferor (via an accessions tax or income inclusion) would better display the tax’s goals and burdens to the public, thereby convincing them of the value of taxing wealth transfers.159See, e.g., Batchelder, supra note 5, at 3 (“The final advantage of a comprehensive inheritance tax is that it should improve public understanding of the taxation of wealth transfers. . . . These misconceptions have been exploited by opponents of the estate tax, who have framed the estate tax as a double tax on frugal, hard-working donors who are ruthlessly taxed right at the moment of death.”).

But these approaches miss the mark by failing to adequately account for deeply held beliefs shared by a large portion of the population about fairness, desert, private property, and family. This Section first explores these beliefs, as well as seemingly contradictory views on equal opportunity and democratic participation that are also widely held. It then argues that a Rignano tax is the best way to reconcile the competing moral intuitions held by many Americans.

A. Attitudes Toward Taxation, Fairness, Redistribution, and Equality

Crucially, these beliefs about fairness, desert, and property rights—which Liam Murphy and Thomas Nagel call “everyday libertarianism” and which economist Steven Sheffrin terms “folk justice”160Murphy & Nagel, supra note 8, at 34–36; Sheffrin, supra note 9, at ix–x. —often do not overlap with the philosophical and economic frameworks favored by policymakers and academics. Sheffrin explains:

Ordinary individuals hold a set of psychological principles about fairness in taxation that are considerably broader and that differ in systematic and fundamental ways from the ideas of fairness that dominate our public debate today. . . . [T]he emphasis on tax fairness as redistribution comes from academic work in philosophy and economics that, in many ways, stands apart from the concerns that motivate everyday people. . . . [T]ax fairness is important, but it is not synonymous with redistribution. To the average person, tax fairness means something else, primarily receiving benefits commensurate with the taxes one pays, being treated with basic respect by the law and the tax authorities, and respecting legitimate efforts to earn income. The average person is not totally indifferent to inequality, but concerns for redistribution are moderated by the extent to which income and wealth have been perceived to be earned through honest effort.161Sheffrin, supra note 9, at ix–x.

Because the public takes these views so seriously, policymakers who simply try to convince the public to change its views face an uphill battle. For example, Murphy and Nagel acknowledge that their argument that pre-tax income is meaningless is “counterintuitive” and that “[c]hanging this [belief] would require a kind of gestalt shift, and it may be unrealistic to hope that such a shift in perception could easily become widespread.”162Murphy & Nagel, supra note 8, at 175. Sheffrin terms this “resonance,” arguing that “[a]ny ethical or social theory that does not resonate with folk ideas will be doomed to eventual failure as a vehicle for social change. Understanding folk ideas of justice is then essential to building effective social structures.”163Sheffrin, supra note 9, at 9.

Going further, many theorists argue that when policymakers fail to take these views seriously, they end up undermining their own normative aims.164See also Lee Anne Fennell & Richard H. McAdams, The Distributive Deficit in Law and Economics, 100 Minn. L. Rev. 1051, 1100 (2016) (arguing that rules that accord with public notions of fairness have lower implementation costs and such reduced costs should be considered by policymakers). Zachary Liscow illustrates with the common law and economics wisdom that redistribution should take place solely in the tax and transfer system. He argues that this approach makes sense in theory but fails in the real world because it “ignores how ordinary Americans think about [taxes] and thus ends up exacerbating inequality rather than mitigating it.” As a result, “tax policy runs up against political constraints—driven by ordinary people’s

attitudes about taxation” that prevent tax policy from accomplishing policymakers’ goals.165Liscow, supra note 11, at 499.

  1. Taxation and Folk Justice

What are these attitudes? One key belief relates to what moral philosophers call “desert” and what Steven Sheffrin terms “equity theory.” To everyday people, there should be a roughly proportional relationship between effort and results.166Sheffrin, supra note 9, at 37. People believe that the money they earn belongs to them,167Id. at 119. and that if they “earn more money, they deserve to keep a decent share of it.”168Liscow, supra note 11, at 516. Even those who critique this belief acknowledge that the “idea that people deserve to be rewarded for thrift and industry” is natural to many and that “it can seem preposterous” that hard-working individuals who are willing to take risks do not deserve more than the lazy and unadventurous.169Murphy & Nagel, supra note 8, at 35–36. Although scholars debate the merits of these views,170See, e.g., id. (critiquing what they call “everyday libertarianism”)   . numerous studies suggest that substantial portions of the public subscribe to them.171See Sheffrin, supra note 9, at 34–38, 119–33; Liscow, supra note 11, at 525–26. As Murphy and Nagel recognize, to many, these views are “instinctive[],”172Murphy & Nagel, supra note 8, at 175. “ingrained,”173Id. at 173. and “hard to banish from [] everyday thinking.”174Id. at 34.

These beliefs lead to a distaste for redistributive taxation generally, and to some extent, opposition to the estate tax simply reflects these general principles of folk justice. But Sheffrin identifies two further aspects of folk justice that supercharge these attitudes as applied to the estate tax. In his view, the fact that estate tax opponents have successfully capitalized on these folk justice beliefs—while estate tax supporters have ignored them—explains a large part of the tax’s deep unpopularity.175Sheffrin, supra note 9, at 145. (Polls consistently suggest that roughly fifty percent of the population supports repealing it entirely).176Thorndike, supra note 3.

Moral Mandates. One concept is that of moral mandates, which are deeply held, non-negotiable subjective beliefs about right and wrong. These beliefs are resistant to logical argument, and can be seemingly inconsistent, such as when a pro-life advocate also favors the death penalty.177Sheffrin, supra note 9, at 45. When something contravenes a moral mandate, it generates a level of outrage that might seem excessive. An act becomes “wrong” and not merely “disagreeable.”

According to Sheffrin, several of the arguments discussed in Section II.B. rise to the level of moral mandates. One is that imposing a tax when someone dies is simply immoral. On this account, the estate tax “comes at the worst possible time for families – the death of their family’s breadwinner.”178Id. at 146–47. People are simultaneously grieving their loved ones and worried about providing for the family that’s left behind. Telling people that it’s not death per se that triggers the tax but instead the transfer of wealth; or that grieving families have to deal with all kinds of logistical and business arrangements, such as funerals and the probate process; or that the families affected by the tax are wealthy and well-provided for, will not make any headway. The tax is associated with death, and that simply seems immoral to many.

Another moral mandate—one which polling data suggests has been extremely influential—is that double taxation is unfair.179Id. at 147. People have deeply-held beliefs that if someone works hard and saves their whole life, paying taxes as she goes along, she should be able to leave her wealth to her family at her death without the government swooping in a second time.180Id. And again, telling people that double taxation is not unique to the estate tax, or that much wealth subject to the estate tax has not already been taxed, is pointless.

And finally, people value entrepreneurship.181Id. They view the tax as disincentivizing hard work and wealth accumulation, thus undermining another deeply held value. Demonstrating that very few small businesses or family farms owe the tax, let alone need be liquidated to pay the tax, is largely fruitless.

System Justification. In addition to touching on moral mandates, Sheffrin argues that the tax also implicates “system justification theory.” This theory—somewhat like cognitive dissonance—posits that individuals adapt their beliefs to defend existing systems and the status quo, even when they do not appear to benefit from those systems. They thus react strongly to threats to that system, even when people other than themselves—such as the wealthy—will be the ones harmed by those threats.182Id. at 49–53.

Specifically, the estate tax appears to threaten two key systems: the family and our meritocratic system that rewards talent and effort. Even if the estate tax will not affect the majority of Americans, many view wealthy businesspeople as “valuable members of society who deserve their wealth and support the American economy.”183Id. at 149. As such, a tax that affects them undermines an entire system of which they are a part. Likewise, even if the families affected by the tax are rich families, taxing them when they engage in a familial act of generosity threatens the family system that we are all a part of.184For an accessible summary of these views, see Joseph Thorndike, Face It: Americans Just Don’t Like the Estate Tax, Forbes (Mar. 31, 2016), https://www.forbes.com/sites/taxanalysts/2016/03/31/face-it-americans-just-dont-like-the-estate-tax [https://perma.cc/3YEC-MZ4E].

  1. Policy Silos

At the same time that the public opposes estate taxes, however, it also shares many of the values highlighted by its supporters. Economist Stefanie Stantcheva’s recent empirical work on how people reason about income and estate taxes illustrates this seeming contradiction. In a large-scale representative survey, Stantcheva finds that 58% of respondents believe that parents should be able to pass along whatever they wish to their children, even if that creates unequal opportunities at a societal level, and that 61% of respondents believe that it is unfair to tax the estates of hard workers. Yet in this same group,

68% say that it is unfair that children from wealthy families have access to better amenities such as schools;

64% believe that the wealth distribution is unfair; and

46% view inequality as a serious issue.185Stantcheva, supra note 4, at 2348 tbl.VII.

Stantcheva is not the first to note that many people hold a variety of conflicting beliefs simultaneously. In fact, her findings illustrate another aspect of moral mandates—people form them on an issue-by-issue basis. They do not represent an overarching world view, and they may contradict each other, as when a pro-life advocate also favors the death penalty.186Sheffrin, supra note 9, at 45.

Zachary Liscow calls this phenomenon “policy silos,” meaning that “ordinary people hold category-by-category views about what is just for a given policy and apply those views partly in isolation.”187Liscow, supra note 11, at 512. For example, people view taxation and transportation separately, such that they may oppose redistributive taxation but favor redistributive transportation policy. The former is “giving” money to the poor, while the latter is helping them get to work.188Id. at 513. Stantcheva’s findings echoed this observation, as respondents’ views differed based on whether the questions focused on parents/transferors or children/transferees. To put it in Liscow’s terms, people appear to view estate taxes in a different silo than equal opportunity concerns.

As a result of siloing, public support for two economically identical but superficially different programs can vary based on framing.189Id. at 514–15 (reviewing experimental evidence on this point). Liscow’s argument that policymakers should not rely solely on taxation when redistributing is not inconsistent with my argument that the concept should also inform the design of tax policies. This has two implications. First, Liscow argues that lawmakers should not rely on the tax system as the sole means of redistribution but should also implement redistributive policies elsewhere. A second implication is that when policymakers do use the tax system for redistributive or similar reasons, they should take advantage of siloing, as the public’s dislike of one tax might not necessarily translate into a dislike of a different tax. Joseph Thorndike has observed, for example, that even though the public hates the estate tax, it favors wealth taxes.190Thorndike, supra note 3.

  1. A Rignano Tax Reconciles These Competing Intuitions

What does all this mean for wealth transfer taxes? One common suggestion is to replace the estate tax with a recipient-focused accessions or inheritance tax.191See, e.g., Batchelder, supra note 5, at 3 (“The final advantage of a comprehensive inheritance tax is that it should improve public understanding of the taxation of wealth transfers. . . . These misconceptions have been exploited by opponents of the estate tax, who have framed the estate tax as a double tax on frugal, hard-working donors who are ruthlessly taxed right at the moment of death.”).

In addition to correcting the psychological mismatch, scholars offer numerous other reasons for replacing the estate tax with a recipient-focused tax. See, e.g., id. (arguing that an estate tax does a poor job [“rough justice”] of measuring ability to pay because it focuses on the donor, not the donee, and estimating that “22% of heirs burdened by the U.S. estate tax have inherited less than $500,000, while 21% of heirs who inherit more than $2,500,000 bear no estate tax burden”); Alstott, supra note 5 (arguing that an inheritance tax better reflects equality of opportunity principles); Fleischer, supra note 54 (contending that an inheritance tax is superior to an estate tax in combatting the accumulation of dynastic power).
The hope is that focusing attention on recipients will shift the debate more firmly into the equal opportunity silo instead of the tax silo, as well as lessening the intensity of some of the moral mandates around double taxation, entrepreneurship, hard work, and thrift.

This Article takes that suggestion one step further. A Rignano-style accessions tax that exempts first-generation transfers does an even better job of incorporating folk justice and people’s everyday psychological intuitions about the estate tax. Imagine the following structure (which Section IV fleshes out in more detail): Grandfather builds a business from the ground up and bequeaths $10,000,000 to Mother. No tax is imposed, but if Mother does not create any wealth of her own and simply retransfers $10,000,000 to Daughter, all of Mother’s estate is taxed. In contrast, if Mother creates new wealth, different portions of her estate are treated differently. The inherited $10,000,000 that Mother re-transfers is taxed, while any newly earned wealth is not.

By allowing individuals to make tax-free transfers of wealth that they themselves have earned—but not wealth that they have merely inherited—a Rignano tax acknowledges the very real, deeply-held value that the public places on hard work, entrepreneurship, and notions of desert while also addressing the concerns people hold about the prevalence of inherited wealth.192See, e.g., Krugman, supra note 12.

IV. A Rignano Tax

The idea of taxing second- or third-generation wealth more heavily than newly earned wealth has a long history. Roughly 100 years ago, Eugenio Rignano offered the first sustained treatment of it, arguing that such a tax is the best way to move gradually toward socialism.193Rignano, supra note 7. Rignano believed that the means of production should eventually be owned by the government, but that individuals, not the government, are better wealth-creators. He thus proposed a tax that would exempt transfers by wealth-creators, tax second transfers at 50%, and tax third transfers at 100%. This, he believed, would be the most efficient way to implement socialism.194Id.

Libertarian Robert Nozick later picked up this idea, albeit for decidedly non-socialist reasons. In The Examined Life, Nozick suggests that a Rignano-type structure is the best means of balancing competing intuitions about family ties, wealth and inheritance, and fairness. He first defends the right of individuals to bequeath what they have created themselves as an act of love: “Bequeathing something to others is an expression of caring about them, and it intensifies those bonds. . . . [T]he donor . . . has earned the right to mark and serve her relational bonds by bequeathal.”195Nozick, supra note 13, at 30. But he does not view second-generation inheritances as a similar act of love, due to the lack

of connection between the person who created the wealth and the second recipient.

He also acknowledges, moreover, that when wealth is “passed on for generations to persons unknown to the original earner and donor, [it] produc[es] continuing inequalities of wealth and position” and that the “[t]he resulting inequalities seem unfair.”196Id. Unfortunately, Nozick’s discussion of this tension is rather sparse. He does not explain, for example, why he believes the resulting inequalities are unfair. Nor do we know whether first-generation bequests are inherently fair, or whether they are unfair, but whose unfairness is outweighed by the value of the donor’s ability to express affection and love.197See Halliday, supra note 13, at 167.

And most recently, philosopher Daniel Halliday argues that a Rignano tax furthers equality of opportunity ideals better than traditional estate and inheritance taxes. In his view, context matters—that is, whether someone is born into a family that has not just wealth, but long-standing wealth and the social and cultural capital that accompanies it (let’s call these “wealth norms”). Imagine that Grandfather starts with nothing, builds a successful business, and leaves all his wealth to Mother at his death. Halliday believes that this bequest does not give Mother a head start in life. Her life prospects were largely shaped long before receiving her inheritance, when she was young and Grandfather was still building his business. He had not yet amassed enough wealth to pay for private school and expensive tutors for Mother, to give her seed money to start her own business or to launch her own career. Moreover, Grandfather’s self-made status suggests that the family did not have wealth norms when Mother was growing up. Instead of golfing at a country club, Grandfather likely bowled in the neighborhood bowling league and did not have the same cultural norms and social and professional networks as families with older wealth.

But now consider Mother and Daughter. Halliday argues that “parental conferral of advantage compounds over successive generations. . . . Families that have been wealthy for longer possess a greater range of powers that keep their children privileged.”198Halliday, supra note 13, at 7. Grandfather’s bequest allows Mother to provide advantages to Daughter that she herself did not have, such as high-quality schools, tutors and after-school lessons, and expensive camps. It also means that Daughter—unlike Mother—grows up in a family with wealth norms. The family belongs to a country club, not a bowling league. Mother’s contacts can give Daughter internships, and Daughter knows which fork to use during the interview lunch and how to dress for it. For these reasons, Halliday views the transmission of wealth across three generations as a contributor to and a tag for economic segregation, which he argues undergirds unequal opportunities. As such, these inheritances should be taxed.

In contrast, Halliday contends that first-generation inheritances should not be taxed. Not only are they not problematic, but they might even reduce economic segregation by serving as a safety net keeping middle-class families afloat in a stagnating or contracting economy. Halliday observes that in many areas, the costs of housing and other necessities have skyrocketed while middle-class wages have stayed flat, rendering home-ownership unaffordable to many such families. But if Grandfather leaves the family home to Mother, or enough money for a down payment, this helps minimize economic segregation in such areas. First-generation inheritances thus counteract inequality of opportunity and therefore should not be taxed.

Implementing a tax that exempts the first transfer but taxes the second might sound simple to those unfamiliar with tax policy. Yet the devil is in the details. Implementing a Rignano tax requires resolving seven design decisions, explored below: the (1) base; (2) rates; (3) valuation; (4) frequency; (5) tracing; (6) transfers in trust; and (7) transition rules. Although a Rignano tax is complex, crafting one is possible.199Many of these ideas were first explored in Miranda Perry Fleischer, Taxing Old Money: Considerations in Crafting a Rignano Tax, 8 LEAP 86 (2020), https://raco.cat/index.php/LEAP/article/view/387931 [https://perma.cc/6M3K-C8B7]. As we shall see, in many instances one solution is superior regardless of why one wants to tax old money more heavily than new. With other decisions, however, differing justifications for taxing repeated wealth transfers point in different directions.

A. The Base

This section addresses three base-related decisions: Should the tax focus on transfers or receipts? Should it treat gifts and bequests equally? And should it contain any exclusions or exemptions?

  1. Transfers or Receipts?

The first base-related question is whether to tax receipts or transfers. If Grandfather earns a fortune, leaves it to Mother, and Mother in turn passes it along to Daughter, who does the tax focus on? Does it look at Grandfather and Mother in turn, and tax Mother because she’s the one who re-transfers wealth while exempting Grandfather because he’s the one who earned the wealth? This model is akin to a traditional estate tax, which focuses on the total amount of wealth transferred by an individual over the course of her lifetime.200See Alstott, supra note 5, at 502. Or does it look at each and ask who among them received re-transferred wealth (here, Daughter)? This is similar to traditional accessions or inheritance taxes, which apply to transferees based on gifts and bequests received.201As explained in Section II, accessions taxes are imposed cumulatively on all the gratuitous transfers received over the course of a lifetime, whereas inheritance taxes are imposed annually. Another recipient-focused option is to treat gifts and bequests as income to the recipient. Although these are distinct concepts, they are often confused in the literature. Fleischer, supra note 54, at 920–21.

In either case, the tax is imposed once, at transfer.202Glogower, supra note 5, at 1483. But the distinction matters, both psychologically and normatively. At first glance, one might think an estate tax model makes the most sense. If Grandfather creates the wealth, and the goal is to allow him to transfer it tax-free, then the focus should be on him. Yet this ignores many of the normative aims of those who wish to tax wealth transfers in the first instance.203If one views a wealth transfer tax as a second-best for a wealth tax, then the distinction between an estate and accessions tax is less relevant. Both decrease the amount passed on to the next generation.

Start with dynastic wealth and equality of opportunity concerns. Looking at the sum of gratuitous transfers received by a given individual tracks ex ante differences in opportunity better than looking at aggregate transfers made by an individual. Imagine a decedent with an estate of $5,000,000. An estate tax treats her the same whether she leaves it all to one child or splits it up among ten recipients. Yet receiving $5,000,000 impacts life opportunities much more dramatically than receiving $500,000. The same is true for dynastic wealth: what matters is how much wealth someone receives. An inheritance of $50,000,000 bestows political and economic power in a way that an inheritance of $500,000 does not. As numerous commentators have acknowledged, a recipient-focused accessions or inheritance tax better reflects these concerns.204See Alstott, supra note 5; Murphy & Nagel, supra note 8, at 157, 160; Duff, supra note 54, at 26–27; Rakowski, Transferring Wealth, supra note 48, at 431.

Next consider the welfarist argument that gratuitous transfers received should count toward an individual’s ability to pay, just like salary, business profits, and gains from property sales. This concern also suggests a recipient-focused tax. How much wealth a transferor has does not necessarily correspond to the ability to pay of the transferee. For example, Lily Batchelder and Surachai Khitatrakun estimate that “22% of heirs burdened by the estate tax have inherited less than $500,000, while about 21% inheriting more than $2,500,000 bear no estate tax burden.”205Batchelder, supra note 5, at 53–56.

An accessions-tax framework also better addresses the concern that wealth concentrations are in and of themselves harmful by encouraging donors to split their fortunes up. An estate tax would treat Warren the same whether he leaves his fortune in one big bundle to one lucky heir, or whether he splits it up among multiple recipients. But an accessions tax treats these two situations differently, since it focuses on cumulative gifts and bequests received in excess of an exemption amount. Since each recipient has their own exemption amount, splitting a large fortune up generates a lower overall tax bill.

Finally, the psychological insights discussed in Section III.B. also point to the superiority of an accessions tax. Recall, for example, Stantcheva’s findings that support for transfer taxes rises when people focus on recipients instead of transferors.206See Stantcheva, supra note 4. This is likely due in part to framing and siloing, but perhaps also to the fact that focusing on recipients weakens the pull of moral mandates about double taxation and hard work.207See, e.g., Batchelder supra note 5, at 3 (“The final advantage of a comprehensive inheritance tax is that it should improve public understanding of the taxation of wealth transfers. . . . These misconceptions have been exploited by opponents of the estate tax, who have framed the estate tax as a double tax on frugal, hard-working donors who are ruthlessly taxed right at the moment of death.”).

  1. Gifts

A second decision is whether the tax should apply not only to bequests but also to gifts. Although Rignano clearly suggests taxing both, Halliday is more equivocal. Halliday’s equivocation is misplaced; the tax should apply to both equally.

a. Gifts in General

Consider the various reasons for taxing wealth transfers, starting with equality of opportunity. As Halliday notes, gifts are usually received earlier in life than bequests. This creates advantages sooner rather than later for the donee and her family, thus magnifying those advantages.208Halliday, supra note 13, at 189. For this reason, Anne Alstott has suggested varying inheritance tax burdens based on the recipient’s age.209Alstott, supra note 5, at 521–32. Further, the act of making a gift suggests that the donor feels financially secure enough to dispose of some of her wealth while alive, which makes it more likely that her heirs grew up in a family with wealth norms.

The ability-to-pay and dynastic wealth concerns also suggest taxing both gifts and bequests. Both gifts and bequests enable recipients to spend money for political purposes as well as influence the economic lives of others. Both gifts and bequests provide utility to recipients. In fact, declining marginal utility suggests that gifts might even provide more utility than bequests of comparable size, as individuals tend to have less money earlier in their lives. And both serve as a tag for one’s nonfinancial endowment. Again, gifts may signal greater nonfinancial advantages than comparably sized bequests, as families that engage in lifetime gifting are often wealthier than families who do not.

Moreover, Halliday’s arguments for excluding gifts from a Rignano tax do not withstand scrutiny. One argument is that transferors have such a strong preference for bequests that excluding gifts would not encourage them to make gifts instead.210Halliday, supra note 13, at 191–92. Halliday correctly observes that many transferors do not maximize opportunities to make tax-free gifts under current law and that many people save more than enough to cover the expenses of old age. He also acknowledges, however, that these statistics reflect decisions made during periods with relatively low rates and that they likely underestimate the extent to which wealthier families will change their behavior. A key part of estate planning for such families is maximizing the tax advantages of lifetime gifts, and minimizing the ability of transferors to characterize bequests as gifts creates a great deal of complexity in the current estate tax system.

Halliday also argues that taxing gifts is essentially pointless.211Id. at 194. He believes that most gifts can be easily concealed—unlike bequests, which are documented during probate and hard to hide. But many large gifts are similarly hard to conceal. Stock transfers are recorded; large cash transfers are tracked. And even gifts of jewelry and other family heirlooms generate records when donees insure them. Of course, under-the-table gifts will always occur, but not at a level that makes attempting to tax gifts pointless. Because this Article advocates for treating gifts similarly to bequests, later references to “bequests” or “inheritances” refer to gifts and vice versa.

b. Gifts and Timing Complications

Taxing gifts does raise a complication related to timing. Return to Grandfather, Mother, and Daughter. We do not know exactly how much Mother will inherit—which affects the accessions tax imposed on Daughter—until Grandfather is dead. If the tax only applied to bequests, this would not be a problem. But what if the tax also applies to gifts and Mother makes a gift to Daughter while Grandfather is still alive, before he bequeaths any wealth to Mother?

To illustrate, imagine that Mother gives Daughter $1,000,000 and five years later, receives $10,000,000 from Grandfather. If we look just at the first gift of $1,000,000, it initially appears to be newly created wealth that should not be taxed. But money is fungible; if Mother knows she’s about to receive an inheritance, this frees her up to make a lifetime gift to Daughter, whether from her own or borrowed funds. The tax would be easy to avoid if we simply cast any transfer from Mother’s generation to Daughter’s generation as a first transfer of wealth if it comes before Grandfather transfers anything to Mother. Yet whether Mother inherits before or after the gift to Daughter seems irrelevant if the point is to tax the second generation in a family that inherits wealth. This is especially true if one views second-generation wealth transfers as more of a welfarist or equal opportunity concern than first-generation transfers.

A “catch-up tax” that applies to transferees who have themselves made prior transfers can account for this scenario. When Daughter receives $1,000,000 from Mother, the tax—as applied to Daughter—would treat it as a first-generation transfer because at that point, Mother has not yet inherited anything. When Mother later inherits $10,000,000 from Grandfather, the tax—as applied to Mother—would treat different parts of that bequest differently. It would treat $9,000,000 as first-generation wealth and any amounts previously transferred by Mother to Daughter—here $1,000,000—as second-generation wealth.

Now consider what might happen later. One possibility is that Mother consumes the $10,000,000 she inherits from Grandfather, making no more gifts to Daughter. Because Daughter receives nothing more, no more tax is imposed upon the family. In total, $11,000,000 has been transferred within the family ($10,000,000 to Mother, and $1,000,000 to Daughter.) Overall, the tax will have treated $10,000,000 as first-generation wealth (Daughter is taxed as receiving $1,000,000 of first-generation wealth and Mother is taxed as receiving $9,000,000) and $1,000,000 as second-generation wealth (imposed on Mother via the catch-up tax at Grandfather’s death).212Note that this possibility is yet another argument in favor of using an accessions-type tax instead of an estate tax. If Mother consumes all $10,000,000 that she inherits, then there are no transfers from Mother subsequent to her initial gift to Daughter to which the catch-up tax could apply. In essence, the price Mother pays for making a lifetime gift before receiving her own inheritance is that she, not Daughter, is treated as having received a second-generation transfer.

Another possibility is that Mother later passes her $10,000,000 inheritance down to Daughter. In that case, a total of $21,000,000 has been transferred within the family ($10,000,000 to Mother, and $11,000,000 to Daughter). Of this, $10,000,000 represents a second transfer, and $11,000,000 represents newly created wealth (Grandfather created $10,000,000 and Mother created $1,000,000). When Daughter receives Mother’s $10,000,000 inheritance, the tax should therefore treat only $9,000,000 as second-generation wealth. This accurately taxes $10,000,000 of the family’s total transfers as second-generation wealth (recall that when Mother received her inheritance, $1,000,000 was treated as second-generation due to the catch-up tax), and $11,000,000 as first-generation wealth ($1,000,000 when Daughter received Mother’s lifetime gift, $9,000,000 of Mother’s receipt from Grandfather, and another $1,000,000 when Mother dies).

  1. Exclusions and Exemptions

The last set of base-related decisions concerns exclusions and exemptions. As both Rignano and Halliday suggest, each individual should have a relatively small lifetime exclusion amount.213Rignano, supra note 7, at 102; Halliday, supra note 13, at 65. Assume that after Grandfather bequeaths his $10,000,000 to Mother, she has several runs of bad luck and passes along only $1,000,000 to Daughter. Even though that $1,000,000 is second-generation wealth, it seems plausible to allow Daughter to inherit something free of tax for the same reasons that most (if not all) systems have such exemptions. In addition to administrative concerns, allowing small inheritances tax-free recognizes that bequests are a natural part of most families’ lives, and that they can provide a needed cushion for many less-wealthy individuals. Any amount chosen would be arbitrary, but something like $500,000 or $1,000,000 seems reasonable.

For similar reasons, the tax should have something similar to the annual exclusion described in Section I, but on a smaller scale. The annual exclusion’s purpose is to simplify record-keeping and to recognize that intra-family gift giving for birthdays, weddings, and holidays is a normal, everyday occurrence in almost all families that does not trigger any normative concerns. These same concerns are relevant in a Rignano tax. That said, the current $19,000 per recipient exclusion is far larger than necessary to cover regular birthday and holiday gifts, and in fact, allows for much tax-free giving that exacerbates unequal opportunities.214See McCaffery, supra note 5. As with the lifetime exemption amount, any chosen number would be arbitrary, but something like $5,000 seems reasonable.

Most transfer tax systems also exempt marital and charitable transfers. Intra-spousal transfers should not be taxed, as they do not transmit wealth down to a lower generation.215Rignano, supra note 7, at 102–03. Charitable transfers are a bit trickier from a normative perspective. In theory, their treatment should depend on what kind of charity receives the gift or bequest. If one’s concern is equality of opportunity, for example, a gift to an inner-city tutoring program furthers equality of opportunity while other gifts may undermine it (imagine gifts to private foundations that employ family members or to a private school that provides few scholarships).216See Fleischer, supra note 57; Fleischer, supra note 51. But if one goal of a Rignano tax is to gain public traction where other transfer taxes flounder, charitable transfers should be exempted. Charities benefit from a “halo effect,” and the point that some charities exacerbate social ills is nuanced and hard for the public to understand. Further, giving to charity is seen as virtuous, and may invoke reactions similar to the moral mandates and systems justification theories discussed earlier.

A final question is whether the relationship between the wealth creator and the second recipient should matter in determining whether a gift or bequest received is second-generation. Specifically, should second-time-around transfers that originate in a different family be exempted if the recipient is the first in her family to inherit? Halliday, for example, suggests the tax should apply to anyone whose parents or grandparents have inherited, but not to individuals who are the first in their families to inherit. That makes sense if one’s concern is equal opportunity and if one agrees with Halliday that repeated wealth transfers are the real culprit in that context due to the creation of wealth norms and economic segregation.217Halliday, supra note 13, at 197. See Fleischer, supra note 199, for a longer discussion of this issue.

Imagine two scenarios in which Grandfather starts with nothing, earns a fortune, and leaves it to Mother. In Childless, Mother has no children and leaves her wealth to Friend’s child. Mother’s Friend neither inherits from Friend’s parents nor bequeaths any wealth to Friend’s child. In Helping Hand Family, Mother has a daughter, to whom she leaves her wealth. In both cases, Mother inherited wealth and then passed it along a second time. In that sense, both Daughter and Friend’s child have received second-generation wealth. But if the concern is that repeated wealth transfers create or signal economic segregation and wealth norms, then Daughter and Friend’s child are not similarly situated. Friend’s child is the first in Friend’s family to inherit, and in that sense, what she receives is not second-generation wealth.218If Mother inherited wealth, her friends likely have similar social capital. It is probable that Friend’s child has grown up with wealth norms, even if Friend did not inherit wealth. However, that is likely also true of the offspring of initial earners, and they do not seem to be Halliday’s concern. Daughter, by contrast, belongs to the second generation of Mother’s family to inherit. This suggests looking not only at the recipient, but also at the pattern of prior transfers in the recipient’s family—if one shares Halliday’s concerns.219See Fleischer, supra note 199, for more on this point.

However, other normative justifications for taxing wealth transfers point in other directions. If one’s focus is dynastic wealth and traditional equality of opportunity concerns, or welfarist concerns, then the source of the gratuitous transfer should be irrelevant. Receiving unearned advantage, power, or welfare is the main concern, more than whether that receipt followed an intra-familial chain of transmission. The same is true if one’s concern is the mere existence of wealth.

Likewise, the psychological insights of folk justice suggest that treating intra-family transfers worse than other transfers would not fare well. First, system justification theory indicates that a large factor in hostility to the existing estate tax is its perceived threat to the family.220Sheffrin, supra note 9, at 149.Second, it is plausible that people hold moral mandates about family businesses and family farms that would be triggered if intra-family transfers were treated worse. Thus, any softening of the public’s opposition to inheritance taxes that comes from exempting first transfers would likely be undone if familial transfers were treated worse than other second transfers.

B. The Rate

After choosing a base, one must also choose a rate. Halliday and Rignano both use examples in which first-generation transfers are not taxed, second-generation transfers are taxed at 50%, and third-generation transfers are taxed at 100%.221rignano, supra note 7, at 102–03. Although Halliday uses this example, he rejects taxing third and later transfers at a rate of 100%. He asks but does not resolve whether first transfers should be totally exempted or merely taxed more lightly than second and later transfers. Nor does he address whether all second or later transfers should be taxed at the same rate. This Article proposes completely exempting first-generation inheritances and taxing subsequent ones at a rate of 40%, although it acknowledges that any rate will be somewhat arbitrary. Although this Article’s normative arguments point to taxing later transfers more heavily than initial transfers, they do not point to specific rates the way they signal, for example, that gifts and bequests should both be taxed. Nor does past experience illuminate the perfect rate as a technical matter. Perhaps

more than any other design question, choosing a rate reflects balancing numerous political considerations.

  1. Initial Transfers

The rate on initial transfers should be a simple, easy to understand zero. Work on cognitive psychology and tax suggests that individuals focus on “highly visible” and “easily recallable” aspects of a tax; this is known as “prominence” or “saliency.” When thinking about income taxes, for example, the public tends to focus on the highest marginal rate.222Edward J. McCaffery, Cognitive Theory and Tax, 41 UCLA L. Rev. 1861, 1886–87 (1994). Completely exempting initial transfers of wealth provides a sharp and clear distinction between initial and successive transfers in a way that merely using a lower rate does not. “You are not taxed at all when you pass along wealth that you have earned” has a salience that “you are taxed less” lacks.

The former also harnesses the power of folk justice better than the latter. Start with systems justification theory and the notion that taxing wealth transfers threatens a system that people are a part of and value. Here, it is the act of taxation in and of itself which is harmful. Taxing transfers of earned wealth at a low rate is still taxing them. Telling people that a system they care about is damaged only “a little bit” will do little to assuage the concerns of those who value the family. Damaging something valuable a little bit still damages it.

Completely exempting initial transfers also better counters the double taxation argument. Once again, it is the act of taxation—not the level of taxation—that gives this argument weight with the public. The public believes (rightly or wrongly) that the wealth-earner has already been taxed on the wealth. Educating the public about untaxed appreciation and the step-up in basis has not countered that. Nor has emphasizing that what should matter is the total tax burden, not the number of times something is taxed. Telling the public that you are taxing earned wealth less than inherited wealth will be similarly fruitless. From a folk justice perspective, the best way to address concerns that earned wealth is being double taxed is to be crystal clear that transferring it does not trigger tax. Only completing exempting such transfers does this.

  1. Subsequent Transfers

If first-generation transfers are completely exempted, how should later transfers be treated? Rignano suggested taxing second-generation transfers at 50% and third-generation transfers at 100%; although Halliday rejects the latter suggestion, he does not address whether second- and third-generation transfers should be taxed differently.223Halliday, supra note 13, at 64–65. This Article proposes treating them alike by taxing all later transfers at a flat rate of forty percent.

As an initial matter, second- and later-generation transfers should be treated similarly to each other. While the insights of folk justice strongly point to distinguishing first-generation wealth, they do not justify treating later transfers differently from each other. Nor do most of the justifications for taxing wealth transfers. Gifts and bequests received increase well-being and enhance ability to pay, regardless of whether the transferor earned or inherited the wealth in question. Money is money when it comes to political spending. Similarly, under traditional equality of opportunity concerns, money is money when it comes to paying for private school tuition or houses in top school districts, tutors, or fancy camps.

That said, other justifications are plausibly consistent with distinguishing among second-generation and later transfers, even if they do not necessarily mandate such an approach. Take Halliday’s linkage of wealth norms and equality of opportunity; it is likely that the older the family’s money, the stronger the wealth norms. Likewise, it is plausible that the longer a family has been politically or economically powerful in a given town, the more powerful they are. Knowing that another family has had power over yours for decades is probably more demoralizing the longer that has been the case.

In these cases, however, any difference in power or opportunity between second- and later-generation wealth diminishes over time. Let’s illustrate with wealth norms and equal opportunity: Grandfather creates wealth, which he passes along to Mother, who in turn passes her inheritance along to Daughter. Under Halliday’s reasoning, Mother enjoys substantially fewer advantages than Daughter, since Mother grows up in a family with first-generation wealth and Daughter grows up in a family with second-generation wealth. Yet it is unlikely that Daughter has substantially fewer advantages than Daughter’s children. The marginal advantage of growing up with third-generation wealth as opposed to second is likely much smaller than the marginal advantage of growing up with second- versus first-generation wealth. The case for distinguishing between second- and later-generation inheritances is therefore much weaker than for distinguishing first transfers.

And on a practical level, treating second and third inheritances alike minimizes the valuation, tracing, and record-keeping concerns addressed below. All that need be determined is how much an individual’s parents inherited. Given the weak theoretical case for distinguishing among later transfers, and the strong practical case against doing so, treating second and later transfers similarly to each other is preferable.

This Article thus proposes a rate of 40% on subsequent transfers, which is the current estate tax rate in the U.S. This number is admittedly arbitrary, and none of the theoretical considerations discussed above mandate any given rate. That said, something about tax rates that exceed 50% seem to hit a nerve with people. And given the prominence bias discussed above, it is likely that a Rignano tax that is seen as “raising rates” above current levels would face more opposition than one that does not raise rates.

  1. Adjusting for Age

A final rate-related issue is whether gifts and bequests received earlier in life should be taxed more heavily than those received later in life. Here, practical and theoretical considerations are in tension. Several justifications for taxing wealth transfers point in the direction of adjusting for age, such as equal opportunity theory.224See, e.g., Alstott, supra note 5, at 521–32.As theorists recognize, receiving an inheritance early in life alters one’s life prospects more than receiving one later in life. A $1,000,000 bequest at age twenty-five provides seed money for a start-up, while such a bequest at age sixty-five likely does no more than enable one to enjoy a more comfortable retirement. Other justifications, however, do not support adjusting for age. A large bequest increases one’s ability to pay regardless of one’s age, for example. And although such adjustments could be made,225See, e.g., id.; Inst. for Fiscal Stud., The Structure and Reform of Direct Taxation: Report of a Committee Chaired By Professor J. E. Meade 320–30 (1978), https://ifs.org.uk/sites/default/files/output_url_files/meade.pdf [https://perma.cc/SC2C-CSXS] [hereinafter Meade Committee Report]; Harry J. Rudick, What Alternative to the Estate and Gift Taxes?, 38 Cal. L. Rev. 150, 169 (1950). doing so adds another layer of complexity and is probably not worth that additional complexity.

C. Frequency: Determining the Number of Transfers

A further issue is determining how many times wealth has been transferred. Revisit Grandfather, Mother, and Daughter. Two questions arise. First, if Grandfather leaves his wealth directly to Daughter in a “generation-skipping transfer” that skips over Mother, is that a first- or second-generation transfer? Put another way, should that be treated the same or differently than if he leaves it to Mother, who in turn re-bequeaths it to Daughter? Second, what if Grandfather leaves his wealth to Mother, who

dies soon thereafter? Should adjustments be made for deaths in rapid succession?

  1. Generation-Skipping Transfers

Let’s start with generation-skipping transfers. Current law imposes an additional tax on such transfers to ensure that families face an equivalent level of tax whether their wealth proceeds directly from one generation to the next or skips over one generation. This prevents ultra-wealthy families in which Mother’s generation may not need Grandfather’s wealth from minimizing their tax burden by having Grandfather pass his wealth directly to Daughter.

Although counterarguments exist, a Rignano tax should contain similar rules that treat a transfer by Grandfather directly to Daughter as a second transfer instead of a first. This would prevent families from avoiding one level of tax by skipping generations. As under current law, however, exceptions should apply if Mother pre-deceases Grandfather, such that Grandfather’s transfer to Daughter does not skip over a living person.226The existing generation-skipping transfer tax rules could be used to determine when a generation-skipping transfer has occurred. For example, if Mother predeceases Grandfather, no additional transfer would be imputed.

To be sure, this design decision runs counter to folk justice principles. It renders transfers directly to grandchildren vulnerable to the double taxation argument and to system justification concerns about harming families. But the Rignano tax is not a tax designed to further folk justice principles; rather, it is a tax designed to take such principles into account when designing a wealth transfer tax that achieves other goals. Here, treating such transfers as first transfers would allow for too much game-playing, thus undermining the goals of taxing second-generation wealth. Moreover, it is plausible that the treatment of such transfers will be less salient to the public than the fact that the default for first transfers is complete exemption.227Very few members of the public who are not extremely wealthy, for example, know about the generation-skipping tax, whereas most people are aware of the estate tax. For these reasons, the better approach is to treat generation-skipping transfers as two transfers, not one.

  1. Transfers in Rapid Succession

A related issue is how to treat transfers in rapid succession. Imagine that Grandfather bequeaths his fortune to Mother, who dies unexpectedly a few months later, re-transferring his wealth to Daughter. Should this be considered a second transfer? Halliday argues that it should not be: “A short interval between bequests may mean that a donor has had less opportunity to save and accumulate due to an early death. It is harder to say, in that case, that this person’s bequests should still be taxed as if he or she had remained idle.”228Halliday, supra note 13, at 63–64.

Halliday’s approach is misguided; transfers in rapid succession are still transfers. Halliday is correct that Mother has had less time to build upon Grandfather’s inheritance after receiving it. Yet he ignores that she had time before either her or Grandfather’s death to earn her own wealth, and that wealth will be taxed as first-generation wealth. Counting each transfer treats Mother and Daughter the same as other families.

D. Valuation

Perhaps the most difficult issue is how to value re-transferred wealth. Revisit Grandfather, who starts with nothing and builds a $10,000,000 fortune. He bequeaths his wealth to Mother, who later dies with a $50,000,000 fortune which she leaves to Daughter. How much of Mother’s $50,000,000 should be considered a second transfer of Grandfather’s wealth? Rignano and Halliday, without discussion, use a simple but flawed approach in their examples: they would treat $10,000,000 as a second transfer and $40,000,000 as newly created wealth.

  1. The Problem

This approach erroneously overlooks the fact that asset values fluctuate over time due to a variety of causes—inflation, the time value of money, changing market conditions, and the owner’s efforts. Take inflation. Imagine that Mother invests her inheritance in an asset that keeps exact pace with inflation. $10,000,000 inherited in 1993 has an inflation-adjusted value of roughly $22,700,000 in 2025.229See CPI Inflation Calculator, supra note 15. The Rignano/Halliday default wrongly treats the $12,700,000 increase that is due to inflation as instead stemming from Mother’s efforts. But Mother has added no value. The asset has simply kept up with inflation.

  1. Risk-Free Rate of Return as the Default Solution

A more accurate approach would impute the risk-free rate of return to Grandfather’s fortune. This better distinguishes between earned and inherited wealth by recognizing the dual roles of risk and choice. To illustrate, imagine that Grandfather leaves Mother a building worth $10,000,000 that is worth $30,000,000 when she re-bequeaths it to Daughter. As explained above, attributing only $10,000,000 of the building’s value to Grandfather overstates Mother’s contribution and understates Grandfather’s. Yet attributing all $30,000,000 to Grandfather does exactly the opposite. It overstates Grandfather’s contribution and understates Mother’s.

What is key is that when Mother inherited the building, she had a choice. At that point, she held $10,000,000 of wealth that she could invest however she liked. She could continue to hold that particular building, swap it for other real estate, or cash out and invest in stocks, bonds, or a risky start-up. If she keeps the building itself, some—but only some—of any later increase in value is due to her choice to do so.

More specifically, a later increase in value has three possible components: the risk-free rate of return, a return to risk, and (occasionally) inframarginal returns.230John R. Brooks, Taxation, Risk, and Portfolio Choice: The Treatment of Returns to Risk Under a Normative Income Tax, 66 Tax L. Rev. 255, 261 & n.25 (2013); Noël B. Cunningham, The Taxation of Capital Income and the Choice of Tax Base, 52 Tax L. Rev. 17, 23 (1996); David A. Weisbach, The (Non)Taxation of Risk, 58 Tax L. Rev. 1, 19 (2004). The risk-free rate of return is the return one would receive by investing in a zero-risk project with a guaranteed return, such as a U.S. Treasury bond. This return is simply compensation for using the invested funds—a pure time-value-of-money return sometimes referred to as the “return to waiting.”231David Elkins & Christopher H. Hanna, Taxation of Supernormal Returns, 62 Tax Law. 93, 98 (2008) (explaining that the “risk free rate return . . . is simply a return to waiting”). See also Brooks, supra note 230, at 261 n.25; Cunningham, supra note 230, at 23.

To illustrate, imagine a stock investor. Unlike a bond investor, the stock investor does not know ex ante whether she will recoup her investment. Because the company’s value could either increase or decrease, she will insist on a higher return to compensate her for taking on that risk. Most investment returns are comprised solely of these two elements, which means that the return to risk is the excess over the risk-free return. 

Occasionally, an investment also yields an inframarginal return, which is a return above and beyond the market rate for risky investments. These arise from “special opportunit[ies] not generally available in the market” and are usually associated with “rents to ideas, managerial skill, or market power.” They can include unique returns to capital due to information asymmetries or imperfect markets, as well as returns to some combination of a person’s labor, ingenuity, and/or luck.232Brooks, supra note 230, at 261 n.25; Weisbach, supra note 230, at 19–21; Elkins & Hanna, supra note 231, at 100–03.

Although distinguishing between inframarginal and market-rate returns is difficult, we need not do so. Mother—not Grandfather—should be credited for both whenever Mother has a choice about investing her inherited wealth. Any investment of Grandfather’s $10,000,000 would have triggered, at minimum, the risk-free rate of return and should be traced back to Grandfather’s bequest. Returns above and beyond the risk-free-rate of return, however, should be attributed to Mother.

The default rule should therefore be to attribute the risk-free rate of return—as measured by the average U.S. Treasury bond yield—to Grandfather’s investment. The best measure of this is the average yield on a U.S. Treasury Bond of comparable length. Imagine that Mother outlives Grandfather by 30 years. If so, the average rate of return for a 30-year bond should be imputed to Mother’s inheritance from Grandfather. Any “extra” wealth should be credited to Mother and treated as new, first-generation wealth.

  1. Complications

The foregoing analysis assumes both that Mother has a choice about what to invest in, and that her investments are successful. But what if those assumptions are incorrect? Start with choice. Imagine that Grandfather bequeaths stock that skyrockets in value to a trust with an independent trustee over whom Mother has no control. Given that Mother has no say in how to invest the asset and assumes no risk herself, none of the stock’s value is attributable to her choices. The stock’s full value at her death should be credited to Grandfather. Moreover, we already have rules that identify when one has control over a trust; the Rignano tax could simply import the grantor trust rules.

Next let’s upend the assumption that Mother’s investments are uniformly successful. Imagine that Mother quickly squanders Grandfather’s fortune by investing his $10,000,000 in Blockbuster Video stock. She later, however, invests in a relatively unknown start-up called “Google,” parlaying a few thousand dollars into $10,000,000. How should Mother’s fortune be treated at her death?

Mother’s fortune should still be treated as inherited and traced back to Grandfather for three reasons (an approach favored by Rignano).233Rignano, supra note 7, at 52–53. First, Mother is able to leave Daughter $10,000,000 more than without Grandfather’s wealth. His bequest enables Mother to start at $10,000,000; lose $10,000,000; and nevertheless end at $10,000,000. Without the bequest, if Mother loses and re-earns $10,000,000, she ends at zero. Second, if we assume that Mother would have earned the risk-free rate of return when successfully investing Grandfather’s bequest, parity requires us to make the

same assumption even when the outcome is different. Either we assume that return or we do not.

Finally, ignoring Grandfather’s bequest ignores that money is fungible and creates incentives that undermine the goals of wealth taxation by essentially encouraging Mother to squander Grandfather’s bequest. Let’s say that Mother has an idea for a successful business that will earn her $15,000,000, and Mother also wants to spend $10,000,000 on a year-long first-class trip around the world. Compare two scenarios, Early Trip and Late Trip. In Late Trip, Mother saves Grandfather’s money and starts a business that earns $15,000,000 before taking the trip. The trip reduces her bank account from $25,000,000 to $15,000,000. Under the default rule established above, we’d use the risk-free rate of return to see what Grandfather’s wealth would have grown to. For the sake of illustration, let’s assume it would have grown to $14,000,000. If so, only $1,000,000 of Mother’s bequest to Daughter is treated as earned by Mother.

In contrast, imagine what happens if we use a rule that ignores Grandfather’s bequest if she spends it or invests it poorly. Mother can reduce her tax burden by travelling before earning her own money. In Early Trip, Mother spends Grandfather’s money on the trip and zeroes out her account. She then starts a business and earns $15,000,000, which she passes along to Daughter. If we ignore Grandfather’s bequest on the grounds that she spent it or wasted it, all her $15,000,000 wealth is treated as self-made.

Mother should not be treated differently depending on what she does with Grandfather’s money. Whether she spends it, invests it poorly, or invests it wisely, she had power over $10,000,000, and at her death, $10,000,000 (plus the risk-free-rate-of-return) should be credited back to Grandfather.

E. Tracing

A fifth issue—flagged by neither Rignano nor Halliday—is determining who receives inherited wealth as it moves downstream. This has two components, one normative and one administrative.

  1. The Normative Question

Let’s start with the normative question. We’ve been using an example with one member in each generation for simplicity. Again, assume that Grandfather leaves Mother $10,000,000, but now imagine that Mother has not one but two children, Daughter and Son.

In applying the tax to Daughter and Son, how should we decide as a normative matter who receives Grandfather’s wealth, and who receives the wealth created by Mother? Ideally, we’d somehow allocate Grandfather’s wealth to each of them in proportion to how much wealth they actually receive from Mother. This would be possible if Mother does not make any lifetime gifts, instead re-transferring all of Grandfather’s wealth at her death. Lifetime gifts, however, render this impossible.

One option is to allocate Grandfather’s bequest pro rata among Daughter and Son by giving them each a $5,000,000 “taxable amount” that is essentially a mirror-image of existing exemptions (this represents the total amount of Grandfather’s wealth that should be taxed as a second transfer when Mother passes it along, divided by two since Mother has two children). Under this approach, transfers to each of them would be taxed until they reached $5,000,000; later transfers would be untaxed. This solution, however, has two problems. First, it undertaxes the family if Mother favors one child. Imagine that Mother does not earn her own wealth, and transfers all of Grandfather’s $10,000,000 to Daughter and none to Son. Under the pro rata apportionment approach, only $5,000,000 would be treated as second-generation. Second, assigning a per-capita amount at Grandfather’s death requires knowing who Grandfather’s bequest should be apportioned among—that is, who Mother is going to leave her wealth too—which may be unknowable at his death.

A better solution is a first-in-time approach that treats the first $10,000,000 received by either Daughter or Son as second-generation, regardless of how Mother splits $10,000,000 between them. This is essentially how the current system treats a donor’s lifetime exemption amount and allows Mother to allocate the tax burden via the timing of her transfers.

  1. Administration

The next question is how one determines as an administrative matter, that a recipient of a gift or bequest has received wealth that has been inherited by the transferor. This requires more record-keeping than a traditional estate or inheritance tax, but not an insurmountable amount. And in fact, certain elements of this Article’s proposal exist in current estate and inheritance taxes in the U.S. and internationally.

Revisit Grandfather, Mother, and Daughter. As under current law, Grandfather’s executor will file a tax return at his death that shows the total amount of gratuitous transfers that Grandfather has made. To implement a Rignano tax, his executor would also make an election on that return to treat some or all of Grandfather’s wealth as first-generation, as well as recording to whom Grandfather left his wealth. Any wealth not elected by the executor will be treated entirely as a second-generation transfer. Absent malpractice, Grandfather’s executor will make the election. Mother, who receives Grandfather’s bequest, will also file a tax return upon receipt showing the bequest’s source and value, as well as indicating whether any assets are not under her investment control. Assuming Grandfather’s executor make the proper election, however, Mother will pay no tax.

These records enable us later to determine how much of any wealth that Mother later passes along should ultimately be traced back to Grandfather. When Mother makes a gift or bequest later, we need to know three things to calculate Daughter’s tax liability: the imputed value of Grandfather’s bequest to Mother at the time of Mother’s later transfer, the amount of that later transfer, and the value of any assets transferred from Grandfather to Mother over which Mother had no control.

We know the imputed value of Grandfather’s bequest by applying the risk-free rate of return to its value, as recorded on his and Mother’s tax return. This, of course, assumes Mother had investment control over the assets. If Grandfather also bequeathed assets to Mother over which she had no control, we’d determine both the imputed value of assets over which she control, and the current value of any assets over which she lacked control. This determines what dollar value of any transfers from Mother should be taxed to the recipients. Any excess will be treated as wealth created by Mother and not taxed.

This approach requires more record-keeping than under current law—namely, it requires both transferors and recipients to file returns, instead of just the transferor (in an estate tax) or just the recipient (in an inheritance tax). But the valuations required present no more difficulties than under current law. Transferors must already value assets at the time of a gift or bequest, and at times, formulas are used to impute such values based on current interest rates.

Two additional aspects of this approach are similarly used both in the U.S. and abroad. First, many inheritance tax systems tax recipients differently depending on from whom they inherit. (Generally, heirs who inherit from close relatives such as parents are treated more leniently than those who inherit from more distant relatives like cousins.). There is thus precedent for looking at the source of a gift or bequest when taxing the recipient.

Second, current law in the U.S. provides that in some circumstances, the tax consequences to a decedent turn on actions taken at the prior death of a spouse.234See I.R.C. § 2010(c)(2), (4) & (5) (portability rules); I.R.C. § 2044(a) and I.R.C. § 2056(b)(7) (second spouse to die must include any property for which the first spouse elected qualified terminable interest property treatment). More specifically, the second spouse to die can use any of the first spouse’s unused exemption amount, so long as the first spouse’s executor made the proper election. The success of portability, as these rules are known, suggest that tying one person’s tax consequences to the actions of prior transferors is workable.

F. Transfers in Trust

The foregoing illustrations have used outright gifts and bequests. But many wealthy families transfer most of their wealth in trusts that last for several generations. For example, Grandfather may choose to create a trust that pays the income to Mother for her life, and at her death, distributes the corpus to Daughter. Applying a Rignano tax to transfers in trust raises additional questions. The first, which arises in any accessions tax proposal, is to determine when the taxable events occur. Note that for each trust beneficiary, there are potentially two important events—the date the tax is actually imposed, and the date the clock starts for valuation purposes for later transfers.

  1. Remainder Interests

Let’s start with Daughter and her remainder interest. Should she be taxed at vesting, or at distribution?235As under current law, receiving a general power of appointment—which provides the holder with unrestricted access to all or part of a trust’s principal—should be treated the same as coming into ownership of the property subject to the power. Most accessions tax proposals suggest distribution for administrative and valuation reasons.236See, e.g., William D. Andrews, Reporter’s Study of the Accessions Tax Proposal, in Federal Estate and Gift Taxation: Recommendations of the American Law Institute and Reporters’ Studies 446 (1969); Batchelder, supra note 5, at 65; Edward C. Halbach, Jr., An Accessions Tax, 23 Real Prop. Prob. & Tr. J. 211 (1988); Meade Committee Report, supra note 225; Rudick, supra note 225, at 169. First, we do not know until distribution exactly how much Daughter receives. While we can often estimate the value of her remainder interest when Grandfather creates the trust based on current interest rates and Mother’s life expectancy, any figure is just that—an estimate. And for some trusts, additional valuation difficulties appear. Imagine that Grandfather’s trust was to Mother for life, and then to her children equally. Perhaps Daughter is the only living child at Grandfather’s death. But whether Mother has more children affects the share of the remainder Daughter will receive. Finally, many interests are subject to trustee discretion, as would be the case if the remainder interest in Grandfather’s trust passed to “Mother’s children in such proportions as the trustee determines to be in their best interests.” Second, until distribution, Daughter may not have liquid funds with which to pay the tax. Although some trust interests can be sold or borrowed against, many cannot.

These concerns apply with equal force to a Rignano tax. But where do normative considerations point, vesting or distribution? With a traditional accessions tax, one could argue that most (but not all) normative justifications suggest treating vesting as the taxable event. For example, if an accessions tax is designed to further welfarist principles, then vesting seems logical, as one’s welfare (from security, reputation, and the fungibility of money) increases upon vesting. Political influence likely starts accumulating at vesting, when politicians and PACs start courting the remainder beneficiary. And since money is fungible, a vested interest frees up other funds that can provide a head start when it comes to educational and economic opportunities. That said, Anne Alstott has argued that the choice/chance distinction counsels in favor of distribution if an accessions tax is designed to reflect equal opportunity concerns.

But a Rignano tax is not designed to further any single normative goal such as equality of opportunity or welfarism in isolation. Instead, it is designed to find a compromise among competing intuitions about wealth transfer taxation—even when those intuitions may seem “wrong” to tax theorists. To that end, some of the administrative considerations discussed above take on normative weight. Consider valuation. In theory, one could tax at vesting based on estimated values and then adjust at distribution to account for divergences from the estimate. But it is quite likely the public would react negatively to the taxation of undistributed yet vested interests, for the same reason the public reacts negatively to the possible taxation of unrealized gains. To many, it simply seems unfair to impose a tax when there has not yet been an event that provides liquidity, or when valuation is unclear. Given that one purpose of a Rignano tax is to make political headway where other inheritance taxes fail, the better course is to wait until distribution of remainder interests to impose the tax—that is, until we know exactly who gets exactly how much.

The same rule, with two exceptions, should apply when determining when Daughter’s clock starts ticking for purposes of valuing later growth for subsequent transfers. Daughter generally does not have control of the funds until distribution, and therefore none of their prior growth (or lack thereof) should be attributed to her to determine what part of subsequent transfers by Daughter stems from her own initiative or Grandfather’s wealth. The first exception would be if Daughter somehow had discretionary investment control of the assets during Mother’s income interest, in which case investment decisions could plausibly be attributed to her. The second is if Daughter could sell her remainder interest at vesting, in which case the decision to leave it invested in the trust should be attributed to her and any later distribution of wealth beyond the risk-free-rate of return should be deemed self-made.

  1. Income Interests

What about income interests? Assume that Mother’s income interest has an estimated FMV of $1,000,000 at vesting based on the present value of its payment stream and is predicted to pay out $100,000 a year for the rest of Mother’s life. Or imagine that Daughter receives a secondary life estate instead of the corpus outright at Mother’s death. Should she be treated as receiving the inheritance all at once at vesting, or over time when she receives her annual income distribution? In theory, these are economically equivalent, assuming perfect information about interest rates and lifespans (just as the difference between taxing a remainder interest at vesting and distribution is).

The same considerations that apply to remainder interests should apply here as well. The normative considerations that justify a traditional accessions tax do not point clearly in one direction, while weighty valuation and liquidity concerns remain. The default should be that the taxable event, be it imposing tax or starting the clock for later valuation purposes, happens at distribution. Exceptions would be made where the beneficiary has control over investment assets or the ability to sell her income interest.

G. Transition Rules

A Rignano tax contains a unique transition issue. In the illustrations used throughout this Article, we have assumed that Grandfather was self-made. And in the example above, we know how much of Mother’s wealth to tax because Grandfather’s estate would have filed an election to treat his estate as first-generation wealth.

But what if Grandfather himself inherited some money, and was not completely self-made? How do we treat the first generation after a transition to a Rignano tax? Treating all existing wealth at the time of the tax’s imposition as self-made is unsatisfactory, for it essentially delays implementation of the tax for a generation and does not reflect reality. Instead, some existing wealth should be treated as self-made, and some should be considered second-generation wealth. Halliday and Rignano both acknowledge the need for a transition rule to determine that portion, with Rignano suggesting that one-third to one-half of current wealth should be treated as inherited.237Rignano, supra note 7, 89–90. Fairly recent studies suggest that anywhere from 15% to 46% of current wealth is inherited. Although any number will be admittedly arbitrary, treating one-sixth to one-third of existing wealth as second-generation wealth seems reasonable.238Wojciech Kopczuk & Joseph P. Lupton, To Leave or Not to Leave: The Distribution of Bequest Motives, 74 Rev. Econ. Stud. 207, 209 (2007).

CONCLUSION

This Article has made the case for an inheritance tax system that—unlike our own—taxes old money more heavily than new. Specifically, it proposes completely exempting gifts and bequests of self-made wealth, but taxing heirs who receive re-transferred wealth. Although such a tax is more complex than our current system, the challenges are manageable and are well worth it.

Crucially, this proposal provides a way out of the enduring stalemate over taxing wealth. The estate tax has been the subject of passionate debate for decades, resulting in an ongoing state of political uncertainty. Rates and exemption levels have ping ponged back and forth for two decades, including a single year—2010—that had no estate tax at all. And although recent legislation ostensibly made the exemption’s expansion “permanent,” there is no reason a future Congress could not “permanently” shrink it again. Given the current political polarization, there is no doubt that questions about whether and how to tax wealth will continue to generate heated debate.

What makes this debate so intractable is not only that the public as a whole is divided on the issue of inheritance taxation, but that many individual Americans hold simultaneous beliefs about wealth, opportunity, desert, fairness, and family that seemingly contradict each other. Many of us, for example, have at least a sliver of sympathy for some of the claims of both supporters and opponents of the tax.

Yet our current system treats taxing wealth transfers as an all or nothing proposition, without acknowledging a key source of our seemingly contradictory beliefs: the finding that many of us silo beliefs about wealth, distinguishing among earned and inherited wealth. By harnessing this finding, as well as the insights of other recent psychological work on taxation, a Rignano tax thus reconciles the benefits of wealth transfer taxation with deeply held beliefs about fairness, desert, private property, and family. And by so doing, it offers an opportunity for a stable and lasting resolution to the debate over taxing inherited wealth.

98 S. Cal. L. Rev. 1439

Download

*Richard and Kaye Woltman Professor in Finance, The University of San Diego School of Law. For helpful feedback and suggestions, the author thanks Anne Alstott, Jordan Barry, Lily Batchelder, Heather Field, Dov Fox, David Gamage, Ari Glogower, Daniel Halliday, Shelly Layser, Ray Madoff, Shu-Yi Oie, Caley Petrucci, Jim Repetti, Diane Ring, Darien Shanske, and Mila Sohoni, as well as participants at the University of Virginia Tax Policy Workshop, the Boston College Law School/Tulane Law School Tax Roundtable, the Association of Mid-Level Tax Scholars Conference, the University of San Diego Colloquium Series, and the staff of the Southern California Law Review. Thanks to the University of San Diego Law Library and Carlisle Olson for invaluable research assistance.

Wage Theft in Los Angeles: Evaluating the Deputization of Worker Centers as an Enforcement Measure

In 2023, Los Angeles County was called the “wage theft capital of the nation,” with up to $28 million stolen from workers every week. This form of theft especially places low-income workers at risk; 80% of low-wage Los Angeles County workers reportedly experience wage theft. In spite of this vast problem, however, government agencies tasked with the enforcement of wage theft have been overworked and underfunded. The under-resourcing of government agencies results in short-staffed labor offices, prolonging the time it takes to resolve wage theft claims and increasing the likelihood that victims of wage theft either drop their claim or fail to raise a claim at all.

To address this problem in Los Angeles City, deputization by the Los Angeles Office of Wage Standards could extend authority to worker centers—community-based workers’ rights organizations—to support the enforcement of wage theft. The Los Angeles Municipal Code could grant worker centers the power to advise workers on their rights, inspect employer records for wage violations, and ultimately expand the enforcement of the issue and thereby reduce wage theft. This Note provides the first analysis of deputization within this space and at this depth, introducing new legal analysis and proposing a new enforcement tool with which to address the massive issue of wage theft.

This Note argues that the deputization of worker centers fits within Los Angeles’s existing statutory framework and would be a constitutional delegation of the legislature’s power under the California Constitution. In so doing, this Note makes recommendations to bolster the constitutionality of the deputization of worker centers by the Los Angeles Office of Wage Standards so that more resources can be put in place to reduce the rampant wage theft problem throughout the city.

Introduction

Wage theft is a pervasive problem in the United States, affecting over two million workers1David Cooper & Teresa Kroeger, Econ. Pol’y Inst., Employers Steal Billions from Workers’ Paychecks Each Year 2 (2017), https://files.epi.org/pdf/125116.pdf [https://perma.cc/U2DN-S2U3]. and costing as much as $50 billion in lost wages each year.2Press Release, Econ. Pol’y Inst., Wage Theft Costs American Workers as Much as $50 Billion a Year (Sept. 11, 2014), https://epi.org/press/wage-theft-costs-american-workers-50-billion [https://perma.cc/44TY-Z5CK]. Wage theft is one of the most common crimes committed in the United States,3Nicole Hallett, The Problem of Wage Theft, 37 Yale L. & Pol’y Rev. 93, 97 (2018). with employers stealing more wages from workers each year than is stolen in “bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined.”4Ross Eisenbrey, Wage Theft Is a Bigger Problem than Other Theft—But Not Enough Is Done to Protect Workers, Econ. Pol’y Inst. (Apr. 2, 2014), http://www.epi.org/publication/wage-theft-bigger-problem-theft-protect [https://perma.cc/GUM7-LE9Q]. A “form of fraud” that “occurs when employers do not pay their workers” what they are legally entitled to, wage theft encompasses a broad range of employers’ activities that deprive workers of earned compensation.5Wage Theft, State of Cal. Dep’t of Indus. Rels. (May 2018), https://www.dir.ca.gov/fraud_prevention/Wage-Theft.htm [https://perma.cc/8AYT-MYU4]. Victims of wage theft include workers who are (1) paid less than the legally mandated minimum wage (affecting almost two million workers in the United States),6Hallett, supra note 3, at 96; Examples of Wage Theft, State of Cal. Dep’t of Indus. Rels. (Feb. 2019), https://www.dir.ca.gov/dlse/Examples_of_Wage_Theft.html [https://perma.cc/5KA7-UX77]. (2) misclassified as “independent contractors” and not provided with the legal rights employees are entitled to,7Joy Jeounghee Kim & Skye Allmang, Wage Theft in the United States: Towards New Research Agendas, 32 Econ. & Lab. Rels. Rev. 534, 537–38 (2021). or (3) not properly paid for overtime or provided with meal breaks.8Id. at 535. See State of Cal. Dep’t of Indus. Rels., supra note 6; Matthew Fritz-Mauer, Lofty Laws, Broken Promises: Wage Theft and the Degradation of Low-Wage Workers, 20 Emp. Rts. & Emp. Pol’y J. 71, 72–73 (2016).

The problem is particularly prevalent in Los Angeles. In 2023, the Los Angeles Worker Center Network called Los Angeles the “wage theft capital of the nation,” with $26 to $28 million stolen from workers every week in Los Angeles County.9L.A. Worker Ctr. Network, Fact Sheet: Wage Theft 1 (2023), https://laworkercenternetwork.org/resources/fact-sheet-wage-theft [https://perma.cc/8TA3-6C6T]. The study also found that workers who stand up for their rights against wage theft place themselves at risk of retaliation, facing consequences such as “reduced hours, increased workload, firing and threats of deportation.”10Id. In addition, a 2024 report found that the Los Angeles metropolitan area lost an average of $1.6 to $2.5 billion a year between 2014 and 2023 through minimum wage violations alone,11Daniel J. Galvin, Jake Barnes, Janice Fine & Jenn Round, Wage Theft in California: Minimum Wage Violations, 2014–2023 1 (2024), https://smlr.rutgers.edu/sites/default/files/Documents/Centers/WJL/California_MinimumWage_Study_May2024.pdf [https://perma.cc/B3KF-N4UY]. and that over 7% of workers were paid below California’s state minimum wage.12Id. at 3.

Recent findings about the prevalence of wage theft in Los Angeles have led lawmakers to introduce new legislation to ameliorate the problem.13See L.A. Councilmembers Introduce New Legislation to Combat Wage Theft; Joined by City Attorney, Advocates, Hydee Feldstein Soto: L.A. City Att’y (Sept. 1, 2023), https://cityattorney.lacity.gov/updates/la-councilmembers-introduce-new-legislation-combat-wage-theft-joined-city-attorney [https://perma.cc/EW3D-WKGQ]. In April 2024, California’s Labor Commissioner’s Office created the Workers’ Rights Enforcement Grant to provide a new funding source targeted at deterring wage theft and other workplace exploitations.14Workers’ Rights Enforcement Grant, State of Cal. Dep’t of Indus. Rels. (Apr. 2024), https://www.dir.ca.gov/DLSE/Grants/Workers-Rights-Enforcement-Grant.html [https://perma.cc/S5M8-9QZQ]. The Workers’ Rights Enforcement Grant awards grants to California public prosecutors to “develop and implement a wage theft enforcement program.”15Id. The grants are to be used to fund staff salaries and benefits; $8,550,000 was awarded during the first grant cycle in 2024–2025 and another $8,550,000 will be awarded between 2025–2026, with a maximum grant of $750,000 per applicant.16Id.

While there have been recent laws targeting wage theft, laws aimed at remedying this issue have been in existence for several years. Various administrative agencies are tasked with the enforcement of employment laws, including determining whether workers are being paid the legally mandated minimum wage, whether employees are properly compensated for overtime worked, and whether employers have violated other employment laws. On the federal level, the Department of Labor’s Wage and Hour Division monitors the enforcement of laws including the federal minimum wage.17Fair Labor Standards Act of 1938, 29 U.S.C. § 204. On the state level, California’s Labor Commissioner’s Office (known formally as the Division of Labor Standards Enforcement) combats wage theft and protects workers from retaliation.18Cal. Lab. Code § 79; Labor Commissioner’s Office, State of Cal. Dep’t of Indus. Rels., https://www.dir.ca.gov/dlse [https://perma.cc/FM4R-5E5D]. On the local level, some cities have established agencies that enforce local laws and ordinances. Within the city of Los Angeles, the Office of Wage Standards “is responsible for implementing and administering the guidelines of the Los Angeles Minimum Wage and Minimum Wage Enforcement Ordinances.”19Jasmine Elbarbary, Raise the Wage LA, Empower LA (June 3, 2016), https://empowerla.org/raise-the-wage-la [https://perma.cc/D9Y4-BF52].

However, agencies tasked with the enforcement of employment and labor laws have been “chronically” underfunded.20Ihna Mangundayao, Celine McNicholas & Margaret Poydock, Worker Protection Agencies Need More Funding to Enforce Labor Laws and Protect Workers, Econ. Pol’y Inst. (July 29, 2021, 12:29 PM), http://epi.org/blog/worker-protection-agencies-need-more-funding-to-enforce-labor-laws-and-protect-workers [https://perma.cc/YB62-RG53]. A 2018 report by Politico found that, in fifteen states, 41% of lost wages were unrecovered.21Marianne Levine, Behind the Minimum Wage Fight, a Sweeping Failure to Enforce the Law, Politico (Feb. 18, 2018, 10:40 AM), http://politico.com/story/2018/02/18/minimum-wage-not-enforced-investigation-409644 [https://web.archive.org/web/20241109013457/https://www.politico.com/story/2018/02/18/minimum-wage-not-enforced-investigation-409644]. This underenforcement comes even as employers’ violations of these laws grow rampant. A 2021 report published by the nonprofit advocacy group National Employment Law Project found that, in 2019 alone, workers earning less than $13 an hour were prevented from recovering over $9.27 billion in stolen wages because of employer-forced arbitration.22Hugh Baran & Elisabeth Campbell, Nat’l Emp. L. Project, Forced Arbitration Helped Employers Who Committed Wage Theft Pocket $9.2 Billion in 2019 from Workers in Low-Paid Jobs 1 (2021), https://s27147.pcdn.co/app/uploads/2021/06/Data-Brief-Forced-Arbitration-Wage-Theft-Losses-June-2021.pdf [https://perma.cc/4EB9-87QF]. In spite of this, the nonpartisan Economic Policy Institute (“EPI”) found that, between 2017 and 2020, only “$3.24 billion in stolen wages was recovered for workers” nationwide.23Ihna Mangundayao, Celine McNicholas, Margaret Poydock & Ali Sait, Econ. Pol’y Inst., More than $3 Billion in Stolen Wages Recovered for Workers Between 2017 and 2020, at 4(2021), https://files.epi.org/uploads/240542.pdf [https://perma.cc/9THV-H9JX]. The underenforcement of minimum wage laws is a problem in California, where workers were owed $280 million in unrecovered claims from unpaid wages in 2017.24Alejandro Lazo, Jeanne Kuang, Lil Kalish & Erica Yee, When Employers Steal Wages from Workers, CalMatters (July 26, 2022), http://www.calmatters.org/explainers/when-employers-steal-wages-from-workers [https://perma.cc/8KB4-7CRJ]. According to California’s Legislative Analyst’s Office report on the 2020–2021 budget, California workers filed $320 million in wage theft claims. Subtracting for the wages recovered through formal proceedings ($15 million) and the wages recovered through settled claims ($25 million), there were $280 million in unrecovered claims from unpaid wages in 2017. The 2020–21 Budget: Improving the State’s Unpaid Wage Claim Process, Legis. Analyst’s Off. (Feb. 19, 2020) [hereinafter The 2020–21 Budget], https://lao.ca.gov/Publications/Report/4165 [https://perma.cc/PC6X-52YE]. And these claims arise only when workers report these wage theft violations; underenforcement of these laws may mean there are a great number of workers who suffer wage theft but either choose not to report a violation or are not sufficiently informed of their rights to be aware that a violation has occurred.25In fact, California’s Legislative Analyst’s Office reported that many affected workers who could file wage claims do not; about 1 in 600 workers statewide file wage claims each year, but “the share of workers owed unpaid wages is likely much greater.”

The inefficiency of agencies enforcing wage theft has also become apparent in recent years. A report by the California Legislative Analyst’s Office found that, although state law requires wage claims to be adjudicated within 120 days, the average claim took nearly 400 days to be adjudicated in 2018.26The 2020–21 Budget, supra note 24. These long wait times disadvantage victims of wage theft by discouraging affected workers from filing claims, increasing the likelihood that the worker will drop their claim before resolution, and potentially compelling workers “to settle their claims for smaller amounts.”27Id.

Wage theft has far-reaching and pernicious effects. Wage theft can cause economic insecurity by introducing financial uncertainty and causing workers to fear the repercussions of speaking up.28Hallett, supra note 3, at 151. In addition, a 2014 study from a nonprofit public health organization found that wage theft reduces the income that is necessary to provide for an employee’s family, which gives way to downstream effects: employees’ children are “less likely to succeed in school,” and workers’ increased stress causes them to feel more anxious and experience poor mental and socioemotional health.29Fabiola Santiago, Brooke Staton, Natalia Garcia, Jill Marucut, Tia Koonse & Human Impact Partners, Health Impact Assessment of the Proposed Los Angeles Wage Theft Ordinance 7 (2014), https://www.labor.ucla.edu/wp-content/uploads/2018/06/wage_theft_report_082514_KF.pdf [https://perma.cc/RZD6-4ZJX]. Wage theft also has effects on society at large, such as creating unfair competition with businesses that do comply with the law, increasing the need for safety-net and welfare programs, and “reducing needed tax revenues.”30Meredith Minkler, Alicia L. Salvatore, Charlotte Chang, Megan Gaydos, Shaw San Liu, Pam Tau Lee, Alex Tom, Rajiv Bhatia & Niklas Krause, Wage Theft as a Neglected Public Health Problem: An Overview and Case Study from San Francisco’s Chinatown District, 104 Am. J. Pub. Health 1010, 1011 (2014).

Given the seriousness of wage theft and the inadequacy of its current enforcement, deputization offers a solution. Deputization would endow private citizens with the authority extended to governmental wage theft authorities. The rights granted to private citizens could vary widely, ranging from entering work sites and advising workers of their rights to accessing employer records to inspect wage violations. However, more rigorous embracing of deputization would lead to more momentum for addressing the enforcement of wage and hour law and decreasing the instances of wage theft suffered by workers.

I. Deputization

Despite the enormity of the wage theft problem in the U.S., the enforcement and containment of the issue is limited. Victims of wage theft currently have a few potential avenues of recourse: (1) file a complaint with the relevant federal, state, or local labor agency;31Workers may file a federal complaint with the U.S. Department of Labor or a state claim with the Labor Commissioner. The 2020–21 Budget, supra note 24. A worker protected by a relevant Los Angeles statute may also file a claim with the Los Angeles Office of Wage Standards. Raise the Wage LA, City of L.A. Off. of Wage Standards, https://wagesla.lacity.org [https://perma.cc/99KG-TG7R]. (2) file a private lawsuit under the federal Fair Labor Standards Act (“FLSA”); (3) file a private lawsuit under state or local wage and hour standards; or (4) do all three.32Elizabeth J. Kennedy, Deputizing the Frontline: Enforcing Workplace Rights in a Post-Pandemic Economy, 38 Hofstra Lab. & Emp. J. 203, 213–14 (2021); see also The 2020–21 Budget, supra note 24. Filing a private lawsuit is burdensome and sometimes out of the question for low-income and marginalized workers (whom wage theft disproportionately affects and who may face difficulty finding attorneys interested in taking low-dollar cases).33See Fritz-Mauer, supra note 8, at 102–03. An EPI report found that Californian victims of wage theft lost out on about $3,400 a year in 2015. Cooper & Kroeger, supra note 1, at 10 tbl.1.

However, leaving the enforcement of wage theft up to the designated government entities is not a solution either—most state and local governments lack sufficient resources to investigate and enforce workplace standards.34Cooper & Kroeger, supra note 1, at 5–6; Farida Jhabvala Romero, State Wage-Theft Investigators Say Staffing Crisis Is Hurting the Agency, KQED (July 18, 2023), http://kqed.org/news/11955920/california-wage-theft-investigators-staffing-crisis [https://perma.cc/AE95-JVGH] (discussing how vacancies in the California Labor Commissioner’s Office are causing backlogs and slowing of work). In recent years, the California Labor Commissioner’s office has reportedly been “too short-staffed to do its job,” an issue that was exacerbated by the COVID-19 pandemic and resulting labor shortage.35Alejandro Lazo, Jeanne Kuang & Julie Watts, Agency Battling Wage Theft in California Is Too Short-Staffed to Do Its Job, CalMatters (Oct. 17, 2022), https://calmatters.org/california-divide/2022/10/agency-battling-wage-theft [https://perma.cc/JR9V-ATLZ]. In 2023, employees at the California Labor Commissioner’s office cited a 30%–40% vacancy rate in the office and reported that these vacancies caused employee burnout, stress, lowered morale, and sometimes the decision to leave the office altogether.36Letter from Rank-and-File Workers, California Lab. Comm’r’s Off., to David Alvarez, Chair, Catherine Blakespear, Vice Chair, and Members of the Joint Legis. Audit Comm. 3 (July 9, 2023) [hereinafter Letter from Rank-and-File Workers] (on file with author); see also Romero, supra note 34. A high vacancy rate, overworked staff, and the resulting “exodus of talented workers” result in an office that is poorly equipped to handle the sheer volume of wage theft claims.37Letter from Rank-and-File Workers, supra note 36, at 4.

One way to address this problem is to deputize private citizens to provide them with the same authorizations that a governmental entity is granted under relevant statutes. Deputized citizens could help the agency more effectively use its authority to enforce the laws among a greater number of affected employers and employees. In particular, private citizens may be deputized to investigate wage theft such that they could enter worksites, speak with employees, and inspect employer records. Sharing the responsibilities of wage theft enforcement with private citizens would reduce the workload of government employees, allowing them to focus their resources on the other stages of resolving a wage theft claim, such as settlements, hearings, and recommendations.

A. What Is Deputization?

Deputization occurs when a principal party “empowers an agent” (“deputizes” the agent) to perform some agreed-upon function,38Bruce I. Carlin, Tarik Umar & Hanyi Yi, Deputization 1 (Nat’l Bureau of Econ. Rsch., Working Paper No. 27225, 2020). authorizing the agent to act on the principal’s behalf in limited ways.39Myriam E. Gilles, Reinventing Structural Reform Litigation: Deputizing Private Citizens in the Enforcement of Civil Rights, 100 Colum. L. Rev. 1384, 1426 (2000). Throughout history, deputization has taken many forms and currently exists in many different contexts.40See Carlin et al., supra note 38, at 1. The judiciary has engaged in deputization; as early as the 19th century, federal courts deputized employer-hired private security personnel to enforce federal injunctions against striking workers.41Gilles, supra note 39, at 1427. Today, the deputization of private attorneys by local prosecutorial agencies to head criminal prosecutions is still common.42Id. at 1428. The federal government has also deputized state and local officials to enforce laws; for instance, the legislature authorizes state and local law enforcement agencies to perform immigration law enforcement functions through the Immigration and Naturalization Act.43Id. at 1431 n.195; 8 U.S.C. § 1103(c).

In addition to deputization of government officials, existing examples of deputization also involve private individuals. The Private Attorneys General Act (“PAGA”) is a model of deputization which gives authority to private citizens under California law,44Labor Code Private Attorneys General Act of 2004, Cal. Lab. Code § 2698 (West 2004); id. § 2699(a) (stating that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments . . . may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees”). meaning that an official government entity is not needed to litigate these violations. This statute “deputizes” private citizens by “authoriz[ing] aggrieved employees to file lawsuits to recover civil penalties on behalf of the State of California for Labor Code violations.”45Private Attorneys General Act (PAGA), Lab. & Workforce Dev. Agency, http://labor.ca.gov/resources/paga [https://perma.cc/VHM6-WWRD]. PAGA was passed in response to deficiencies in the state’s ability to “effectively investigate and prosecute” labor law abuses,46Kennedy, supra note 32, at 245. especially as there was an increasing “disparity between California’s large labor force” and the “finite” resources of California’s enforcement agencies.47Matthew J. Goodman, Comment, The Private Attorney General Act: How to Manage the Unmanageable, 56 Santa Clara L. Rev. 413, 414 (2016). The statute essentially deputizes private citizens to “step into the shoes” of the state and prosecute employers’ statutory labor violations.48Id. at 414–15. In allowing private citizens to act as “attorneys general,” PAGA enables these private citizens to “recover civil penalties for Labor Code violations” committed against them, with the official enforcement agencies retaining “primacy” over the private enforcement efforts.49Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129, 146–47 (Cal. 2014) (quoting Cal. Lab. Code § 2699 (West 2004)). PAGA has been successful in recovering the stolen wages of employees, collecting “more than $88 million from lawbreaking corporations in 2019.”50Rachel Deutsch, Rey Fuentes & Tia Koonse, California’s Hero Labor Law: The Private Attorneys General Act Fights Wage Theft and Recovers Millions from Lawbreaking Corporations, UCLA Lab. Ctr. (2020), http://labor.ucla.edu/publication/paga [https://perma.cc/E8EY-YL7N].

Despite PAGA’s achievements and enforcement measures against lawbreaking corporations, PAGA has a large shortcoming: it only allows employees who have experienced or are experiencing the alleged Labor Code violation to bring the action. Aggrieved employees must bring actions “on behalf of the employee and other current or former employees.”51Cal. Lab. Code § 2699(a)(8) (West 2004). Although PAGA permits employees to bring suit on behalf of other employees and form a class action–like group of employees as plaintiffs,52Goodman, supra note 47, at 415. many of these cases have been called “unmanageable” by courts when there are “a large number of allegedly aggrieved individuals who would require a multitude of individual assessments to prove liability.”53Id. at 433–34. To proceed on the case following an “unmanageability” ruling by the court, the plaintiff must demonstrate liability of thousands of individually aggrieved employees,54Id. at 433; see Defendants’ Motion to Strike PAGA Representative Actions Allegations at 13, Ortiz v. CVS Caremark Corp., No. C 12-05859, 2014 U.S. Dist. LEXIS 36833 (N.D. Cal. March 19, 2014). which poses an immense obstacle for plaintiffs.

In addition to the barriers employees face when attempting to file PAGA suits, there may also be employees who are eligible to file a PAGA suit but simply do not do so. To commence an action, an aggrieved employee must give notice of the alleged violation to the California Division of Occupational Safety and Health, stating the provisions that they allege their employer violated and “the facts and theories support[ing] the alleged violation.”55Chris Micheli, Private Attorneys General Act Lawsuits in California: A Review of PAGA and Proposals for Reforming the “Sue Your Boss” Law, 49 U. Pac. L. Rev. 265, 272–73 (2018) (quoting Cal. Lab. Code § 2699.3(a)(1)). This lengthy process may exclude employees who are both unfamiliar with the administrative process and with the law. Furthermore, not all employees who are “aggrieved” may be aware that their employer is violating a law or willing to file a suit through PAGA.

While PAGA has expanded the accessibility of enforcement remedies to aggrieved employees, some localities have also arranged for deputization of community organizations to enter work sites and perform outreach to inform workers of their rights. For example, the Santa Clara County Office of Labor Standards Enforcement (“OLSE”) has partnered with the Fair Workplace Collaborative (“FWC”), a coalition of dedicated community organizations and advocates who directly engage with employees through flyering, training, and legal services.56Fair Workplace Collaborative, Working P’ships USA, http://wpusa.org/work/just-economy/fair-workplace-collaborative [https://perma.cc/F9BF-SEZW]; OLSE Partnerships, Cnty. of Santa Clara, https://desj.santaclaracounty.gov/offices/office-labor-standards-enforcement/partnerships-olse [https://perma.cc/68RE-MU9R]. The FWC is made up of several community-based organizations, including the Pilipino Association of Workers & Immigrants,57The Pilipino Association of Workers & Immigrants fights social and economic injustice faced by Filipino workers and immigrants or migrants of Santa Clara County. About Us, Pilipino Ass’n of Workers & Immigrants, https://pawis-sv.com/about-us [https://perma.cc/69SM-V8MB]. the Vietnamese American Roundtable,58The Vietnamese American Roundtable is a nonprofit organization that develops and promotes projects that benefit the Vietnamese community. Who We Are, Vietnamese Am. Roundtable, https://www.varoundtable.org/who-we-are [https://perma.cc/NW4S-64N2]. and the Day Worker Center of Mountain View,59The Day Worker Center of Mountain View is a nonprofit organization that develops programs and services to advocate for the rights of day workers who work on a contingent, day-to-day basis. Who We Are, Day Worker Ctr. of Mountain View, https://www.dayworkercentermv.org/who-we-are [https://perma.cc/CXN6-5VQN]. among other organizations.60Working P’ships USA, supra note 56; Telephone Interview with Ruth Silver-Taube, Member of Santa Clara Cnty’s Fair Workplace Collaborative & Supervising Att’y of the Santa Clara Cnty’s Off. of Lab. Standards Enf’t Legal Advice Line (Dec. 7, 2023) [hereinafter Ruth Silver-Taube Interview]. According to Ruth Silver-Taube, a member of Santa Clara County’s FWC and Supervising Attorney of Santa Clara County’s OLSE Legal Advice Line, as of December 2023, the FWC is made up of about twenty-five people, three of whom are attorneys; the others work through the organizations that compose the FWC.61Ruth Silver-Taube Interview, supra note 60. Since 2018, the FWC has formed yearly contracts with the Santa Clara County OLSE that authorize FWC members to enter work sites and perform outreach, advising employees of their rights.62Id. Bearing a Santa Clara County badge, the FWC members go into work sites and speak with employees to assess whether they have experienced wage theft.63Id. The contracts also set out deliverables the FWC must achieve, and require the FWC to provide monthly updates and regularly check in with the OLSE regarding its progress on the deliverables.64Id.

The authority that the FWC gains through deputization comes from Santa Clara County’s Food Permit Enforcement Program.65Id. The Program enforces wage theft judgments against employers by suspending food facility permits from businesses who have “outstanding wage theft judgments” from the state.66County of Santa Clara New Enforcement Program to Fight for Owed Wages and Food Workers’ Rights, Cnty. of Santa Clara (Sept. 23, 2019), https://news.santaclaracounty.gov/news-release/county-santa-clara-new-enforcement-program-fight-owed-wages-and-food-workers-rights-0 [https://perma.cc/PQ6M-YNSH]. Each year, the FWC is provided a list of Santa Clara County food vendor employers (employers who require health permits) and the FWC enters those work sites and speaks with its employees.67Ruth Silver-Taube Interview, supra note 60. The FWC speaks with employees to assess whether they may have experienced wage theft or whether they may be facing abuse in the workplace—asking them whether they have received paychecks, whether they have been compensated for overtime, and whether there is violence in their workplace.68Id. But the outreach efforts of the FWC are not limited just to food vendor employers; they can and have entered workplaces and spoken with employees outside of the food industry.69Id.

In addition to checking on worksites and speaking with employees, the contract between FWC and Santa Clara County also requires FWC to perform outreach efforts. As a result, the FWC organizes and presents training programs, during which it educates workers on their rights in the workplace.70Id. Silver-Taube, who leads these trainings, hosts at least one training a month, each tailored to the different organizations making up the FWC.71Id. In total, her training efforts have reached more than one hundred workers in one year, as she has hosted trainings in conjunction with the Pilipino Association of Workers & Immigrants, the Vietnamese American Roundtable, and the Day Worker Center.72Id.

Silver-Taube also supervises the Santa Clara County’s OLSE Legal Advice Line, another outreach effort that has emerged from the partnership between FWC and Santa Clara County OLSE.73Id.; Resources: OLSE Attorney Staffed Advice Line, Cnty. of Santa Clara, https://desj.sccgov.org/resources-olse [https://web.archive.org/web/20231210054411/https://desj.sccgov.org/resources-olse]. Offered in six different languages, the advice line helps workers who have questions about their rights or are seeking legal advice.74Ruth Silver-Taube Interview, supra note 60. Silver-Taube estimates that, in about 90% of the calls, workers identify some actionable violation that their employer committed.75Id. The three FWC lawyers can file claims on behalf of employees who suffer an actionable violation or can, alternatively, refer these employees to other attorneys to pursue their claims.76Id.

Deputization under the Santa Clara OLSE and FWC partnership benefits employees, but the work that the partnership is authorized to perform is limited. The partnership’s members may speak with employees but cannot access employer records or more thoroughly investigate wage theft. In Los Angeles, deputization is even more constrained, as no program similar to the Santa Clara OLSE and FWC partnership currently exists. Initiating deputization in Los Angeles as well as expanding the deputized functions so that private individuals can perform enforcement actions like inspecting employer records could broadly bolster wage theft enforcement.

The enormity of the wage theft problem in Los Angeles City could be addressed by deputizing private citizens to enter work sites and inform workers of their rights as well as inspect employer records to determine whether wage theft has occurred. Deputization is effective and important for several reasons. First, deputization expands the quantity of people authorized to perform an important government function. State enforcers have said that having a “million eyes on the ground” in the form of private citizens has been especially successful in deterring unlawful action.77Myriam Gilles & Gary Friedman, The New Qui Tam: A Model for the Enforcement of Group Rights in a Hostile Era, 98 Tex. L. Rev. 489, 493–94 (2020) (quoting James F. Barger, Jr., Pamela H. Bucy, Melinda M. Eubanks & Marc S. Raspanti, States, Statutes, and Fraud: An Empirical Study of Emerging State False Claims Acts, 80 Tul. L. Rev. 465, 485–86 (2005)). Additionally, deputizing private citizens to enter work sites and investigate wage theft violations would increase the number of people actively working to disincentivize employers’ illegal actions, increasing the likelihood that victims of wage theft could become more knowledgeable of their rights and learn how to seek redress.

B. Who Would Deputize?

1. California Bureau of Field Enforcement

As an investigator of minimum wage and overtime claims and a subsection of California’s Labor Commissioner’s Office, California’s Bureau of Field Enforcement (“BOFE”) could deputize private citizens to perform investigations of wage theft.78Bureau of Field Enforcement (BOFE), State of Cal. Dep’t of Indus. Rels., https://www.dir.ca.gov/dlse/dlse-bofe.html [https://perma.cc/WGQ8-PLGN]. The BOFE investigates and enforces statutes covering minimum wage, overtime, “workers’ compensation insurance, child labor, cash pay, unlicensed contractors, [and] Industrial Welfare Commission orders.”79Id. The BOFE investigates “on behalf of all affected workers,” meaning that when workers file a complaint, the BOFE performs site-wide investigations and accordingly issues citations for violations it discovers.80Tia Koonse, Miranda Dietz & Annette Bernhardt, Enforcing City Minimum Wage Laws in California: Best Practices and City-State Partnerships 19 (2015), https://laborcenter.berkeley.edu/pdf/2015/minimum-wage-enforcement.pdf [https://perma.cc/JAX2-SFCG]. When a violation is discovered, the BOFE collects and distributes unpaid wages to affected workers, but keeps the remaining penalties and fines to account for the costs incurred while performing the investigation.81Id.

Although the BOFE has not deputized people to perform labor investigations, it has formed partnerships with workers’ rights advocacy groups, including worker centers.82Nat’l Emp. L. Project, California Strategic Enforcement Partnership: A Public Agency-Community Partnership 1 (2018), https://s27147.pcdn.co/wp-content/uploads/CA-Enforcement-Document-Letter-11-27-18-1.pdf [https://perma.cc/E2AZ-66ZG]. Formed in 2016, the California Strategic Enforcement Partnership “is a collaboration between the Labor Commissioner’s Office, the National Employment Law Project, and 14 workers’ rights and legal advocacy organizations.”83Id. The partnership was formed to boost California’s efforts against wage theft, and partnering with worker organizations was meant to encourage a culture of compliance with labor law.84Id.

The BOFE “investigates reports of widespread labor law violations by interviewing workers, inspecting workplaces, issuing citations for violations, and collecting unpaid wages for distribution to workers.”85Id. at 3; Koonse et al., supra note 80, at 19. In the 2015–2016 fiscal year, the BOFE conducted 2,424 inspections and assessed over $81 million in wages and penalties. The BOFE engages with worker organizations through the California Strategic Enforcement Partnership by (1) meeting regularly in teams to share knowledge, identify and address wage theft, and discuss emerging complaints, (2) convening annually to build skills and relationships throughout the partnership, and (3) facilitating monthly conference meetings to share strategies and cross-train on tools for labor law enforcement.86Nat’l Emp. L. Project, supra note 82, at 4. Worker centers support workers throughout “every step of the investigation process”87Id. at 3. and can convince “groups of workers to testify in an investigation.”88Alejandro Lazo & Jeanne Kuang, To Fight Wage Theft California Gets Strong Assist from Worker Centers, CalMatters (May 2, 2023), https://calmatters.org/california-divide/2022/11/california-wage-theft-workers [https://perma.cc/H3HD-KEN7].

The California Strategic Enforcement Partnership recognizes the importance of worker centers and labor organizations in the fight against wage theft. However, there may be untapped potential behind these worker organizations because they have not been deputized such that they can act with the same authority as the BOFE when it comes to enforcement of wage theft. According to a BOFE 2020–2021 fiscal year report, the department collected around $29 million across wages, penalties, and interest from employers who committed violations.89Lilia García-Brower, Cal. Labor Comm’r’s Off., 2020–2021: The Bureau of Field Enforcement Fiscal Year Report 6, https://www.dir.ca.gov/dlse/BOFE_LegReport2021.pdf [https://perma.cc/5LJQ-PF78]. Although this number indicates that the BOFE has made strong enforcement progress, it still has a long way to go. This number encompasses several violation categories that the BOFE is responsible for (including wage theft categories like overtime and misclassification, but also adding up outside categories like workers’ compensation and child labor).90Id. (noting the BOFE’s penalty collections by several different categories of violations). However, California’s Legislative Analyst’s Office found that, in 2017, workers alleged a total of $320 million in unpaid wages alone, revealing a massive disparity.912017 was the last year with complete data. The 2020–21 Budget, supra note 24. Expanding the BOFE’s partnership with worker centers such that worker centers are deputized with legal authority to investigate wage theft—entering work sites, inspecting employer records, interviewing employees, and ultimately identifying wage theft—could increase the BOFE’s capability to discover and address wage theft violations.

  1. Los Angeles Office of Wage Standards

The Los Angeles Office of Wage Standards (“OWS”) is also well-positioned to deputize private citizens to combat wage theft within the city of Los Angeles. The OWS is a city government agency within the Bureau of Contract Administration of the Department of Public Works.92L.A., Cal., Mun. Code § 188.00 (Ord. No. 187,710, 2023). The agency “enforces minimum wage, paid sick leave (PSL), and ban-the-box requirements for all employees who perform work in the City of Los Angeles.”93Off. of Wage Standards, Bureau of Cont. Admin., Office of Wage Standards: Milestone Report 1 (2023), https://wagesla.lacity.org/sites/g/files/wph1941/files/2023-09/Milestone%20Report%202023-09-19.pdf [https://perma.cc/W8NC-CYWP]. In the city of Los Angeles, the OWS is authorized to investigate violations of wage and hour laws.94L.A., Cal., Mun. Code § 188.05(C). Pursuant to the Los Angeles Municipal Code (“LAMC”), the OWS is statutorily authorized to enforce and implement several ordinances governing employment law in Los Angeles, including the Minimum Wage Ordinance (“MWO”),95Id.; id. § 187.01 (Ord. No. 184,320, 2016). the Fair Work Week Ordinance,96Id. § 188.05(C); id. § 185.01 (Ord. No. 187,710, 2023). and the Hotel Worker Ordinance97Id. § 188.05(C); id. § 182.01 (Ord. No. 187,565, 2022). (among others).

The OWS exists within the broader context of federal and state law. The federal government established standards for minimum wage, overtime pay, and employment standards for employees in the enactment of the FLSA in 1938.98Fair Labor Standards Act, 29 U.S.C. § 206(a)(1) (establishing a federal minimum wage); id. § 207(a)(1) (establishing requirements for overtime pay). See generally id. § 212 (prohibiting employment of “oppressive child labor”); id. § 211(c) (establishing recordkeeping requirements for employers). The FLSA sets many wage and hour standards for employees, including restricting the employment of minors,99Id. § 212. and establishing recordkeeping mandates that require employers to display an official poster outlining the requirements of the FLSA100         29 C.F.R. § 516.4. and to keep employee time and pay records for at least three years.10129 U.S.C. § 211; 29 C.F.R. § 516.4. In addition, the FLSA offers overtime protection; the statute mandates that covered, nonexempt employees receive overtime pay for hours worked over forty per workweek at a rate of least one and one-half times the regular rate of pay.10229 U.S.C. § 207(a)(2).

The FLSA also governs the federal minimum wage, which promises employees a baseline pay for hours worked.103Fair Labor Standards Act of 1938, Pub. L. No. 718, ch. 676, 52 Stat. 1060 (codified as amended at 29 U.S.C. § 206(a)). However, the federal minimum wage has remained $7.25 since 2007,104See 29 U.S.C. § 206(a). which, as inflation increases, is becoming less of a livable wage for earners. Many states have filled this gap by raising their state minimum wage well above the federal minimum wage. Effective January 1, 2025, California’s minimum wage was set at $16.50 per hour for all employers.105Minimum Wage, State of Cal. Dep’t of Indus. Rels., https://www.dir.ca.gov/dlse/minimum_wage.htm [https://perma.cc/YK9G-TPSN]. In addition, California also established a minimum wage of $20 per hour for all “fast food restaurant employees” (effective April 1, 2024) and a heightened minimum wage for certain health care workers (effective October 16, 2024). Id. Within California, the city of Los Angeles updates its minimum wage annually based on the Consumer Price Index (“CPI”) for Urban Wage Earners and Clerical Workers (“CPI-W”) for the Los Angeles metropolitan area, which is published by the Bureau of Labor Statistics.106L.A., Cal., Mun. Code § 187.02(d) (Ord. No. 184,320, 2016); Memorandum from Karen Bass, Mayor, City of Los Angeles, to All Employers and Employees Subject to the City of Los Angeles Minimum Wage Ordinance, July 1, 2024, Minimum Wage Ordinance Wage Rate Increase (Feb. 1, 2023), https://wagesla.lacity.org/sites/g/files/wph1941/files/2024-02/2024%20MWR%20Increase%20Memo.pdf [https://perma.cc/CSV7-X2HU]. As of July 1, 2024, the minimum wage in the city of Los Angeles for all employers is $17.28 per hour107Announcement: 2024 Minimum Wage Rate Increase, City of L.A. Off. of Wage Standards, http://wagesla.lacity.org [https://perma.cc/3ENH-KWWF]. The Los Angeles Minimum Wage Ordinance, codified in Article 7 of Chapter XVIII of the Los Angeles Municipal Code, establishes that the City will pay higher than the California-mandated minimum wage and provide sick time benefits to employees.108L.A., Cal., Mun. Code § 187.00. The OWS is tasked with bearing administrative responsibilities under the MWO.109Id. § 187.01(B).

As of December 2023, the OWS has one Division Head and thirty employees.110E-mail from Angela de la Rosa, Compliance Program Manager for the Outreach and Info. Section, Off. of Wage Standards (Dec. 7, 2023, 1:26 PM PST) (on file with author). It is comprised of three sections: Outreach and Information (eight employees), Investigation and Compliance (sixteen employees), and Fair Work Week (six employees).111Id. The first two sections (Outreach and Information and Investigation and Compliance) are, collectively, tasked with effectively implementing and enforcing the MWO.112Wage Standards, City of L.A. Dep’t of Pub. Works, Bureau of Cont. Admin., https://bca.lacity.org/wage-standards [https://web.archive.org/web/20241005230631/https://bca.lacity.gov/wage-standards]. The Investigation and Compliance Section “investigates complaints of wage underpayment” and sick time violations to assess where penalties may be applicable.113Id. The Information and Outreach Section informs businesses and employees about legal minimum wage and paid sick leave requirements, while helping with community outreach.114Id. On the outreach side, the OWS has attended outreach events, hosted training sessions for government staff, and made over 241 million media impressions since 2016.115Off. of Wage Standards, supra note 93, at 2.

Within its investigation wing, from July 2016 to September 2023, the OWS received 1,084 complaints and closed 785 of them, collecting $540,600 in total penalties.116Id. at 1. The OWS’s investigation process generally follows five steps: (1) the complaint is vetted to ensure it falls within the OWS’s “jurisdiction and employee requirements are met”; (2) “the case is assigned to an investigator and additional information is obtained”; (3) “the employer is notified of the investigation and relevant records are requested”; (4) “the records are analyzed to determine whether the employer is complying with the MWO requirements”; and (5) “the case is then submitted to management for an evaluation of the investigative findings and recommendations.”117Email from Angela de la Rosa, supra note 110.

In addition to the MWO, the third section of the OWS bears administrative responsibilities for the Fair Work Week Ordinance (“FWWO”), which provides a more predictable work schedule for retail workers.118City of L.A. Dep’t of Pub. Works, Bureau of Cont. Admin., supra note 112; L.A., Cal., Mun. Code §§ 185.00, 185.01(B) (Ord. No. 187,710, 2023). The FWWO requires that employers provide work schedules to employees before they begin employment.119Id. § 185.02(A). The FWWO also establishes “Predictability Pay,” which requires that employers compensate employees “with one additional hour of pay” for each change to a scheduled date, time, or location that either “does not result in loss of time to the” employee or “results in additional work time exceeding fifteen minutes.”120Id. § 185.06(A)(1)(a)–(b). There are some exceptions to this predictability pay requirement, such as if the employee initiates the work schedule change or if the employer’s operations are compromised due to force majeure.121Id. § 185.06(B)(1)–(5). However, in general, the FWWO aims to establish a more predictable work schedule with which retail employees can more accurately predict the sizes of their paychecks.

Furthermore, the LAMC’s Los Angeles Office of Wage Standards Ordinance, which was effective as of April 1, 2023, explicitly sets forth the OWS’s authority to enforce violations of wage theft and sick time benefits under the Los Angeles MWO and to enforce the rights and benefits provided to retail employees by the FWWO.122Id. § 188.00. The Los Angeles Office of Wage Standards Ordinance requires employers to retain employee records for at least four years and allows the OWS to access these records to monitor compliance with the MWO.123Id. § 188.03(B). The Los Angeles Office of Wage Standards Ordinance also gives the OWS authority to investigate employers for possible violations of the Los Angeles MWO, Sick Time Benefits, and FWWO.124Id. § 188.05(C).

Given the vast amount of authority provided to the OWS to enforce wage and hour laws in Los Angeles, deputized private entities through this division could expand the OWS’s ability to investigate and enforce LAMC ordinances. Sharing the OWS’s investigative power with private individuals would enable them to broaden their capabilities, allowing them not only to identify more instances of illegal employer action, but also to seek remedies for employees who have been victims of wage theft.

The OWS serves as a robust starting point to analyze the potential of deputization within the City of Los Angeles. Because it exists within a defined statutory framework, the OWS’s legal structure can be examined to determine the possibility of deputization. Furthermore, because the OWS governs a city, it can pave the way for potential future applications to the BOFE and evaluations of deputization on a broader, statewide level.

C. Who Would Be Deputized?

There have not been any legal restrictions placed on who can be “deputized,” and previous examples of deputization in the law have provided for both private individuals (as in PAGA)125See Labor Code Private Attorneys General Act of 2004, Cal. Lab. Code § 2698 (West 2004); id. § 2699(a). and nonprofit organizations (as in the worker centers in Santa Clara County’s FWC)126See source cited supra note 56. to be deputized. Since one of the benefits of deputization towards wage theft is to expand enforcement and ensure that more workers know about their rights and can seek redress when they have experienced wage theft, deputizing an organization would be more helpful than deputizing an individual. Organizations, which are generally equipped with more resources, can train their members to provide outreach and education to workers and can also gain rapport with workers so that workers have a resource to turn to.

Unions are organizations that have traditionally been thought of as advocates for workers’ rights, but they have seen “a significant decline in membership” in recent years.127Stefan J. Marculewicz & Jennifer Thomas, Labor Organizations by Another Name: The Worker Center Movement and Its Evolution into Coverage Under the NLRA and LMRDA, 13 Federalist Soc’y Rev. 79, 79 (2012), https://fedsoc.org/fedsoc-review/labor-organizations-by-another-name-the-worker-center-movement-and-its-evolution-into-coverage-under-the-nlra-and-lmrda [https://web.archive.org/web/20231224172912/https://fedsoc.org/fedsoc-review/labor-organizations-by-another-name-the-worker-center-movement-and-its-evolution-into-coverage-under-the-nlra-and-lmrda]. The union membership rate was 10.0% in 2023.128News Release, Bureau of Lab. Stats., U.S. Dep’t of Lab., Union Members – 2023 (Jan. 23, 2024), https://www.bls.gov/news.release/pdf/union2.pdf [https://web.archive.org/web/20241119053452/https://www.bls.gov/news.release/pdf/union2.pdf]. The 2023 rate was very similar to the 10.1% rate in 2022, which was “down from 10.3% in 2021” and was the lowest union membership rate since 1983, the earliest year with comparable data on record.129Union Membership Rate Fell by 0.2 Percentage Point to 10.1 Percent in 2022, U.S. Bureau of Lab. Stats. (Jan. 23, 2024), https://www.bls.gov/opub/ted/2023/union-membership-rate-fell-by-0-2-percentage-point-to-10-1-percent-in-2022.htm [https://perma.cc/ES4G-EPAJ]. Since the low union membership rate indicates that fewer workers can seek workplace protection through a union, a different source of workplace protection is needed. To meet this growing need, worker centers have become one of the most important means through which change is sought within the workplace.130See Marculewicz & Thomas, supra note 127, at 79–80.

Worker centers are nonprofit, community-led organizations aimed especially at supporting low-wage and immigrant workers.131Kevin L. Lee, Magaly Lopez, Ana Luz Gonzalez-Vasquez & UCLA Lab. Ctr., New Directions in Racial and Economic Justice: How California’s Worker Centers Are Bringing Worker Power into Workforce Development 2 (2022), http://labor.ucla.edu/wp-content/uploads/2022/01/Worker-Centers-and-Workforce-Development_v5.pdf [https://perma.cc/PS9J-TK5S]. There are hundreds of worker centers throughout the United States, and California has forty-seven worker centers—more than any other state.132Thomas A. Kochan, Janice R. Fine, Kate Bronfenbrenner, Suresh Naidu, Jacob Barnes, Yaminette Diaz-Linhart, Johnnie Kallas, Jeonghun Kim, Arrow Minster, Di Tong, Phela Townsend, Danielle Twiss, The Worker Empowerment Rsch. Network, U.S. Workers’ Organizing Efforts and Collective Actions: A Review of the Current Landscape 32 (2022), https://mitsloan.mit.edu/sites/default/files/2022-06/Report%20on%20Worker%20Organizing%20Landscape%20in%20US%20by%20Kochan%20Fine%20Bronfenbrenner%20Naidu%20et%20al%20June%202022.pdf [https://perma.cc/5XMJ-RFX8]. Worker centers’ advocacy work ranges from lobbying and community organizing to direct engagement and research.133Marculewicz & Thomas, supra note 127, at 79. Some key characteristics define worker centers: (1) they mainly focus on low-income immigrant workers from a particular occupation or industry or from a particular ethnic group; (2) they place special focus on “organizing and leadership development” among their members; (3) they “provide a case management system for their members that focuses on labor violations,” including wage and hour claims; and (4) they lead “workshops on health and safety issues.”134Victor Narro, Impacting Next Wave Organizing: Creative Campaign Strategies of the Los Angeles Worker Centers, 50 N.Y.L. Sch. L. Rev. 465, 467–68 (2006).

The deputization of worker centers also carries many benefits because worker centers have distinct characteristics that enable them to serve the community. Worker centers have existed since the 1920s but grew enormously in the early 2000s.135Lee et al., supra note 131, at 2. Although worker centers have changed in scope and objectives throughout their history, they still maintain a focus on being community-led.136Janice Fine, Worker Centers: Organizing Communities at the Edge of the Dream, 50 N.Y.L. Sch. L. Rev. 417, 420–21 (2006). The members of worker centers are workers themselves—employees who are also seeking an improved workplace.137Id. at 419–20; Lee et al., supra note 131, at 2–3. Furthermore, the cornerstone of worker centers is that they are made up of a “strong base of workers at the local level” who frequently play key roles in the “organizational decision-making” of their employers.138Janice Fine, Victor Narro & Jacob Barnes, Understanding Worker Center Trajectories, in 7 No One Size Fits All: Worker Organization, Policy, and Movement in a New Economic Age 7, 10 (Janice Fine et al. eds., 2018).

Worker centers use a combination of approaches, including: (1) “[s]ervice delivery, including legal representation to recover unpaid wages, English classes, worker rights education, and access to health clinics”; (2) advocacy, including researching employment conditions in low-wage industries and improving monitoring and grievance processes; and (3) organizing, including engaging in “leadership development.”139Fine, supra note 136, at 420. Because worker centers offer services, advocacy, and organizing, they provide unique services to help “low-wage immigrants navigate the world of work in the United States.”140Id. Unlike labor unions, worker centers do not typically operate a dues-paying system;141Id. at 444. instead, they usually require people to become involved in the work or take courses on workers’ rights in order to join.142Janice Fine, Worker Centers, 14 Race, Poverty & Env’t, Spring 2006, at 54, 55. Worker centers also engage in direct community outreach and educational workshops that can benefit people who are not members of the worker centers, making their services accessible to many.143Nadia Marin Molina, The Workplace Project, 14 Race, Poverty & Env’t, Spring 2006, at 56, 56.

Since worker centers provide a broad range of services and are accessible to workers, they are well-positioned to handle the authority that would come with deputization by a government agent. The efforts that worker centers engage in are wide-ranging; thus, they could absorb the responsibilities of being deputized by a government agent to enforce wage theft. Moreover, the deputization of Santa Clara County’s FWC is an example of successful deputization of worker centers. Most of the organizations that make up the FWC are worker centers that consist of members of the community and whose purpose is to serve a specific subset of marginalized workers.144For instance, the Pilipino Association of Workers & Immigrants, one subset of Santa Clara County’s FWC, is aimed specifically at educating and advocating for Pilipino workers, and the organization is made up of Filipino workers and immigrants. Our Mission and Vision, Pilipino Ass’n of Workers & Immigrants, https://pawis-sv.com/our-mission-and-vision [https://perma.cc/SV6F-MTSR]. The deputization of worker centers has seen success in Santa Clara County, and worker centers’ deputization to educate workers and investigate wage theft would also be impactful within the city of Los Angeles.

II. Deputization to Perform Outreach

Deputization of private citizens to assist in reducing the wage theft problem in Los Angeles can come in many forms, but two specific areas could benefit from deputization: outreach and investigation. Outreach is already contemplated through the LAMC. Under the LAMC, the OWS is given express statutory authority to develop an outreach program and inform employers and employees of minimum wage laws.145L.A., Cal., Mun. Code § 188.12 (Ord. No. 187,710, 2023). Section 188.12 of the LAMC states:

The Division shall establish a community-based outreach program to conduct education and outreach to Employers and Employees. In partnership with organizations involved in the community-based outreach program, the Division shall create outreach materials that are designed for Employers and Employees in particular industries.146          Id.

Although the outreach program that the OWS has been charged with creating and implementing is not detailed in the statute, the OWS has taken several actions as part of its outreach efforts. As noted in its September 2023 Milestone Report, the OWS’s outreach included: (1) notifying businesses registered with the Office of Finance through mailed business tax statements, online renewals, and direct emails to business owners; (2) providing content for chambers of commerce & business associations, business improvement districts, and the Department of Neighborhood Empowerment to include in member newsletters; (3) holding training sessions and delivering information materials to staff from the “Mayor’s Office, [c]ouncil [d]istricts, [p]ublic [l]ibraries, [a]nimal [s]helters, BusinessSource Centers, and WorkSource Centers”; (4) attending outreach events; (5) establishing a toll-free hotline, email, and website to field inquiries and provide information; and (6) issuing requests for quotes and establishing an on-call list of contractors who will “provide community outreach and other support services.”147Off. of Wage Standards, Bureau of Cont. Admin., supra note 93, at 2.

Its mention of “partnership with organizations” and “community-based outreach” indicates that the authority extended to the OWS includes partnership with organizations like worker centers. Thus, express deputization of worker centers to perform outreach could be framed within LAMC section 188.12, allowing private parties to communicate directly with workers to educate them about their rights under the law.

III.  Deputization to Investigate

In addition to outreach, the LAMC also gives the OWS authority to investigate violations of Los Angeles ordinances relating to wages:

The [OWS] shall be responsible for investigating possible violations of the Los Angeles Minimum Wage, Sick Time Benefits, Fair Work Week Ordinance, and this article by an Employer or other person. The Employer shall cooperate fully in any investigation by the Division. The Division shall have access to all business sites and places of labor subject to the Minimum Wage and Fair Work Week Ordinances during business hours to inspect and request copies of books and records, interview employees and any other relevant witnesses, investigate such matters necessary or appropriate and request the Board of Public Works to issue a subpoena for books, papers, records, or other items relevant to the enforcement of this article. The Employer is required to provide to the Division its legal name, address, and telephone number in writing.148L.A., Cal., Mun. Code § 188.05(C).

Employees can submit complaints regarding violations of the MWO directly to the OWS.149Submit a Complaint, City of L.A.: Off. of Wage Standards, https://wagesla.lacity.org/complaint [https://perma.cc/F3WS-Y64X]. Employees also have the option of filing separate or additional complaints through the State Labor Commissioner’s office.150Report a Labor Law Violation, State of Cal. Dep’t of Indus. Rels., https://www.dir.ca.gov/dlse/howtoreportviolationtobofe.htm [https://perma.cc/3HYT-ET8F]; Fact Sheet: Wage Theft, L.A. Worker Ctr. Network, https://laworkercenternetwork.org/wage-theft [https://perma.cc/5XUX-G6DK]. According to its September 2023 milestone report, the OWS received 1,084 complaints and closed 785 of them (202 with violations) since July 2016, thus handling complaints at a rate of 72%.151Office of Wage Standards, Bureau of Cont. Admin, supra note 93, at 1. But even as the OWS addresses complaints submitted to it, data indicates that the complaints received encompass only a small proportion of Angelenos who have experienced wage theft. For example, Los Angeles Worker Center Network’s 2023 concept paper called Los Angeles the “wage theft capital of the nation”152L.A. Worker Ctr. Network, Labor Standards Enforcement Paves the Way for a New LA 2 (2023), https://laworkercenternetwork.org/resources/lawcn-concept-paper-labor-standards-enforcement-paves-the-way-for-a-new-la [https://perma.cc/FM4N-KLFT]. after a UCLA survey revealed that 88.5% of low-wage Los Angeles County workers in the sample experienced at least one type of pay-related workplace violation in the week of work before the survey.153Ruth Milkman, Ana Luz Gonzalez, Victor Narro, Inst. for Rsch. on Lab. & Emp., Wage Theft and Workplace Violations in Los Angeles 30 (2010), https://www.irle.ucla.edu/old/publications/documents/LAwagetheft-Milkman-Narro-110.pdf [https://perma.cc/22QA-LCXJ]. The term “low-wage workers” was defined in the study as workers of certain low-wage industries, including bank tellers, car repair workers, child care workers, gardeners, grocery store workers, janitors, retail workers, security guards, and warehouse workers, among others. Id. at 12. According to 2023 Census Bureau data, 66.5% of Los Angeles City’s population of 3,820,914 were in the civilian labor force from 2019–2023.154QuickFacts: Los Angeles City, California, U.S. Census Bureau, https://www.census.gov/quickfacts/fact/table/losangelescitycalifornia,losangelescountycalifornia/PST045223 (last visited Feb. 28, 2025). These numbers indicate that over two and a half million working Angelenos are at risk of wage violations per year. Thus, even though the city provides a method for reporting complaints relating to wage violations through the OWS, many violations appear to be slipping through the cracks.155Several news sources have reported on the wage theft crisis in the United States. See Michael Sainato, ‘I Have Not Seen One Cent’: Billions Stolen in Wage Theft from US Workers, The Guardian (June 15, 2023, 6:00 AM), http://www.theguardian.com/us-news/2023/jun/15/wage-theft-us-workers-employees [https://perma.cc/94ZS-NFPA]; Chris Hacker, Ash-har Quraishi, Amy Corral & Ryan Beard, Wage Theft Often Goes Unpunished Despite State Systems Meant to Combat It, CBS News (June 30, 2023, 8:00 AM), http://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft [https://perma.cc/8GAE-9UQV]. The first criminal prosecution of garment factory business owners in California for felony wage theft was brought in October 2023, accruing more than $160,000 in citations. News Release, State of California Dep’t of Indus. Rels., California Lab. Comm’r Partners with L.A. District Attorney’s Office on First Crim. Prosecution of Garment Mfg. Bus. Owner for Felony Wage Theft (Oct. 12, 2023), https://www.dir.ca.gov/DIRNews/2023/2023-75.html [https://perma.cc/PK8Y-CT4M].

Given the magnitude of the wage theft problem in Los Angeles, deputizing private citizens through the OWS could identify more employees who are experiencing wage theft and, in doing so, disincentivize employers from stealing wages. Deputization to investigate would enable worker centers to access employer records to identify wage theft victims, speak directly with employees, and encourage them to file complaints to seek redress.

Currently, the enforcement power given to the OWS is explicitly limited to only designated OWS officials. The Los Angeles Office of Wage Standards Ordinance provides the OWS with the following investigative authority:

The head of the [OWS] or their designee shall have access to all business sites and places of labor subject to the Minimum Wage Ordinance, the Fair Work Week Ordinance, and [the Los Angeles Office of Wage Standards Ordinance] during business hours to inspect books and records, interview employees and any other relevant witnesses, and investigate such matters necessary or appropriate to determine whether an Employer has violated any provisions of the Minimum Wage Ordinance, the Fair Work Week Ordinance, or [the Los Angeles Office of Wage Standards Ordinance].156L.A., Cal., Mun. Code § 188.03(C).

The OWS Ordinance grants broad discretion to the OWS and allows it to perform an extensive range of investigative functions, subject to several separate ordinances. Rules and regulations implementing the FWWO even extend this authority, allowing the OWS to “conduct inquiries and investigations into areas outside of the FWWO to determine compliance with the FWWO.”157City of L.A. Dep’t of Pub. Works, Bureau of Cont. Admin., Rules and Regulations Implementing the Fair Work Week Ordinance 3 (2023), https://wagesla.lacity.org/sites/g/files/wph1941/files/2023-09/FWWO-RulesandRegulations-2023-09.pdf [https://perma.cc/BFJ6-V9EY].

Although the OWS’s powers are wide-ranging, the determination of who can exercise these powers has not been clearly defined. The OWS Ordinance expressly grants access and authority to the OWS’s head and the head’s designee. The “head” of the OWS can likely be straightforwardly pinpointed to the OWS’s “Division Manager,” who leads the Office.158L.A., Cal., Mun. Code § 185.00 (Ord. No. 187,710, 2023); City of L.A. Dep’t of Pub. Works, Bureau of Cont. Admin., supra note 112. However, the determination of who can be categorized a “designee” is not so clear. Although there are defined terms under both the FWWO section authorizing the OWS159L.A., Cal., Mun. Code § 185.01. and under the FWWO’s rules and regulations,160City of L.A. Dep’t of Pub. Works, Bureau of Cont. Admin., supra note 157, at 4. neither provide a definition for whom exactly a “designee” may be. This lack of clarity leaves open the possibility that the designee may not necessarily be a government entity employed with the OWS and may instead be a third party. Thus, private citizens could be deputized to investigate with authorization as a “designee” by the head of the OWS. However, whether the Division head of the OWS may grant such authority to the private citizens of a worker center is circumscribed by the California Constitution and relevant case law.

A. The Municipal Nondelegation Doctrine

The California Constitution restricts private persons from performing certain governmental functions. Los Angeles is a charter city, meaning the basic law of the city’s government is found in the City Charter, rather than in general law.161See generally L.A., Cal., City Charter (2024); Meet Your Government: City Charter, Rules, and Codes, LACITY.GOV, https://www.lacity.gov/government/city-charter-rules-and-codes [https://perma.cc/A83D-A5T8]. While a general law city organizes itself with “local government provisions in the state constitution and state statutes,” a charter city like Los Angeles can design its own government, developing some “political and governmental autonomy.”162Raphael J. Sonenshein, Los Angeles: Structure of a City Government 20 (Evan Gotlieb & Sandy Wolber eds., 2006). The Los Angeles City Charter is the fundamental document of the city,163Id. giving the city control over its own “municipal affairs.”164L.A., Cal., City Charter & Admin. Code § 6.781. The California Constitution authorizes charter cities the ability to exercise plenary authority over municipal affairs, subject only to constitutional limitations.165Cal. Const. art. XI, § 5(a). The city charter “identifies the main governing bodies of the city, along with their powers and duties.”166Sonenshein, supra note 162, at 20–21; L.A., Cal., City Charter & Admin. Code § 200 (identifying the officers of the Los Angeles City as a Mayor, the Members of the Council, a City Attorney, a City Clerk, a Controller, a Treasurer, the members of the boards or commissions of the departments and the chief administrative officer of each department and office, an Executive Director of the Board of Police Commissioners, and other officers as prescribed by ordinance). No changes to the charter can be made “without a vote of the people.”167Sonenshein, supra note 162, at 21.

Still, all cities must comply with the state constitution; the California Constitution governs both county and city government within California.168Id. at 20. Of particular relevance, the California Constitution includes a nondelegation doctrine in article XI, section 11: “The Legislature may not delegate to a private person or body power to make, control, appropriate, supervise, or interfere with county or municipal corporation improvements, money, or property, or to levy taxes or assessments, or perform municipal functions.”169Cal. Const. art. XI, § 11(a).

This prohibition against legislative delegations of power to private entities was initially enacted as article XI, section 13 of the California Constitution on May 7, 1879.170Editor’s and Revisor’s Notes, Cal. Const. Art. XI § 11 (West 2013); Howard Jarvis Taxpayers’ Assn. v. Fresno Metro. Projects Auth., 48 Cal. Rptr. 2d 269, 276 (Ct. App. 1995). On June 1970, California voters passed Proposition 2, a ballot measure aimed at revising the substance and language of the California Constitution.171Howard Jarvis Taxpayers’ Assn., 48 Cal. Rptr. 2d at 276 (citing Bruce W. Sumner, Constitution Revision by Commission in California, 1 W. St. Univ. L. Rev. 48, 51 (1972)); George H. Murphy, Statutes of California and Digests of Measures A-43 (1970), https://clerk.assembly.ca.gov/sites/clerk.assembly.ca.gov/files/archive/Statutes/1970/70vol1_Constitution.pdf [https://perma.cc/NA88-Q2VS]. As part of this revision, Section 13 was redesignated as Section 11, and the section was amended to its current language.172Howard Jarvis Taxpayers’ Assn., 48 Cal. Rptr. 2d at 276. The provision went into effect on November 23, 1970.173Murphy, supra note 171, at A-3, A-43.

Although the restriction against delegating municipal functions is a narrower subsection of the nondelegation doctrine, laws against delegating governmental power exist on a broader level. The nondelegation doctrine has been examined both within federal law174The existence of a federal nondelegation doctrine is a highly politicized debate and a complex topic. See generally A.J. Kritikos, Resuscitating the Non-Delegation Doctrine: A Compromise and an Experiment, 82 Mo. L. Rev. 441 (2017); Keith E. Whittington & Jason Iuliano, The Myth of the Nondelegation Doctrine, 165 U. Penn. L. Rev. 379 (2017); Julian Davis Mortenson & Nicholas Bagley, There’s No Historical Justification for One of the Most Dangerous Ideas in American Law, The Atlantic (May 26, 2020), https://www.theatlantic.com/ideas/archive/2020/05/nondelegation-doctrine-orliginalism/612013 [https://perma.cc/422M-BJHQ]. and state law. Under state law, the doctrine is applied in many different circumstances, spanning a wide range of applications such as “delegations to private parties, other state governments, and nearly all types of interbranch delegations.”175Benjamin Silver, Nondelegation in the States, 75 Vand. L. Rev. 1211, 1214–15 (2022). Yet, although state courts apply the nondelegation doctrine in more contexts than federal courts, scholarship on state nondelegation doctrine is scarce; only two to three studies about the state nondelegation doctrines have been published throughout the past few decades.176Joseph Postell & Randolph J. May, The Myth of the State Nondelegation Doctrines, 74 Admin. L. Rev. 263, 267 (2022). Furthermore, states frequently apply the nondelegation doctrine in many different contexts, resulting in little coherence.177Id.

The two most recently published treatments of state nondelegation doctrines both categorize California as a state with a more lenient nondelegation doctrine.178Id. at 272. The first study is Gary Greco’s article, published in 1994, which grouped states into three categories. Eighteen states were categorized as “strict” nondelegation states, meaning these states require the legislature to “provide definite and clear standards with the delegation” of power in a statute.179Id. at 269–70 (quoting Gary J. Greco, Note, Standards or Safeguards: A Survey of the Delegation Doctrine in the States, 8 Admin. L.J. Am. U. 567, 580 (1994)). Twenty-four states were categorized as a “loose standards” state, meaning that standards or safeguards must be provided by either the legislature or administrative agency, and the administrative agency is required to adopt “procedural safeguards” to follow when making a decision.180Id. at 270 (quoting Gary J. Greco, Note, Standards or Safeguards: A Survey of the Delegation Doctrine in the States, 8 Admin. L.J. 567, 580 (1994)). Greco’s final category, containing six states, was “procedural safeguards” states, which do not require even minimal statutory standards to uphold a delegation, leaving legislatures with less effect on policy.181Id. Greco categorized California as a procedural safeguards state.182Id.

The second, more recent study is Jim Rossi’s, published in 1999, which also places states into three separate categories to “update and refine” Greco’s summary of the state doctrines.183Id. at 271 (quoting Jim Rossi, Institutional Design and the Lingering Legacy of Antifederalist Separation of Powers Ideals in the States, 52 Vand. L. Rev. 1167, 1191 n.108 (1999)). Rossi grouped twenty states into the “strong” nondelegation category, meaning these states have statutes which are “periodically struck on non-delegation grounds.”184Jim Rossi, Institutional Design and the Lingering Legacy of Antifederalist Separation of Powers Ideals in the States, 52 Vand. L. Rev. 1167, 1197 (1999). Twenty-three states were categorized in Rossi’s “moderate” category, which “do not always require specific standards,” but can vary the standards necessary depending on the statute.185Id. at 1198. Rossi categorized seven states in the “weak” category; these states uphold delegations as long as the agency has “adequate procedural safeguards.”186Id. at 1191. California was grouped into Rossi’s “weak” category.187Id. at 1192–93. Although these studies and groupings are imperfect,188Postell & May, supra note 176, at 274–76. they provide a general framework to understand how California’s nondelegation doctrine compares to other states: California’s nondelegation doctrine is more lenient than several other states’ nondelegation doctrines.

California is not alone in restricting delegation of legislative power to municipal functions; more than a dozen states forbid their legislatures from delegating powers, including their municipal powers.189Whittington & Iuliano, supra note 174, at 416. Colorado and Wyoming each forbid their state legislatures from delegating “any municipal function whatever” to private parties.190Id.; Colo. Const. art. V, § 35 (“The general assembly shall not delegate to any special commission, private corporation or association, any power to make, supervise or interfere with any municipal improvement, money, property or effects, whether held in trust or otherwise, or to levy taxes or perform any municipal function whatever.”); Wyo. Const. art. III, § 37 (“The legislature shall not delegate to any special commissioner, private corporation or association, any power to make, supervise or interfere with any municipal improvements, moneys, property or effects, whether held in trust or otherwise, to levy taxes, or to perform any municipal functions whatever.”). Similarly, Utah prohibits legislative delegations from “perform[ing] any municipal functions.”191Whittington & Iuliano, supra note 174, at 416 n.242; Utah Const. art. VI, § 28 (“The Legislature shall not delegate to any special commission, private corporation or association, any power to make, supervise or interfere with any municipal improvement, money, property or effects, whether held in trust or otherwise, to levy taxes, to select a capitol site, or to perform any municipal functions.”).

Importantly, this provision of the California Constitution does not preclude all delegation of the legislature’s power. Instead, the prohibition on delegation is cabined such that the legislature may not delegate the power to “perform municipal functions.” As a result, case law regarding the municipal nondelegation doctrine involves determining what constitutes a nondelegable activity, who the delegated party can be, and whether the delegation was proper.

  1. Legislative Actions

Since California “prohibit[s] delegation of legislative power,”192Kugler v. Yocum, 445 P.2d 303, 305–06 (Cal. 1968). case law interpreting the nondelegation doctrine addresses the preliminary question of whether a legislative action was taken. In Kugler v. Yocum, Alhambra city residents contested a proposed ordinance by their city council which would set Los Angeles wage rates as the minimum for Alhambra firefighters’ salaries.193Id. at 304. The court found that this proposed ordinance was a legislative action by the city council because wage rates were expressly provided for as a council power in the city charter; the city council was therefore acting in its “legislative” capacity.194Id. at 305. Alhambra City Charter § 81 provides: “The council . . . shall have power to . . . establish . . . the amount of [the fire division’s] salaries.” Alhambra, Cal., City Charter § 81 (2024). Decisions about wage rates are an explicit authority of the council in Alhambra, making it a legislative action.195Kugler, 445 P.2d at 305.

Like the wage rates of firefighters in Kugler, the investigative powers for wage theft are expressly left to the OWS under the Los Angeles City Charter. The Los Angeles City Charter states that all legislative power of the City is “vested in the Council and shall be exercised by ordinance.”196L.A., Cal., City Charter & Admin. Code § 240. The LAMC is the ordinance granting authority to the OWS;197L.A., Cal., Mun. Code (Ord. No. 77,000, 1936) (noting that the Los Angeles Municipal Code was enacted by adoption of Ordinance No. 77,000). under the LAMC, the OWS is given specific duties under the MWO198Id. § 187 (Ord. No. 184,320, 2016) (noting that the Los Angeles Minimum Wage Ordinance was amended in entirety by Ordinance No. 184,320). and FWWO.199L.A., Cal., Mun. Code ch. XVIII, art. 5 § 185 (Ord. No. 187, 710, 2023) (noting that the Fair Work Week Ordinance was added by Ordinance No. 187,710). Thus, the passage of this local legislation is likely a legislative function. As a result, any delegations of these powers would likely be a legislative action subject to the nondelegation doctrine of the California Constitution.

  1. Municipal Actions

In addition, California’s municipal nondelegation doctrine prohibits delegation of municipal functions. The determination of what constitutes a “municipal function” such that it cannot be delegated to private persons within the constraints of the California Constitution is a fact-specific inquiry. Courts must “decide, under the facts of each case, whether the subject matter under discussion is . . . municipal.”200Cnty. of Riverside v. Superior Ct., 66 P.3d 718, 728 (Cal. 2003) (quoting Pro. Fire Fighters, Inc. v. City of L.A., 384 P.2d 158, 169 (Cal. 1963)). Article XI of the California Constitution, which sets forth the nondelegation doctrine, does not define “municipal functions.” To define this term, courts have looked to other provisions of the California Constitution to determine the responsibilities that the governing body is assigned.201See Cnty. of Riverside, 66 P.3d at 728 (“[California Constitution] Section 1, subdivision (b), states that the county shall provide for employee compensation. Viewing, as we must, sections 1, subdivision (b), and 11, subdivision (a), together and not in isolation, they clearly provide that compensating county employees is a municipal function.”).

The question of what constitutes a “municipal affair” has been addressed by courts when it comes to several different provisions of the California Constitution.202See Pac. Tel. & Tel. Co. v. City & Cnty. of San Francisco, 336 P.2d 514, 516 (Cal. 1959) (reading article XI, sections 6 and 8 of the California Constitution). Within these contexts, courts generally view municipal functions as “problems which exhibit exclusively local characteristics at certain times in the life of a community.”203People ex rel. Younger v. Cnty. of El Dorado, 487 P.2d 1193, 1204 (Cal. 1971). Acknowledging that this view encompasses ever-changing characteristics, the California Supreme Court has said, “It is . . . settled that the constitutional concept of municipal affairs is not a fixed or static quantity. It changes with the changing conditions upon which it is to operate.”204Pac. Tel., 336 P.2d at 517. The subject matter of cases addressing the municipal nondelegation doctrine are diverse, but courts generally hold that municipal matters relate to “local function”—functions so limited in scope to a particular region that they can be “adequately handled by the municipal authorities of a single town.”205Younger, 487 P.2d at 1206.

In People ex rel. Younger v. County of El Dorado, the Tahoe Regional Planning Compact was created to plan for the future and preservation of Lake Tahoe.206Id. at 1195–96. The Compact created an internal agency that made “plans for land use, transportation, conservation, recreation, and public services and facilities” throughout the entire Lake Tahoe region, which spanned California and Nevada.207Id. The Compact’s authority was challenged as an unconstitutional delegation of municipal power.208See id. at 1199–200. The California Supreme Court held the Compact was constitutional because the delegation of power was not for municipal functions; the Compact was enacted to serve regional purposes, not just local purposes.209Id. at 1206. The Compact did not have the authority to perform municipal functions such as building “local parks”; instead, it operated on a larger regional basis.210Id. Because it served a regional and not a municipal function, the Compact did not violate the California Constitution.211Id.

Applying that reasoning here, the deputization of worker centers by the OWS is likely a municipal function because it is limited in scope and region—affecting only workers in the city of Los Angeles. Since this deputization would likely be seen as both a legislative action and a municipal action, it would likely trigger application of the municipal nondelegation doctrine.

  1. Private Parties

Legislatures may be prohibited from delegating municipal matters when such delegation lands in the hands of private parties. In Howard Jarvis Taxpayers’ Assn. v. Fresno Metropolitan Projects Authority, the Fresno legislature created the Fresno Metropolitan Projects Authority and gave it the ability to tax. The California Court of Appeal found that levying taxes was a legislative function because the California Constitution has explicitly identified the imposition of taxes as a function of local government.212See Howard Jarvis Taxpayers’ Assn. v. Fresno Metro. Projects Auth., 48 Cal. Rptr. 2d 269, 272 (Ct. App. 1995) (prohibiting the legislature’s delegation of power of levying taxes to private entities). The quoted portion of the California Constitution states: “The Legislature may not impose taxes for local purposes but may authorize local governments to impose them.” Id. at 284; Cal. Const. art. XIII, § 24(a). In addition, eleven of the Authority’s thirteen board members were individuals from private organizations with no “governmental subservience”; thus, they were private parties.213Howard Jarvis Taxpayers’ Assn., 48 Cal. Rptr. 2d at 285. The court therefore found that the Authority was a private body to whom the legislature could not delegate its taxing power, a legislative function.

Simi Valley Recreation & Park, in which the legislature passed a statute that delegated decisions regarding undeveloped land to a local agency formation commission, serves as a contrast.214Simi Valley Recreation & Park Dist. v. Loc. Agency Formation Comm’n of Ventura Cnty., 124 Cal. Rptr. 635, 638 (Ct. App. 1975). In this case, the California Court of Appeal found this delegation did not violate article XI, section 11 of the California Constitution because local agency formation commissions are government agencies, not “a private person or body” under the language of the constitution.215Id. at 653 (quoting Cal. Const. art. XI, § 11). The court also noted that, prior to its amendment and while it was categorized as section 13, California’s nondelegation doctrine expressly precluded delegation to a “special commission.”216Id.; see also Howard Jarvis Taxpayers’ Assn., 48 Cal. Rptr. 2d at 277–78. Art. XI § 13 initially stated: “The Legislature shall not delegate to any special commission, private corporation, company, association or individual any power to make, control, appropriate, supervise or in any way interfere with any county, city, town or municipal improvement, money, property, or effects, whether held in trust or otherwise, or to levy taxes or assessments or perform any municipal function whatever . . . .” People ex rel. Younger v. County of El Dorado, 487 P.2d 1193, 1205 (Cal. 1971) (quoting Cal. Const. art. XI, § 13 (1879)). However, this language was repealed in the section 11 amendment in 1970.217Simi Valley Recreation, 124 Cal. Rptr. at 653. See supra notes 172–73. Courts no longer apply the former section 13 language, and special commissions are no longer an indication of an unconstitutional delegation.218Simi Valley Recreation, 124 Cal. Rptr. at 653.

Worker centers are not government-affiliated and are thus private parties. Since this deputization structure would be a delegation of legislative power to a private party, it must meet the standards courts require for a proper delegation to avoid being banned under the municipal nondelegation doctrine. But this private aspect of worker centers is, in this context, actually a virtue. After all, one of the values of deputization is its separateness from resource-strapped government entities.

  1. Standard for Delegation

Even when a legislature allows a private party to commit an action which is found to be legislative and municipal, such delegation may still be acceptable if a sufficient standard for delegation exists. In Kugler v. Yocum, the California Supreme Court set out the standard for determining whether legislative power is validly delegated.219Kugler v. Yocum, 445 P.2d 303, 305–06 (Cal. 1968); see also Simi Valley Recreation, 124 Cal. Rptr. at 649 (laying out the standards drawn by the court in Kugler). The court stated that legislative power can be delegated if it is “channeled by a sufficient standard”; after the Legislature creates a policy and sets the standards for it, it may leave the “power to fill up the details” to executive or administrative officers by giving these officers the ability to prescribe rules and regulations that will effectuate the law.220Kugler, 445 P.2d at 306 (quoting First Indus. Loan Co. v. Daugherty, 159 P.2d 921, 923 (Cal. 1945)). In addition, “[w]hile the legislative body cannot delegate its power to make a law, it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend.”221Id. (quoting Wheeler v. Gregg, 203 P.2d 37, 47 (Cal. Ct. App. 1949)).

In Kugler, the court rejected the residents’ argument that a new ordinance tying Alhambra city firemen’s salaries to the Los Angeles salaries would be an unlawful delegation of legislative power to those parties who establish salaries for Los Angeles firemen.222Id. at 304. Instead, the court concluded that the legislature’s decision to adopt the ordinance itself would “constitute the legislative body’s resolution of the ‘fundamental issue,’ ” and any subsequent steps taken to fill in the application and execution of policy is not legislative delegation.223Id. at 306–07.

More recently, California courts have determined whether a sufficient standard for delegation exists by looking at whether the legislature is stripped of its ability to make final decisions.224Cnty. of Riverside v. Pub. Emp. Rels. Bd., 200 Cal. Rptr. 3d 573, 576 (Ct. App. 2016). The California Court of Appeal stated: “The constitutionality of [a statute’s] factfinding provisions turns on whether the provisions divest the County of its final decision-making authority.”225Id. at 579. The California Supreme Court has not addressed whether final decision-making authority meets a sufficient standard for delegation. However, lower courts have relied on this principle, finding that a municipal function has not been improperly delegated when the Legislature leaves the task of achieving their goals to some other body—whether public or private—so long as it is the Legislature who makes the “fundamental policy decisions.”226People ex rel. Younger v. Cnty. of El Dorado, 487 P.2d 1193, 1210 (Cal. 1971); Kugler v. Yocum, 445 P.2d 303, 305–07 (Cal. 1968). In general, California courts have been relatively generous in finding that an agency did not improperly delegate power so long as a county or city has not been divested of its authority to make final decisions.227See Cnty. of Riverside, 200 Cal. Rptr. at 576. Courts are also deferential to the legislature, noting, “If there is any doubt as to the Legislature’s power to act in any given case, the doubt should be resolved in favor of the Legislature’s action.”228Id. at 579 (quoting Methodist Hosp. of Sacramento v. Saylor, 488 P.2d 161, 165 (Cal. 1971)). The court in County of Riverside additionally noted that “[w]e do not look to the Constitution to determine whether the legislature is authorized to do an act, but only to see if it is prohibited.” Cnty. of Riverside, 200 Cal. Rptr. at 579 (quoting Methodist Hosp. of Sacramento, 488 P.2d at 165).

The municipal nondelegation doctrine was not violated in California Renters Legal Advocacy & Education Fund v. City of San Mateo. In that case, the legislature added a provision to its Housing Accountability Act (“HAA”) allowing a reasonable person standard to determine compliance with a housing project.229Cal. Renters Legal Advoc. & Educ. Fund v. City of San Mateo, 283 Cal. Rptr. 3d 877, 887 (Ct. App. 2021). The relevant provision of the HAA stated, “For purposes of this section, a housing development project . . . shall be deemed consistent, compliant, and in conformity with an applicable plan, program, policy, ordinance, standard, requirement, or other similar provision if there is substantial evidence that would allow a reasonable person to conclude that the housing development project . . . is consistent, compliant, or in conformity.” Id. at 887; Cal. Gov’t Code § 65589.5(f)(4) (West 2024). When a renters group’s residential project was denied by the City of San Mateo, it argued that this denial violated the HAA.230Id. at 833. The City of San Mateo challenged the HAA provision as unconstitutional, arguing it would allow a private person to place evidence into the record that a project is compliant with objective standards.231Id. at 899 (arguing that the provision would “place into the record evidence indicating a project is consistent with objective standards and thereby force a local agency to approve the project . . . [which] would divest local authorities of final decisionmaking control in violation of the prohibition on delegation of municipal functions”). The City argued this was a violation of the nondelegation doctrine because a private person could force a local agency to approve the project, stripping the legislature of its decision-making function.232Id. However, the court of appeal found this provision did not violate the municipal nondelegation doctrine. The court of appeal stated:

 [The] city’s governing body retains broad authority, subject to judicial review, to exercise decisionmaking authority: to determine whether there is substantial evidence from which a reasonable person could conclude the project is consistent with the city’s applicable objective requirements; to deny or reduce the density of a project that does not meet such standards or that causes an unavoidable adverse impact on public health or safety; and to impose conditions of approval that do not reduce the project’s density where applicable objective standards are met.”233Id. at 900.

In contrast, the municipal nondelegation doctrine was violated in County of Riverside v. Superior Court when a sheriff’s association ordered the county to binding arbitration to resolve economic issues arising from negotiations with unions representing firefighters or law enforcement officers.234Cnty. of Riverside v. Superior Ct., 66 P.3d 718, 721 (2003). Analysis of nondelegation was triggered: the compensation of these individuals was a municipal function expressly provided to the legislature in the California Constitution,235Id. at 728 (citing Cal. Const. art. XI, § 1, subdiv. (b)) (providing that counties have the authority to provide for the compensation of its employees). and the arbitrators of the issues were private entities, not public officials.236Id. at 729. The court ultimately held the statute unconstitutional because the arbitration it required, from which the results would be binding on the public agency,237Id. at 725. deprived the public agency of the ultimate power to make its own decisions.238Id. at 725–26.

In sum, although deputization by the OWS to worker centers is a delegation of a municipal function by a legislative body to a private party, the municipal nondelegation doctrine is still likely not violated. As long as the OWS retains final decision-making authority, extending the authority granted to the Los Angeles OWS to private citizens within worker centers is likely permissible and not in violation of the municipal nondelegation doctrine. Entering worksites to perform investigations on employer wage practices and inspecting employer records does not bind the public agency of the OWS to any final decision. On the other hand, a worker center’s ability to take actions such as filing wage claims or arbitrating with employers would likely be characterized as final decisions. As to these binding choices, a worker center’s authority should be thoroughly constrained; the decision of whether or not to take these steps must belong to the OWS. However, when it comes to non-binding decisions, the deputization of worker centers under the LAMC is likely permissible under the California Constitution.

To further strengthen the constitutionality of this deputization, the reservation of this final decision-making authority should be made explicit in contracts between deputized entities and the OWS. In particular, all contracts between the OWS and the worker centers should precisely note that the deputized entities may not file suit, begin employment action, or make any final decisions without prior written approval of the OWS. Contracts should state expressly that the work product of deputized worker centers are subject to the approval of and final decisions are to be made by the OWS. This clarity and explicitness would bolster the legitimacy of the deputization relationship between the OWS and private citizens, preventing the relationship from being barred by the California Constitution’s municipal nondelegation doctrine.

Conclusion

The enormity of the wage theft problem affecting millions of American employees requires a solution beyond the underenforced laws currently in place. Located in the “wage theft capital of the nation,”239L.A. Worker Ctr. Network, supra note 9, at 1. the city of Los Angeles is particularly affected by this issue.

The deputization of private citizens by Los Angeles’s Office of Wage Standards offers a path through which the city government can more effectively enforce wage laws and hold employers accountable. Deputization could not only endow workers with knowledge about their rights through outreach, but would also enable private citizens to inspect employer records to identify victims of wage theft. Deputizing private citizens would broaden the enforcement powers available to the OWS and encourage workers to file complaints while discouraging employers from violating the law. Although deputization through the OWS would still result in some limitations on Los Angeles City’s enforcement abilities, its successes and drawbacks should be

studied to assess the potential of statewide deputization through a larger entity such as the BOFE.

Deputization of worker centers to perform worker outreach and investigate wage theft within work sites could provide greater enforcement of wage laws. However, such deputization is vulnerable to attack under the California Constitution’s municipal nondelegation doctrine. Deputization of worker centers would be a delegation of municipal action by the Los Angeles legislature to worker centers, a private party. Although these factors make the municipal nondelegation doctrine applicable, a clear standard for delegation would likely allow deputization to survive. In particular, unambiguous language that the OWS would retain ultimate control over any decision-making would help strengthen the legality of this deputization and prevent it from violating the California Constitution’s municipal nondelegation doctrine. This explicit language could be found in formal documentation of a deputization relationship, or in rules and regulations from the LAMC regarding the OWS.

Overall, with the proper boundaries and constraints, the deputization of worker centers by the OWS to perform outreach to employees and to investigate wage theft is likely permissible and constitutional. Taking advantage of the community ties and expertise of worker centers could enable the OWS to better serve the workers of Los Angeles while discouraging wage theft by employers. Deputization of worker centers offers a powerful avenue to combat Los Angeles’s enormous and persistent wage theft problem.

98 S. Cal. L. Rev. 725

Download

* Executive Senior Editor, Southern California Law Review, Volume 98; J.D. Candidate 2025, University of Southern California Gould School of Law; B.A. English & Psychology 2021, University of California, Los Angeles. My sincere gratitude to Professor Clare Pastore, Yvonne Medrano, Victor Narro, and Ruth Silver-Taube for providing their valuable insight. Thank you also to the editors of the Southern California Law Review for their work, and to my family for their support.

Major Questions, Common Sense?

The Major Questions Doctrine (“MQD”) is the newest textualist interpretive canon, and it has driven consequential Supreme Court decisions concerning issues from vaccine mandates to environmental regulation. Yet, the new MQD is a canon in search of legitimization. Critics allege that the MQD displaces the Court’s conventional textual analysis with judicial policymaking. Textualists have now responded that the MQD is a linguistic canon, consistent with textualism. Justice Barrett recently argued in Biden v. Nebraska that the MQD is grounded in ordinary people’s understanding of language and law, and scholarship contends that the MQD reflects ordinary people’s understanding of textual clarity in “high-stakes” situations. Both linguistic arguments rely centrally on “common-sense” examples from everyday situations.

This Article tests whether these examples really are common sense to ordinary Americans. We present empirical studies of the examples offered by advocates of the MQD, and the results challenge the arguments that the MQD is a linguistic canon. Moreover, the interpretive arguments offered to legitimize the MQD as a linguistic canon threaten both textualism and the Supreme Court’s growing anti-administrative project.

INTRODUCTION

The Supreme Court’s most consequential interpretive canon is a new one: the major questions doctrine (“MQD”). The basic idea is as follows: when an agency undertakes a “major” policy action, the statutory authorization must be clear and specific (rather than unclear or general).1See infra Section I.A. In several high-profile cases, the Court has used the MQD to strike down agency actions involving vaccine mandates,2Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., Occupational Safety & Health Admin., 142 S. Ct. 661, 665–66 (2022). environmental regulation,3West Virginia v. EPA, 142 S. Ct. 2587, 2609–16 (2022). and student loan relief.4Biden v. Nebraska, 143 S. Ct. 2355, 2375 n.9 (2023). The majority opinion states that the issue is resolved by “statutory text alone,” and its appeal to the Major Questions Doctrine (“MQD”) “simply reflects [the] Court’s familiar practice of providing multiple grounds to support its conclusions.” Id. Given this track record, no wonder critics have argued that the MQD poses an existential threat to the administrative state, since few statutes are likely to provide the requisite clear language, and what constitutes “majorness” is subjective and potentially applicable to a wide range of agency actions.5See, e.g., Lisa Heinzerling, The Power Canons, 58 Wm. & Mary L. Rev. 1933, 1938 (2017). But see Kristin E. Hickman, The Roberts Court’s Structural Incrementalism, 136 Harv. L. Rev. F. 75, 76–77 (2022) (arguing that the development of the MQD is more incrementalist than critics have suggested and that it will likely not threaten the administrative state).

Despite its undeniable influence, the MQD is undertheorized, and it remains a canon in search of a justification.6See Mila Sohoni, The Major Questions Quartet, 136 Harv. L. Rev. 262, 285–87 (2022) (recounting but disagreeing with these efforts). Scholars and judges have splintered in their understanding of how the doctrine operates on statutory language.7See, e.g., Louis J. Capozzi III, The Past and Future of the Major Questions Doctrine, 84 Ohio St. L.J. 191, 219, 222–23 (2023). Compare West Virginia v. EPA, 142 S. Ct. at 2587, with West Virginia v. EPA, 142 S. Ct. at 2616 (Gorsuch, J., concurring), and Biden v. Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring). For instance, one advocate of the canon describes it as a requirement for a “clear and specific statement from Congress if Congress intends to delegate questions of major political or economic significance to agencies.”8Ilan Wurman, Importance and Interpretive Questions, 110 Va. L. Rev. 909, 909 (2024). As we discuss in Section I.B, Wurman’s characterization of the MQD as a clear statement rule notwithstanding, he views the MQD as justifiable as a linguistic canon. Two critics of the MQD have described it similarly as a rule requiring courts “not to discern the plain meaning of a statute using the normal tools of statutory interpretation, but to require explicit and specific congressional authorization for certain [major] agency policies.”9Daniel T. Deacon & Leah M. Litman, The New Major Questions Doctrine, 109 Va. L. Rev. 1009, 1009 (2023). In response, Justice Barrett in Biden v. Nebraska has denied that the MQD requires courts “to depart from the best interpretation of the text,” and claims that the canon is not a clear statement rule and does not require explicit congressional authorization of the “precise agency action under review.”10Biden v. Nebraska, 143 S. Ct. at 2378 (Barrett, J., concurring). These kinds of disagreements, while perhaps technical, influence how the doctrine is defended and employed, and even implicate its future as an interpretive canon.

So far, efforts to legitimize the doctrine have been unpersuasive. The canon is used primarily by self-identified textualists,11See, e.g., West Virginia v. EPA, 142 S. Ct. at 2616 (Gorsuch, J., concurring); Biden v. Nebraska, 143 S. Ct. at 2372–75; id. at 2376 (Barrett, J., concurring). but critics (textualist and non-textualist alike) have alleged that the MQD is inconsistent with textualism, or even is anti-textualist, because it displaces the ordinary meaning of statutory text in the name of normative values.12See, e.g., Sohoni, supra note 6, at 282–90; Daniel E. Walters, The Major Questions Doctrine at the Boundaries of Interpretive Law, 109 Iowa L. Rev. 465, 523–37 (2024); Chad Squitieri, Who Determines Majorness?, 44 Harv. J.L. & Pub. Pol’y 463, 480 (2021); Benjamin Eidelson & Matthew C. Stephenson, The Incompatibility of Substantive Canons and Textualism, 137 Harv. L. Rev. 515, 522–33 (2023); Mike Rappaport, Against the Major Questions Doctrine, The Originalism Blog (Aug. 15, 2022, 8:00 AM), https://originalismblog.typepad.com/the-originalism-blog/2022/08/against-the-major-questions-doctrinemike-rappaport.html [https://web.archive.org/web/20240728034527/https://originalismblog.typepad.com/the-originalism-blog/2022/08/against-the-major-questions-doctrinemike-rappaport.html]; Chad Squitieri, Major Problems with Major Questions, L. & Liberty (Sept. 6, 2022), https://lawliberty.org/major-problems-with-major-questions [https://perma.cc/2D3Y-AA4K]. In fact, the MQD’s rise coincides with a surge of skepticism among textualists and commentators about the validity of substantive canons generally.13See, e.g., Eidelson & Stephenson, supra note 12, at 517–21. Of course, textualist skepticism about substantive canons is not new. See, e.g., Amy Coney Barrett, Substantive Canons and Faithful Agency, 90 B.U. L. Rev. 109, 110 (2010). The Court’s use of the MQD even prompted Justice Kagan to retract her quip that “we’re all textualists now.”14Harvard Law School, The 2015 Scalia Lecture Series: A Dialogue with Justice Elena Kagan on the Reading of Statutes, YouTube (Nov. 25, 2015), https://youtu.be/dpEtszFT0Tg [https://perma.cc/L65V-9AET]. She now notes: “It seems I was wrong. The current Court is textualist only when being so suits it.”15West Virginia v. EPA, 142 S. Ct. at 2587, 2641 (Kagan, J., dissenting). See generally Kevin Tobia, We’re Not All Textualists Now, 78 N.Y.U. Ann. Surv. Am. L. 243 (2023) (providing an overview of the influence and evolution of “all textualist” statements). These critiques allege that the MQD inappropriately licenses textualists to depart from the best reading of statutory text in the name of values or norms. An ideal response for a textualist favoring the MQD would be some account of how the MQD determines the linguistic meaning of a statute.

Increasingly, textualists are making precisely this “linguistic” move. Some textualists now propose that the MQD is a linguistic interpretive canon, consistent with textualism.16See, e.g., Wurman, supra note 8, at 916–17; Biden v. Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring). On this account, textualists remain committed to the ordinary reader’s understanding of language, with the MQD simply reflecting how ordinary people, exercising basic “common sense,” generally understand the meaning of statutes delegating authority to agencies.17See, e.g., Amy Coney Barrett, Congressional Insiders and Outsiders, 84 U. Chi. L. Rev. 2193, 2208–11 (2017) (arguing for statutory interpretation to focus on the understanding of ordinary people rather than Congress). On this “linguistic” picture, normative or substantive values are not relevant to the canon or its application, and they certainly do not lead textualists to depart from the best reading of the text. Instead, the MQD is just like any other linguistic canon—it reflects only a generalization about how ordinary people use and understand language in context.18On the modern textualist Court’s emphasis on ordinary readers and the relationship between ordinary understanding and linguistic canons, see Kevin Tobia, Brian G. Slocum & Victoria Nourse, Statutory Interpretation from the Outside, 122 Colum. L. Rev. 213, 213 (2022) [hereinafter Tobia et al., From the Outside]. This rebranding of the MQD as a linguistic canon has rapidly moved from the pages of law reviews19See Wurman, supra note 8, at 909. to the Supreme Court.20Biden v. Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring). There, Justice Barrett recently denied that the MQD is normatively driven and instead argued that it merely reflects ordinary people’s “common-sense” understanding of instructions, including those given by Congress.21Id. at 2384; see also Beau J. Baumann, Let’s Talk About That Barrett Concurrence (on the “Contextual Major Questions Doctrine”), Yale J. on Reg.: Notice & Comment Blog (June 30, 2023), https://www.yalejreg.com/nc/lets-talk-about-that-barrett-concurrence-on-the-contextual-major-questions-doctrine-by-beau-j-baumann [https://perma.cc/8PKB-458K] (discussing Barrett’s arguments).

In this Article, we evaluate the MQD’s “linguistic turn” and subject its premises to empirical study. We study two key issues: (1) Does the MQD follow from ordinary people’s understanding of language and, more specifically, delegating instructions?; and (2) Do ordinary people interpret more cautiously or narrowly in “high-stakes” situations? The empirical results support answering “no” to both questions. Contrary to the MQD proponents’ contentions, the results indicate that ordinary people do not adjust their judgments of textual clarity according to the stakes of interpretation, and they interpret broad delegations broadly, even in situations in which Justice Barrett claims that “common sense” would dictate narrower interpretations of the scope of authorization.22See infra Part III.

Part I introduces the MQD and the two linguistic arguments that have been offered in defense of the canon. After briefly addressing the defense of the MQD as a substantive canon in Section I.A, we turn in Section I.B to the proposal that ordinary interpretation shifts in “high-stakes” contexts, and that this behavior justifies the MQD as a linguistic canon.23See Wurman, supra note 8, at 917. The high-stakes argument appeals to an example from analytic philosophy24See, e.g., Keith DeRose, Contextualism and Knowledge Attributions, 54 Phil. & Phenomenological Rsch. 913, 913–18 (1992). and prior legal scholarship25See Ryan D. Doerfler, High-Stakes Interpretation, 116 Mich. L. Rev. 523, 523 (2018). that suggests that high-stakes contexts diminish ordinary knowledge. Thus, as a famous hypothetical illustrates, you might know that the town bank is open on the weekend when planning to deposit a small check with low stakes. In contrast, in a higher-stakes context (for example, if the check is for ten thousand dollars and must be deposited before Monday to avoid an overdraft), you may decide instead that you do not really know that the bank is open. Legal scholarship proposes that this is how ordinary people understand knowledge: ordinary knowledge is stakes sensitive.26See, e.g., Wurman, supra note 8, at 957–59. More importantly for the MQD, an emerging argument builds on this premise to suggest that ordinary understanding of textual clarity is also stakes driven: in high-stakes contexts, a text is less clear.27See id. As such, in those high-stakes (or “major”) cases, courts should require highly specific language to authorize agency action.

Section I.C introduces Justice Barrett’s separate proposal that ordinary language is context sensitive and anti-literal, and therefore a textualist faithful to the ordinary reader should adopt the MQD as a means to determine the best reading of statutory language.28Biden v. Nebraska, 143 S. Ct. 2355, 2376 (2023) (Barrett, J., concurring); see also Barrett, supra note 17, at 2200 (on textualists’ commitment to the ordinary reader, not the ordinary legislator). Justice Barrett’s argument also appeals to an intuitive example: instructing a babysitter to “have fun with the kids” while handing him a credit card might literally permit the babysitter to take them on an overnight trip to an out-of-town amusement park (after all, doing so would be “fun”). But in context, ordinary people employ “common sense” and understand the literal meaning of the instruction to only permit the most reasonable set of applications of the instruction.29Biden v. Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring). Ordinary people are therefore non-literalists, understanding general delegations to be more limited in meaning than their terms alone might suggest. As such, the argument goes, the MQD is “consistent with how we communicate conversationally,” making it a valid linguistic canon that reflects an interpretive commitment to ordinary people.30Id. at 2379.

Justice Barrett’s argument is important and places her as a leader among the Court’s textualists; she is the only textualist advocate of the MQD who has offered a proposal to square the MQD with textualism. At the same time, the linguistic argument in her brief concurring opinion is not entirely clear. As such, we attempt to charitably reconstruct Justice Barrett’s defense as a workable argument—that is, one that derives the MQD conclusion from the babysitter hypothetical premise.

Part I contributes to the literature by explaining these two new arguments for the linguistic MQD in sufficient detail. Unpacking the arguments clarifies each argument’s theoretical challenges and empirical claims. Both arguments employ hypotheticals about how ordinary people interpret language but, significantly, support these hypotheticals with references to academic philosophy or judicial intuition; neither uses empirical evidence.

Parts II and III investigate these empirical claims, both by engaging with the existing empirical literature on high-stakes knowledge (much of it uncited by proponents of the linguistic MQD) and by conducting original survey experiments of both high-stakes interpretation and how ordinary people interpret instructions. Part II considers the claim that ordinary knowledge is stakes sensitive. This claim has been influential in philosophy,31See, e.g., Keith DeRose, Contextualism, Contrastivism, and X-Phi Surveys, 156 Phil. Stud. 81, 81 (2011). legal scholarship,32Doerfler, supra note 25, at 523. and now the major questions debate.33Wurman, supra note 8, at 917. Although philosophers claim knowledge is stakes sensitive, many existing studies report that stakes have little or even no effect on ordinary attributions of knowledge.34See generally Jonathan Schaffer & Joshua Knobe, Contrastive Knowledge Surveyed, 46 Noûs 675 (2012) (surveying studies). Other studies report only a small effect. See, e.g., David Rose, Edouard Machery, Stephen Stich, Mario Alai, Adriano Angelucci, Renatas Berniūnas, Emaa E. Buchtel, Amita Chatterjee, Hyundeuk Cheon, In-Rae Cho, Daniel Cohnitz, Florian Cova, Vilius Dranseika, Ángeles Eraña Lagos, Laleg Ghadakpour, Maurice Grinberg, Ivar Hannikainen, Takaaki Hashimoto, Amir Horowitz, Evgeniya Hristova, Yasmina Jraissati, Veselina Kadreva, Kaori Karasawa, Hackjin Kim, Yeonjeong Kim, Minwoo Lee, Carlos Mauro, Masaharu Mizumoto, Sebastiano Moruzzi, Christopher Y. Olivola, Jorge Ornelas, Barbara Osimani, Carlos Romero, Alejandro Rosas Lopez, Massimo Sangoi, Andrea Sereni, Sarah Songhorian, Paulo Sousa, Vera Tripodi, Naoki Usui, Alejandro Vásquez del Mercado, Giorgio Volpe, Hrag Abraham Vosgerichian, Xueyi Zhang & Jing Zhu, Nothing at Stake in Knowledge, 53 Noûs 224, 232–37 (2019) (reporting no effect of stakes on knowledge in fifteen countries, a small effect in three, and a marginal and small effect in the U.S.). For example, in the U.S., over 80% of participants agreed in both the high- and low-stakes cases that there was knowledge; in Japan, a country with the largest difference between high and low stakes, over 70% of participants attributed knowledge in both. Id. And, to our knowledge, no empirical study bears on the question of whether higher stakes reduce textual clarity (a related but different issue). The critical link in one version of the linguistic MQD argument is therefore entirely untested.

Part III presents studies designed to test the empirical claims of the linguistic MQD arguments. Our studies use the exact two cases offered by proponents of the linguistic MQD—the “bank case” and the “babysitter hypothetical”—to conduct original survey experiments. Overwhelmingly, ordinary people in our studies did not interpret these scenarios consistently with the empirical premises of the linguistic MQD arguments.

Part IV develops three sets of implications that follow from our empirical evidence and the textualist efforts to legitimize the MQD as a linguistic canon. These implications concern the empirical evidence for the linguistic MQD (IV.A), challenges that the linguistic MQD poses for textualism (IV.B), and the relationship between empirical evidence of how ordinary people view delegations and administrative law, including intriguing evidence that people are more concerned about underenforcement of instructions compared with overenforcement (IV.C).

In brief, the extant and new empirical findings do not support the linguistic MQD. Specifically, the findings count against the predictions of the two leading linguistic MQD arguments, using the exact cases offered in defense of the linguistic MQD. Of course, we are open to the possibility that study of further examples could weigh against our conclusions. But for interpreters deciding today whether to employ a “linguistic MQD,” there is insufficient empirical support and theoretical clarity to cast the MQD as a valid linguistic canon. Moreover, the results provide stronger support for a new counter-MQD: ordinary people understand general authorizing language as consistent with a broad range of reasonable actions that fall under the text’s meaning. Textualists committed to the “ordinary reader” and “interpretation from the outside” claim to follow those commitments to where they lead—and the current evidence favors an interpretive rule far from the current MQD.35Barrett, supra note 17, at 2208–11 (arguing that courts should interpret from the “outside,” from the perspective of ordinary people, rather than from the “inside,” which would reflect Congress’s perspective).

I.  THE MAJOR QUESTIONS DOCTRINE AND THEORIES OF ITS LEGITIMACY

The MQD has sparked a great deal of scholarly effort to specify exactly what the doctrine is and how it fits into traditional categories of interpretive doctrine. In this Part, we survey these efforts, many of which conclude that the MQD is a substantive, or normative, canon.36See infra Section I.A. These classifications matter because substantive canons are increasingly questioned as being inconsistent with textualism.37See Eidelson & Stephenson, supra note 12, at 517–21; Barrett, supra note 13, at 110. But see Brian G. Slocum & Kevin Tobia, The Linguistic and Substantive Canons, 137 Harv. L. Rev. F. 70, 70–73 (2023) (arguing that an interpretive canon can have both a linguistic and substantive basis). Classifying the MQD as substantive (rather than linguistic) is tantamount to saying it is illegitimate or tenuous, at least on textualist grounds.38But see Walters, supra note 12, at 469–73 (assuming that substantive canons are often acceptable but arguing that the MQD has features that differentiate it from the rest of the canons in troubling ways). Perhaps not surprisingly, some textualist defenders of the MQD have not fully endorsed the idea that the MQD is a substantive canon.39Wurman, supra note 8, at 912. The exception here is Justice Gorsuch, who offered a full-throated endorsement of the MQD as a nondelegation canon in his concurrence in West Virginia v. EPA. See West Virginia v. EPA, 142 S. Ct. 2587, 2617 (2022) (Gorsuch, J., concurring). In fact, as we discuss below, perhaps the most serious attempt to ground the MQD in interpretive law asserts that the doctrine is instead a linguistic, or semantic, canon.40See infra Sections I.B & I.C. In theory, at least, this move would legitimize the canon for textualists and everyone else because the doctrine would simply be folded into the relatively uncontroversial search for the ordinary meaning of delegating statutes.41Wurman, supra note 8, at 916. For a discussion of “ordinary meaning,” see Brian G. Slocum, Ordinary Meaning: A Theory of the Most Fundamental Principle of Legal Interpretation 1–5 (2015).

This pivot to a linguistic defense raises many questions, very few of which have been answered. After describing how the linguistic defense works, we then highlight theoretical limitations, open questions, and the broader implications of defending the MQD as a linguistic canon.

A.  The Canonization of the Major Questions Doctrine

1.  Historical Threads of the Major Questions Doctrine

The MQD is not entirely new; it is in the process of “metamorphosis.”42Walters, supra note 12, at 480–81. It is also, of course, the talk of the town because of fears/hopes that it will be deployed in such a way as to “kneecap” administrative agencies and promote an economic, libertarian conception of American governance. See Matt Ford, The Supreme Court Conservatives’ Favorite New Weapon for Kneecapping the Administrative State, New Republic (Mar. 13, 2023), https://newrepublic.com/article/171093/supreme-court-major-questions-doctrine-administrative-state [https://perma.cc/R3FJ-GVN8]; John Yoo & Robert Delahunty, The Major-Questions Doctrine and the Administrative State, Nat’l Affairs (Fall 2022), https://www.nationalaffairs.com/publications/detail/the-major-questions-doctrine-and-the-administrative-state [https://perma.cc/7NYU-M8FJ]. Arguably, the first appearance of something like the MQD was in the plurality opinion in a 1980 case known as the Benzene Case.43Indus. Union Dep’t v. Am. Petrol. Inst., 448 U.S. 607, 614–15 (1980) [hereinafter Benzene Case]. In that case, the Occupational Safety and Health Administration (“OSHA”) was charged with promulgating standards that “most adequately assure[], to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life.”4429 U.S.C. § 655(b)(5). Rather than follow OSHA’s argument that the statute, fairly read, seemed to require it to “impose standards that either guarantee workplaces that are free from any risk of material health impairment, however small, or that come as close as possible to doing so without ruining entire industries,” the plurality opinion held that OSHA had only been delegated authority to regulate “significant” risks.45Benzene Case, 448 U.S. at 641, 651.

As Cass Sunstein notes, although the Court invoked the nondelegation doctrine and constitutional avoidance to arrive at this statutory interpretation, it is impossible to square what the Court did with the “(standard) nondelegation doctrine.”46Cass R. Sunstein, There Are Two “Major Questions” Doctrines, 73 Admin. L. Rev. 475, 484 (2021) (calling the MQD a “linear descendant” of the Benzene Case). This relatively recent vintage has been contested by Louis Capozzi, who argues that the Supreme Court deployed the MQD in a series of rate cases in the late 19th Century. Capozzi, supra note 7, at 196–97. However, this analogy has itself been contested. See Capozzi on the Future of the Major Questions Doctrine, Admin Wannabe (Oct. 19, 2022), https://adminwannabe.com/?p=114 [https://perma.cc/FK6S-MGZW]. The interpretation offered by OSHA, in addition to doing little violence to the text of the statute, would “sharply cabin” the agency’s discretion.47Sunstein, supra note 46, at 486. Sunstein suggests that the plurality opinion in the Benzene Case instead endorsed the novel idea that “without a clear statement from Congress, the Court will not authorize the agency to exercise that degree of (draconian) authority over the private sector.”48Id.

It was hardly clear at the time, however, that the Court was creating something called the “major questions doctrine”; in fact, that would not become clear until very recently. Instead, for several decades, the Court intermittently invoked similar, but often distinct, reasoning from the Benzene Case in regulatory cases involving “extraordinary” circumstances, all while leaving the precise theory behind the reasoning unstated. Paradigmatic of these invocations is FDA v. Brown & Williamson Tobacco.49FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 120 (2000). In that case, the Food and Drug Administration (“FDA”) promulgated a rule regulating tobacco products as “drugs” under the Food, Drug, and Cosmetics Act. The Court applied the familiar Chevron two-step analysis and concluded, on the basis of an examination of legislative history, that Congress had unambiguously declined to give the FDA this power.50Id. at 160–61. The Court added another reason for its conclusion, though, stating that “[i]n extraordinary cases . . . there may be reason to hesitate before concluding that Congress has intended . . . an implicit delegation.”51Id. at 159.

As the “implicit delegation” phrase reveals, the Court explicitly couched its consideration of the “majorness” or “extraordinariness” of the power asserted by the FDA as part of the Chevron analysis. Thus, the MQD acted as a “carve-out” or “exception” to the ordinary rule that statutory ambiguities constitute implicit delegations that an agency is given primacy over courts to resolve, so long as it does so reasonably.52Sunstein, supra note 46, at 482. Instead, when “extraordinary” questions are presented by the agency’s claim of delegated authority, the Court itself resolves the ambiguity at Chevron step one.53Id.

The Brown & Williamson opinion’s use of proto-MQD logic departed from the apparent logic of the Benzene Case in an important way. The Benzene Case left little room for an agency interpretation to survive once the doctrine was triggered. The only way to prevail was to point to clear statutory authorization that could not be limited by the Court to avoid the major implications of the agency’s interpretation. Sunstein calls this the “strong version” of the MQD.54Id. at 486. By contrast, in Brown & Williamson, Sunstein sees a “weak version” that theoretically allowed an agency’s major action so long as the statutory interpretation could be endorsed by a Court engaged in independent (de novo) review without according the agency any deference.55Id. at 484.

As a practical matter, the weak version of the MQD seemed to win out for a while after Brown & Williamson, and on at least one occasion, an agency did win in a major questions case. In King v. Burwell, the Internal Revenue Service (“IRS”) interpreted the Affordable Care Act to make tax credits available even if an individual purchased health insurance on a federal insurance exchange, despite statutory language that limited tax credits to plans purchased through “an Exchange established by the State.”56King v. Burwell, 576 U.S. 473, 483 (2015) (citing 77 Fed. Reg. 30378 (2012) and 26 U.S.C. §§ 36B(b)–(c)). Like in Brown & Williamson, the Court noted that there “may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”57Id. at 485 (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)). Unlike in Brown & Williamson, however, the Court concluded that the agency had the power to issue the rule, even on a de novo interpretation of the statute. Although the Court’s interpretation of the statutory language at issue has been criticized,58Richard M. Re, The New Holy Trinity, 18 Green Bag 407, 408–09 (2015); Ryan D. Doerfler, The Scrivener’s Error, 110 Nw. U. L. Rev. 811, 811 (2015). the important point is that the “weak version” of the MQD—that is, an “exception,” or “carve-out” from Chevron deference—seemed to rule the day. The only open questions were about where, precisely, to locate the major questions exception: at Chevron step zero,59See Thomas W. Merrill & Kristin E. Hickman, Chevron’s Domain, 89 Geo. L.J. 833, 873 (2000); Cass R. Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187, 207–11 (2006) (elucidating a “step zero” that asks whether Chevron deference even potentially applies or whether some other standard of review, such as Skidmore or de novo review, should prevail). Most observers viewed King v. Burwell as deploying the major questions exception at step zero. step one,60Most observers viewed Brown & Williamson as deploying the major questions exception at step one. or step two.61The only case to have apparently located the major questions exception at step two was Utility Air Regulatory Group v. EPA, 573 U.S. 302, 331–33 (2014).

2.  The Modern Major Questions Doctrine and Its Justification

Enter what Mila Sohoni calls the “major questions quartet.”62Sohoni, supra note 6, at 262. If it was unclear exactly which version of the MQD existed before the quartet, the waters have become only murkier afterward. One thing is unmistakably clear though: The Court did not treat the MQD as a mere exception or carve-out from Chevron deference. Instead, it “unhitched the major questions exception from Chevron.”63Id. at 263. In fact, the majority opinion in West Virginia v. EPA,64West Virginia v. EPA, 142 S. Ct. 2587, 2587–616 (2022). the leading case in the quartet, did not even mention Chevron in its elaboration or application of the MQD.65Part of the reason why Chevron was not mentioned may be because the Court is now generally hostile to the doctrine. See Lisa Schultz Bressman & Kevin M. Stack, Chevron Is a Phoenix, 74 Vand. L. Rev. 465, 466 (2021) (describing the debate about Chevron and arguing that judicial deference to agency interpretations is a foundational aspect of administrative law). As this Article went to press, the Court overruled Chevron. See Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2254 (2024). Instead, the Court offered an almost entirely new gloss on the doctrine:

“[I]n certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there. To convince us otherwise, something more than a merely plausible textual basis for the agency action is necessary. The agency instead must point to ‘clear congressional authorization’ for the power it claims.”66West Virginia v. EPA, 142 S. Ct. at 2609 (citation omitted).

For the vast majority of commentators, these words have been taken to suggest that the current Court, post-quartet, thinks of the MQD as a particularly powerful form of substantive canon: a clear statement rule.67Deacon & Litman, supra note 9, at 1012; Sohoni, supra note 6, at 264; Walters, supra note 12, at 480–89. On this reading—which seems similar to the implicit use of the doctrine in the Benzene Case—Congress must have spoken with unmistakable clarity in order for agencies to have the “major” power they are claiming to have been delegated. If there is any ambiguity, and even if the agency has a “plausible” basis for concluding that it has the authority under applicable statutes, the agency cannot exercise that power. Some are not convinced the MQD is a clear statement rule and view it as a weaker substantive canon that resolves ambiguity.68See, e.g., Natasha Brunstein & Donald L.R. Goodson, Unheralded and Transformative: The Test for Major Questions After West Virginia, 47 Wm. & Mary Env’t L. & Pol’y Rev. 47 (2022) (noting that the Court in West Virginia v. EPA does not refer to the MQD as a clear statement rule). Accordingly, when the MQD is applicable, any statutory ambiguities should be resolved against the agency’s assertion of power so as to vindicate “separation of powers principles.”69West Virginia v. EPA, 142 S. Ct. at 2609. In any event, a common understanding is that the MQD is driven by a normative commitment to a limited role for administrative agencies in the legal system, and perhaps by a “delegation doctrine” that insists that agencies have no power unless it is affirmatively shown that Congress has granted it to them.70See generally Jonathan H. Adler, The Delegation Doctrine, Harv. J. Pub. Pol’y: Per Curiam, Summer 2024, at 1.

The MQD is inherently controversial as a substantive canon regardless of whether it is a clear statement rule or a tiebreaker canon. Simply by virtue of being a substantive canon, the “new MQD” is in tension with textualism. As Justice Kagan, a self-avowed textualist, puts it, there is some momentum for “toss[ing] [substantive canons] all out.”71Transcript of Oral Argument at 60, Ysleta del sur Pueblo v. Texas, 142 S. Ct. 1929 (2022) (No. 20-493). As she noted in her West Virginia dissent, channeling Karl Llewelyn, “special canons like the ‘major questions doctrine’” function as “get-out-of-text-free cards.”72West Virginia v. EPA, 142 S. Ct. at 2641 (Kagan, J., dissenting). Karl Llewellyn famously purported to show that every canon can be countered by an equal and opposite canon, which he argued deprives canons of any probative force in the interpretive process. See Karl N. Llewellyn, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to Be Construed, 3 Vand. L. Rev. 395, 401–06 (1950). Llewellyn’s famous critique, however, overstated the conflict among canons. See William N. Eskridge, Jr., Norms, Empiricism, and Canons in Statutory Interpretation, 66 U. Chi. L. Rev. 671, 679 (1999) (“The large majority of Llewellyn’s competing canonical couplets are presumptions about language and extrinsic sources, followed by qualifications to the presumptions.”). Recently, Benjamin Eidelson and Matthew Stephenson have exhaustively assessed “leading efforts to square modern textualist theory with substantive canons” and ultimately concluded that “substantive canons are generally just as incompatible with textualists’ jurisprudential commitments as they first appear.”73Eidelson & Stephenson, supra note 12, at 520–21; see also Barrett, supra note 13, at 110. This challenge would apply to a range of canons employed by the textualist Supreme Court. The Roberts Court, though textualist, often employs substantive canons. See Nina A. Mendelson, Change, Creation, and Unpredictability in Statutory Interpretation: Interpretive Canon Use in the Roberts Court’s First Decade, 117 Mich. L. Rev. 71, 141 tbl.2 (2018); Anita S. Krishnakumar, Reconsidering Substantive Canons, 84 U. Chi. L. Rev. 825, 825–26 (2017). The MQD, insofar as it is a substantive canon, would not be spared.74Eidelson & Stephenson, supra note 12, at 520–21.

Beyond these generalized concerns with substantive canons, some commentators have questioned whether the MQD satisfies basic expectations about the Court’s recognition and use of substantive canons, even assuming that they can sometimes be legitimate aids to interpretation. Simply put, the Court has not been at all clear about the source of the normative foundation of the MQD.75Biden v. Nebraska, 143 S. Ct. 2355, 2376 (2023) (Barrett, J., concurring) (noting that “there is an ongoing debate” about the MQD’s “source and status”). For Sohoni, formulating the MQD as a kind of constitutional avoidance rule fails because of the “Court’s failure to say anything about nondelegation”—a failure that “creates genuine conceptual uncertainty about what exactly it was doing in these cases.”76Sohoni, supra note 6, at 297. The currently prevailing nondelegation test asks merely whether Congress has provided a “reasonably intelligible policy” to guide an agency’s exercise of discretion.77A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 500 (1935). That test would not have provided anywhere close to a “significant risk” of constitutional invalidity in any of the statutes examined in the major questions quartet.78Significant risk is required under the modern form of the constitutional avoidance doctrine. Although Justice Gorsuch in his concurrence in West Virginia v. EPA suggested that the MQD is inspired by the nondelegation doctrine (and probably his preferred version of the nondelegation doctrine, which is not the law currently), the majority pointed more generally to “separation of powers principles.”79West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022). Some have inferred that the Supreme Court might be interested in developing constitutional principles demanding affirmative proof of delegation in certain circumstances—and that the MQD reflects this implicit constitutional project80Sohoni, supra note 6, at 312–13; Adler, supra note 70, at 6.––but if so the Court has not been explicit. This uncertainty about the connection between constitutional principles and the MQD also seems to doom the MQD under Justice Barrett’s own test for the legitimacy of substantive canons within textualism, under which there must be a reasonably specific constitutional principle to which a constitutionally inspired substantive canon attaches.81Barrett, supra note 13, at 178. In other words, if the MQD is a substantive canon, its substance, or normative content, is not clear. Most substantive canons either reflect a broad societal consensus or are tied closely to constitutional law. The MQD at first glance has neither of these attributes.

3.  The Modern Major Questions Doctrine’s Linguistic Turn

Perhaps not surprisingly, given the strong pushback that the MQD has received when it is formulated as a substantive canon, defenders of the MQD are increasingly suggesting that the MQD is not a substantive canon at all. Instead, proponents suggest it is a linguistic canon.

This rebranding is not as far-fetched as it might seem at first. “ ‘[L]inguistic’ validity and ‘substantive’ value are properties of canons.”82Slocum & Tobia, supra note 37, at 73. The standard dichotomy between “linguistic” and “substantive” canons suggests that a canon has at most one property; but, it is conceptually possible for a canon to have both.83Id. There is evidence that some canons that have long been treated as “substantive canons”—such as anti-retroactivity and anti-extraterritoriality—are also consistent with how ordinary people understand rules. For example, when a rule (especially a punitive rule) does not explicitly state whether it applies retroactively, prospectively, or both, people tend to understand it to apply only prospectively.84Id. at 82–83. Insofar as textualism is guided by ordinary understanding of language,85See, e.g., Barrett, supra note 17, at 2194. textualists have good reason to consider such “substantive” canons as simultaneously linguistic ones. Even some tough critics of substantive canons like Eidelson and Stephenson show some openness to these arguments: “[T]he textualist’s reasonable reader . . . opens the door to recasting some seemingly substantive canons as simply default inferences that a reasonable reader would draw . . . . The presumption against extraterritoriality is a possible example.”86Eidelson & Stephenson, supra note 12, at 539.

Could a similar linguistic argument support the MQD? Acknowledging that criticisms of the MQD as a substantive canon “are, to some if not a large extent, warranted,”87Wurman, supra note 8, at 912. Professor Ilan Wurman recently rebranded the MQD as a linguistic canon.88Wurman, supra note 8, at 916 (“On this conceptualization, the importance of a purported grant of authority would operate as a kind of linguistic canon: ordinarily, lawmakers and private parties tend to speak clearly, and interpreters tend to expect clarity, when those lawmakers or parties authorize others to make important decisions on their behalf.”). Wurman argues that the MQD could be understood as motivated by a theory of linguistic usage about how interpretive uncertainty should be resolved rather than as importation of substantive or normative values into the interpretive enterprise. He appeals to prior work in philosophy and legal philosophy, which argues that “high-stakes” contexts lead to less knowledge or legal clarity.89See infra Section I.B.

Even more recently, Justice Barrett has proposed her own, separate linguistic argument for the MQD’s legitimacy. The Supreme Court has made the major questions quartet a quintet with its decision in Biden v. Nebraska. That case concerned President Biden’s 2022 proposal to forgive $10,000 to $20,000 in student loans for low to middle-income borrowers. Biden’s Department of Education traced the authority for their emergency loan relief to the HEROES Act, a 2001 law that grants the U.S. Secretary of Education the ability to “waive or modify” provisions related to federal student loans “in connection with a war or other military operation or national emergency.”9020 U.S.C. § 1098bb(a)(1). After Biden announced his administration’s loan forgiveness program as a response to the COVID-19 national emergency, several states challenged the program. That case reached the Supreme Court and divided the Justices 6–3 along conservative-liberal lines. Justice Roberts’s majority opinion proceeded with traditional textual interpretation, concluding that the government’s student loan relief is not within the statutory meaning of “waive or modify” any provision. But the opinion also referenced the major questions doctrine, as an alternative ground for the holding.

Justice Barrett wrote separately to argue that the MQD is not a substantive canon but rather “a tool for discerning—not departing from—the text’s most natural interpretation.”91Biden v. Nebraska, 143 S. Ct. 2355, 2376 (2023) (Barrett, J., concurring). Candidly, and consistently with her prior writings on substantive canons,92See Barrett, supra note 13, at 110. Justice Barrett conceded that the substantive canon version of the MQD might be “inconsistent with textualism” and therefore “should give a textualist pause.”93Biden v. Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring). By grounding the MQD in how ordinary readers apply common sense in reading statutory text, Justice Barrett aims to put the MQD on more solid footing, particularly for textualists.

After the opinion, some suggested that Justice Barrett’s argument “mirrors” Wurman’s.94See, e.g., Baumann, supra note 21. We disagree: the two arguments both present the MQD as a linguistic canon, but the arguments are distinct. Wurman appeals to high-stakes context and the resolution of interpretive uncertainty, while Barrett appeals to anti-literalism and contextual restriction concerning major actions (with nothing about high stakes). Thus, Wurman’s argument centers on “ambiguity” caused by high stakes, whereas Justice Barrett’s theory is about how ordinary people generally use “common sense” to interpret non-literally (with no mention of “ambiguity”). The next two Sections separately reconstruct Wurman’s (I.B) and Justice Barrett’s (I.C) linguistic arguments in detail and present some theoretical challenges for each.

B.  The Major Questions Doctrine as a High-Stakes Linguistic Canon

One important line of work defending the “linguistic” MQD appeals to the philosophical and legal-philosophical literature on stakes and knowledge.95Wurman, supra note 8, at 957–61 (appealing to Doerfler, supra note 25). That theoretical literature proposes that knowledge is sensitive to high stakes: it could be true that one knows a proposition in a low-stakes context (for example, the bank is open) but does not know that proposition, given the same evidence, in a high-stakes context.

The legal literature about stakes and interpretation, including the linguistic MQD defense, takes this claim about knowledge to be important. But the relationship between knowledge and legal interpretation is not entirely clear. Roughly, the argument goes as follows: we are less likely to know a proposition when the practical stakes of its truth are raised, and similarly, we are less likely to assess that a text is clear when the practical stakes of its meaning are raised.96E.g., Doerfler, supra note 25, at 523.

The linguistic defense of the MQD is clearly based in part on this philosophical literature about stakes and knowledge. Before interrogating the full argument, however, we must spell it out. Here we attempt to reconstruct the defense.

1.  Reconstruction of the “High Stakes” Linguistic Defense of the Major Questions Doctrine

(1)  [Empirical Premise 1: Stakes-Sensitive Knowledge]: The ordinary reader’s knowledge is sensitive to high stakes.97Wurman, supra note 8, at 957 (“[O]rdinary speakers attribute ‘knowledge’—and, in turn, ‘clarity’—more freely or less freely depending upon the practical stakes.” (quoting Doerfler, supra note 25, at 527)).

(2)  [Empirical Premise 2: Stakes-Sensitive Clarity]: The ordinary reader’s understanding of textual clarity is sensitive to high stakes.98Id. at 959 (“[O]rdinary readers and speakers are more likely to find the statute ambiguous in that [high-stakes] context than in a relatively lower-stakes context.”); see also id. at 917 (appealing to “how ordinary persons interpret instructions in high-stakes contexts”).

(3)  [Definition: MQD Case]: In a MQD case, the agency’s statutory powers are defined in linguistic terms that are semantically clear but highly general. The agency is exercising “vast powers” of great economic/political significance and pointing to the statutory language as authorization.99See id. at 911 (summarizing the MQD as the idea that “[c]ourts should have ‘skepticism’ when statutes appear to delegate to agencies questions of major political and economic significance, which skepticism the government can only overcome ‘under the major questions doctrine’ by ‘point[ing] to “clear congressional authorization” to regulate in that manner’ ” (citation omitted)).

(4)  [Premise]: MQD cases involve a high-stakes context.100Although Wurman, supra note 8, never explicitly describes the MQD cases as “high stakes,” we assume this premise is uncontroversial as part of a reconstruction of the argument. If they did not involve a high-stakes context, none of the arguments would be relevant.

(5)  [Textualist Premise]: Judges should interpret statutory language from the perspective of the ordinary reader.

(6)  [Minor Conclusion, from 1, 2, 3, 4, 5]: In a MQD case, the text is unclear.

(7)  [Premise]: If a text is unclear with respect to authorizing an agency’s action, it does not authorize that action.

(8)  [Major Conclusion, from 6, 7]: In a MQD case, the agency’s action is not authorized.

Attempting to construct the argument fully and precisely reveals several interesting features and questions. First, consider the two “Empirical Premises” (1 and 2). It is unclear exactly what function the first Empirical Premise (about knowledge) serves. It is included in the argument above because it features repeatedly and centrally in Wurman’s (and Doerfler’s) scholarship on high stakes, but even if that Premise were false, Premise 2 alone could support the argument.

Why, then, does the “high-stakes” literature emphasize knowledge in addition to textual clarity? Perhaps because there is little data bearing on the truth of Premise 2, but there is rich, decades-old philosophical literature that seemingly supports Premise 1.101E.g., Stewart Cohen, Contextualism, Skepticism, and the Structure of Reasons, 13 Phil. Persps. 57, 57 (1999); DeRose, supra note 24, at 913–18. As such, we understand the legal literature to be using Premise 1 as support for Premise 2: philosophers have concluded that knowledge is stakes sensitive, and this conclusion supports also concluding that textual clarity is stakes sensitive.

In Part III, we investigate the stakes-knowledge-clarity relationship empirically, but here we note some initial skepticism about the inference from knowledge to clarity. Law includes technical language,102Frederick Schauer, Is Law a Technical Language?, 52 San Diego L. Rev. 501, 501 (2015). and as such, many ordinary people do not have direct knowledge of a law’s meaning. Nevertheless, this does not imply that a particular law is unclear, in the sense of being unclear to a legal expert or inherently indeterminate. Recent empirical work supports this point: ordinary readers understand law to include technical legal meanings, and they defer to legal experts to elaborate those meanings.103Kevin Tobia, Brian G. Slocum & Victoria Nourse, Ordinary Meaning and Ordinary People, 171 U. Pa. L. Rev. 365, 365 (2023) [hereinafter Tobia et al., Ordinary People]. The mere fact that laypeople do not know the meaning of a law without further inquiry or assistance strikes us as an implausible basis for judges to treat the law as ambiguous or unclear.

Moreover, the “Minor Conclusion” (6) only follows with a very strong interpretation of the meaning of “sensitive to high stakes” (1) and (2). To conclude that “general” statutory language is unclear because of ordinary sensitivity to a high-stakes context, one must interpret (2) to mean that a high-stakes context eliminates clarity.

Wurman describes the MQD as limited to “resolving statutory ambiguities.”104Wurman, supra note 8, at 940–41. This is a common way to describe a “tiebreaker” canon. We ultimately find this confusing insofar as Wurman also presents the MQD as a linguistic canon, a rule of thumb that is evidence of linguistic meaning. If “ambiguity” refers to linguistic ambiguity, an applicable “linguistic” canon would render the statute non-ambiguous. For example, in Lockhart the Court faced a linguistic ambiguity.105Lockhart v. United States, 577 U.S. 347, 361 (2016). Lockhart was convicted under 18 U.S.C. § 2252(a) and faced a mandatory minimum due to an earlier conviction. The penalty increased if the defendant had a prior conviction “under the laws of any State relating to aggravated sexual abuse, sexual abuse, or abusive sexual conduct involving a minor or ward.”10618 U.S.C. § 2252(b)(1). That final modifier (involving a minor or ward) could modify all three noun phrases (aggravated sexual abuse, sexual abuse, and abusive sexual conduct) or just the last (abusive sexual conduct). The series qualifier canon instructs us to apply the modifier to all three noun phrases. The determination that the series qualifier canon applies qua linguistic canon is a decision that the linguistic meaning of the provision is determinate and has a specific meaning, not that it is ambiguous. If ambiguity persists—for example, if there is a competing linguistic canon that counsels in favor of the opposite interpretation—the Court might resolve ambiguity with some non-linguistic consideration, such as the rule of lenity.

Alternatively, perhaps the argument is that the MQD is “linguistic” in the sense that it represents how ordinary people believe that ambiguity should be resolved, and thus how ordinary people would choose to resolve disputes in MQD cases. But that would be an unusual sense of “linguistic.” Existing linguistic canons help determine the linguistic meaning of a provision; they do not enter the interpretive process after that meaning has been concluded to be indeterminate.

This might all seem pedantic, but it highlights a problem with this linguistic defense of the MQD. We have done our best to explain the argument in a clear form, but we are unsure that there is even a workable argument for the “high stakes” linguistic MQD that arrives at the Major Conclusion (8).

Beyond this general issue (that the logic of the argument itself is unclear), several of the premises are open to debate. For example, perhaps some of the Court’s major questions cases do not involve high stakes or sufficiently high stakes (Premise 4).107See Deacon & Litman, supra note 9, at 1009–10 (discussing and critiquing the Court’s criteria of majorness); Natasha Brunstein & Richard L. Revesz, Mangling the Major Questions Doctrine, 74 Admin. L. Rev. 217, 219 (2022) (discussing how the Trump Administration distorted the majorness determination by invoking the doctrine “enormously expansively and inconsistently”). Premise 7 is also controversial: just because a text’s meaning is unclear does not necessarily imply that it should be interpreted against an agency delegation (perhaps instead, it should be interpreted with a presumption of judicial nonintervention).108Wurman acknowledges that this is a contestable claim. See Wurman, supra note 8, at 958 (noting that Doerfler views the question as whether judges should “demand more epistemic confidence” before overturning an expert agency’s interpretation). But Wurman suggests that “the legal system already contingently addresses this question” by presumptively disallowing agency action unless agencies “demonstrate authority for their actions” and thus satisfy their “burden of proof.” Id. at 960. Note the connection here to the theory of exclusive delegation, which is a nascent substantive grounding for the canon, not a linguistic one. See supra note 80 and accompanying text.

Nevertheless, most of our attention in this Article is on the two Empirical Premises, 1 and 2. Whatever the argument is, it is clear that these two premises are central: the “high-stakes” argument repeatedly appeals to these claims.109See Wurman supra note 8, at 954–55. If these premises—and especially the second premise—are empirically invalid, the entire argument is a nonstarter. Part II of this Article presents evidence bearing on Premise 1, and Part III presents original empirical studies bearing on both Premise 1 and Premise 2. To preview the findings, (1) although academic philosophers have long assumed that higher stakes reduce knowledge, many studies find that stakes have no effect on ordinary people’s knowledge attributions;110See infra Part II. (2) we find a very small effect of stakes on knowledge (far from sufficient to conclude that “the ordinary reader” is stakes-sensitive about knowledge), and no effect of stakes on linguistic clarity.111See infra Section III.A.

C.  The Major Questions Doctrine as an Anti-Literal Linguistic Canon

A second argument for the “linguistic” MQD surfaced in summer 2023. Justice Barrett’s concurrence in Biden v. Nebraska proposes that the MQD has a linguistic basis in ordinary people’s anti-literalism and sensitivity to context.

The crux of the argument is an appeal to the predicted reaction of ordinary people to everyday situations, such as Justice Barrett’s “babysitter” hypothetical:

Consider a parent who hires a babysitter to watch her young children over the weekend. As she walks out the door, the parent hands the babysitter her credit card and says: “Make sure the kids have fun.” Emboldened, the babysitter takes the kids on a road trip to an amusement park, where they spend two days on rollercoasters and one night in a hotel. Was the babysitter’s trip consistent with the parent’s instruction? Maybe in a literal sense, because the instruction was open-ended. But was the trip consistent with a reasonable understanding of the parent’s instruction? Highly doubtful. In the normal course, permission to spend money on fun authorizes a babysitter to take children to the local ice cream parlor or movie theater, not on a multiday excursion to an out-of-town amusement park. If a parent were willing to greenlight a trip that big, we would expect much more clarity than a general instruction to “make sure the kids have fun.”112Biden v. Nebraska, 143 S. Ct. 2355, 2379–80 (2023) (Barrett, J., concurring) (emphasis omitted).

Justice Barrett explains that additional context could make a difference, including (1) “maybe the parent left tickets to the amusement park on the counter,” (2) “[p]erhaps the parent showed the babysitter where the suitcases are, in the event that she took the children somewhere overnight,” (3) “maybe the parent mentioned that she had budgeted $2,000 for weekend entertainment,” (4) the “babysitter had taken the children on such trips before,” or (5) “if the babysitter were a grandparent.”113Id. at 2380. Notably, not all of these are additions to the text of the statement. We are sympathetic to this view of non-text-based context, but it is arguably a significant departure from traditional text-focused textualism.114See infra Section IV.B.

Moreover, Justice Barrett argues that the babysitter hypothetical illustrates how “we communicate conversationally” and that the MQD merely represents “common sense” in a different context:

In my view, the major questions doctrine grows out of these same commonsense principles of communication. Just as we would expect a parent to give more than a general instruction if she intended to authorize a babysitter-led getaway, we also “expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’ ” That clarity may come from specific words in the statute, but context can also do the trick. Surrounding circumstances, whether contained within the statutory scheme or external to it, can narrow or broaden the scope of a delegation to an agency.115Biden v. Nebraska, 143 S. Ct. at 2380 (Barrett, J., concurring) (citation omitted).

This justification coheres with Justice Barrett’s “ordinary speaker” approach to interpretation. In Congressional Insiders and Outsiders, Justice Barrett argues that judges should approach language “from the perspective of an ordinary English speaker—a congressional outsider.”116Barrett, supra note 17, at 2194. This generally requires avoiding insider knowledge about Congress: “What matters to the textualist is how the ordinary English speaker—one unacquainted with the peculiarities of the legislative process—would understand the words of a statute.”117Id.

While Justice Barrett’s babysitter example is intriguing, it is not immediately clear how it supports the MQD. A skeptic might read the babysitter-to-MQD argument as committing a “motte” and “bailey” fallacy, conflating one position that is very easy to defend (the motte) with one much harder to defend (the bailey). It is undeniable that context influences interpretation and it would not be surprising that ordinary people are more confident in delegation of power with additional supporting contextual evidence. If the babysitter had previously taken the children on trips ((4) from above) or the agency had a longstanding practice of developing new programs, that context would often make readers equally or more confident that a text delegating authority to that agent encompasses similar action.

But this observation (that context can lend further support to particular actions taken pursuant to a delegation) does not justify the MQD. Justice Barrett’s key claim about ordinary language is much stronger, something like: ordinary people understand general delegations to X to be limited to only the most reasonable ways to X, absent further textual or contextual support for X. Recall Justice Barrett’s argument about the babysitter’s trip: “But was the trip consistent with a reasonable understanding of the parent’s instruction? Highly doubtful.”118Biden v. Nebraska, 143 S. Ct. at 2379–80 (Barrett, J., concurring). The central claim in the strong form of Justice Barrett’s argument is not merely that context matters but that absent supporting context, ordinary delegations are limited to the set of most reasonable applications of the instruction.

To appeal to the “motte” claim in support of the “bailey” claim is to trade an obvious fact about context to support a highly controversial claim about intuitive understanding of delegations. We do not, however, read Justice Barrett to make such a slippery move. There is a more charitable way to read her concurrence (that is, relying on the stronger key claim). This reading relies on an interesting and empirically testable question: When a text delegates an agent the power to X with general language, do people intuitively understand the delegation to be limited to only the set of the most reasonable/natural ways to X, or do they understand the delegation more broadly (even if not entirely literally)? For example, when a parent instructs a babysitter to “use this credit card to make sure the kids have fun this weekend,” does that authorize only the most reasonable actions (for example, ordering pizza, ordering a movie), or does it also authorize some actions that would be understood as less reasonable (for example, taking the kids to an amusement park)? Similarly, when Congress delegates to an agency, is the agency limited to only the set of most reasonable understandings (absent supporting context), or do people understand delegations to communicate a broader (if not quite literal) authorization?

Justice Barrett’s “linguistic defense” of the MQD leaves some questions open—the quotations above capture the bulk of the defense. Our formal reconstruction of the arguments follows.

1.  Reconstruction of the “Anti-Literalism” Defense of the Major Questions Doctrine

(1)  [Definition: Ordinary Majorness]: For a given rule, an action is “major” if the ordinary reader understands it, absent additional context, as not among the set of most reasonable ways to follow the rule.119A “major” action may be consistent with the rule’s literal meaning. The appeal to “reasonableness” generates an interesting feature of this definition: an action could be “major” in the sense of exceeding the reasonable set of actions or subceeding it. For example, imagine the babysitter responds by choosing to simply play board games with the kids, without using the credit card. It is possible that this is not among the most reasonable ways to follow the rule.

(2)  [Definition: MQD Case]: In a MQD case, the agency’s statutory powers are defined in linguistic terms that are semantically clear but highly general. The agency is exercising “vast powers” of great economic/political significance and pointing to the statutory language as authorization.

(3)  [Empirical Premise: MQD Cases Involve Ordinary Majorness] The ordinary reader takes MQD cases to involve a “major” action (for example, in the MQD cases, the ordinary reader takes the contested action, absent additional context, as not among the most reasonable ways to follow the rule).

(4)  [Textualist Premise]: Judges should interpret statutory language from the perspective of the ordinary reader.120Some textualists might adopt a weaker premise: “In interpreting statutes, judges should employ some principles that guide the ordinary reader, some principles that guide an idealized or informed reader (for example, ‘reasonable reader’), and some principles that guide the expert reader (for example, ‘ordinary lawyer’).” Insofar as Justice Barrett’s linguistic MQD argument adopts something like this weaker premise, the argument only goes through if the weaker premise is supplemented with a further premise: “In MQD cases, textualists should employ the principles that guide an ordinary reader’s understanding of delegations of authority to agents.” Justice Barrett’s MQD argument relies heavily on her ordinary babysitter example, suggesting that—at least for the purpose of major questions cases—judges’ approach to language should include the ordinary reader’s understanding of delegations (including how the literal meaning of a delegation is restricted by context). For simplicity, our main argument uses the simpler but stronger premise, but it could also use the weaker (but more complicated) pair of premises.

This weaker premise also reveals hard questions for textualists, which are beyond the scope of this Article: When, exactly, should a textualist adopt one or other of these perspectives and principles? We are skeptical about textualists that freely shift among these perspectives, with no guiding principles. Justice Barrett herself has not clearly answered this question, sometimes treating the ordinary reader as the lodestar for interpretation and other times pointing to legally trained readers. See Barrett, supra note 17, at 2202. A defense of the MQD on the grounds that it reflects lawyerly training is arguably more substantive than linguistic, and more circular than logical, but we do not purport to address this defense of the MQD in this Article. See also Tobia et al., Ordinary People, supra note 103, at 432–34 (arguing that standards like “appropriately informed interpreter” are more normative than descriptive).

(5)  [Empirical Premise]: Absent additional context, the ordinary reader understands rules that delegate power to an agent to have significant contextual limitations against all “major” actions; such a rule’s communicative content is limited to authorizing only the set of most reasonable actions.

(6)  [Conclusion]: In MQD cases, absent additional context, judges interpreting delegations should interpret delegations to exclude all major actions.

II.  PHILOSOPHICAL AND EMPIRICAL BACKGROUND

The previous Part introduced the two linguistic MQD arguments, one concerning high stakes and one concerning anti-literalism. This Part provides background from philosophy and empirical studies related to these arguments.

Some of the questions at the heart of the “high-stakes” MQD defense have been long debated by epistemologists (philosophers who specialize in the study of knowledge). More recently, the same questions have been studied empirically by psychologists and experimental philosophers.121See generally A Companion to Experimental Philosophy (Justin Sytsma & Wesley Buckwalter eds., 2016) (for an overview of experimental philosophy). Much of this work challenges a premise in the high-stakes MQD argument: although philosophers have claimed high stakes impact knowledge, high stakes have (at most) a small effect on ordinary judgments of knowledge. Section II.A reviews this research.

Section II.B provides background related to Justice Barrett’s claims about context and anti-literalism. Context matters in interpretation, and recent research has found that ordinary people understand law in line with anti-literalism, as Justice Barrett notes. However, there is no extant research that supports the stronger empirical premise in the anti-literalism argument.

A.  Stakes and Knowledge

1.  Philosophical Epistemology of Stakes and Knowledge

For decades, philosophers have evaluated stakes’ impact on knowledge with hypothetical “thought experiments.”122See, e.g., Cohen, supra note 101, at 58–60. Consider a pair of cases as an example.123Rose et al., supra note 34, at 237–39 (for a discussion of this version of the case); see also DeRose, supra note 24, at 913–16. The only differences between cases are highlighted in italics.

(1)  Low-Stakes Bank Deposit:

Bob and Jane are considering whether to stop at the bank to deposit a check on a Friday. Nothing turns on whether they deposit the check in the next week. The line is long, and they consider coming back on Saturday. Bob says that he remembers that the bank was open last Saturday, and Jane replies that banks sometimes change their hours. Bob says, “I know the bank will be open tomorrow.”

In this case, many philosophers claim that Bob knows that the bank will be open tomorrow.124Keith DeRose, The Ordinary Language Basis for Contextualism, and the New Invariantism, 55 Phil. Q. 172, 176 (explaining that “almost any speaker in my situation would claim to know the bank is open on Saturdays” in this low stakes case). Now consider a slight variation on this case.

(2)  High-Stakes Bank Deposit:

Bob and Jane are considering whether to stop at the bank to deposit a check on a Friday. It is critical that the check is deposited on one of the next two days. On Sunday, there will be a large debit to Bob’s account, which does not currently have enough funds, and the check is Bob’s only means to cover that expense. The line is long, and they consider coming back on Saturday. Bob says that he remembers that the bank was open last Saturday, and Jane replies that banks sometimes change their hours. Bob says, “I know the bank will be open tomorrow.”

In this case, philosophers say that Bob’s statement is false.125Id. at 177 (“Almost everyone will accept [‘I don’t know if the bank is open’] as a reasonable admission, and it will seem true to almost everyone.”). He does not know the bank will be open tomorrow.

The epistemology literature has taken philosophers’ shared reactions to these cases as intuitive data. And philosophers have offered different theories to make sense of that data. These are rich and complicated philosophical debates, which this Article does not have the space to rehearse or explore deeply.126For example, “contextualism” holds that “to know” is context sensitive, such that the truth conditions for knowledge attributions vary across contexts. Cohen, supra note 101, at 57; DeRose, supra note 24, at 914; see also Keith DeRose, Solving the Skeptical Problem, 104 Phil. Rev. 1, 4–5 (1995). “Interest-relative invariantism” (“IRI”) rejects the claim that knowledge is context sensitive; instead, IRI holds that practical factors impact whether knowledge obtains. Jason Stanley, Knowledge and Practical Interests 85–89 (2005). Our principal interest is in how this work has informed recent debates in legal philosophy.

Legal-philosophical scholarship has drawn on this work in epistemology in support of the claim that high-stakes legal interpretation differs from lower-stakes interpretation. Ryan Doerfler suggests that high-stakes contexts influence textual clarity,127Doerfler, supra note 25, at 523; see also William Baude & Ryan D. Doerfler, The (Not So) Plain Meaning Rule, 84 U. Chi. L. Rev. 539, 546–47 (2017). and Wurman piggybacks on this premise to argue that stakes sensitivity supports the MQD.128Wurman, supra note 8, at 957–61. Importantly, these legal applications appeal to “ordinary speakers129Doerfler, supra note 25, at 523, 542. and “ordinary epistemic justification,” especially reactions to the bank cases described above.130Id. at 575. A starting premise is that, for ordinary speakers of ordinary language, stakes impact knowledge; this is typically illustrated by the low- and high-stakes bank example.

2.  Do Stakes Impact Knowledge? Empirical Perspectives

Despite the pedigree of the stakes-knowledge literature, there is one big problem: many empirical studies report that stakes have no effect on ordinary attributions of knowledge. As Joshua Knobe & Jonathan Schaffer explain, “[l]ooking at this recent evidence, it is easy to come away with the feeling that the whole contextualism debate was founded on a myth. The various sides offered conflicting explanations for a certain pattern of [stakes-sensitive] intuitions, but the empirical evidence suggests that this pattern of intuitions does not exist.”131Schaffer & Knobe, supra note 34, at 675–76.

Much of this evidence comes from “experimental philosophy.” Rather than relying on the intuitions of philosophers (some of whom might have a lot at stake in intuitions about contextualism), experimental philosophers examine the understandings of ordinary people. Moreover, they often conduct experiments, which present different participants with different versions of the same scenarios, varying in only one respect (for example, higher stakes). This allows experimenters to draw inferences about whether certain factors (for example, stakes) affect people’s judgments in these cases. Some readers may be familiar with experimental philosophy’s testing of the well-known “trolley dilemma.”132See, e.g., Joshua D. Greene, R. Brian Sommerville, Leigh E. Nystrom, John M. Darley & Jonathan D. Cohen, An fMRI Investigation of Emotional Engagement in Moral Judgment, 293 Sci. 2105, 2105 (2001). Many have also poured substantial effort into testing the influence of stakes on knowledge, especially in the “bank cases.”

Do stakes affect lay attributions of knowledge? Many studies report no.133Adam Feltz & Chris Zarpentine, Do You Know More When It Matters Less?, 23 Phil. Psych. 683, 697 (2010); Wesley Buckwalter, Knowledge Isn’t Closed on Saturday: A Study in Ordinary Language, 1 Rev. Phil. & Psych. 395, 403 (2010); Wesley Buckwalter & Jonathan Schaffer, Knowledge, Stakes, and Mistakes, 49 Noûs 201, 228 (2015); Rose et al., supra note 34, at 245; Kathryn B. Francis, Philip Beaman & Nat Hansen, Stakes, Scales, and Skepticism, 6 Ergo 427, 450–52 (2019); Joshua May, Walter Sinnott-Armstrong, Jay G. Hull & Aaron Zimmerman, Practical Interests, Relevant Alternatives, and Knowledge Attributions: An Empirical Study, 1 Rev. Phil. & Psych 265, 272–73 (2010). As one important example, consider the study conducted by David Rose and other contributing authors. They gave participants versions of the bank case described at the start of this Section. They collected data from over 3,500 participants across 16 countries. The vast majority of countries show no significant effect, and for the few that show an effect, the size is very small (about a 10% difference in low- versus high-stakes cases). The researchers conclude that, overall, there is “virtually no evidence that stakes affect knowledge attribution.”134Rose et al., supra note 34, at 233.

Other papers report a complicated pattern for other epistemic notions besides knowledge. For example, Mark Phelan finds no effect of stakes on judgments about how (epistemically) confident someone should be in a between-subjects study, but he finds an effect in a within-subjects study (when the same participant considered matched cases).135Mark Phelan, Evidence that Stakes Don’t Matter for Evidence, 27 Phil. Psych. 488, 505 (2014); see also May et al., supra note 133, at 272 (reporting an effect of stakes on confidence but not knowledge).

Other studies report stakes effects for more complicated (and perhaps controversial) measures of knowledge. As an example, consider Alexander Dinges and Julia Zakkou’s study.136Alexander Dinges & Julia Zakkou, Much at Stake in Knowledge, 36 Mind & Language 729, 746 (2021). For another recent example, see generally Brian Porter, Kelli Barr, Abdellatif Bencherifa, Wesley Buckwalter, Yasuo Deguchi, Emanuele Fabiano, Takaaki Hashimoto, Julia Halamova, Joshua Homan, Kaori Karasawa, Martin Kanovsky, Hackjin Kim, Jordan Kiper, Minha Lee, Xiaofei Liu, Veli Mitova, Rukmini Bhaya, Ljiljana Pantovic, Pablo Quintanilla, Josien Reijer, Pedro Romero, Purmina Singh, Salma Tber, Daniel Wilkenfeld, Stephen Stich, Clark Barrett & Edouard Machery, A Puzzle About Knowledge Ascriptions, Noûs: Early View, July 4, 2024, at 1, available at https://onlinelibrary.wiley.com/doi/10.1111/nous.12515?af=R (finding no effect for questions like “[name] knows/only thinks he knows that [. . .],” but an effect for questions like “how many times do you think [name] has to check the logs before he knows [. . .]”). The weight of current evidence suggests that there is a small or no effect of stakes on knowledge attribution, but there is an effect of stakes on these other measures, such as questions about whether you “stand by” your claim or whether you should “check” your evidence more times. This study instructed participants to consider a scenario in one of three versions. All scenarios began with the following:

Picture yourself in the following scenario:

You and Hannah have been writing a joint paper for an English class. You have agreed to proofread the paper. You’ve carefully proofread the paper 3 times and used a dictionary if necessary. You spotted and corrected a few typos, but you didn’t find any typos in the last round anymore.

You meet up with Hannah to finally submit the paper. Hannah asks whether you think there are no typos in the paper anymore. You respond:

“I know there are no typos anymore.”

At this point, . . .

Then, the scenarios proceeded in either a “neutral,” “stakes,” or “evidence” version. The “stakes” manipulation sought to change the practical significance of the knowledge claim, while the “evidence” manipulation sought to change the evidence base on which the knowledge claim rests.

Neutral: . . . Hannah reveals to you for the first time that she’s always been a big fan of the Backstreet Boys. You’ve never liked the Backstreet Boys, but since you like Hannah, you promise to listen to a few songs she particularly recommends. You doubt that it will change your mind but agree that it doesn’t hurt to give it a try. As you’re about to submit the paper, Hannah asks whether you stand by your previous claim that you know there are no typos in the paper. You respond:

Stakes: . . . Hannah reveals to you for the first time that it is extremely important for her to get an A in the English class. Her scholarship depends on it, and she’ll have to leave college if she loses the scholarship. If there is a typo left in the paper, she’s very unlikely to get an A, so it is extremely important to her that there are no typos in the paper. As you’re about to submit the paper, Hannah asks whether you stand by your previous claim that you know there are no typos in the paper. You respond:

Evidence: . . . Hannah reveals to you for the first time that she’s secretly read your previous term papers and always spotted lots of typos in them even when you said you had carefully proofread them. She apologizes for not telling you earlier. You are slightly disappointed but forgive her. Hannah is a good friend, and you appreciate that she was honest with you in the end. As you’re about to submit the paper, Hannah asks whether you stand by your previous claim that you know there are no typos in the paper. You respond:

All scenarios ended with: “I do” or “I don’t,” asking participants to pick the response they would be more likely to give.

Using this “stand by” question, the researchers found a difference. In the “Neutral” version, 94% of participants stood by their knowledge claim (“I do”); in the “Stakes” version, 76% of participants stood by; and in the “Evidence” version, 42% stood by. The researchers found similar results in a bank case. The Neutral-Stakes difference suggests that stakes can impact knowledge attributions. The Stakes-Evidence difference indicates that other factors (for example, an attributor’s evidence base) also matter and can have a larger effect than stakes. This difference (76% versus 42%) is one of the larger differences reported in the literature.137Dinges & Zakkou, supra note 136, at 735.

It is not clear if agreement with “standing by” a claim is equivalent to agreement with knowledge of a claim. To “stand by” a claim calls to mind the action associated with the claim (that is, going to the bank today or not). From a cost-benefit perspective, stakes are relevant to action. The rising expected cost of failing to act in light of a possible bank closure or paper typo is relevant to a rational actor’s decision-making. Arguably, some of the observed small impacts of stakes on lay attributions of knowledge could be reflecting lay participants’ actionability judgments: in the high-stakes context, Bob’s knowledge has not changed, but whether he should go to the bank has changed.

Overall, the evidence is mixed concerning whether stakes impact ordinary knowledge attributions. Historically, many philosophers had stakes-sensitive knowledge intuitions, predicted that others would, and developed complex theories about those effects.138See, e.g., DeRose, supra note 24, at 913–18. Yet, a large number of empirical studies of thousands of ordinary participants, across many languages and cultures, have found no impact of stakes, or only a very small effect, on knowledge.139See Schaffer & Knobe, supra note 34, at 703. Very recently, one new study has reignited the debate, finding some support for the impact of stakes on epistemological judgments.140See Dinges & Zakkou, supra note 136, at 729. Another forthcoming paper also adopts a nuanced position that normative facts influence knowledge. See N. Ángel Pinillos, Bank Cases, Stakes and Normative Facts, in 5 Oxford Studies in Experimental Philosophy 375 (Joshua Knobe & Shaun Nichols eds., 2024). Yet, another recent study reports that stakes do not affect judgments about knowledge141Su Wu, Are Folks Purists or Pragmatic Encroachers? New Discoveries of Relation Between Knowledge and Action from Experimental Philosophy, Episteme 1, 11 (2023) (studying Chinese participants). but do affect judgment about action.142Id. at 12. In total, there is evidence pointing in both directions. Resolving the debate will require further empirical research as well as systematic theorizing of the seemingly conflicting empirical results.

Consequently, it remains far from settled that high stakes reduce knowledge for “the ordinary person.” Most studies have found that stakes do not impact knowledge in this way. And even for the studies that do report an effect, it is small. If 95% of participants evaluate that there is knowledge in a low-stakes case, and 80% evaluate that there is knowledge in a comparable high-stakes case, does this imply that the “ordinary person” has stakes-sensitive knowledge intuitions? Advocates of ordinary stakes sensitivity need to spell out why stakes-sensitivity manifesting in 10–15% of ordinary participants implies that the ordinary reader has stakes-sensitive knowledge.

The claim that high stakes impact knowledge figures prominently in the argument for a high-stakes linguistic MQD.143See supra Section II.A. Extant legal literature has drawn heavily on this claim in supporting that “high-stakes” interpretation differs from lower-stakes interpretation. In doing so, it has drawn primarily from hypotheticals in academic philosophy (the “bank cases”) and intuitions about those hypotheticals offered by academic philosophers. Insofar as the legal literature concerns stakes’ impact on ordinary people’s knowledge attributions,144See, e.g., Wurman, supra note 8, at 956–61. those legal debates would benefit from greater engagement with the large body of recent empirical work summarized in the previous Section.

3.  From Philosophy to Legal Philosophy

The previous two Subsections have introduced the debate about stakes and knowledge in epistemology. But it is important to recall that the connection of this debate to legal philosophy requires another step. For example, Doerfler proposes a connection between “clarity” or “plain meaning” of a statute and knowledge about the statute’s meaning: “[T]o say that the meaning of a statute is ‘clear’ or ‘plain’ is, in effect, to say that one knows what that statute means.”145Doerfler, supra note 25, at 527 (emphasis omitted); see also Baude & Doerfler, supra note 127, at 545. The logic appears to be that clarity attributions are a subset of knowledge claims, such that a property demonstrated to affect knowledge claims should transitively affect clarity claims.

Ultimately, this relationship between knowledge and clarity is outside the scope of our Article (the relevant question for the linguistic MQD is stakes’ impact on clarity). However, there are some philosophical questions to raise about the proposed relationship between clarity and knowledge. One, which we described earlier, concerns technical meaning. A layperson might not know what a statute means because it is technical, yet the statute may not be “unclear” to that person in the relevant sense of clarity (that is, ambiguous). As another difference, consider factivity. Philosophers often propose that knowledge is factive: I know p only if p. But it is not obvious that clarity is factive. The meaning of a statute might appear clear (that is, not ambiguous) to an agent while the agent is wrong about the statute’s meaning, and thus the agent lacks knowledge of the statute’s meaning. Such a case would be a counterexample to the claim that an agent knows what a statute means if and only if the meaning of the statute is clear.

Most importantly, the empirical evidence about ordinary attributions of knowledge reviewed here—to the extent that it even does support stakes sensitivity—does not necessarily extend to ordinary determinations of whether statutory text is clear. The studies to date mostly used the bank case, but the bank case presents no rule to which clarity judgments might attach. It might be possible that the clarity of rules is reduced for ordinary people in higher-stakes contexts. Indeed, it is theoretically possible that clarity judgments about textual rules are more sensitive to stakes than knowledge more generally. But it is just as possible that there is a breakage: that is, that clarity claims are not simply a subset of knowledge claims but a special and different kind of knowledge claim. However, as far as we are aware, these are entirely untested empirical hypotheses. Without any empirical evidence specific to clarity claims, it would not be possible to bootstrap ordinary stakes-sensitive clarity from ordinary stakes-sensitive knowledge (moreover, as we have argued, ordinary stakes-sensitive knowledge is also empirically dubious). Part III therefore tests this clarity claim.

B.  Context and Anti-Literalism

Justice Barrett’s concurring opinion in Biden v. Nebraska offers a different argument for the MQD as a linguistic canon. For Justice Barrett, the MQD simply reflects “common sense” inferences about how broader context restricts language’s (literal) meaning.146Biden v. Nebraska, 143 S. Ct. 2355, 2379 (2023) (Barrett, J., concurring) (“Context also includes common sense, which is another thing that ‘goes without saying.’ Case reporters and casebooks brim with illustrations of why literalism—the antithesis of context-driven interpretation—falls short.”). Justice Barrett illustrates this with the babysitter example, claiming that ordinary people understand a delegation to a babysitter to have implicit limits (although a babysitter’s attempt to transgress those normal limits might be allowed by a supplemental clear authorization). This, Justice Barrett suggests, is precisely how an ordinary reader would read a statute delegating authority to an agency, and therefore a canon requiring a clear statement from Congress is justified.147See supra Section I.C.

1.  Anti-Literalism and Context in Ordinary Language

Anti-literalism is an important feature of ordinary language. Consider François Recanati’s discussion of the “You are not going to die” example from Kent Bach:

[Imagine] a child crying because of a minor cut and her mother uttering . . . [“you are not going to die”] in response. What is meant is: “You’re not going to die from that cut.” But literally the utterance expresses the propositions that the kid will not die tout court—as if he or she were immortal. The extra element contextually provided (the implicit reference to the cut) does not correspond to anything in the sentence itself; nor is it an unarticulated constituent whose contextual provision is necessary to make the utterance fully propositional.148François Recanati, Literal Meaning 8–9 (2004).

This example helpfully illustrates that we often understand propositions anti-literally, in light of context, and that the relevant context need not come from the statement itself. The very same words “you’re not going to die,” convey a different meaning when uttered after a child gets a cut than they would in some other context where the literal meaning would be the correct meaning.

The powerful influence of context is not limited to anti-literalism. Extratextual context can also disambiguate. As an example, consider the statement “Do not take drugs and alcohol.” Does this mean “Do not take either one?” Or does it mean “Do not take the two together?” The answer varies across contexts.

If this rule were presented in the context of a substance abuse counseling session, our extratextual knowledge about that session leads us to understand this text [to prohibit each individually]: Don’t take drugs; don’t take alcohol. However, if this rule were presented in the context of a patient’s annual physical, in which the doctor prescribed cholesterol-reducing medications, our extra-textual knowledge about that session encourages [understanding the rule to prohibit the combination].149Kevin Tobia, Jesse Egbert & Thomas R. Lee, Triangulating Ordinary Meaning, 112 Geo. L.J. 23, 51 (2023).

2.  Anti-Literalism in Ordinary Understanding of Legal Rules

Justice Barrett’s argument is attractive in its appeal to context and anti-literalism. And Justice Barrett is not the only modern textualist to appeal heavily to anti-literalism; Justices Gorsuch and especially Kavanaugh have also called attention to the perils of overliteral interpretation.150The Justices use “literal” in various ways, but Justice Gorsuch and Kavanaugh have recently called attention to avoiding inappropriate literalism. See, e.g., Bostock v. Clayton County, 140 S. Ct. 1731, 1750 (2020) (Gorsuch, J.); id. at 1825 (Kavanaugh, J., dissenting) (“[C]ourts must follow ordinary meaning, not literal meaning.”).

For modern textualism, this is a welcome development. Analysis of the (linguistic) meaning of legal rules should attend to context and exceed pure literalism. As one example, consider the linguistic canons. Many linguistic canons reflect intuitive contextual restrictions from literal meaning. “No cars, trucks, or other vehicles may enter the park” might literally prohibit bicycles from the park, as most ordinary people take a bicycle to be a vehicle.151Kevin P. Tobia, Testing Ordinary Meaning, 134 Harv. L. Rev. 726, 757 (2020) (reporting that most laypeople, law students, and judges agree that a bicycle is a “vehicle”). However, the principle of ejusdem generis instructs interpreters to construe the broad, catchall term “vehicle” in light of the listed items (“cars,” “trucks”).152See McBoyle v. United States, 283 U.S. 25, 26–27 (1931). Even if laypeople are not familiar with the name “ejusdem generis,” they intuitively apply this kind of reasoning when analyzing both legal and ordinary rules.153Tobia et al., From the Outside, supra note 18, at 259–60.

People also apply other types of contextual restrictions from literal meaning. This includes some contextual rules that are not currently recognized by courts as linguistic canons. For example, people understand that universal quantifiers like “any” often do not mean literally any.154Id. (reporting studies demonstrating that laypeople intuitively apply a ejusdem generis principle); see also Tobia, supra note 151, at Appendix (reporting that most laypeople do not take “no vehicles in the park” to prohibit a bicycle from the park, even though most laypeople agree that a bicycle is a “vehicle”). If this tendency were at least as systematic in ordinary understanding as those underlying conventional linguistic canons (for example, the tendency to restrict catchall terms as ejusdem generis reflects), a textualist committed to the ordinary reader should employ those new canons (for example, the “quantifier domain restriction canon”).

Recent legal scholarship has also asked whether thinking about context and anti-literalism might reveal that some “substantive” canons are also linguistic canons.155Slocum & Tobia, supra note 37, at 73. Some clear statement rules—such as anti-retroactivity and anti-extraterritoriality—could be seen as linguistic canons, based on our understanding of context. Taken literally, many statutes would seem to apply at all times, in all places.156E.g., 18 U.S.C. § 2119 (“Whoever, with the intent to cause death or serious bodily harm takes a motor vehicle that has been transported, shipped, or received in interstate or foreign commerce from the person or presence of another by force and violence or by intimidation, or attempts to do so, shall . . . be fined under this title or imprisoned not more than 15 years, or both.”). But people understand statutes to communicate temporal and geographical restrictions: while there is some division among laypeople, overall, people tend to understand rules to apply only prospectively, and only territorially.157Slocum & Tobia, supra note 37, at 81–96.

Textualists may rhetorically privilege the “ordinary reader” and express support for anti-literalism, but they have not yet adopted many of these suggestions. For instance, no textualist has adopted an anti-literal “quantifier domain restriction canon” or theorized anti-retroactivity as a linguistic canon (although it is a long-standing clear statement rule). These context-sensitive rules are relatively robust and systematic and are supported by empirical evidence. We have reservations about a textualism that ignores such systematic patterns of anti-literalism while also freely adopting “ad hoc” anti-literal arguments related only to particular cases. On this score, Justice Barrett’s concurrence in Biden v. Nebraska is commendable in hypothesizing about a broader contextual principle that generally guides ordinary understandings of delegations (that is, a principle applying across cases, not an ad hoc appeal to context and anti-literalism related only to the authorization of emergency student loan relief). Whether Barrett’s contextual principle is systematic and empirically supported is a separate question.

Anti-literalism and contextual restriction are powerful ideas that accurately reflect language usage, but if textualists have no theory about when one can appeal to them, there is a danger that textualists can freely frame different readings as “literal” and “anti-literal,” choose liberally among them, or simply ignore non-literal meanings when doing so is convenient.158See id. at 106–08; see also William N. Eskridge, Jr., Brian G. Slocum & Kevin Tobia, Textualism’s Defining Moment, 123 Colum. L. Rev. 1611, 1612–27 (2023) (documenting twelve theoretical choices facing modern textualists and arguing that textualists’ failure to explain their answers to these choices facilitates cherry-picking and undermines rule of law values like predictability). The claim that “in context,” a text does not “literally” mean what it says is also a powerful way for motivated interpreters to escape a text’s clear meaning.

Context matters. But if textualists have no theory about what counts as context and when they must appeal to it, ad hoc appeals to context are like “looking out over a crowd and picking out your friends.”159See Confirmation Hearing on the Nomination of John G. Roberts, Jr. to Be Chief Justice of the United States Before the S. Comm. on the Judiciary, 109th Cong. 200–01 (2005) (on looking to foreign law in U.S. constitutional interpretation). Except here, the “friends” are not even limited to preexisting sources; they also include entirely novel hypothetical examples generated by the judge.

3.  Contextual Restriction of Delegations?

As Section II.B argued, the “anti-literalism” argument of the linguistic MQD needs a stronger premise than simply “people sometimes understand language non-literally.” The mere fact that “you are not going to die” has a nonliteral meaning does not justify the MQD.

The premise necessary to the argument involves a new claim about ordinary understanding of delegations. Justice Barrett proposes that there is some MQD-like principle that is part of ordinary people’s common sense, concerning the limited authorization from a general delegating instruction. It is for this reason that she relies on the babysitter hypothetical, an anti-literalism intuition-pump about an ordinary instruction that delegates power to an agent. General delegation language, Justice Barrett posits, has an anti-literal limitation. Unless there is further specific authorization, that general language is understood to be limited to only the most reasonable actions.

This is an interesting and empirically testable proposition: ordinary people understand general delegations to be limited to only the most reasonable actions falling under the language of the delegation. As far as we know, there is no empirical study that has examined this question. We present a new study to do so in Section III.B.

III.  NEW EMPIRICAL EVIDENCE

This Part tests key empirical claims at the core of the linguistic arguments for the MQD. In both tests, we seek to reduce our researcher degrees of freedom (that is, eliminate cherry-picking scenarios) by relying on the exact cases that advocates of the linguistic defense offer: the high-stakes “bank case” and the “babysitter hypothetical.”

Section III.A presents a study that tests whether ordinary people’s judgments about knowledge are lowered in high-stakes contexts (using the bank case). It also examines, for the first time, whether people’s understanding of a rule is impacted: Are rules perceived as less clear in high-stakes contexts?

Section III.B presents a study to examine the babysitter case: a parent instructs the babysitter to use a credit card to “make sure the kids have fun.” Do ordinary people understand this instruction to license taking the children on a road trip to an amusement park, or do they understand it to be limited to only more reasonable actions?

Section III.C responds to the primary two objections to the studies that have appeared in print since we first publicized this Article’s empirical findings.

A.  Do High Stakes Reduce Knowledge and/or Clarity? The Bank Case

1.  General Overview

The first study examined whether (high) stakes reduce ordinary attributions of (1) knowledge and (2) clarity of rules. We randomly assigned participants to either a low-stakes160Rose et al., supra note 34, at 231. Low:

Bob and his wife are driving home on a Friday afternoon. They both received some money earlier in the day, and so they plan to stop at the bank on the way home to deposit it. But as they drive past the bank, they notice that the lines inside are very long, as they often are on Friday afternoons. Although they generally like to deposit any money they receive at the bank as soon as possible, it is not especially important in this case that it be deposited right away, and so Bob suggests that they drive straight home and deposit their money on Saturday morning. His wife says, “Maybe the bank won’t be open tomorrow. Lots of banks are closed on Saturdays.” Bob replies, “No, I know the bank will be open. I was just there two weeks ago on Saturday. It was open until noon.” As a matter of fact, the bank will be open on Saturday morning.

Id.
or high-stakes161Id. High:

Bob and his wife are driving home on a Friday afternoon. They both received some money earlier in the day and so they plan to stop at the bank on the way home to deposit it. But as they drive past the bank, they notice that the lines inside are very long, as they often are on Friday afternoons. They have recently written a very large and very important check. If the money is not deposited into their bank account before Monday morning, the important check they wrote will not be accepted by the bank, leaving them in a very bad situation. Bob suggests that they drive straight home and deposit their money on Saturday morning. His wife says, “Maybe the bank won’t be open tomorrow. Lots of banks are closed on Saturdays.” Bob replies, “No, I know it’ll be open. I was just there two weeks ago on Saturday. It was open until noon.” As a matter of fact, the bank will be open on Saturday morning.

Id.
condition of the bank case. In each condition, participants read a version of the famous bank case, in which Bob and his wife discuss whether a bank is open on Saturday. Participants answered two types of knowledge questions, drawn from the previous literature.162See id. at 229–32. The basic knowledge question asks:

In your personal opinion, when Bob says “I know the bank will be open” is his statement true?

Yes, Bob’s statement is true.

No, Bob’s statement is not true.

Defenders of context sensitivity have argued that this question more accurately tracks debate about contextualism than questions that simply ask participants to rate “knowledge.”163See DeRose, supra note 31, at 82. The “strict” knowledge question asks:

In your personal opinion, which of the following sentences better describes Bob’s situation?

Bob knows that the bank will be open on Saturday.

Bob thinks he knows that the bank will be open on Saturday, but he doesn’t actually know it will be open.

Next, we randomly assigned participants to one type of rule: Clear, Ambiguous 1, Ambiguous 2, Unclear. The study presented a vignette explaining that Bob’s wife now used her phone to find the bank’s policy on its website. We randomly presented participants with one of four types of rules:

  • [Clear] The bank is open on Saturdays.
  • [Ambiguous 1] The bank is closed on Sundays.
  • [Ambiguous 2] The bank is closed only on Sundays and federal holidays.
  • [Unclear] The bank is open during regular business hours.

Participants rated whether the rule is clear or unclear concerning whether the bank is open on Saturday:

Now imagine that Bob’s wife uses her phone to search for the bank’s policy. She finds a website for the local bank branch. The website’s text states: “[RULE]” In your personal opinion, is this rule’s meaning clear or unclear concerning whether the bank is open on Saturday?

Clear: The bank is open on Saturday.

Clear: The bank is closed on Saturday.

Unclear.

In sum, we experimentally varied two factors: Stakes (low, high) and Rule Type (Clear, Ambiguous 1, Ambiguous 2, Unclear). This study examines whether Stakes affect lay judgment of knowledge (basic and strict). The study also examines whether Stakes affect lay judgment of a rule’s clarity across hypothesized clear, ambiguous, and unclear rules.

2.  Methodological Details

All study materials, hypotheses, exclusion criteria, and primary analyses were preregistered at Open Science.164Kevin Tobia, Stakes and Legal Interpretation, Center for Open Science (July 12, 2023, 09:21 AM), https://osf.io/adw2n [https://perma.cc/9MVV-BR2J]. The study data is also available at the same site. A total of 501 participants were recruited from Prolific.co and compensated $1.00 ($12.00/hr) for a 5-minute task. To be eligible, participants must have completed at least 10 tasks on Prolific, with a 100% approval rating, and they must currently reside in the United States.

Within the study, there were several check questions. First was a simple attention check question, which asked participants to select the answer “purple” in a long list of colors. There was also a manipulation check, clearly labeled as an “attention check”: “Attention check question: According to the story, which of the following statements is correct?” The options were “it is very important that Bob and his wife deposit their money” [correct answer in high-stakes condition] and “it is not very important that Bob and his wife deposit their money” [correct answer in low-stakes condition]. Later in the study, there was a third multiple choice attention check: “Alex is taller than Sam, and Sam is taller than John. Who is the shortest?” [correct answer = “John”; incorrect answers = “Alex,” “Sam,” “They are all the same height”]. Finally, all participants were asked to complete a CAPTCHA. Participants who answered any one of these questions incorrectly were excluded from the analyses. Thirty-two (out of 501; i.e., 6%) participants were excluded from these criteria.

3.  Results

A total of 469 participants were included in the data analysis (mean age = 39.58; 50% men, 48% women, 1% non-binary).

A binomial logistic regression revealed an effect of Stakes on knowledge. Participants attributed knowledge less in high-stakes cases (prob. = 0.86, 95% CI = [0.81, 0.90]) than in low-stakes cases (prob = 0.95, 95% CI = [0.91, 0.97]), odds ratio = 0.35, 95% CI = [0.18, 0.70], z = -2.99, p = 0.003.165See infra Figure 1.

Figure 1.

Figure 1. Percentage attributing knowledge (top panel) and strict knowledge (bottom panel), in low- and high-stakes bank cases. In the high-stakes case, knowledge attributions were slightly (about 10%) lower. Overall, the majority of participants attributed knowledge in low- and high-stakes cases.

A binomial logistic regression revealed an effect of Stakes on strict knowledge. Participants attributed strict knowledge less in high-stakes cases (prob. = 0.66, 95% CI = [0.60, 0.71]) than in low-stakes cases (prob = 0.78, 95% CI = [0.72, 0.83]), odds ratio = 0.55, 95% CI = [0.37, 0.83], z = -2.85, p = 0.004.166See supra Figure 1.

A multinomial logistic regression examined the effect of Stakes (low, high) and Rule Type (Clear, Ambiguous 1, Ambiguous 2, Unclear) on judgment of the bank rule’s clarity (clearly open, clearly closed, unclear). First, consider the effect of Stakes. Comparing clearly open and clearly closed responses, there was no effect of Stakes, z = 0.06, p = 0.956. Comparing clearly closed and unclear responses, there was no effect of Stakes, z = 0.38, p = 0.705. Next, consider the effect of Rule Type. Comparing clearly open and clearly closed responses, there was a significant effect of the clear versus unclear rule, z = -3.07, p = .002. There was no significant effect among the other rule types, |zs| < 0.21, ps > 0.8. Comparing clearly closed and unclear responses, there were no significant rule type effects, |zs| < 0.2, ps > 0.85. Finally, there were no significant Stakes * Rule Type interactions, |zs| < 0.41, ps > 0.68.167See infra Figure 2.

Figure 2.

Figure 2. Percentage attributing a clear meaning (open or closed) or unclarity for four different rules in low- and high-stakes cases. There were large and significant differences among the rules’ perceived meaning: the “Obviously Clear” and “Ambiguous 2” rules were generally understood to mean clearly open; the “Ambiguous 1” rule was understood to be unclear or mean clearly open; and the “Obviously Unclear” rule was unclear. However, there was no impact of high stakes on clarity judgments for any type of rule, whether the rule was clear (for example, Obviously Clear), ambiguous (for example, Ambiguous 1), or unclear (for example, Obviously Unclear).

4.  Discussion

The results regarding stakes and knowledge are consistent with the prior literature. Some previous studies have found a small effect of stakes on knowledge in the United States.168E.g., Rose et al., supra note 34, at 235 (finding a small pattern in the U.S., but not in most other countries). Here, we find a similar small effect: In the low-stakes bank case, 95% attribute knowledge, but in the high-stakes bank case, this number drops to 86%. The “strict knowledge” measure reflects a similarly sized difference (78% versus 66%).

i.  Is Knowledge “Sensitive” to Stakes?

The empirical results clarify the importance of refining this philosophical question: What is it for ordinary knowledge to be “sensitive to stakes”? One (weak) interpretation is that in some circumstances, for some people, stakes affect knowledge attributions. A stronger interpretation is that for most or all people, there are some cases in which knowledge is lost in high-stakes contexts. The strongest interpretation is that in many or most circumstances, high stakes defeat knowledge (for many or most people).

Once we have greater philosophical clarity about what it means to say knowledge is sensitive to stakes, we can analyze those theses in light of the empirical results. The results here straightforwardly provide support for the weak interpretation: the high-stakes manipulation affects (some participants’) attributions of knowledge. But the results do not support the “stronger” or “strongest” interpretations. The vast majority of participants attributed knowledge in low- and high-stakes cases. And even for the “strict knowledge” question, most participants still judged that there was (strict) knowledge in the high-stakes scenario. In other words, for the vast majority of participants, stakes did not impact knowledge.

ii.  Do High Stakes Reduce Clarity?

The results provide a more straightforward answer to this question. The high- versus low-stakes manipulation had no impact on whether people understood rules to be clear or unclear. Importantly, we used four types of rules, which varied in their basic level of clarity. With respect to whether the bank is open Saturday, “the bank is open on Saturday” is obviously clear; “the bank is closed on Sunday” is ambiguous; “the bank is closed only on Sundays and federal holidays” is ambiguous;169Note, we hypothesized that this rule has some ambiguity, given that the scenario does not specify whether the following Saturday is a federal holiday. Participants generally overlooked this possibility or assumed that the next day was not a holiday. Thus, the “Ambiguous 2” stimulus could be treated as another example of “obviously clear” text. The “Ambiguous 1” rule was much more often understood as unclear. and “the bank is open during regular business hours” is unclear. For all of these rules, high stakes did not increase the base level of unclarity.170See supra Figure 2.

B.  Ordinary Understanding of Delegations: The Babysitter Case

The second study examines how ordinary Americans understand delegations in an ordinary context. This Study takes inspiration from Justice Barrett’s recent concurrence in Biden v. Nebraska, which offered a new linguistic defense of the MQD.

1.  General Overview

The second study examined Premise 5 from Justice Barrett’s argument, the second empirical premise: When assessing whether an agent has followed or disobeyed a rule granting authority to perform some actions, do ordinary people restrict the rule’s literal meaning to only the set of most reasonable actions (absent additional context)?171See supra Section I.C. Study 2 examines this question by presenting participants with an ordinary rule granting authority, followed by one of five possible actions. These five actions varied in their anticipated reasonableness, and we examined whether participants evaluated each as following or violating the rule.

As in Study 1, we sought to minimize our researcher degrees of freedom by relying on existing and important test cases that have been offered by advocates of the linguistic MQD. For Study 2, we chose Justice Barrett’s “babysitter” hypothetical, as well as Justice Barrett’s proposed “major” action: a babysitter taking children to an amusement park in response to the instruction “Use this credit card to make sure the kids have fun this weekend.”

We randomly varied the conventional gender of the parent’s name (Patrick or Patricia) and babysitter’s name (Blake or Bridget). This did not affect rule violation judgment. Below is the text of the scenarios with the names Patricia and Blake:

Imagine that Patricia is a parent, who hires Blake as a babysitter to watch Patricia’s young children for two days and one night over the weekend, from Saturday morning to Sunday night. Patricia walks out the door, hands Blake a credit card, and says: “Use this credit card to make sure the kids have fun this weekend.”

Next, the scenario continued in one of five ways:

[MISUSE] Blake only uses the credit card to rent a movie that only he watches; Blake does not use the card to buy anything for the children.

[MINOR] Blake does not use the credit card at all. Blake plays card games with the kids.

[REASONABLE] Blake uses the credit card to buy the children pizza and ice cream and to rent a movie to watch together.

[MAJOR] Blake uses the credit card to buy the children admission to an amusement park and a hotel; Blake takes the children to the park, where they spend two days on rollercoasters and one night in a hotel.

[EXTREME] Blake uses the credit card to hire a professional animal entertainer, who brings a live alligator to the house to entertain the children.

All scenarios concluded with:

The kids have fun over the weekend.

We anticipated that the five scenarios would be seen as varying in their “reasonableness” as a response to the rule “Use this credit card to make sure the kids have fun this weekend,” with the REASONABLE scenario as maximal and the others as less reasonable. As we describe below, this prediction was borne out.

In all of the questions, we randomly varied whether the scenario described the parent’s directive as an “instruction” or “rule.” This also had no effect on rule violation judgment. Below we present the questions using the term “instruction.” After reading the scenario, participants first answered a comprehension question:

Attention check question: According to the story, which of the following statements is correct?

[CORRECT] Patricia’s instruction was “Use this credit card to make sure the kids have fun this weekend.”

Patricia’s instruction was “Do not use this credit card to make sure the kids have fun this weekend.”

Patricia’s instruction was “Use this credit card for anything this weekend.”

Patricia’s instruction was “Do not use this credit card for anything this weekend.”

Next, participants answered the rule violation question:

[Rule Violation] In your personal opinion, which better describes this situation?

Blake followed the instruction.

Blake violated the instruction.

We also measured participants’ judgment of the rule’s literal meaning and purpose.172[Literal Meaning] “Think about what the instruction ‘Use this credit card to make sure the kids have fun this weekend’ means literally. In your personal opinion, did Blake’s actions comply with or violate the literal meaning of the instruction? Blake complied with the rule’s literal meaning; Blake violated the rule’s literal meaning” and [Purpose] “Think about the underlying purposes of Patricia’s instruction. In your personal opinion, did Blake’s actions support or oppose the instruction’s underlying purposes? Blake’s actions supported the instruction’s underlying purpose; Blake’s actions opposed the instruction’s underlying purposes.” Finally, we measured participants’ evaluation of whether the babysitter’s action was a reasonable response to the instruction:

[Reasonableness] Think about how Blake responded to Patricia’s instruction. In your personal opinion, is this an unreasonable or reasonable way to respond to that instruction?

(completely unreasonable) 1  2  3  4  5  6  7 (completely reasonable)

2.  Methodological Details

As for Study 1, all Study 2 materials, hypotheses, exclusion criteria, and primary analyses were preregistered at Open Science.173See Tobia, supra note 164. The study data is also available at the same site. A total of 500 participants were recruited from Prolific.co and compensated $1.00 ($12.00/hr) for a 5-minute task. To be eligible, participants must have completed at least 10 tasks on Prolific, with a 100% approval rating, they must currently reside in the United States, and they must not have taken Study 1. Within the study, there were the same two check questions used as exclusion criteria in Study 1 (attention check and transitivity) and the new comprehension check described in the previous Section. Twenty-four (out of 499; i.e., 4.8%) participants were excluded with this criteria.

3.  Results

A total of 475 participants were included in the data analysis (mean age = 37.74; 48% men, 50% women, 2% non-binary).

First, we examined whether the five acts differed in their perceived reasonableness with respect to the rule. A linear regression revealed significant effects of the Action (misuse, minor, reasonable, major, extreme). Compared to ratings for the “reasonable” act (buying pizza and a movie for the kids), ratings for the misuse act (buying a movie for only the babysitter) were significantly lower, β = -1.67, 95% CI = [-1.89, -1.46], p < .001; ratings for the minor act (playing cards rather than purchasing anything) were significantly lower, β = -0.48, 95% CI = [-0.69, -0.27], p < .001; ratings for the major act (purchasing the amusement park trip) were significantly lower, β = -1.03, 95% CI = [-1.24, -0.82], p < .001; and ratings for the extreme act (purchasing the alligator entertainer) were significantly lower, β = -1.77, 95% CI = [-1.98, -1.56], p < .001.174See infra Figure 3.

Figure 3.

Figure 3: Reasonableness Ratings. Ordinary judgments of an action’s reasonableness in the babysitter hypothetical. Higher scores indicate greater reasonableness (1–7 scale).

Next, we examined which of the five acts participants understood as instances of following or disobeying the instruction. A binomial logistic regression revealed effects of Act type on rule violation. For the misuse case, rule following prob. = 0.15, 95% CI = [0.09, 0.24]; for the minor case, rule following prob. = 0.51, 95% CI = [0.41, 0.61];175This differed significantly from the misuse case, odds ratio = 5.88, 95% CI = [2.94, 11.79], z = 5.00, p < 0.001. for the reasonable case, rule following prob. = 1.00, 95% CI = [0.00, 1.00];176All participants in the reasonableness condition answered, “rule followed.” for the major case, rule following prob. = 0.92, 95% CI = [0.84, 0.96];177This differed significantly from the misuse case, odds ratio = 62.07, 95% CI = [24.73, 155.79], z = 8.79, p < 0.001. and for the extreme case, rule following prob. = 0.90, 95% CI = [0.82, 0.94].178This differed significantly from the misuse case, odds ratio = 49.66, 95% CI = [20.88, 118.11], z = 8.83, p < 0.001.

Table 1.
CaseWas the rule violated?Was the action reasonable (7) or unreasonable (1)?
Reasonable0%6.84 (Most reasonable)
Minor49%5.83 (Highly reasonable)
Major8%4.68 (Reasonable)
Misuse89%3.32 (Unreasonable)
Extreme10%3.12 (Unreasonable)
Note: Table 1 represents the proportion of participants judging that the action violated the rule and the estimated marginal mean ratings of the action’s reasonableness. Some actions that were not the most reasonable (for example, major, extreme) were seen as largely consistent with the rule; others that were seen as fairly reasonable (for example, minor) were also seen as inconsistent with the rule
4.  Discussion

This Study aimed to test the empirical claims underlying the “babysitter hypothetical,” an example that has been used to support claims in a linguistic defense of the MQD.

i.  Do People Understand Different Actions to Vary in Their Reasonableness as a Response to the Rule “Use This Credit Card to Make Sure the Kids Have Fun This Weekend”?

Yes. People evaluated some actions as highly reasonable, such as buying pizza and a movie for the kids. Other actions appeared less reasonable, like taking the kids to an amusement park or simply playing cards (and not buying anything). Others were even less reasonable, such as hiring an alligator entertainer or using the card to only purchase something for the babysitter. These results are unsurprising, but this variation is essential to test the key claim that the babysitter hypothetical has been offered to demonstrate.

ii.  Do People Understand Authorizing Rules to Be Limited to Only the Set of Most Reasonable Actions?

No. Although people evaluate Justice Barrett’s “major” action (taking the kids to an amusement park) as less reasonable than at least one alternative, they nevertheless understand it as consistent with the rule. Moreover, people evaluated the even more extreme example of bringing a live alligator to the house as consistent with the rule.

To be sure, people did rule out some actions as impermissible. In particular, the respondents overwhelmingly said that misuse of the credit card for the babysitter’s benefit rather than that of the children violated the rule. They also divided roughly evenly over the babysitter’s decision to forgo using the credit card at all. We will have more to say about these interesting patterns in Part IV,179See infra Part IV. but for now, the most important thing to note is that two of the less reasonable actions that tested the boundaries of the instruction were nevertheless deemed to be within the parent’s rule.

iii.  Why Do People’s Judgments About an Act’s Reasonableness and Rule Violation Differ?

Our survey also included questions about the rule’s literal meaning and the rule’s purposes. First consider reasonableness judgments by considering the results for purpose and literal meaning. Figure 4 presents the results for the purpose question. On inspection, this pattern of purpose attributions across actions is similar to the pattern of reasonableness ratings (Figure 3): actions seen as more reasonable were also the ones seen as most supportive of the rule’s purposes. The ratings for purpose and reasonableness, r = 0.63, 95% CI = [0.57, .0.68], p < .001, were more highly correlated than the ratings for purpose and literal meaning, r = 0.39, 95% CI = [0.31, .0.47], p < .001.

Next consider judgments about rule violation. Both literal meaning and purpose were correlated with rule violation judgment, but rule violation was more strongly correlated with literal meaning, r = 0.67, 95% CI = [0.62, .0.72], p < .001, than purpose, r = 0.49, 95% CI = [0.42, .0.56], p < .001.

Figure 4.

Figure 4: Purpose Ratings. Ordinary judgments of whether an action supports (rather than opposes) the rule’s purposes in the babysitter hypothetical.

These analyses are exploratory and further work is required to more fully understand the differences in participants’ judgments about whether an action is reasonable and whether it violates a rule, but the Study here clearly shows a difference in these judgments.180See supra Table 1. The question of whether the rule was violated and the question of whether the action was a reasonable response to the rule are understood differently by ordinary people: These questions are not synonymous. The comparisons to the purpose measure suggest a stronger relationship between reasonableness and purpose than rule violation and purpose.

Textualists concerned with the ordinary meaning of rules would presumably favor the rule violation question over the reasonableness question. Textualists who place significant weight on whether an action was “reasonable” with respect to a rule may be incorporating purposive reasoning, which is not as clearly relevant to ordinary people’s straightforward understanding about whether an act violates a rule.

The results reported here about laypeople’s rule violation judgments are consistent with prior work. Previous studies have found that both text (operationalized as literal meaning) and purpose influence rule violation judgment, but the former has a stronger influence.181Ivar R. Hannikainen, Kevin P. Tobia, Guilherme da F. C. F. de Almeida, Noel Struchiner, Markus Kneer, Piotr Bystranowski, Vilius Dranseika, Niek Strohmaier, Samantha Bensinger, Kristina Dolinina, Bartosz Janik, Eglė Lauraitytė, Michael Laakasuo, Alice Liefgreen, Ivars Neiders, Maciej Próchnicki, Alejandro Rosas, Jukka Sundvall & Tomasz Żuradzki, Coordination and Expertise Foster Legal Textualism, 119 Proc. Nat’l Acad. Scis., no. 44, 2022, at 1, 6; Kevin Tobia, Experimental Jurisprudence, 89 U. Chi. L. Rev. 735, 783–91 (2022) (summarizing research on lay judgment about legal interpretation). See generally Guilherme da Franca Couto Fernandes de Almeida, Noel Struchiner & Ivar Hannikainen, Rules, in Cambridge Handbook of Experimental Jurisprudence (Kevin Tobia ed., forthcoming 2024) (reviewing recent empirical studies about the effect of text and purpose on laypeople’s rule violation judgments). In sum, ordinary people lean towards textualism, but not the “common sense” limitations claim at the heart of the linguistic MQD.

C.  Objections

This Section considers the two primary objections that have been raised in print about the results since we first circulated a draft of this Article.

1.  Objection 1: Subjects Must Be Sensitive to Stakes

One objection concerns stakes sensitivity. Wurman writes, “In conversation, Ryan Doerfler has pointed out that it does not appear that the participants [in this Article’s Study 1] were asked whether the rule was clear to Bob, as opposed to themselves, and Bob is the one sensitive to stakes in the example.”182Wurman, supra note 8, at 961 n.271.

It is not clear why this observation constitutes an objection. One version of this objection is that only the judgments of those directly impacted by the stakes are relevant to legal theory, and because our study’s participants are not themselves impacted by the bank’s closure, their judgments about knowledge and clarity are not useful. This objection proves too much. The legal literature theorizing the effects of stakes-on-knowledge and stakes-on-clarity draws heavily on philosophical thought experiments (especially the bank case about Bob). None of these examples involve high stakes for the thought experimenter. The stakes are always for the subject described in the scenario, like Bob. The assumption is that those considering the scenarios can evaluate the significance of stakes (for some other person). If this objection undercuts our experiments, it also undercuts the merit of the original philosophical thought experiments offered to support Wurman’s argument.

A different way to elaborate this observation into an objection is to propose that (1) there is a more subjective relationship between stakes and clarity and (2) that (subjective sense) of clarity is relevant to legal interpretation. For a particular judge, that judge’s determination of clarity depends on the practical stakes to that particular judge. We do not have the space to fully engage with the merits of this theory, but some of its consequences are unusual. Because the subjective practical stakes of a decision may vary between judges, on this subjective view of stakes and clarity, such differences in subjective stakes would appropriately correspond to differing evaluations of clarity. A judge experiencing high practical stakes could deem a text unclear, while a judge experiencing lower practical stakes could deem the same text clear. However, many would think that whether a legal text is clear or unclear (in the sense relevant to legal interpretation) should not vary among judges in this way.183See Richard M. Re, A Law Unto Oneself: Personal Positivism and Our Fragmented Judiciary, 110 Va. L. Rev. (forthcoming 2024) (manuscript at 5), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4687303 [https://perma.cc/E6DW-U4P2] (acknowledging that the dominant approach in jurisprudence is to “identify a ‘general’ theory of law that assertedly applies to most or all legal systems” but also arguing for the possibility and desirability of some degree of “personal” law implemented by judges). On this highly subjective view, to predict whether a law is correctly identified as “clear” (in the eyes of a particular judge), one must know what practical stakes the (particular) judge faces.

Although we find this an unusual view about what clarity means in current legal interpretation, this objection’s underlying claim is an empirically testable one. As such, we investigate this empirical question as a robustness check: Do stakes affect people’s judgment about whether the rule is clear to Bob?

2.  Objection 2: Only Parents’ Views About the Babysitter Hypothetical Count

A recurring objection to our study about the babysitter hypothetical concerns the population surveyed. Both Josh Blackman and Ilan Wurman have suggested that the appropriate audience for Justice Barrett’s hypothetical is parents.184See Josh Blackman, Major Questions or Lax Parents?, Reason (July 27, 2023, 10:28 PM), https://reason.com/volokh/2023/07/27/major-questions-or-lax-parents [https://perma.cc/J74R-XGX7] (“Justice Barrett . . . may be referring to people who are familiar with the process of hiring babysitters. . . . Diversity of views is very important. One facet of diversity is having children.”); Wurman, supra note 8, at 961 n.271 (“It would be worth testing how many participants would agree that the instruction was followed if they were the parents.”). Because Justice Barrett’s hypothetical involves a parent, the objection goes, we should look to (only) the views of parents in understanding the meaning of the parent’s instruction.

Our original study did not collect data about participant’s parental status because we see it as irrelevant to the legal theory debate about the ordinary meaning of the parent’s instruction to the babysitter—more on that below. However even if we had that data in the first study, it is extremely unlikely that filtering by parental status would result in a different bottom line result given that the overall results lean so strongly in one direction.185Consider a back-of-the-envelope calculation. Only 8% of participants responded that the babysitter who took the children to an amusement park violated the rule. Assume, favorably to the objectors, that these 8% of responders all had children. The majority of all parents’ responses would favor the babysitter hypothetical intuition if at least 92% (85/92) of the other participants did not have children. This would imply that, at most, 16% of all participants had children. Given that we recruited a sample of Americans, it is likely that much more than 16% had children. Only 8% of participants shared the intuition that the babysitter violated the parent’s instruction, and of the other 92% of participants, it is unlikely that that the vast majority (say 90%) did not have children. In the next Section, we present a new study that collects this additional demographic data. The results do not vary depending on parental or babysitter-hiring status.

Our more fundamental responses to this objection are theoretical and appeal to longstanding principles of interpretation. First, consider the question of audience: Should the babysitter hypothetical be limited to parents? That is, should textualist interpretation’s “ordinary reader” be limited to only a small subset of ordinary readers?

First, the objection assumes the wrong interpretive perspective. In Justice Barrett’s hypothetical, the parent is the lawgiver and the babysitter is the audience. But the correct textualist focus, according to Justice Barrett, is on interpretation from the “outside[],” not from the “inside[].”186See Barrett, supra note 17, at 2194. Textualists typically view interpretation from the perspective of a “hypothetical reasonable person,” not from the perspective of the lawgiver. Fidelity to the text of the statute, as understood by an ordinary reader, is the best way to remain a faithful agent of Congress (or, as Justice Barrett would have it, as a faithful agent of the people). Thus, even if one specific focus in the babysitter hypothetical were deemed more appropriate, for modern textualists that focus would more likely be that of a babysitter (the instruction’s reader), not a parent (the instruction’s author).187See Tara Leigh Grove, Testing Textualism’s “Ordinary Meaning”, 90 Geo. Wash. L. Rev. 1053, 1057 (2022).

Second, textualists do not subdivide the general class of ordinary people that determines ordinary meaning. Instead, the “Supreme Court tends to employ a one-size-fits-all approach to interpretation.”188David Louk, The Audiences of Statutes, 105 Cornell L. Rev. 137, 193 (2019). We recognize the importance of interpretive communities and the observation that statutes have audiences.189See generally id. (arguing that the varied audiences of statutes may have differing expectations about statutory meaning). However, the concept of audience is most often used in textualist theory and otherwise to support the use of technical meanings (instead of ordinary meanings) for certain specialized statutes. Otherwise, the same statute might mean different things to the different groups subject to it, a position that Justice Scalia (writing for the Court) condemned.190Clark v. Martinez, 543 U.S. 371, 380 (2005) (rejecting the argument that the same statutory provision can have a different meaning depending on the group subject to it). The proposal to find ordinary meaning only in the views of the people most directly implicated by the law is thus a radical departure from modern textualism.

This suggestion (the legal interpretive equivalent of “ask only parents”) also strikes us as unworkable. If an interpreter aimed to limit “ordinary meaning” to the meaning a statute has to the people most directly impacted by it, how do we identify the people in this community? Even in Justice Barrett’s more straightforward babysitter hypothetical (and again setting aside that the babysitter is the audience, not the parent), we could ask: Are the relevant readers all parents, parents who go away for weekends, parents who can also afford babysitters, parents who would be willing to hand a credit card to a babysitter, or parents who would be willing to hand a credit card to a babysitter with limited instructions?

Even if the relevant subcommunity could be identified, it is not clear a judge would be well positioned to identify this narrow subcommunity’s understanding. If the textualist interpretive inquiry shifted from one about ordinary meaning to one about “ordinary meaning for only the audience most directly impacted by this statute,” might judicial intuition be especially unreliable if judges were not part of this latter subcommunity?

This suggestion becomes more bizarre as we shift from the babysitter hypothetical to real legal examples. In Biden v. Nebraska, who is the relevant interpretive community of people: the Department of Education, people with student loans, or some other group? If we take this objection and analogy seriously, it seems we should ask who is the “parent” in Biden v. Nebraska? Presumably, it is Congress. Do Blackman and Wurman suggest that Congress’s views are most relevant in interpretation? If so, this objection offered by Justice Barrett’s defenders, emphasizing a narrow subgroup of people who give or implement this instruction, is inconsistent with Justice Barrett’s broader approach to interpretation, which emphasizes judges as faithful agents of the “people,” not Congress.191See supra notes 186–87 and accompanying text.

In sum, the objection to “ask parents” about the babysitter hypothetical is not persuasive. Theoretically, the legal-interpretive analogue to “ask parents” is unmotivated, unworkable, and inconsistent with modern textualism. Nevertheless, we address this objection in the next part of this Section, in a replication study that asks for the participants’ parental status. Empirically, the results are no different for participants who are parents or who have hired a babysitter.

3.  An Additional Empirical Study

We are not persuaded by the theory underlying these two objections, but we are grateful to those who have raised them. And, setting the theoretical issues aside, it is possible to test these objections empirically. To do so, we conducted one final study.

Five hundred participants were recruited from Prolific to complete Study 1 and Study 2, with a few minor modifications aimed at addressing the objections described previously. A total of 445 participants passed the same attention checks described in Study 1 and Study 2 above and were included in the analysis (mean age = 37.9, 47% men, 51% women, 2% nonbinary). The final demographics section also asked about whether the participants had children (38% yes, 59% no, 2% prefer not to respond), had hired a babysitter (21% yes, 77% no, 2% prefer not to respond), and had worked as a babysitter (48% yes, 51% no, 1% prefer not to respond).

i.  Testing Clarity to Bob (the Agent Sensitive to Stakes)

Participants first read the Study 1 materials concerning Bob and the bank. They were again randomly assigned to high or low stakes and one of the four rule types (Obviously Clear, Ambiguous 1, Ambiguous 2, Obviously Unclear). Participants answered the same questions about knowledge and strict knowledge, as well as a new question that Wurman recommends about clarity to Bob:

[Clarity to Bob] Now imagine that Bob’s wife uses her phone to search for the bank’s policy. She finds a website for the local bank branch. The website’s text states [rule text varying by scenario].

Consider Bob’s perspective on this scenario.

Is this rule’s meaning clear or unclear to Bob concerning whether the bank is open?

Clear: The bank is open on Saturday.

Clear: The bank is not open on Saturday.

Unclear

A multinomial logistic regression examined the effect of Stakes (low, high) and Rule Type (Clear, Ambiguous 1, Ambiguous 2, Unclear) on judgment of the bank rule’s clarity to Bob (clearly open, clearly closed, unclear). First, consider the effect of Stakes. Comparing clearly open and clearly closed responses, there was no effect of Stakes, z = 0.95, p = 0.341. Comparing clearly closed and unclear responses, there was no effect of Stakes, z = 1.26, p = 0.209. There was no significant effect of Rule Type and no significant Stakes * Rule Type interactions.

The results for these questions about whether the rule is clear to Bob also show no effect of stakes. For the Obviously Clear rule, stakes did not affect judgments of clarity to Bob (2% of participants selected unclear in high stakes; 2% in low stakes); for the Ambiguous 1 rule, stakes did not affect judgments of clarity to Bob (29% of participants selected unclear in high stakes; 38% in low stakes); for the Ambiguous 2 rule, stakes did not affect judgments of clarity to Bob (4% of participants selected unclear in high stakes; 12% in low stakes); and for the Obviously Unclear rule, stakes did not affect judgments of clarity to Bob (61% of participants selected unclear in high stakes; 59% in low stakes).

The results for knowledge and strict knowledge were similar to the results found in Study 1. A binomial logistic regression revealed an effect of Stakes on knowledge. Participants attributed knowledge less in high-stakes cases (prob. = 0.85, 95% CI = [0.80, 0.89]) than in low-stakes cases (prob = 0.94, 95% CI = [0.89, 0.96]), odds ratio = 0.38, 95% CI = [0.19, 0.73], z = -2.89, p = 0.004. A binomial logistic regression revealed an effect of Stakes on strict knowledge. Participants attributed strict knowledge less in high-stakes cases (prob. = 0.64, 95% CI = [0.58, 0.70]) than in low-stakes cases (prob = 0.81, 95% CI = [0.75, 0.86]), odds ratio = 0.42, 95% CI = [0.27, 0.65], z = -3.91, p < 0.001.

In sum, one objection to our original Study 1 is that it fails to ask the right question about clarity: it should ask whether the text is clear to Bob, not clear in general. This follow-up study tested that question about clarity to Bob, finding identical results: participants’ judgments about clarity to Bob were not sensitive to high stakes.

ii.  Parents Only

The second objection is that we should consider only the views of parents. Consider the results of the same study, replicated, broken out by whether participants are parents, and have hired a babysitter.192See infra Table 2.

Table 2.
CaseViolation: All ParticipantsViolation: Parents OnlyViolation: Hired Babysitter OnlyWas the act reasonable (7) or unreasonable (1) (All Participants)
Reasonable0%0%0%6.87
Minor30%26%33%6.23
Major8%7%10%4.41
Misuse81%79%84%3.21
Extreme21%18%25%3.00
Note: Table 2 represents the proportion of participants judging that the action violated the rule and the estimated marginal mean ratings of the action’s reasonableness.

Comparing across all participants, parent participants, and those who have hired babysitters, the results are essentially identical. Participants generally disagreed that the babysitter violated the rule/instruction by taking the children to an amusement park overnight, and this did not depend on whether those participants were themselves parents or had hired a babysitter.

4.  Additional Objections

We have responded to the two major objections leveled against the studies since we made a draft of this Article public. However, there are two other objections that strike us as worth pursuing, but which we do not have the space to fully explore here.

The first is that in our babysitter experiment, we should have asked a different question. As a reminder, we asked “which better describes this situation?”—that the babysitter “followed” the instruction/rule or “disobeyed” the instruction/rule? This strikes us as a straightforward way to capture textualists’ concern: What does the rule mean to the ordinary reader? Wurman suggests that we should have asked other questions, like whether participants agree that the instruction “include[s] authorization” to undertake this action, or whether participants think “ordinary, reasonable interpreters of this parent’s instruction would have interpreted it to include this scenario.”193Wurman, supra note 8, at 961 n. 271. (“The question’s framing effectively required the participants to answer whether the babysitter literally violated the instruction. And the answer is of course not. But if the question had been asked another way—‘does the best reading of the parent’s instruction include authorization to undertake this action?’ or ‘do you think the parent’s instruction was intended to include this scenario?’ or ‘do you think ordinary, reasonable interpreters of the parent’s instruction would have interpreted it to include this scenario?’—the answer almost certainly would have been different.”). Wurman does not motivate these suggestions with much theory, and it is not obvious why these phrasings would identify participants’ understanding of the meaning of the rule. For example, recall that there are many theories of interpretation: textualism, purposivism, and consequentialism. It is not obvious that most people think the “reasonable interpreter” is a textualist. Perhaps people think that the “ordinary reasonable interpreter” is not a pragmatist. If so, asking people about their views of “the reasonable interpreter” would reliably generate non-textualist judgments.

Nevertheless, in our third study, we also asked these two additional questions: (1) “In your personal opinion, which better describes this situation?”—(a) The parent’s instruction/rule “authorized” the babysitter “to undertake this action”; or (b) The parent’s instruction/rule “did not authorize” the babysitter “to undertake this action”; and (2) “In your personal opinion, which better describes this situation?”—(a) “An ordinary person interpreting” the parent’s instruction/rule “would understand it to allow what” the babysitter did; or (b) “An ordinary person interpreting” the parent’s instruction/rule “would not understand it to allow what” the babysitter did. The results did not differ in the dramatic way that Wurman predicts. For the first authorization question, 85% of participants agreed that the “major” action was authorized. For the second “reasonable interpreter” question, a majority (57%) agreed that this reasonable interpreter would give the textualist response to the major action case: the reader would understand the instruction/rule to allow what the babysitter did.

A final objection states that the parent-babysitter analogy is a poor analogy for the Congress-agency relationship. This objection is sometimes offered as a critique of the MQD, not a defense, and as a reason why we should not indulge a faulty analogy. Less frequently, it is raised as a defense to the MQD—suggesting that the context of a real-world delegation would surely include consideration of constitutional structure.194See generally Chad Squitieri, Placing Legal Context in Context (Oct. 23, 2023) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4610078 [https://perma.cc/G7CL-UZBV]. We find the basic point that context matters persuasive, but the muscular vision of ordinary understanding of legal context that Squitieri offers raises serious problems. It cannot be the case that the MQD is supported because an “ordinary” reader who studied the question of congressional delegation closely enough might become skeptical of the delegation of major power to agencies. First, questions of delegation are highly contested on many grounds—even trained lawyers and judges disagree vehemently about the legality and propriety of delegation. See Julian Davis Mortenson & Nicholas Bagley, Delegation at the Founding: A Response to the Critics, 122 Colum. L. Rev. 2323, 2323 (2022) (providing an overview of contemporary debates about the original public meaning of the Constitution’s vesting of legislative power in Congress). Second, on Squitieri’s approach, there must be some limit on the amount of legal context that can be assumed to be known by the “ordinary” reader. Otherwise, there would be nothing constraining judges in the elucidation of matters of ordinary meaning through their own trained, but highly subjective, minds. Ultimately, if the concept of the ordinary reader is to do any work within a textualist theory that constrains judges, it must provide some limits on the amount of legal context that can be assumed by the judge. We are exploring the idea that the babysitter hypothetical misses important relevant context to the evaluation of delegations in a future piece, but for now we set it aside. This Article takes the babysitter hypothetical from Biden v. Nebraska on its own terms. For readers that are skeptical that such an analogy provides insight into the meaning of statutory language, our study offers a second line of critique: the analogy does not offer insight into statutory meaning, and even if it did, its assumption about ordinary readers is faulty.

IV.  IMPLICATIONS

The recent pivot to a linguistic defense of the MQD is a watershed moment for two fields of law that often intersect: statutory interpretation and administrative law. Through the narrowest lens, the reframing of the MQD as “linguistic” attempts to insulate the nascent MQD from scrutiny as hypocritical anti-textualism, allowing conservative judges to use the doctrine to curb the power of the administrative state without turning in their textualist cards.195See supra Section I.A. But the move also resonates much more deeply. If accepted, the connection being drawn between ordinary people and the MQD would move textualism further towards an “outsider” orientation, with implications well beyond the narrow purview of the MQD.196See Barrett, supra note 17, at 2199; Tobia et al., Ordinary People, supra note 103, at 383. Likewise, if accepted, the linguistic defense of the MQD would tend to reinforce trends toward an explicitly “libertarian administrative law,”197Cass R. Sunstein & Adrian Vermeule, Libertarian Administrative Law, 82 U. Chi. L. Rev. 393, 393 (2015). backing it with the force of supposedly ordinary people’s commonsense understanding of how government should work.

The theoretical critiques and original empirical evidence presented thus far in this Article support skepticism about the arguments to adopt the MQD as linguistic. In this Part, we explain why, and we also reflect on what our evidence says more generally about the fields of statutory interpretation and administrative law.

We start in Section IV.A by discussing how our investigation and findings challenge the conclusion that the MQD is a valid linguistic canon. In light of existing empirical work, our new empirical studies, and our new theoretical analysis and objections, we conclude that the two “linguistic defenses” of the MQD do not have adequate empirical support or theoretical clarity to succeed. Of course, defenders of the MQD might propose new arguments or different evidence, but for now, it is difficult to see on what basis one could employ the MQD as a valid linguistic canon.

Section IV.B explains that Justice Barrett and Wurman’s attempts to establish the MQD as a linguistic canon raise serious challenges to textualism. Justice Barrett’s arguments about “common sense” and “context” are so general that they threaten to undermine textualism’s commitment to enforcing the rule of law by privileging semantic content, even when unexpected applications are at issue. In turn, Wurman’s defense of the MQD necessarily involves a broad conception of “ambiguity.” This broad framing of ambiguity has been criticized by Justices Scalia and Kavanaugh and, like Justice Barrett’s arguments, would result in courts using “ambiguity” as a pretext to avoid the semantic meanings of statutes.

Finally, Section IV.C addresses broader implications for administrative law and regulation. We have reservations about any strategy to ground judicial interpretation in “ordinary people’s” understanding of ordinary examples, especially for a topic as technical as administrative law. Nevertheless, for the sake of argument, we consider where such an “ordinary” approach should take textualist interpreters. Empirical evidence about ordinary understanding of law and language suggests a dramatically different approach than what Justice Barrett suggests for the MQD. Ordinary people understand broad delegations to include a wide range of reasonable actions consistent with the delegation. Moreover, our findings reveal something we did not expect: ordinary people are fairly skeptical that underimplementation of delegated authority is consistent with facially broad delegations. These facts do not support the MQD, but they might support other linguistic canons—many of which have more in common with Chevron than the MQD—and they may counsel some rethinking of administrative law’s indifference to agency inaction.

A.  The Major Questions Doctrine Is Not a Valid Linguistic Canon

The most immediate question motivating our studies is whether there is a valid basis for considering the MQD as a linguistic canon of statutory interpretation. As discussed above, canons are traditionally distinguished according to whether they are justified by normative or legal principles (in which case they are substantive) or whether they help determine the linguistic meaning of statutory language (in which case they are linguistic).198The conventional understanding of canons takes these options to be mutually exclusive: the MQD is either a linguistic canon, a substantive canon, or neither—but it cannot be both. See, e.g., Biden v. Nebraska, 143 S. Ct. 2355, 2376 (2023) (Barrett, J., concurring) (proposing that the MQD is a linguistic canon and noting skepticism about (all) substantive canons). Although a canon can be both substantive and linguistic,199Slocum & Tobia, supra note 37, at 70 (arguing that a canon could have both a valid linguistic and substantive basis). the MQD’s defenders have emphasized the MQD’s supposed linguistic properties because of growing concerns among textualists about both substantive canons generally and the MQD in particular. The existing empirical evidence reviewed in Part II and original empirical studies in Part III suggest this is a false start: the linguistic properties identified by the MQD’s defenders do not find support in the intuitions (or “common sense”) of ordinary people. Consequently, at least in the absence of further empirical studies, the MQD cannot, and should not, be defended as a valid linguistic canon capturing how ordinary readers understand delegating statutes.

1.  The Evidence Does Not Support a “High-Stakes” Linguistic Major Questions Doctrine
i.  High Stakes and Knowledge

Start with the theory that the MQD is justified on the grounds that, for ordinary people, the stakes of an interpretive dispute impact the text’s clarity.200Wurman, supra note 8, at 957. This argument begins by appealing to analytic philosophy and legal theory that posits a relationship between stakes and knowledge claims.201See, e.g., DeRose, supra note 24, at 914–15; Doerfler, supra note 25, at 523. The central example is the bank case: when little depends on the bank being open on Saturday, we know that it is open; but, when the stakes of the Saturday deposit are higher, we do not know that it is open.

However, a large empirical literature reports this claim to be false,202See supra Part II. and the entire philosophical literature to be “founded on a myth” about people’s reactions to these cases.203Schaffer & Knobe, supra note 34, at 675. Many studies find that high stakes have no effect at all on knowledge. Moreover, most of these studies use the exact case (the bank case) to which defenders of the linguistic MQD appeal.

The comparatively fewer studies that find an effect on knowledge report a small effect. In those studies, high stakes reduce knowledge for around 10% of participants, but not for the vast majority.204See, e.g., Rose et al., supra note 34, at 233. This Article’s new large empirical study (N = 500) finds a similarly small effect on knowledge, only a 9% difference between the low- and high-stakes cases.205See supra Section III.A.

Textualists are not always clear about how to construct their “ordinary reader,” but it is difficult to see how even this small difference (95% of people in low stakes agree there is knowledge, and 86% of people in high stakes agree there is knowledge) is sufficient to conclude that “the ordinary reader” has less knowledge in high-stakes contexts. For the vast majority of ordinary participants, high stakes have no impact on knowledge; the foundational premise in the “high-stakes” MQD seems to reflect an unordinary epistemology.

ii.  High Stakes and Clarity

The “high-stakes” argument for the linguistic MQD uses this (false) premise about knowledge as a theoretical foundation to support a technically distinct, and to date untested, claim that ordinary people follow the same epistemological pattern when making judgements about the clarity of statutory language. Assuming that people do this, the argument concludes that a high-stakes situation can render otherwise clear statutory language unclear.

The recent “high-stakes” legal interpretation literature seems to assume that statutory interpretation essentially involves a kind of knowledge claim, such that high stakes’ impact on knowledge necessarily carries over into the interpretive context.206See Wurman, supra note 8, at 957; Doerfler, supra note 25, at 523. Conceptually, we disagree with this literature’s equation of knowledge about a text’s meaning and textual clarity: language can be clear (in the relevant sense) even if laypeople do not have knowledge of its meaning. Consider books that report statements like: “The Art Nouveau movement preceded the Art Deco movement,” or “The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board.” Even if a layperson does not have full knowledge about what these statements mean (that is, cannot accurately assess the statements’ truth or falsity, or explain what they mean to someone in reasonable detail), this does not imply that the statements are in any way unclear (in the sense of appearing ambiguous or indeterminate) to that layperson. Our data (the only we are aware of on this point) is not consistent with this transitive logic.207See supra Section III.B. We found that high stakes have a small effect on knowledge, but no effect at all on textual clarity. This finding supports the conclusion that ordinary judgments of knowledge do not rise and fall consistently with ordinary judgments of textual clarity.

More importantly, we find that high stakes have no effect on clarity for texts of varied levels of baseline ambiguity. High stakes did not reduce ordinary people’s sense of clarity for a fairly clear text or even for texts that were initially more ambiguous.208See supra Section III.B. This finding challenges the more critical premise in the “high-stakes” MQD defense (concerning clarity, not knowledge).

Together, these two problems count against the “high-stakes” linguistic defense of the MQD. High stakes have (at best) a small impact on knowledge and no impact on clarity. We have also noted various other theoretical issues with the “high-stakes” linguistic argument. For example, even if high stakes had the hypothesized effects, it is not clear why reduced knowledge or textual clarity puts more weight on judges’ readings of the statutes or implies anti-agency interpretation rather than putting more weight on agency interpretations of the statutes.209See Wurman, supra note 8, at 954–55 and accompanying text.

2.  The Evidence Does Not Support an “Anti-Literalist” Linguistic Major Questions Doctrine
i.  The Data Do Not Support the Stronger Claim Necessary to the “Anti-Literal” Linguistic Major Questions Doctrine

The previously discussed considerations about anti-literalism210See supra Section II.B. are insufficient to support a strong conclusion about the MQD. Just because people sometimes interpret non-literally and display context sensitivity does not imply that courts should interpret general delegating language to authorize only a small subset of agency actions that fall under the text’s meaning. One could easily agree that (1) delegations should not always be interpreted literally, while also holding that (2) anti-literalism does not lead to the MQD.

In Section III.B, we reconstructed Justice Barrett’s argument in sufficient detail to deliver the MQD conclusion. We understood her key empirical claim to be the following: absent additional context, ordinary people understand rules that grant authority to an agent to have significant contextual limitations against all “major” actions; such a rule’s communicative content is limited to authorizing only the set of most reasonable actions. Here, an action is “major” if readers understand it, absent additional context, as not among the set of most reasonable ways to follow the rule. While this is a much stronger premise than mere anti-literalism, an even stronger premise is necessary to conclude that in MQD cases, absent additional context, judges should interpret delegations to exclude all major actions.

Our empirical study tested this claim about ordinary understanding of grants of authority.211See supra Section III.B. Here, we again sought to minimize researcher degrees of freedom and chose cases that have been offered by advocates of the linguistic MQD. In Study 2, we examined Justice Barrett’s “babysitter case.” We found that most ordinary people do not take the babysitter’s actions, that is, taking children on a multi-day trip to an amusement park, to be unauthorized by the parent’s instruction to use the parent’s credit card to ensure that the kids have fun over the weekend. To the contrary, 92% of respondents took the babysitter’s actions to be consistent with the rule/instruction. When we looked at a more extreme hypothetical—bringing a zookeeper to the house to entertain the kids with a live alligator—respondents judged the babysitter’s actions less reasonable but virtually just as authorized by the parent’s instruction to “make sure the kids have fun.”

However, our respondents did not simply think anything followed the rule. Fully 85% of them thought that the babysitter’s decision to use the credit card for something other than the children’s entertainment violated the instruction, and 49% believed that it was a violation of the instruction to entertain the children too little.

Importantly, these different actions varied in their perceived reasonableness. Participants agreed that it is more reasonable to respond to the parent’s instruction by buying the kids pizza, and less reasonable to take the kids to an amusement park or hire an animal entertainer. Nevertheless, participants judged that these latter actions—while not part of the most reasonable set of responses—are fully consistent with the rule.

Ultimately, these findings suggest that even if Justice Barrett is right that context matters for interpreting grants of authority to administrative agencies, that fact alone does not justify the strong MQD. To point to “common sense” and “context” may be entirely reasonable for a judge—we will have more to say about this in the next Section—but referring to them does not rule out “major” or less reasonable agency actions, at least in the minds of ordinary readers.

3.  Limits of the Evidence, and the Bottom Line

Our two studies test the central examples that have been offered by proponents of the MQD as a linguistic canon. Both of those arguments appeal centrally to claims about how ordinary readers understand language; neither of those claims is supported by the studies conducted here. Of course, this Article’s focus is on the linguistic arguments, not the many other defenses of the MQD.212See, e.g., Randolph J. May & Andrew Magloughlin, NFIB v. OSHA: A Unified Separation of Powers Doctrine and Chevron’s No Show, 74 S.C. L. Rev. 265, 289–91 (2022) (discussing the MQD as a separation of powers principle); Nathan Richardson, Keeping Big Cases from Making Bad Law: The Resurgent “Major Questions” Doctrine, 49 Conn. L. Rev. 355, 359 (2016) (discussing the MQD as a safety valve for Chevron deference). And concerning the linguistic case, we are open to future arguments and empirical studies: some future revision of a linguistic defense of the MQD could possibly succeed. In this Section, we briefly highlight some of the limits of our studies and the doors they leave open for proponents of the MQD. We also summarize our “bottom line” about the MQD.

i.  Substantive Arguments for the Major Questions Doctrine

First, and perhaps most obviously, our studies do not foreclose a substantive basis for the MQD. That is, rather than grounding the doctrine in how text is understood, proponents of the MQD might point to constitutional or normative values that should lead judges to depart from the best reading of statutory language when agencies take major actions. The fact that none of the other Supreme Court justices joined Justice Barrett’s concurrence might suggest that at least five justices are comfortable with the idea that the MQD is solely substantive rather than partly or entirely linguistic.

So far, the Court has not clearly articulated the substantive basis of this canon: for Justice Gorsuch, the source of normative substance appears to be the nondelegation doctrine; for Chief Justice Roberts, the source is general separation of powers principles. But this lack of clarity about from where the justices are drawing the MQD’s substantive content does not mean that the MQD might eventually come, through an incremental process, to coalesce around some common narrative that would suffice to justify the MQD as a substantive canon alongside the many other substantive canons that our legal system recognizes. Given the growing textualist skepticism of substantive canons, as well as the contestable premises of the nondelegation doctrine and separation of powers, we doubt that such a defense would be uncontroversial,213See Walters, supra note 12, at 521 (discussing the limits of the argument in favor of the MQD as simply another substantive canon). but this is a topic that falls outside the scope of this Article.

ii.  Linguistic but Non-Ordinary Arguments for the Major Questions Doctrine

Second, our studies focus on linguistic defenses that tie themselves explicitly to appeals to the construct of the “ordinary reader.” While we think this focus is defensible, given the larger textualist commitment to the ordinary reader as the anchor for interpretation,214See Barrett, supra note 17, at 2194. it is also possible to defend a linguistic MQD on the grounds that it represents some kind of generalization about how Congress likely intends delegating statutes to be interpreted. The move here is to ground the MQD in what Beau Baumann calls the “descriptive case”: that is, an empirical assertion about the ordinary context of delegating statutes and the way Congress operates when it passes delegating statutes.215Beau J. Baumann, The Major Questions Doctrine Fiction 11–12 (Mar. 14, 2023) (unpublished manuscript) (on file with authors).

Indeed, the Court in West Virginia v. EPA said as much when it cited a “practical understanding of legislative intent” as a basis for the MQD;216West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022). both Wurman and Justice Barrett nod to this possibility as well.217As Wurman, supra note 8, at 955–56 puts it:

Deliberate ambiguity benefits both parties when it comes to issues that are not sufficiently important as a general matter to scuttle an entire piece of legislation. But whether to tackle climate change through CO2 regulation, or to regulate cigarettes, or to allow a public health agency to prohibit evictions, are probably not the kinds of things legislators leave to strategic ambiguity; they are the kinds of things that one side wins and the other loses.
On Wurman’s account, it makes sense as a linguistic matter to bake this contextual evidence of how Congress treats important questions into our reading of delegating statutes—that is, to interpret ambiguous statutes as not intended to delegate important matters. Justice Barrett’s concurrence in Biden v. Nebraska makes a similar move. After noting that all interpreters seek to “situate[] text in context,” Justice Barrett posits that “[b]ackground legal conventions . . . are part of the statute’s context.”218Biden v. Nebraska, 143 S. Ct. 2355, 2378 (2023) (Barrett, J., concurring). In a principal-agent relationship, “ ‘the context in which the principal and agent interact,’ including their ‘prior dealings,’ industry ‘customs and usages,’ and the ‘nature of the principal’s business or the principal’s personal situation’ ” help form the background legal conventions that govern delegation.219Id. at 2379. From there, Justice Barrett argues that we know from the context of how Congress usually delegates to agencies that Congress is “more likely to have focused upon, and answered, major questions, while leaving interstitial matters [for agencies] to answer themselves in the course of a statute’s daily administration.”220Id. at 2380.

These kinds of arguments based on the “descriptive case” run into persistent empirical problems—namely, there is ample evidence that Congress often does intend to delegate major questions to agencies through vague language, and only weak and contested evidence that Congress does not so intend.221See, e.g., Blake Emerson, “Policy” in the Administrative Procedure Act: Implications for Delegation, Deference, and Democracy, 97 Chi.-Kent L. Rev. 113, 113 (2022); Alison Gocke, Chevron’s Next Chapter: A Fig Leaf for the Nondelegation Doctrine, 55 U.C. Davis L. Rev. 955, 970–71 (2021); Heinzerling, supra note 5, at 1933–34. Both Wurman and Barrett make much of a study of congressional staffers conducted by Abbe Gluck and Lisa Schultz Bressman that found that over 60% of staffers thought that drafters typically intend for Congress, not agencies, to decide important policy questions. See Wurman, supra note 8, at 951, 954–56 (citing Abbe R. Gluck & Lisa Schultz Bressman, Statutory Interpretation from the Inside—An Empirical Study of Congressional Drafting, Delegation, and the Canons: Part I, 65 Stan. L. Rev. 901, 1003–06 (2013)); Biden v. Nebraska, 143 S. Ct. at 2380 (same). However, the Gluck and Bressman study is at best weak support for the proposition that Congress intends to reserve major questions for itself. See Walters, supra note 12, at 533–34; Ronald M. Levin, The Major Questions Doctrine: Unfounded, Unbounded, and Confounded, 112 Calif. L. Rev. (forthcoming 2024) (manuscript at 145–47), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4304404 [https://perma.cc/W3X3-5GXM]. These kinds of arguments are also in significant tension with textualism, which generally eschews evidence of legislative intent except insofar as it is “objectified” in statutory language. However, given the evidence presented in this Article, these arguments may still be more promising for proponents of the MQD than a linguistic defense premised on ordinary meaning.

On the whole, then, it does not seem like the doors that are left open by our study are ones that would be attractive to the textualist justices who have given us the MQD. But we cannot deny another possibility: that textualism itself may evolve (or dissolve?) in ways that accommodate the MQD on these other grounds. We turn to that topic in the next Section, but before doing that, we would reiterate that the ordinary-meaning defense of the MQD is, by all appearances, a total dead end. Textualists would be hard-pressed to continue to defend the MQD on this theory of the case and this record of decision.

iii.  The Bottom Line

This Section has briefly noted some limitations of the Article. We make no claims about other (non-linguistic) defenses of the MQD. And we are, of course, open to the possibility that some future argument or evidence could rehabilitate the linguistic defense of the MQD.

However, it is important to emphasize that we endorse a firm conclusion about the current state of affairs for the linguistic MQD and textualists’ use of the canon. The two extant linguistic defenses of the MQD depend on empirical claims about specific hypotheticals (for example, the bank case) that are not supported by empirical studies of ordinary Americans. Proponents of the linguistic MQD may offer new, more workable arguments, with different thought experiments, or different empirical support. But until then, there is no basis to employ it as a linguistic canon, and there is now significant evidence counting against core claims of the two publicly stated linguistic arguments.

Second, even for textualist judges with no interest in the linguistic defense, the empirical data about ordinary readers counts against the MQD’s consistency with ordinary language. Given ordinary readers’ understanding of language, there is more evidence in favor of treating the MQD as an anti-linguistic canon than a linguistic canon.222For example, it appears false that people intuitively understand delegations to be limited to the most reasonable set of actions consistent with the language’s literal meaning. With further empirical study, one could imagine refining a canon that captures ordinary judgment about delegation. Most plausible candidates are at odds with the MQD. We discuss this idea further in Section IV.C, infra. And as Justice Kagan remarked, judges who appeal to such non-principles over linguistic interpretation are not really textualists.223West Virginia v. EPA, 142 S. Ct. 2587, 2641 (2022) (Kagan, J., dissenting).

B.  Broader Implications for Modern Textualism

Justice Barrett and Wurman’s arguments have implications for textualism beyond the narrow (but hugely important) issue of whether the MQD is a linguistic canon. Textualism’s claim to distinctiveness centers on a commitment to interpretation according to a text’s linguistic meaning, thereby promoting rule of law values.224See William N. Eskridge, Jr., Brian G. Slocum & Kevin Tobia, Textualism’s Defining Moment, 123 Colum. L. Rev. 1611, 1613 (2023) (explaining how textualism claims to promote the rule of law). Textualism thus abjures judicial discretion to depart from that linguistic meaning.225Tara Leigh Grove, Comment, Which Textualism?, 134 Harv. L. Rev. 265, 269 (2020) (advocating for formalistic textualism). As Justice Scalia emphasized, judges should not exercise an unbounded “personal discretion to do justice.”226See Antonin Scalia, The Rule of Law as a Law of Rules, 56 U. Chi. L. Rev. 1175, 1176 (1989). Instead, judges should be restrained even when some results may have been unanticipated by the legislature.227See John F. Manning, The Absurdity Doctrine, 116 Harv. L. Rev. 2387, 2392–95 (2003).

Justice Barrett’s expansive view of “context,” “common sense,” and non-literal interpretation expands, but also challenges, these foundations of textualism. Justice Barrett admirably argues for a sophisticated version of textualism that rejects literalism and recognizes implied terms.228See supra Section I.C; see also Kevin Tobia, Brian G. Slocum & Victoria Nourse, Progressive Textualism, 110 Geo. L.J. 1437, 1475 (2022) (arguing that textualism should more willingly acknowledge that linguistic meaning can often include implied terms). Even so, existing interpretive canons that recognize implied terms are narrow, and thus do not undermine textualism’s commitment to linguistic meaning.229See supra Section I.C. In contrast, Justice Barrett’s “common sense” interpretive canon is unbounded, granting judges considerable discretion to claim that a wide range of actions fall outside of the text’s meaning (or “reasonable meaning”).

Wurman’s arguments also have implications that threaten to expand, if not unravel, textualism. Recall that Wurman, unlike Justice Barrett, frames the MQD as a tiebreaker canon that resolves statutory ambiguity.230See supra Section I.B. Wurman is correct that the Court has referenced “ambiguity” in MQD cases. This framing of the MQD, however, requires a broad view of ambiguity that would make its determination even more discretionary, and likely more pretextual.

1.  Justice Barrett’s Theory of Non-Literal Interpretation

Justice Barrett’s general appeals to context and non-literal interpretation are consistent with modern textualist scholarship and thinking. Justice Kavanaugh has also repeatedly emphasized the distinction between literal and ordinary meaning and has insisted that courts should avoid overly literalist meanings.231See Bostock v. Clayton County, 140 S. Ct. 1731, 1825 (2020) (Kavanaugh, J., dissenting) (“[C]ourts must follow ordinary meaning, not literal meaning. And courts must adhere to the ordinary meaning of phrases, not just the meaning of the words in a phrase.”). Similarly, John Manning argues that “the literal or dictionary definitions of words will often fail to account for settled nuances or background conventions that qualify the literal meaning of language and, in particular, of legal language.”232Manning, supra note 227, at 2393.

Textualism, though, purports to privilege semantic meaning, thereby giving a relatively limited role to non-literal meanings informed by context and pragmatics. Thus, while Manning endorses some non-literal interpretation, his “background conventions” are narrow ones relevant to the “relevant linguistic community” subject to the law, such as common law criminal defenses.233Id. at 2466–67. Besides these limited examples, according to Manning, judges “have a duty to enforce clearly worded statutes as written, even if there is reason to believe that the text may not perfectly capture the background aims or purposes that inspired their enactment.”234See John F. Manning, Second-Generation Textualism, 98 Calif. L. Rev. 1287, 1290 (2010). Doing so ensures “Congress’s ability to use semantic meaning to express and record its agreed-upon outcomes.”235Id.

A coherent textualism would thus recognize a narrow role for implied terms. Crucially, an implied term must be one that would be obvious to the discourse participants, rather than one imposed by the interpreter for other reasons. An implied term must therefore reflect a presupposition about meaning that is warranted in the circumstances.236See Emiel Krahmer, Presupposition and Anaphora 3 (1998); Alan Cruse, A Glossary of Semantics and Pragmatics 139 (2006) (explaining that presuppositions are a ubiquitous aspect of language).

Statutes are often drafted at a high level of generality, and Justice Barrett is correct that readers of those rules understand that sometimes the rules expressed are not meant to be taken literally in all respects. Crucially though, the relevant existing interpretive canons are implicated in narrow circumstances and provide relatively specific rules for limiting literal meaning.237See Tobia et al., From the Outside, supra note 18, at 281–87 (providing examples of textual canons that narrow literal meaning); Slocum & Tobia, supra note 37, at 75 (providing examples of substantive canons that are also linguistic and which serve to narrow literal meaning). Furthermore, empirical evidence supports these narrow rules as linguistic and thus consistent with how ordinary people interpret legal texts.238See Slocum & Tobia, supra note 37, at 75.

Justice Barrett’s view of implied terms as governed by “common sense” and “context” is similar to Richard Fallon’s approach. Fallon argues that “[o]rdinary principles of conversational interpretation call for us to ascribe a reasonable meaning to prescriptions and other utterances unless something about the context indicates otherwise.”239Richard H. Fallon, Jr., The Meaning of Legal “Meaning” and Its Implications for Theories of Legal Interpretation, 82 U. Chi. L. Rev. 1235, 1260–61 (2015). Fallon reasons that “[i]n ordinary conversation, we do not waste time and breath offering elaborations and qualifications of our utterances that ought to be obvious to any reasonable person.”240Id. at 1261. Instead, a “reasonable person” understands that “[t]he moral reasonableness of a particular ascribed meaning possesses a distinctive importance.”241Id. at 1261–62. Both Fallon and Justice Barrett draw on principles of conversational communication and context, and while Fallon references “reasonable meaning” and Justice Barrett “common sense,” the two are essentially the same idea. In fact, Justice Barrett uses the word “reasonable” in relation to interpretation eleven times in her Biden v. Nebraska opinion (e.g., “reasonable understanding,” “reasonable view,” “reasonable interpreter”).242Biden v. Nebraska, 143 S. Ct. 2355, 2376–84 (2023) (Barrett, J., concurring). Furthermore, her appeal to “common sense” and “reasonable” interpretations has, like Fallon’s view, room for moral and normative beliefs to motivate non-literal interpretations.

The similarities between the interpretive approaches of Justice Barrett and Fallon should be surprising and troubling to textualists. Fallon’s interpretive principle is in furtherance of his decidedly anti-textualist view of interpretation.243See generally Richard H. Fallon, Jr., The Statutory Interpretation Muddle, 114 Nw. U. L. Rev. 269 (2019) (arguing against the idea that statutes have determinate linguistic meanings). Justice Barrett’s principle of “common sense,” guided by “context,” is supposedly in furtherance of textualism, but it raises questions that do not have easy textualist answers. Can the principle always defeat the literal meaning of a statute? How can “common sense” even be defined? Even if “common sense” could be defined, do judges share the same “common sense” as ordinary people, or do judges speak with what Eskridge and Nourse refer to as an “upper-class accent?”244See William N. Eskridge, Jr. & Victoria F. Nourse, Textual Gerrymandering: The Eclipse of Republican Government in an Era of Statutory Populism, 96 N.Y.U. L. Rev. 1718, 1811 (2021). The ability for judges to appeal, with little restraint, to “common sense” and “context,” calls to mind Scalia’s fears about non-textualist judging: “personal discretion to do justice” as the judges saw fit.245Scalia, supra note 226, at 1176.

2.  The Anti-Textualist Broad View of Ambiguity

An additional threat to textualism is posed by a broad view of “ambiguity.” Recall that Wurman argues that the MQD is a linguistic canon that resolves statutory ambiguity.246See supra Section I.B. In support of this claim, Wurman quotes from MQD decisions where the Court argues that the relevant statutes are “ambiguous.”247See Wurman, supra note 8, at 915. This defense of the MQD is unsurprising. Textualism is much more permissive about available arguments and interpretive sources when a provision has been deemed “ambiguous.”

There are two key drawbacks in viewing the MQD as serving a tiebreaking role in resolving ambiguity. First, doing so understates the MQD’s role in the Court’s precedents. The MQD has not merely resolved “ties” between meanings; it has caused the Court to choose meanings it would not otherwise have selected. Second, Wurman’s view requires a definition of ambiguity that should be especially troubling to textualists, and the significance of the issue extends beyond the MQD.

Wurman’s argument raises an essential question: On what basis can a provision be deemed “ambiguous”? Wurman suggests that a provision can be “ambiguous” even when a court can determine the provision’s “best reading.”248Id. Thus, crucially, the question of ambiguity does not require that a provision be indeterminate. In other words, the semantic meaning of the provision’s terms could be clear (even if broad) but still “ambiguous,” based on non-textual considerations like the novelty and importance of an agency’s actions.

Use of the “ambiguity” label often obscures rather than clarifies linguistic issues. Specifically, it glosses over the distinctive linguistic features of the prototypical statute involved in MQD cases, which is a statute with broad but semantically clear terms. These features—broad but semantically clear—should represent for textualists a prima facie case against the MQD. After all, textualists assert that courts should focus on the semantic meaning of statutes.

Outside of MQD cases, some textualists have recognized the potential dangers associated with a judicial focus on “ambiguity.” Most significantly, Justice Kavanaugh has criticized “ambiguity” as an interpretive doctrine because its identification is standardless and subjective.249See Brett M. Kavanaugh, Fixing Statutory Interpretation, 129 Harv. L. Rev. 2118, 2121 (2016) (reviewing Robert A. Katzmann, Judging Statutes (2014)). Its discretionary identification and legitimizing power, however, make “ambiguity” an especially attractive interpretive tool for judges. “Ambiguity” is extremely useful because it gives a court cover to interpret a statute narrowly or broadly on the basis of normative concerns. For instance, an explicit announcement of ambiguity allowed the Court in King v. Burwell to “avoid the type of calamitous result that Congress plainly meant to avoid” and gave it justification for “interpret[ing] the Act in a way that” improves health insurance markets and does not destroy them.250King v. Burwell, 576 U.S. 473, 498 (2015).

“Ambiguity’s” legitimizing power explains why the Court in MQD (and other) cases is motivated to label a provision as “ambiguous” without much consideration about whether it is applying a coherent definition of ambiguity. It may be activist to interpret a clear statute narrowly because doing so would be in tension with the provision’s linguistic meaning. In contrast, resolving statutory “ambiguity” is necessary to decide the interpretive dispute, and choosing the narrower interpretation does not conflict with the provision’s linguistic meaning. Thus, if a provision is problematically broad, labeling it as “ambiguous” does not require the Court to explicitly reject its literal meaning.

If a provision can be “ambiguous” even when a court can nevertheless determine its “best reading,” “ambiguity” would mean something like “any uncertainty about the meaning of a provision.” But this sort of definition would make ambiguity ubiquitous and is inconsistent with how it is used in Chevron and other tiebreaker canons like the rule of lenity.251See Eskridge, Slocum & Tobia, supra note 224, at 1656 (discussing how the Court’s textualists determine ambiguity). If instead “ambiguity” means that a provision must actually be indeterminate, there is no “best reading” of a provision, but merely possible competing meanings.

The question of ambiguity thus hinges on whether “ambiguity” is synonymous with “indeterminacy.” Even if the terms are synonymous, framing the MQD in terms of “ambiguity” should be unappealing to textualists. The MQD would still be a matter of judgment that depends on how one weighs semantic and pragmatic evidence. In other words, a combination of meaning and context makes a provision clear or, conversely, ambiguous. Univocal semantics and univocal pragmatics may uncontroversially result in a clear provision, and multivocal semantics and multivocal pragmatics in an ambiguous provision, but other combinations are contestable and subject to normative resolution via highly discretionary judgments.

The choice is thus between a narrow definition of “ambiguity” that would require the semantic meaning of the statutory text be indeterminate in some way, and a broad definition that would allow even semantically clear language to be deemed “ambiguous” based on non-language concerns like statutory purpose. Justice Scalia argued that the broad view of ambiguity is “judge-empowering” and mocked the idea that “[w]hatever has improbably broad, deeply serious, and apparently unnecessary consequences . . . is ambiguous!”252Bond v. United States, 572 U.S. 844, 870 (2014) (Scalia, J., concurring in the judgement). A broad definition of ambiguity would allow the label to be used at any time by emphasizing any number of pragmatic considerations, such as the problematically broad semantic meaning of terms or the “novelty” of an agency’s interpretation. If instead, as Justice Scalia argues, pragmatic evidence can only clarify semantically indeterminate text, ambiguity would therefore require indeterminate semantic meaning and be a narrower, less discretionary doctrine.253See id.

Textualists in MQD cases should be honest about their use of “ambiguity.” If they use the term broadly, they should explain why Justice Scalia’s critique of the broad definition is mistaken. If they instead agree with Justice Scalia, the MQD cases involving clear (but broad) semantic meaning should thus be viewed by textualists as similar to situations not involving ambiguity. In such cases, if the Court wishes to narrow the literal meaning of the language, it should state so explicitly, giving reasons for why such narrowing is consistent with the judicial function.

C.  Broader Implications for Administrative Law

This Article has taken textualists’ defenses of the MQD at face value. But some harbor a more realist or critical take on the MQD. Perhaps the MQD is animated by neither constitutional values nor language, but rather by the aim of limiting the administrative state’s power. And perhaps leaving questions about the MQD’s legitimacy unresolved allows strategic ambiguity, which is better for this purpose.254See Sohoni, supra note 6, at 266; see also Patrick J. Sobkowski, Of Major Questions and Nondelegation, Yale J. on Reg.: Notice & Comment (July 3, 2023), https://www.yalejreg.com/nc/of-major-questions-and-nondelegation-by-patrick-j-sobkowski [https://perma.cc/23GL-D2G6] (noting that the MQD is currently marked by “strategic ambiguity” that “allows the Justices to strike down or uphold policies without being criticized by other actors for judicial activism and aggrandizement”). Some go even further to argue that the justices are engaged in a form of constitutional hardball, seeking to aggrandize themselves vis-à-vis the other branches of government.255See, e.g., Josh Chafetz, The New Judicial Power Grab, 67 St. Louis U. L.J. 635, 635 (2023); Allen C. Sumrall & Beau J. Baumann, Clarifying Judicial Aggrandizement, 172 U. Pa. L. Rev. Online 24, 24 (2023); Mark A. Lemley, The Imperial Supreme Court, 136 Harv. L. Rev. F. 97, 97 (2022). It is certainly difficult to overlook the hostility that many of the justices express toward modern administrative government and the legislative acts that authorized it.256See generally Beau J. Baumann, Americana Administrative Law, 111 Geo. L.J. 465 (2023) (discussing examples including National Federation of Independent Businesses v. Department of Labor, Occupational Safety and Health Administration, 142 S. Ct. 661, 669 (Gorsuch, J., concurring); Gundy v. United States, 139 S. Ct. 2116, 2134–35 (2019) (Gorsuch, J., dissenting); and City of Arlington v. FCC, 569 U.S. 290, 327 (2013) (Roberts, C.J., dissenting)).

Yet, turning our attention away from the Supreme Court and toward the broader legal community, our findings about how ordinary people understand delegations of authority have significant implications for administrative law well beyond the MQD. While we acknowledge that there are good reasons to be skeptical about outsourcing questions of administrative law to laypeople, insofar as textualist principles animate the statutory interpretation questions at the heart of administrative law, it is worth asking where ordinary people’s intuitions lead.257Indeed, an emerging literature does just this, often using survey experiments to investigate questions important to administrative law and the administrative state. See generally Brian D. Feinstein, Legitimizing Agencies, 91 U. Chi. L. Rev. 919 (2024); Edward Stiglitz, The Reasoning State (2022). Below, we highlight a couple takeaways from this exercise. An irony of textualist’s turn to “ordinary people” to support the MQD may be that it actually supports a significantly cabined judicial role in controlling delegation of authority to the administrative state. Far from endorsing a kind of “libertarian administrative law” that treats delegations of authority to administrative agencies with suspicion and seeks almost perfunctorily to narrow them,258See Sunstein & Vermeule, supra note 197, at 410. ordinary people appear to take general ordinary delegations to license a range of reasonable actions.

To be sure, we considered ordinary judgments of an ordinary, private delegation (that is, the babysitter), but critics of the administrative state have made that ordinary context relevant by insisting that general principles of private agency and/or ordinary delegations law should inform public law delegation.259Biden v. Nebraska, 143 S. Ct. 2355, 2379–80 (2023) (Barrett, J., concurring); Phillip Hamburger, Is Administrative Law Unlawful? 386 (2014); Gary Lawson & Guy Seidman, “A Great Power of Attorney”: Understanding the Fiduciary Constitution 104 (2017). We are also skeptical that there is an easy way to study the “ordinary person’s” view of specific cases. As prior research has shown, interpreters’ values affect their interpretation.260Ward Farnsworth, Dustin F. Guzior & Anup Malani, Ambiguity About Ambiguity: An Empirical Inquiry into Legal Interpretation, 2 J. Legal Analysis 257, 259 (2010). Asking ordinary people whether the EPA has authority to issue broad climate change regulations under the Clean Air Act is likely to tell us more about people’s values and politics than their understanding of language. Thus, the implications we spell out depend on the validity of this ordinary analogy—the one made by the linguistic MQD’s defenders (recall the “high stakes” appeal to the ordinary bank case and the “common sense” appeal to the ordinary babysitter case).

To start, our study of the babysitter hypothetical revealed a surprising result about what ordinary people would think of the amusement park hypothetical. Taking the children to the amusement park might not be the most reasonable response to the instruction to “use this credit card to make sure the kids have fun this weekend,” but it certainly does not violate it (after all, an amusement park is “fun”). The study also revealed that the vast majority of ordinary people believe that the parent’s instruction extends to the even more unusual action of bringing a live alligator to the house. This surprising finding suggests that people do not limit delegations to only the most reasonable actions or the ones most consistent with the rule’s purpose.

Ordinary readers approached the limits of broad delegations through a textual and purposive lens. Compared with the amusement park, alligator, and movie scenarios, respondents were far more likely to say that the babysitter violated the instruction when the babysitter failed to achieve the purpose of the instruction (as in the case of not using the credit card and potentially shortchanging the children’s fun) and when the babysitter actively undermined it (by using the credit card for the babysitter’s own enjoyment). This finding is difficult to understand unless ordinary readers understand delegations in large part as remedial—that is, as seeking to empower the agent to solve a problem or achieve some goal—rather than exclusively delimiting—that is, as setting out the scope of the agent’s power.261This explanation is largely consistent with Brian Feinstein’s discovery that ordinary people are prompted to increase their trust in government when they believe it is being undertaken by an agent with expertise to fulfill social functions. See Feinstein, supra note 257, at 919. In both Feinstein’s studies and ours, delegations are understood by ordinary people to be about problem solving.

The modern textualist commitment to ordinary people’s understanding as a basis for interpretation262See, e.g., Barrett, supra note 17, at 2194. and linguistic canons263See, e.g., Wurman, supra note 8, at 909. opens the door to uncovering a linguistic basis for other canons, including new canons.264See Tobia et al., From the Outside, supra note 18, at 288–90. As a hypothetical, imagine if a textualist were to carefully consider evidence about ordinary people’s understanding of delegating language (e.g., in the babysitter case) and attempt to “canonize” those intuitions into administrative law doctrine. The result would probably be a fundamental recalibration of the field—but not in the way the MQD imagines. Were one to follow the evidence, it seems to instead support canonizing a sort of “counter-MQD” that presumes that general delegations should be interpreted broadly (or at least not as restrictively as Justice Barrett’s argument claims), significantly curtailing judicial power to limit Congress’s attempts to empower administrative agencies.

In addition, and relatedly, our findings are in some tension with administrative law’s traditional approach to questions of underimplementation of statutory delegations. A variety of administrative law doctrines insulate agency discretion to decline to enforce the law: for instance, Heckler v. Chaney provides that agency nonenforcement decisions are almost never reviewable by courts,265Heckler v. Chaney, 470 U.S. 821, 821 (1985). and Norton v. Southern Utah Wilderness Alliance makes it impossible for challengers to force agency action unless they can point to a discrete duty (rather than a more general failure to pursue broad policy goals of a statute).266Norton v. S. Utah Wilderness All., 542 U.S. 55, 55 (2004). These doctrines insulate agency underuse of delegated regulatory authority from judicial scrutiny. Yet our findings suggest that ordinary readers may be more troubled by delegated authority’s underuse than uses that fit with the language but exceed an observer’s sense of reasonableness.267Both using the credit card for only the babysitter’s needs (“misuse”) and bringing an alligator to the house for entertainment (“extreme”) were judged as “unreasonable,” while failing to use the card and entertaining the children with card games (“minor”) was judged as “reasonable.” But rule violation judgments did not rise and fall with these evaluations of reasonableness. The extreme action was more consistent with the rule than the minor action, and both were more consistent than the misuse action. On the flip side, when agencies do take action pursuant to their delegations, judges often artificially narrow those delegations.268Cass R. Sunstein, Nondelegation Canons, 67 U. Chi. L. Rev. 315, 315–16 (2000). Canons that might theoretically push in the opposite direction—toward liberally construing “remedial” statutes, for instance—have fallen into disrepute.269Dir., Off. of Workers’ Comp. Programs, Dep’t of Lab. v. Newport News Shipbuilding & Dry Dock Co., 514 U.S. 122, 135 (1995) (noting that the remedial canon is the “last redoubt of losing causes”). This basic asymmetry in the treatment of delegations to agencies—deep skepticism of exercises of delegated authority coupled with indifference toward failures to exercise delegated authority at all270See Daniel E. Walters, Symmetry’s Mandate: Constraining the Politicization of American Administrative Law, 119 Mich. L. Rev. 455, 455–56 (2020).—may be exactly backwards if ordinary people’s intuitions are to be the guide.

Again, we do not endorse any particular changes to administrative law here. There are many good reasons, such as the institutional constraints under which agencies operate, to disfavor outsourcing administrative law into ordinary people’s linguistic or legal intuitions (whatever those may be).271Eric Biber, The Importance of Resource Allocation in Administrative Law, 60 Admin. L. Rev. 1, 1–2 (2008). There are also many countervailing concerns, such as fair notice and due process, that may justify curtailing expansive ordinary readings of delegating statutes.272See, e.g., Jennifer Lee Koh, Crimmigration and the Void for Vagueness Doctrine, 2016 Wis. L. Rev. 1127, 1153–59 (2016). But we also believe that for those inclined to remake administrative law through the eyes of the ordinary reader, it is worth grappling with facts rather than judicial hypotheticals about those ordinary readers. People are far more comfortable with broader interpretation of general-language delegations than many textualists have assumed, and they appear to be disproportionately uncomfortable with violations through underuse of delegated authority.

CONCLUSION

The MQD is the most influential interpretive development at the modern Supreme Court.273See supra notes 2–4 and accompanying text. Yet it lacks a compelling theoretical basis and a satisfactory explanation of its consistency with textualism, the interpretive theory held by the MQD’s advocates. The new “linguistic MQD” purports to solve both problems: because the MQD reflects ordinary understanding of language, it is a valid linguistic canon and thus consistent with textualism.

This Article has taken this linguistic defense on its own terms and studied the two central ordinary examples offered by its advocates. We find that ordinary people do not understand language as textualists have assumed. High stakes do not undermine knowledge or impact textual clarity, and people do not understand general delegations to be limited to only the most reasonable set of actions. These results challenge the essential empirical claims at the heart of the arguments for the linguistic MQD. While scholarly debate should continue, judges must take stock of the evidence and decide whether to employ the canon—and whether to do so in the name of linguistics and ordinary people. In our view, there is insufficient empirical support and theoretical clarity to cast the MQD as a valid linguistic canon. Arguably, the linguistic defense is the only viable theory for textualists to consistently employ the MQD. Thus, unless they offer a successful alternative, the results here support the broader conclusion that consistent textualists should not employ the MQD.

97 S. Cal. L. Rev. 1153

Download

* Associate Professor of Law, Georgetown University Law Center.

† Associate Professor of Law, Texas A&M University School of Law.

‡ Stearns Weaver Miller Professor, Florida State University College of Law. For helpful comments and/or discussion, we thank Cary Coglianese, Anuj Desai, Ryan Doerfler, Rebecca Kysar, Edouard Machery, Ángel Pinillos, Larry Solum, Ilya Somin, Ilan Wurman, and audiences at the American Association of Law Schools Annual Conference, and at Cornell, Georgetown, NYU, and USC law schools. Thanks to the Southern California Law Review for excellent editorial assistance. We also thank Kirsten Worden and Michael Cooper for their research assistance.

Our Parochial Administrative Law

Going back to the birth of modern administrative law in America reveals something striking. The pioneers of the field and many who followed in their footsteps weren’t trying to fashion a body of law for a rapidly expanding administrative state by being exclusively self-referential—that is, by focusing only on our own idiosyncratic experiences and needs in the United States. Rather, they were consistently looking at what we might learn from other nations as well. In short, modern administrative law began in America very much as an exercise in comparative or transnational law. Fast forward to today, and this intense comparative engagement has almost vanished from the administrative law scene. It lives, but only on the very margins of the scholarly and policy debate without any real purchase or impact. What’s more, even when administrative law comparison does suddenly appear in quite prominent places, its employment seems so problematic that it actually gives the entire enterprise a bad rap. For instance, in his dissent from a denial of cert. in Buffington v. McDonough from the October 2022 Term, Justice Gorsuch chastised his colleagues for refusing to reevaluate Chevron deference among other things by noting simply that other countries “declined to adopt” something similar. To be sure, Justice Gorsuch’s comparative statement seems superficially true. But it suffers from many of the familiar failures of irresponsible comparative inference—including by being shallow, acontextual, and selective. In fact, Justice Gorsuch’s comparativism in Buffington may not only be flawed but also what comparativists might call “abusive”—that is, it was done in the service of gradually undermining what our constitutionally legitimate administrative state presently seems to require.

This Article calls for reviving comparative administrative law as a much more meaningful enterprise in our system, arguing that its many benefits should cause domestic scholars to engage in it more and judges, litigators, and policymakers to not be reluctant to use it as well. In the process, this Article also suggests how precisely to approach comparative administrative law in useful and productive—rather than shallow and abusive—ways that would avoid the kind of pitfalls characteristic of Justice Gorsuch’s opinion in Buffington. With the Court any day now poised to conclusively opine on the continued validity of Chevron deference in two cases that came to it after Buffington, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, and given the larger pressures our administrative state faces, considering the values of administrative law comparison and how to employ it properly seems exactly opportune.

Part I tracks the rise and fall of comparative administrative law in the U.S. through the years and suggests the causes for its demise. Part II makes the affirmative case for comparative administrative law’s revival, emphasizing the increased possibilities for such comparison today, its ability to enhance understanding of our own administrative law and to point in the direction of desirable reforms, and identifying what this Article calls a “modest and experimentalist” approach that should enable amplifying comparativism’s place while avoiding risks of misuse and abuse. Part III then illustrates this approach by discussing two doctrinal areas where our administrative law could indeed learn valuable lessons by looking outside: first, the law governing administrative guidance, and, second, Chevron, illustrating how an adequate comparative approach rectifies Buffington’s failures and might usefully illuminate the Court’s analysis in either Loper Bright and Relentless or well beyond. The Article concludes by highlighting strategies to support the desired comparative administrative law rebirth, pointing to changes in the law school curriculum and in some scholarly, judicial, and bar practices.

INTRODUCTION

In the field of administrative law, we love our history. We frequently turn to history, for example, to try and figure out the origins of our administrative state, debating whether it is a relatively recent creation or rather a much older one.1Compare Daniel P. Carpenter, The Forging of Bureaucratic Autonomy: Reputations, Networks, and Policy Innovation in Executive Agencies, 1862–1928, at 8–9 (2001) (emphasizing the recency of the administrative state and that it was largely a creation of the end of the nineteenth and twentieth century), and Stephen Skowronek, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920, at 24–26 (1982) (same), with Jerry L. Mashaw, Creating the Administrative Constitution: The Lost One Hundred Years of American Administrative Law 3–5 (2012) (emphasizing the administrative state has much older roots than conventional stories tell), and Nicholas R. Parrillo, A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, 130 Yale L.J. 1288, 1288 (2021) (same). We turn to history too to make better sense of the passage of the Administrative Procedure Act of 1946 (“APA”)—discerning the various forces that were pushing for it (or against it),2See, e.g., George B. Shepherd, Fierce Compromise: The Administrative Procedure Act Emerges from New Deal Politics, 90 Nw. U. L. Rev. 1557, 1558–61 (1996) (providing a by now canonical account of the emergence of the APA as a result of a preceding struggle); Joanna L. Grisinger, The Unwieldy American State: Administrative Politics Since the New Deal 59 (2012) (similar). and what ideas or compromises exactly stood behind its various provisions and instructions.3See, e.g., Paul R. Verkuil, The Administrative Procedure Act at 75: Observations and Reflections, 28 Geo. Mason L. Rev. 533, 534–36 (2021) (describing the ideas and thought behind some of the APA’s central provisions); Emily S. Bremer, The Undemocratic Roots of Agency Rulemaking, 108 Cornell L. Rev. 69, 90–101 (2022) (same, with a focus on notice-and-comment rulemaking); Blake Emerson, The Public’s Law: Origins and Architecture of Progressive Democracy 21 (2019) (discussing the general ideational influences on modern administrative law). And we finally turn to history to understand what role different institutions or players were believed to have (or should have) over the administrative apparatus more broadly—whether those are the courts,4See, e.g., Thomas W. Merrill, Article III, Agency Adjudication, and the Origins of the Appellate Review Model of Administrative Law, 111 Colum. L. Rev. 939, 953–69 (2011) (discussing the early modern evolution of judicial review of administrative action). the President,5See, e.g., Noah A. Rosenblum, The Antifascist Roots of Presidential Administration, 122 Colum. L. Rev. 1, 18–31 (2022) (providing one account of the historical evolution of the role of the president in the administrative state). Congress,6See, e.g., Louis Fisher, The Legislative Veto: Invalidated, It Survives, 56 L. & Contemp. Probs. 273, 275–84 (1993) (discussing the historical pedigree of the legislative veto); Abner S. Greene, Checks and Balances in an Era of Presidential Lawmaking, 61 U. Chi. L. Rev. 123, 163–66 (1994) (same). or much beyond.7See, e.g., Reuel E. Schiller, Enlarging the Administrative Polity: Administrative Law and the Changing Definition of Pluralism, 1945–1970, 53 Vand. L. Rev. 1389, 1399–1404 (2000) (discussing the role of interest groups and a broadly general commitment to the ideology of pluralism as significantly impacting the shape and development of administrative law). For some, this continuous turn to administrative law history is done as a source of intellectual learning and reflection about our past, sometimes in order to better grasp why our law is what it is today or what opportunities we might have to change it.8See, e.g., Daniel R. Ernst, Tocqueville’s Nightmare: The Administrative State Emerges in America, 1900–1940, at 6–7 (2014) (discussing the ideas that shaped up the foundational structures of the administrative state); Mark Tushnet, Administrative Law in the 1930s: The Supreme Court’s Accommodation of Progressive Legal Theory, 60 Duke L.J. 1565, 1566–68 (2011) (similar). For others, embracing labels such as administrative law “originalism”9See, e.g., Evan D. Bernick, Envisioning Administrative Procedure Act Originalism, 70 Admin. L. Rev. 807, 834–35 (2018) (defending administrative law originalism); Jeffrey A. Pojanowski, Neoclassical Administrative Law, 133 Harv. L. Rev. 852, 884–95 (2020) (defending a more self-proclaimed softened version of constitutional and administrative law originalism). or APA “textualism,”10See, e.g., Kathryn E. Kovacs, Superstatute Theory and Administrative Common Law, 90 Ind. L.J. 1207, 1251 (2015) (defending a version of administrative law originalism); John F. Duffy, Administrative Common Law in Judicial Review, 77 Tex. L. Rev. 113, 141 (1998) (criticizing central facets of administrative law as grounded in impermissible common law rather than the text of the APA). this incessant turn to history can take a much more authoritative tone—insisting that the lessons of the past might still govern us today.

But there is something in all this love that we’ve been giving to our administrative law history that we seem to be forgetting today. Our contemporary talk about our administrative past is usually pitched in strongly self-referential terms—as though modern administrative law was born out of exclusive reflection on our own idiosyncratic challenges in developing a body of law for a rapidly growing administrative state. As though it was only about “we,” “us,” and “our” needs. That, however, wasn’t the case at all. Modern administrative law didn’t begin in our system through geographically bounded reflection and thought. To the contrary, we were consistently looking at other nations and their own respective administrative states and laws to see what we might learn from them. In short, administrative law was born in America very much as an exercise in comparative or transnational law.

This is not an exaggeration. In fact, the work of scholarship that was the first to coin and popularize the term “administrative law” in the U.S. was explicitly comparative in nature. That work was Frank Goodnow’s book, suitably titled Comparative Administrative Law and published in its first edition in 1893.11Frank J. Goodnow, Comparative Administrative Law: An Analysis of the Administrative Systems National and Local, of the United States, England, France and Germany (1893). And, as its subtitle says, the book was indeed a deep comparative study of administrative systems and laws, both national and local, of the United States, the United Kingdom, France, and Germany. Goodnow also spent time in this book defending his unabashedly comparative administrative law methodology. He said for example that a “foreign point of view” is necessary because “in the present stage of the study [of the field of administrative law] it is to foreign writers that we must look for all scientific presentations of the subject.”121 Frank J. Goodnow, Comparative Administrative Law v (1893). More broadly, Goodnow argued that “only by study, and by comparison of our own with foreign administrative methods” can we meet the “enormous demands” imposed on our government by “modern complex social conditions.”13Id. at iv.

Goodnow’s 1893 book was undoubtedly important and influential. But it was by far not alone. Many other prominent administrative law scholars working from Goodnow’s time and until roughly the end of the 1960s and beginning of the 1970s were also very much in the business of studying what Goodnow called the “foreign point of view” in administrative law with impressive levels of intensity—including Ernst Freund, Roscoe Pound, Felix Frankfurter, James Landis, and later Louis Jaffe, Kenneth Culp Davis, and Walter Gellhorn.14See infra Section I.A (discussing these scholars’ contributions). Of course, unfortunately but unsurprisingly, it is worth noting that all these prominent administrative law scholars were men. The most prominent American law journals were also emphatically part of this transnational administrative law enterprise. These journals were consistently publishing at the time comparative administrative law scholarship, sometimes written by domestic public law academics but sometimes by foreign scholars who were specifically invited to contribute to their pages.15See infra Section I.A (discussing mainline American law reviews’ continuous interest in comparative administrative law). Even judges and litigators in the U.S. occasionally demonstrated interest in administrative law developments across our borders and how they might teach us about our own law.16See, e.g., Morgan v. United States, 298 U.S. 468, 482 (1936) [hereinafter Morgan I] (“The Government presses upon our attention the [British House of Lords] case of Local Government Board v. Arlidge [1915] A.C. 120 . . . .” (second alteration in original)). Comparative administrative law was also a key pedagogical tool used in the American law school classroom.17See infra Section I.A (discussing the many and varied uses of comparative administrative law in the administrative law classroom of the past). Indeed, most shockingly perhaps, our students used to know in the past quite a bit about how administrative law is practiced abroad.

It is not at all surprising then that one prominent contemporary American scholar has observed, in a rare moment of recognition of comparativism’s past dominance in the broader landscape of U.S. administrative law, that the pioneers of the field would rely on foreign and domestic sources in unison without even noting their different national origins.18See Jerry L. Mashaw, Federal Administration and Administrative Law in the Gilded Age, 119 Yale L.J. 1362, 1375 (2010) (“[T]he works of the pioneers in American administrative law . . . often drew as much on European as American sources and, when treating American law, did not distinguish between state, local, and national developments.”). As one other commentator at the time put it, proving the necessity of comparative administrative law at the time was a no-brainer—as if you were to ask someone to prove the necessity of eating something for breakfast.19See, e.g., Ludwik Ehrlich, Comparative Public Law and the Fundamentals of Its Study, 21 Colum. L. Rev. 623, 623 (1921) (noting that “[t]o justify the study of comparative public law will not be more difficult than to prove the proverbial pudding.”).

Fast forward to today, and this obvious and intense preoccupation with administrative law comparison has clearly waned. American scholars and judges working in the administrative law space rarely ever express interest today in what’s going on beyond U.S. borders. Unlike their predecessors, and even more than their colleagues in the field of constitutional law who have been flirting much more eagerly with the laws of other nations,20See, e.g., Bruce Ackerman, The Rise of World Constitutionalism, 83 Va. L. Rev. 771, 782–87, 794–97 (1997) (focusing on constitutional developments abroad and comparing them to the U.S. model of constitutionalism); Mark Tushnet, The Possibilities of Comparative Constitutional Law, 108 Yale L.J. 1225, 1257–59, 1265–69 (1999) (developing an argument for the values of engaging in comparative constitutional law from a perspective of a scholar based in the U.S.); David Fontana, The Rise and Fall of Comparative Constitutional Law in the Postwar Era, 36 Yale J. Int’l L. 1, 8–14 (2011) (documenting the rise and fall, and again rise, of the U.S. interest in comparative constitutional law). administrative law scholars, judges, and practitioners are increasingly parochial and self-referential. They don’t even debate or fight about the merits of the comparison.21For the battles on the legitimacy of the use of foreign law in the respective field of constitutional law and their centrality, see, e.g., Norman Dorsen, The Relevance of Foreign Legal Materials in U.S. Constitutional Cases: A Conversation Between Justice Antonin Scalia and Justice Stephen Breyer, 3 Int’l J. Const. L. 519, 520–24 (2005) (detailing the highly divergent views of Justice Breyer and Justice Scalia on the use of comparative materials for constitutional analysis); Stephen Breyer, The Court and the World: American Law and the New Global Realities 100–09 (2015) (developing a general argument for the positive use of comparative law in constitutional law); Ruth Bader Ginsburg, The Value of a Comparative Perspective in Judicial Decisionmaking: Imparting Experiences to, and Learning from, Other Adherents to the Rule of Law, 74 Revista Jurídica U.P.R. 213, 215–16, 219–24 (2005) (rejecting the strong criticism against the use of comparative materials in constitutional law cases); Vicki C. Jackson, Constitutional Comparisons: Convergence, Resistance, Engagement, 119 Harv. L. Rev. 109, 112–15, 120–24 (2005) (defending the use of comparative law in constitutional analysis and identifying various modes or uses it can have). It’s as if the possibility of engaging comparative administrative law is entirely invisible to them.

If you don’t believe me, try. Ask your favorite American administrative law scholar what other systems are doing in the doctrinal domain which they presently study or write about, and they will rarely know. Take from the bookshelf one of your favorite recent administrative law scholarly works (or, more realistically perhaps, search the internet on your go-to electronic database), and you will almost never find discussion of relevant foreign practice or law. Flagship law reviews also rarely publish today work that centers comparative administrative law.22See infra Section I.B. And foreign administrative law and practice basically never makes an appearance in judicial practice, either—whether being referenced in a judgment or cited in a brief.23See infra Section I.B. The work of other influential bodies in the administrative law space in America, such as the Administrative Conference of the United States, likewise rarely tries to look across geographical spaces.24See infra Section I.B. Comparative administrative law today also basically never makes an appearance in the administrative law classroom.25See infra Section I.B.

And if you think that other countries don’t notice, try again. Indeed, our substantial “uninterest[]”26Dan Priel, Conceptions of Authority and the Anglo-American Common Law Divide, 65 Am. J. Compar. L. 609, 609 (2017). in what others have to offer in administrative law is frequently remarked upon.27See, e.g., Elizabeth Fisher, The Open Road? Navigating Public Administration and the Failed Promise of Administrative Law, in The Foundations and Future of Public Law: Essays in Honour of Paul Craig 209, 212 (Elizabeth Fisher et al. eds., 2020) (noting the decrease in transatlantic dialogue on administrative law themes between the U.S. and the U.K.). As a result, the fact that a recent compilation of essays on “Judicial Review of Administrative Action Across the Common Law World” doesn’t include serious discussion of U.S. administrative law probably should be seen as a form of tit for tat.28See generally Judicial Review of Administrative Action Across the Common Law World: Origins and Adaptation (Swati Jhaveri & Michael Ramsden eds., 2021). For an even more recent compilation of essays on administrative law in common law systems that similarly fails to cover the United States, see Researching Public Law in Common Law Systems v–vi (Paul Daly & Joe Tomlinson eds., 2023).

As one might expect, there are exceptions to this contemporary administrative law parochialism in America. Occasionally, scholars in the field (or in public law more broadly) do dabble in some comparative administrative law engagement.29See infra Section I.B. And there are some serious and well-known contemporary U.S. scholars who have taken systematic interest in comparative administrative law—most prominently, Susan Rose-Ackerman,30See generally Susan Rose-Ackerman, Democracy and Executive Power: Policymaking Accountability in the U.S., the U.K., Germany, and France (2021); Susan Rose-Ackerman, Controlling Environmental Policy: The Limits of Public Law in Germany and the United States (1995). Peter Lindseth,31See generally Peter L. Lindseth, Democratic Legitimacy and the Administrative Character of Supranationalism: The Example of the European Community, 99 Colum. L. Rev. 628 (1999); Peter L. Lindseth, The Paradox of Parliamentary Supremacy: Delegation, Democracy, and Dictatorship in Germany and France, 1920s-1950s, 113 Yale L.J. 1341 (2004) [hereinafter Lindseth, The Paradox]. Francesca Bignami,32See generally Francesca Bignami, Comparative Administrative Law, in The Cambridge Companion to Comparative Law 145 (Mauro Bussani & Ugo Mattei eds., 2012) [hereinafter Bignami, Comparative]; Francesca Bignami, From Expert Administration to Accountability Network: A New Paradigm for Comparative Administrative Law, 59 Am. J. Compar. L. 859 (2011); Francesca Bignami, Regulation and the Courts: Judicial Review in Comparative Perspective, in Comparative Law and Regulation: Understanding the Global Regulatory Process 275 (Francesca Bignami & David Zaring eds., 2016). Michael Asimow,33See generally Michael Asimow, Delegated Legislation: United States and United Kingdom, 3 Oxford J. Legal Stud. 253 (1983); Michael Asimow & Jeffrey S. Lubbers, The Merits of “Merits” Review: A Comparative Look at the Australian Administrative Appeals Tribunal, 28 Windsor Y.B. Access Just. 261 (2010); Michael Asimow, Five Models of Administrative Adjudication, 63 Am. J. Compar. L. 3 (2015); Michael Asimow & Yoav Dotan, Open and Closed Judicial Review of Agency Action: The Conflicting U.S. and Israeli Approaches, 64 Am. J. Compar. L. 521 (2016). and, before his passing, Bernard Schwartz.34See generally Bernard Schwartz, Law and the Executive in Britain: A Comparative Study (1949); Bernard Schwartz, French Administrative Law and the Common Law World (1954); Bernard Schwartz, Lions Over the Throne: The Judicial Revolution in English Administrative Law (1987); Bernard Schwartz, Wade’s New Edition and Its Relevance for Americans, 42 Admin. L. Rev. 67 (1990); Bernard Schwartz, Wade’s Seventh Edition and Recent English Administrative Law, 48 Admin. L. Rev. 175 (1996).

It is hard to escape the conclusion, though, that this sort of work is quite limited in nature. For one thing, it is marginalized in the debate, not really being cited, or studied, by domestic U.S. scholars, courts, or other practitioners (partly because some of it isn’t focused on what is still, for better or worse, the heartland of our field—the issue of judicial review of administrative action35For instance, Peter L. Lindseth’s illuminating work, see sources cited supra note 31, has been mostly historical and theoretical and did not directly engage for the most part with the doctrinal structure of judicial review of administrative action. —and partly because it is usually published in outlets that unfortunately don’t attract a lot of domestic American administrative law readership, like edited essay collections or specialty international and foreign law reviews).36See, e.g., Kevin M. Stack, Overcoming Dicey in Administrative Law, 68 U. Toronto L.J. 293, 293 (2018), and Professors Asimow and Bignami’s important work cited supra notes 32–33. For another thing, some of the comparative administrative law work that does exist today in the U.S., while certainly illuminating and sophisticated, is somewhat one-sided and monological. It is about what others can learn from us, not what we might learn from others.37Susan Rose-Ackerman’s work, for example, has focused on the need for other systems to take more seriously the commitment, evident in the U.S., for relatively broad public participation in the formulation of general policies. See, e.g., Susan Rose-Ackerman, Democracy and Executive Power: Administrative Policymaking in Comparative Perspective, 6 Rev. de Derecho Público: Teoría y Método 155, 157 (2022). Only occasionally has she commented on notions that may enhance and improve the American administrative state in particular. See also infra note 157 and accompanying text.

In addition, despite the general neglect, we do occasionally see some form of administrative law comparison in quite prominent places. Consider in this context Justice Gorsuch’s dramatic dissent from denial of cert. in Buffington v. McDonough from the October 2022 Term.38Buffington v. McDonough, 143 S. Ct. 14, 14–22 (2022) (Gorsuch, J., dissenting). Buffington raised the question of whether the famous Chevron decision39Chevron U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984). —well-known for granting deference to administrative agencies’ reasonable interpretations of statutes—should be overruled. In chastising his colleagues for not taking up that question in Buffington (we’ll see in a moment there’s been an important development on that front), Justice Gorsuch casually highlighted the fact that courts in other countries have “declined to adopt the [Chevron] doctrine” as another reason for why the Court was too quick to shut its ears.40Buffington, 143 S. Ct. at 22 (Gorsuch, J., dissenting). That was undoubtedly a moment of important recognition of the possibility of comparative administrative law in the U.S. reports. But Justice Gorsuch’s casual comparativism in Buffington, though superficially true, was the kind of thing that serious comparativists would quickly reject. With vigor. It suffers from exactly the kinds of failures that comparative law scholars have consistently emphasized would be the hazards of their craft—including by being acontextual and selective. In fact, Justice Gorsuch’s shallow comparativism may not be merely irresponsible; it might also be what some comparativists would call “abusive”—that is, it was done in the service of gradually undermining what our constitutionally legitimate administrative state seems at present to require.41Rosalind Dixon & David Landau, Abusive Constitutional Borrowing: Legal Globalization and the Subversion of Liberal Democracy 3 (2021).

This Article argues that all this needs to urgently change. We need to stop being so parochial and self-obsessed only with our own administrative law. We need to revive our interest in and engagement with comparative administrative law.42I note that this Article does not address another parochialism in our administrative law—the one which manifests itself in the neglect of state and local administrative law in favor of exclusive or highly hegemonic focus on federal administrative law. While this is clearly an important blind spot, it is still worth noting that this particular parochialism is now much more systematically addressed, or at least is beginning to be addressed, in both administrative law scholarship and practice. See generally Jim Rossi, Overcoming Parochialism: State Administrative Procedure and Institutional Design, 53 Admin. L. Rev. 551 (2001); Nestor M. Davidson, Localist Administrative Law, 126 Yale L.J. 564 (2017); Maria Ponomarenko, Substance and Procedure in Local Administrative Law, 170 U. Pa. L. Rev. 1527 (2022); Miriam Seifter, Gubernatorial Administration, 131 Harv. L. Rev. 483 (2017). By contrast, the global and comparative parochialisms that are emphatically the focus of this Article have not yet seen similar rekindling in interest (a reality which of course this Article seeks to correct). This means that domestic administrative law scholars should demonstrate more interest and reflect more frequently about foreign practice and law in the areas that they study and write about. And this means too that judges, litigators, and policymakers in the U.S. should not be so reluctant to use comparative administrative law and draw on it as well. To be clear—my claim is decidedly not that comparative administrative law should become methodologically hegemonic or that we should massively start to engage it at the expense of all other things. There are good reasons to focus primarily on domestic developments and perspectives and draw on diverse methodologies. Sensible comparativists accept, even if grudgingly, that they are destined in some important sense to be marginalized.43For an example of this recognition of comparativists’ marginalized fate, by a leading modern comparativist (now deceased), see Basil Markesinis, Comparative Law in the Courtroom and Classroom: The Story of the Last Thirty-Five Years 1–2 (2003). At the same time, the present neglect is extremely out of whack with the substantial benefits of comparative administrative law. Some meaningful amplification of the place of comparative administrative law in our system is quite clearly justified.

The present moment seems opportune for the domestic administrative law world to extend an invitation once again to comparativists to come and play a bit more outside their usually secluded purviews, and to go more comparative itself. This is so for three primary reasons. First, after years in which the field of administrative law has been perceived as one whose particularities erect substantial barriers from performing responsible cross-national comparison that generates real insights, things are now beginning to change. More and more scholarship that compares national administrative states and laws is now appearing—updating the work of previous generations as well as complicating it.44See infra Section II.B.3. The overall impression from this scholarship is that in light of processes of globalization and, as we will soon see, the fading away of some important divergences between national administrative systems, the “possibilities”45I draw this term from Tushnet, supra note 20, at 1228. of comparative administrative law are now finally evident and growing, like they have been for a while now in the adjacent field of comparative constitutional law. It is time for the domestic administrative law community in the U.S. to realize that changed global reality and start tapping into it as well.

A second reason for why we need to go more comparative now is that it is hard to dispute that our own administrative law is under severe pressure today, especially from our Supreme Court. As is well known and widely discussed, the Court has recently introduced many dramatic changes into administrative law, substantially breaking away from—if not directly attacking—the “equilibrium”46I draw this term in this particular context from Adrian Vermeule, Portrait of an Equilibrium, New Rambler, https://newramblerreview.com/book-reviews/law/tocqueville-s-nightmare [https://perma.cc/GS4L-GFMG]. that existed before.47See, e.g., Lucia v. SEC, 138 S. Ct. 2044, 2052–55 (2018) (holding that administrative law judges are inferior officers of the U.S., rather than mere employees, when vested with authority to oversee enforcement proceedings); Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2197 (2020) (holding that Congress could not make single-member agency heads removable only for cause); United States v. Arthrex, Inc., 141 S. Ct. 1970, 1985 (2021) (holding that administrative patent judges were principal officers of the United States); Collins v. Yellen, 141 S. Ct. 1761, 1784 (2021) (holding that any restriction on presidential removal is unconstitutional for single-headed agencies); West Virginia v. EPA, 142 S. Ct. 2587, 2607–10, 2614–16 (2022) (announcing a broad “major questions” doctrine). But because a key virtue of comparative administrative law is exactly that it helps produce a better understanding of our own domestic predicament in the United States, comparison could be an important resource for facing the contemporary malaise. With comparative law’s aid we might, for example, see more clearly which components of our administrative law really emerge from our own unique situation in the U.S., and therefore why attacking these components of present-day law could be especially misguided and abusive. Alternatively, looking at the way other systems balance the conflicting goals underlying administrative law might assist us in recognizing paths for administrative law reform that we did not think of before, or that we were so far too hesitant to embrace. Such reforms might even respond to genuine failures that exist in our own contemporary administrative law. Accordingly, they might help take some of the edge from the present attack, and even build in the direction of an attractive resolution.

A final reason for why the exploration of the values of comparative administrative law is timely is that the Court itself may be dramatically heading for a second round of comparative administrative law. Though in Buffington, the Court refused to grant cert. on the question of Chevron’s continued validity, the Court appears to have had a change of heart. Indeed, in two different cases that came to the Court later, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, the Court did end up taking up that exact same question.48Loper Bright Enters., Inc. v. Raimondo, 45 F.4th 359 (D.C. Cir. 2022), cert. granted, 143 S. Ct. 2429 (2023); Relentless, Inc. v. U.S. Dep’t of Com., 62 F.4th 621 (1st Cir. 2023), cert. granted, 144 S. Ct. 325 (2023). And the world of administrative law stands still with anticipation.

Of course, the Court’s analysis in Loper Bright and Relentless—expected any day now (!)—will focus mostly on domestic perspectives, as it emphatically should. But given Justice Gorsuch’s dissent in Buffington, it is not unlikely that the Court might itself be interested in looking abroad again. If so, the current moment is an important opportunity first and foremost to correct the record on Buffington’s failures of shallow, selective, and even abusive comparison. To show, in other words, what a responsible comparative exercise can in fact teach us about Chevron’s continued validity and how it might illuminate the Court’s forthcoming analysis in Loper Bright and Relentless (or, if not in these cases, then beyond them). Additionally, this dramatic moment of a possible second round at the Court provides an opportunity to try to develop a more constructive approach to administrative law comparison in general. This kind of general approach to comparative administrative law could not only systematically avoid Buffington’s failures in the future but would also clear the path (and even actively support) the desired revival of comparative administrative law.

The remainder of this Article proceeds in four parts. Part I begins by sketching the rise and fall of comparative administrative law in the U.S. through the years and explores the reasons for its contemporary demise. Part II then slowly builds the affirmative case for the comparative administrative law revival. It emphasizes the increased possibilities of such comparison today relative to the past; it highlights comparativism’s substantial benefits in enhancing understanding of domestic administrative law systems and in providing a source of inspiration for useful reforms (particularly in times of administrative and democratic distress); and, finally, it identifies what I will call a “modest and experimentalist” approach to administrative law comparison that should enable amplifying comparativism’s place while minimizing risks of “misuse”49O. Kahn-Freund, On Uses and Misuses of Comparative Law, 37 Mod. L. Rev. 1, 20 (1974) (a by-now canonical elaboration of the values and risks of comparative law); Cheryl Saunders, The Use and Misuse of Comparative Constitutional Law, 13 Ind. J. Glob. Legal Stud. 37, 41 (2006) (an extension of Kahn-Freund’s argument to the specific context of constitutional law and constitutional adjudication). and abuse. To illustrate the approach this Article defends, Part III follows by zooming in on two doctrinal domains within our administrative law that seem ripe for comparative engagement, both in general and especially given the current pressures on the American administrative state.

The first domain Part III zooms in on is that of the law governing the use of guidance—that is, those documents that agencies regularly issue that lack the force of law and are thus exempt from notice-and-comment proceedings.50See infra Section III.A. As it currently stands, our law has landed on a particular path for “domesticating”51I draw this term from Peter L. Strauss, Domesticating Guidance, 49 Env’t L. 765, 765 (2019). the risks of abusing administrative guidance, namely by empowering courts to invalidate guidance that is “practically binding”52See, e.g., Cass R. Sunstein, “Practically Binding”: General Policy Statements and Notice-and-Comment Rulemaking, 68 Admin. L. Rev. 491, 496–97 (2016). and requiring that it goes through notice-and-comment. As we will later see, though, other jurisdictions, including primarily the United Kingdom, but also France, Italy, Canada, and the European Union, adopt a quite different approach to guidance domestication. That approach mostly denies courts the power to police the line between guidance that lacks the force of law and rules that do, for example because the guidance “practically binds.” Instead, this comparative approach focuses courts on a contextual review, on a pre-enforcement basis, of both the legality and arbitrariness of sufficiently important guidance documents. I will suggest that a modest and experimentalist approach to administrative law comparison provokes the possibility of moving our law in a direction closer to what we see abroad.

The second domain Part III zooms in on is, of course, Chevron deference. As Justice Gorsuch was right to say in Buffington, it is hard to see Chevron or something exactly like it abroad.53See infra Section III.B. But contrary to what Justice Gorsuch suggested in Buffington, that comparison doesn’t support overruling Chevron or dramatically cutting it back. A modest and experimentalist comparative administrative law approach that looks to countries as diverse as the United Kingdom, Germany, France, Israel, Australia, and Canada (among others) makes that conclusion at present extremely hazardous, even untenable and indeed abusive. As Part III argues, there are too many crucial cross-national differences that Justice Gorsuch’s opinion has ignored, differences which help to both explain and justify why other systems lack Chevron and why we have had it thus far.

Having said that, Part III also suggests that the kind of modest and experimentalist comparative administrative law approach this Article defends can certainly provoke us toward imagining a future where seriously considering letting go of Chevron and displacing it with something else that exists abroad (specifically, the deference regime that was recently consolidated in our neighbor jurisdiction, Canada) would indeed be desirable. As will be clear soon enough, the legal and political conditions that would make this Chevron-free future workable contrast starkly with the notions underlying the present judicial attack, including by the Supreme Court, on Chevron and on our administrative state more broadly. They would require quite a bit of transformation in American constitutional politics and legal culture. As a result, this potentially desirable, Chevron-less future is likely not realizable in the immediate term. That doesn’t mean, however, that we shouldn’t start working toward bringing that future closer. Comparative law itself suggests we can and should, so long as we do so modestly and experimentally, as I suggest here, rather than shallowly and abusively, as Justice Gorsuch’s opinion in Buffington has attempted.

Part IV concludes the Article by pointing toward several institutional strategies that could help bring forth the desired rebirth of comparative administrative law. These strategies look to the law school curriculum and to some important scholarly, judicial, governmental, and bar practices. The aim is to show that change is within our grasp if we would only choose to pursue it.

I.  THE RISE AND FALL OF COMPARATIVE ADMINISTRATIVE LAW

This Part sketches the story of the rise and fall of comparative administrative law in America through the years. My purpose here is first and foremost to show just how much it used to be prevalent in the past and how much it is neglected and marginalized today. In addition, this Part’s goal is also to speculate about what may have been the primary causes of the demise of comparative administrative law. After all, any attempt at its revival will have to confront these reasons to see if they still hold today.

Section I.A begins with the rise. Section I.B continues to the fall. Section I.C concludes with explanations.

A.  At the Start: An Era of Persistent Comparison

We have largely forgotten this, but the truth is that modern administrative law began in our system very much as a “self-conscious exercise” in comparative law.54John K.M. Ohnesorge, Western Administrative Law in Northeast Asia: A Comparativist’s History 54 (June 2002) (S.J.D. dissertation, Harvard Law School), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3483842 [https://perma.cc/HPN9-UDT2]. Frank Goodnow’s 1893 book Comparative Administrative Law, mentioned before and which was the first to even coin the term “administrative law” in America, is Exhibit A.55See Goodnow, supra note 12, at 6–7. The title (and subtitle) of the book basically shouts it, but its content also doesn’t fail to deliver on the comparative promise. Indeed, the book contains an exhaustive discussion of the different ways that France, Germany, the United Kingdom, and the United States organize their respective central56Id. at 53–160. and local57Id. at 162–337. administrations, the law applicable to official appointments in each country,582 Frank J. Goodnow, Comparative Administrative Law 1–104 (1893). and the various systems of control of administration—whether political59Id. at 262–308. or judicial.60Id. at 144–261.

But Goodnow, a Professor of Political Science at Columbia and later the President of Johns Hopkins University, persisted with administrative law comparisons much beyond this initial and influential book and throughout his illustrious career. In many ways, comparative law was his central scholarly methodology. For example, Goodnow’s extensive use of comparative law and practice was also evident in Politics and Administration (1900). In this pioneering book, still considered a staple in the field of public administration,61See, e.g., Ronald J. Pestritto, The Progressive Origins of the Administrative State: Wilson, Goodnow, and Landis, 24 Soc. Phil. & Pol’y 16, 17 (2007). Goodnow built extensively on practices in Germany, France, Italy, and the United Kingdom to suggest reforms to the organization of the growing administrative state in America. As he repeatedly emphasized throughout the book, despite the existence of apparent differences between these countries, they nonetheless share common goals, a fact that Goodnow believed opened the door for learning mutual cross-national administrative lessons.62Frank J. Goodnow, Politics and Administration: A Study in Government 138–145 (1900) (discussing the potential explanations for why bureaucratic centralization has occurred across European countries more easily than in the United States and arguing that there is good reason that American reality should change to become closer to what is seen abroad). Goodnow continued to draw on comparison also in Social Reform and the Constitution,63Frank J. Goodnow, Social Reform and the Constitution (1911). which resulted from a series of lectures he gave in 1911. Among other things, Goodnow compared in this book decisions of the U.S. Supreme Court that recognized the legality of broad delegations to agencies to those of courts in the U.K. and Germany.64Among the decisions Goodnow discussed are Boske v. Comingore, 177 U.S. 459 (1900); In re Kollock, 165 U.S. 526 (1897); and Buttfield v. Stranahan, 192 U.S. 470 (1904). And he lauded the Court for “bringing our law into accord with that of foreign countries, where such ordinance powers have for a long time been regarded as a necessary adjunct of executive or administrative authority.”65Goodnow, supra note 63, at 218. Even when Goodnow bracketed his overt comparativism, its influence was substantial. His book, The Principles of the Administrative Law of the United States, while making no explicit reference to comparative law,66A point that was highlighted in reviews of the book, perhaps because it was somewhat surprising given the balance of Goodnow’s previous consistently comparative work. See Ernst Freund, Book Review, 1 Am. Pol. Sci. Rev. 136, 136 (1906) (reviewing Frank J. Goodnow, The Principles of the Administrative Law of the United States (1905)). was organized entirely based on a similar book by a noted German administrative law scholar whose work was intimately familiar to Goodnow.67See Frank J. Goodnow, The Principles of Administrative Law of the United States 373 n.1 (1905) (citing Rudolph Gneist, Das Englische Verwaltungrescht (1884)).

Another important figure at the birth of modern administrative law was Ernst Freund. Like Goodnow’s 1893 book, Freund’s 1894 essay, The Law of the Administration in America, is still considered key for the emergence of the field of modern administrative law.68See Ernst Freund, The Law of the Administration in America, 9 Pol. Sci. Q. 403, 404 (1894). And just like Goodnow, Freund’s method of making sense of administrative law was centrally comparative. Indeed, Freund, who had been teaching at the University of Chicago Law School since 1904, published in 1911 what was the first American casebook in administrative law. The title of the casebook gave no illusions about its pedagogical methodology: it was Cases on Administrative Law Selected from Decisions of English and American Courts.69Ernst Freund, Cases on Administrative Law Selected from Decisions of English and American Courts i (James Brown Scott ed., 1911). But Freund’s most notable and extensive foray into comparative administrative law was probably in his 1928 book, Administrative Power Over Persons and Property: A Comparative Survey. This book described in painstaking detail (which also was in large part what made the book “virtually unreadable”)70Daniel R. Ernst, Ernst Freund, Felix Frankfurter, and the American Rechtsstaat: A Transatlantic Shipwreck, 1894-1932, 23 Stud. Am. Pol. Dev. 171, 173 (2009). the different court systems in Germany and the U.K., the various theories that stood behind these countries’ laws on governmental liability as well as supervision of the legality of agency action, and the remedial powers of courts. And it encapsulated Freund’s central view that American administrative law was increasingly showing signs of resemblance to, surprisingly perhaps, German administrative law, mainly given what Freund argued was America’s adoption of the technique of legislative specificity and refinement as the primary method for constraining administrative discretion.71See id. at 183 (arguing that the message of Freund’s book was that “Americans had embraced the Rechtsstaat”); see also John Dickinson, Book Review, 22 Am. Pol. Sci. Rev. 981, 984 (1928) (reviewing Ernst Freund, Administrative Powers Over Persons and Property: A Comparative Survey (1928)) (emphasizing how Freund saw developments in domestic U.S. public law as putting the American approach in close proximity to continental approaches to administrative law).

Goodnow and Freund are justly considered the “pioneer[s]” of the field of modern administrative law in America.72Felix Frankfurter, The Task of Administrative Law, 75 U. Pa. L. Rev. 614, 616 (1927). But other scholars working roughly at the same time also followed in their footsteps in drawing consistently on comparative administrative law.73I note that another important administrative law scholar working at the time of Goodnow and Freund was Bruce Wyman. But while Wyman’s work has proven influential until this very day, his comparative interest appears to have been much less systematic when compared to Goodnow and Freund, as well as to the work of the other authors discussed in the rest of this present paragraph. On Wyman’s contemporary administrative law influence, see, e.g., Kevin M. Stack, Reclaiming ‘The Real Subject’ of Administrative Law: A Critical Introduction to Bruce Wyman’s The Principles of Administrative Law Governing the Relations of Public Officers (1903) IV–VI (Vanderbilt Univ. L. Sch. Pub. L. & Legal Theory, Working Paper No. 15-13, 2014), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2613561 [https://perma.cc/3KE8-GUFR]; and for one of Wyman’s relatively few comparative references in his own work, see Bruce Wyman, The Principles of the Administrative Law Governing the Relations of Public Officers 2 (1903) (stating that in “England and in the countries which like the United States derive their civilization from English sources, the system of administrative law and the very principles upon which it rests are in truth unknown” and noting that it is “remarkable that administrative law has not been conceived of as a department of our public law when it is part of the legal system of every country of continental Europe.”). Edmund Parker, a lecturer at Harvard University, wrote a noted piece at the time advocating a system of administrative courts in the U.S. based on France and using French law to strongly argue for reforms of the U.S. doctrine of sovereign immunity.74See Edmund M. Parker, Administrative Courts for the United States, 6 Proc. Am. Pol. Sci. Ass’n 46, 52 (1909). James Garner, a political scientist at the University of Pennsylvania, published a series of articles, including in the Yale Law Journal and the N.Y.U. Law Review, on German and French administrative law.75See generally James W. Garner, Judicial Control of Administrative and Legislative Acts in France, 9 Am. Pol. Sci. Rev. 637 (1915); James W. Garner, French Administrative Law, 33 Yale L.J. 597 (1924); James W. Garner, Anglo-American and Continental European Administrative Law, 7 N.Y.U. L.Q. Rev. 387 (1929). And in 1913, Stephen Foster wrote a piece in the Illinois Law Review with extensive reference to the practice of legislative delegation in the U.K.76See Stephen A. Foster, The Delegation of Legislative Power to Administrative Officers, 7 Ill. L. Rev. 397, 399–402 (1913). The openness of the slowly growing field of administrative law to comparative influence and transnational dialogue was furthermore evident in the fact that in 1914, Leon Duguit, one of France’s leading administrative law theorists, was invited to write a “glowing account” of the French administrative court system in one of the leading American political science journals.77Ohnesorge, supra note 54, at 60. See generally Leon Duguit, The French Administrative Courts, 29 Pol. Sci. Q. 385 (1914). After this, Duguit’s work also appeared in highly regarded law journals in the U.S. See generally, e.g., Leon Duguit, Collective Acts as Distinguished from Contracts, 27 Yale L.J. 753 (1917); Leon Duguit, The Concept of Public Service, 32 Yale L.J. 425 (1923); Leon Duguit, Objective Law, 20 Colum. L. Rev. 817 (1920); Leon Duguit, Compensation for Losses of War, 13 Ill. L. Rev. 565 (1919).

Administrative law comparison continued well into the New Deal era. Sidney Jacoby, a fellow at Columbia University and later a Professor at Georgetown University wrote an influential article published in the Columbia Law Review in 1936 discussing, partly in response to the Supreme Court’s dramatic decisions in Panama Refining78Pan. Refin. Co. v. Ryan, 293 U.S. 388 (1935). and Schechter Poultry,79A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935). the practice of delegations to the executive in France, the U.K., Germany, Italy, and Switzerland (among others).80See Sidney B. Jacoby, Delegation of Powers and Judicial Review: A Study in Comparative Law, 36 Colum. L. Rev. 871, 871–76 (1936). In 1938, the University of Chicago Law Review also reprinted a lecture given by Karl Loewenstein, then a Professor and later the Head of Political Science at the University of Massachusetts at Amherst, extensively discussing delegation from a comparative perspective in large part to criticize the Court’s decisions in Panama Refining and Schechter Poultry.81See Karl Loewenstein, The Balance Between Legislative and Executive Power: A Study in Comparative Constitutional Law, 5 U. Chi. L. Rev. 566, 569 (1938). Stefan Riesenfeld, soon to be a Professor at the University of Minnesota and later at Berkeley, wrote a series of three articles in 1938, published in the Boston University Law Review, in which he discussed—like Garner and Duguit before him—the potential suitability of the French system of administrative law for the U.S.82See Stefan Riesenfeld, The French System of Administrative Justice: A Model for American Law?, 18 B.U. L. Rev. 48, 48 (1938); Stefan Riesenfeld, The French System of Administrative Justice: A Model for American Law? (Part II), 18 B.U. L. Rev. 400, 412 (1938); Stefan Riesenfeld, The French System of Administrative Justice: A Model for American Law? (Part III), 18 B.U. L. Rev. 715, 745 (1938). Fritz Morstein Marx, then Professor of Government at Harvard, similarly wrote a series of articles published mostly in the University of Pennsylvania Law Review titled Comparative Administrative Law on various themes in administrative law, referring mostly to France and Germany (though occasionally also to English and Italian administrative law) and suggesting points of useful borrowing.83See generally Fritz Morstein Marx, Comparative Administrative Law: A Note on Review of Discretion, 87 U. Pa. L. Rev. 954 (1939); Fritz Morstein Marx, Comparative Administrative Law: Economic Improvisation by Public Authorities, 88 U. Pa. L. Rev. 425 (1940); Fritz Morstein Marx, Comparative Administrative Law: Public Employer-Employee Relationships, 4 U. Det. L.J. 59 (1941); Fritz Morstein Marx, Comparative Administrative Law: Exercise of Police Power, 90 U. Pa. L. Rev. 266 (1942). And in 1942, C. Sumner Lobingier, a former judge and SEC commissioner, and later a long time faculty member at George Washington University, published in the University of Pennsylvania Law Review a study on French administrative law and how it might prove “instructive” for the U.S.84See C. Sumner Lobingier, Administrative Law and Droit Administratif: A Comparative Study with an Instructive Model, 91 U. Pa. L. Rev. 36, 37 (1942).

But of course, a central figure in the rapidly emerging field of administrative law during the New Deal was undoubtedly Felix Frankfurter, then at Harvard and later an Associate Justice of the Supreme Court. Contrary to Goodnow, Freund, and many of the other scholars previously mentioned (like Garner, Riesenfeld, and Marx), Frankfurter adamantly rejected continental approaches to administrative law originating from France and Germany as suitable for the American system. However, his interest in administrative law of the “English-speaking” world—including “Great Britain, Canada, Australia, South Africa, [and] the Irish Free State” —was substantial and persistent.85Felix Frankfurter & J. Forrester Davison, Cases and Other Materials on Administrative Law vii (1932). Frankfurter talked, for instance, in a famous article from 1927 about the existence of a shared “Anglo-American legal order” that, he argued, can appropriately guide administrative law at the time and into the future.86Frankfurter, supra note 72, at 614. Indeed, he spoke in praise—even reverence—of the English bureaucracy, which he described as “a highly trained and disinterested permanent service, charged with the task of administering the broad policies formulated by Parliament and of putting at the disposal of government that ascertainable body of knowledge on which the choice of policies must be based.”87Felix Frankfurter, The Public and Its Government 145 (1930). And in his own influential case book on administrative law, coauthored with James Davison, he moreover highlighted how “comparative study of [the English-speaking] systems of public law [could] yield[] very practical as well as cultural illumination.”88Frankfurter & Davison, supra note 85, at vii.

Frankfurter expressed his comparative administrative law interest in various ways that went well beyond his own primary scholarship. For example, Frankfurter authored an opening piece for a comparative administrative law symposium in the Iowa Law Review in 1933 that, as he described it, “focuses attention upon problems that will increasingly demand thought in action—how to make government effective and yet retain our noble prejudice in favor of liberty and our belief that reason may be domesticated.”89Felix Frankfurter, A Symposium on Administrative Law Based Upon Legal Writings 1931–33: Introduction, 18 Iowa L. Rev. 129, 132 (1933). That symposium opened with an article on French administrative law,90See generally Edwin M. Borchard, French Administrative Law, 18 Iowa L. Rev. 133 (1933). an article on German administrative law,91See generally A.H. Feller, Tendencies in Recent German Administrative Law Writing, 18 Iowa L. Rev. 144 (1933). and, perhaps reflecting Frankfurter’s own aversion to continental approaches and his emphatic embrace of the “Anglo-American” tradition,92Ralph F. Fuchs, Concepts and Policies in Anglo-American Administrative Law Theory, 47 Yale L.J. 538, 538 (1938). two articles on administrative law in the U.K.93See generally John Willis, The Delegation of Legislative and Judicial Powers to Administrative Bodies: A Study of the Report of the Committee on Ministers’ Powers, 18 Iowa L. Rev. 150 (1933); Arthur Suzman, Administrative Law in England: A Study of the Report of the Committee on Ministers’ Powers, 18 Iowa L. Rev. 160 (1933). In addition, when the noted British public law scholar W. Ivor Jennings gave a paper on administrative law in the U.K. at Harvard, which was later published in the Harvard Law Review, Frankfurter wrote a glowing opening essay.94Felix Frankfurter, Foreword to W. Ivor Jennings, Courts and Administrative Law—The Experience of English Housing Legislation, 49 Harv. L. Rev. 426, 426–28 (1936). He acknowledged there that “when an important legal treatise is contained within the covers of an English Blue Book, it is not likely to secure vogue among American lawyers.”95Id. at 427. But Frankfurter insisted that “despite the great formal differences, many of the basic conceptions of the public law of England and of the United States are rooted in the same historic soil.”96Id. at 428. And he described Jennings’ survey of administrative law in the U.K. as “illuminating” and “of immediate concern to the student of American Administrative Law.”97Id. Finally, Frankfurter’s interest in comparison was also evident by the fact that at Harvard he was the doctoral supervisor of John Willis who wrote what was described as the “leading English response” to the critique of the administrative state across the pond.98See Jeremy K. Kessler, A War for Liberty: On the Law of Conscientious Objection, in 3 The Cambridge History of the Second World War 447, 457 (Michael Geyer & Adam Tooze eds., 2015) (citing John Willis, The Parliamentary Powers of English Government Departments (1933)). Willis’s comparative work also appeared in law reviews in the U.S. See generally, e.g., John Willis, Administrative Law and the British North America Act, 53 Harv. L. Rev. 251 (1939); Willis, supra note 93.

Though Frankfurter was central to the establishment of administrative law, he was again not the only central figure interested in comparative administrative law during this time. James Landis’s book The Administrative Process99See generally James M. Landis, The Administrative Process (1938). is discussed and mentioned in debates about the administrative state to this very day.100See, e.g., Adrian Vermeule, Bureaucracy and Distrust: Landis, Jaffe, and Kagan on the Administrative State, 130 Harv. L. Rev. 2463, 2466–72 (2017) (reconstructing Landis’s argument in detail). But what these discussions fail to mention is that the book is also chock-full of references to administrative law in the U.K. For instance, Landis referred in the book to “[o]ur British cousins” who, he said, were also dealing with similar questions of how to square the administrative state with their own respective constitutional framework.101Landis, supra note 99, at 1. He cited pronouncements by an English judge on the growth of the administrative state,102Id. at 18 (quoting 1 Hugh Macmillan, Local Government Law and Administration in England and Wales xi (1934)). and he referred to the push in England for some specialization in the judiciary (particularly in the conduct of administrative adjudications).103Id. at 32 (quoting 1 William Holdsworth, History of English Law ch. 3 (5th ed., 1931)). Most dramatically perhaps, Landis also argued for a potential borrowing of solutions from the U.K. to America in response to the legitimacy tensions that he believed broad delegation to administrative agencies create, noting that “English administrative law . . . [developed] techniques . . . which might be adapted to our needs.”104Id. at 77–79.

At the time, comparative administrative law lived mostly in the pages of scholarship and in the hallways of the academy. But it wasn’t entirely absent from legal practice as well. In fact, a famous decision by the U.K. House of Lords in a case called Local Government Board v. Arlidge105Loc. Gov’t Bd. v. Arlidge [1915] AC (HL) 120. proved influential to initial American practice of administrative agencies in conducting hearings. In Arlidge, the House of Lords ruled, in what was a major innovation at the time, that administrative agencies need not follow “judicialized” procedures when making adjudicative decisions.106Id. at 133. Agencies could rely, for example, on written testimonies and confidential information. And agency heads could delegate to their subordinates the power to conduct a hearing, review the materials, and issue initial recommendations. In other words, they need not “hear” themselves. Despite forceful criticism of the decision in America (including, most vocally perhaps, by Roscoe Pound),107See Roscoe Pound, The Growth of Administrative Justice, 2 Wis. L. Rev. 321, 323–24 (1924) (describing the Arlidge decision as “a startling decision in the cradle of our common law”). the idea of sub-delegation to subordinates to conduct hearings, which Arlidge blessed in the U.K., quickly penetrated here as well. As one case note from the time put it, “this same procedural method has been followed in many of our departments and upheld by the United States courts.”108Recent Case Notes, 14 Ind. L.J. 164, 164–65 (1938); see, e.g., State ex rel. Wis. Inspection Bureau v. Whitman, 220 N.W. 929, 938–40 (Wis. 1928); Gen. Broad. Sys., Inc. v. Bridgeport Broad. Station, Inc., 53 F.2d 664, 665–66 (D. Conn. 1931). It was also relied on by the Attorney General while arguing Morgan v. United States (also known as Morgan I) in the Supreme Court.109Morgan v. United States (Morgan I), 298 U.S. 468, 482 (1936). And while the Court in Morgan I explicitly distinguished Arlidge, suggesting that sub-delegation to subordinates to conduct hearings can occur only when the agency in question is a commission headed by multiple commissioners,110Id. the decision’s impact on American law continued.111For example, Arlidge was cited approvingly in NLRB v. Baldwin Locomotive Works, 128 F.2d 39, 64 n.96 (3d Cir. 1942). And Arlidge’s overtones were incorporated into scholarship on the conduct of hearings more broadly. See, e.g., Kenneth Culp Davis, The Requirement of Opportunity to Be Heard in the Administrative Process, 51 Yale L.J. 1093, 1128–29 n.140 (1942). But see Mazza v. Cavicchia, 105 A.2d 545, 557 (N.J. 1954) (reading Morgan I to suggest a much stronger rebuke of Arlidge’s message). Arlidge was continuously discussed, mostly approvingly, both in scholarship as well as in the legislative process leading to what came to be the APA.112See, e.g., Frankfurter, supra note 72, at 615; Max Thelen, Practice and Procedure Before Administrative Tribunals, 16 Calif. L. Rev. 208, 214–15 (1928); Arthur T. Vanderbilt, The Place of the Administrative Tribunal in Our Legal System, 24 A.B.A. J. 267, 267 (1938).

Since the passage of the APA in 1946, administrative law comparison “tailed off dramatically.”113Ohnesorge, supra note 54, at 63. Still, it was far from entirely gone. It continued to live, for example, in occasional publications in journals (even if now less prestigious ones and more geared toward domestic specialists).114See, e.g., Werner Feld, The German Administrative Courts, 36 Tul. L. Rev. 495, 499 (1962); Fred P. Bosselman, An Introduction to the Symposium on the Public Hearing, 21 Admin. L. Rev. 119, 119 (1969); Helen McCleave Cake, The French Conseil d’Etat—An Essay on Administrative Jurisprudence: The Jurisdiction and Philosophy of the French Court and the Desirability of Introducing Certain French Standards of Administrative Control in the United States, 24 Admin. L. Rev. 315, 320 (1972). And it was still meaningfully incorporated into the work of several prominent administrative law scholars though, admittedly, in a somewhat subtler form.

Louis Jaffe, obviously another key figure in modern administrative law whose name and work are still invoked to this very day,115See, e.g., Daniel B. Rodriguez, Jaffe’s Law: An Essay on the Intellectual Underpinnings of Modern Administrative Law Theory, 72 Chi.-Kent L. Rev. 1159, 1159 (1997). devoted “considerable energy to comparative research” even if he “tended to incorporate foreign law into his basic work, rather than reporting on foreign law, or writing self-consciously comparative exercises.”116Ohnesorge, supra note 54, at 66. For example, a year after the APA entered into force, Jaffe wrote an article echoing themes raised by Landis about the possibility of exporting techniques from the U.K. to solve the tensions underlying expansive delegation to agencies (and which could help achieve, he said, more “active control” for Congress over the administrative state).117Louis L. Jaffe, An Essay on Delegation of Legislative Power: I, 47 Colum. L. Rev. 359, 372–74 (1947). Jaffe also returned to the same issue in his famous treatise, Judicial Control of Administrative Action, which incorporated much of his earlier work.118Louis L. Jaffe, Judicial Control of Administrative Action 46–48 (1965). But Jaffe’s discussion of comparative law in his treatise went well beyond that specific theme. Indeed, foreign sources and comparative discussion were sprinkled all over it. Among other things, Jaffe made references to the phenomenon of Henry VIII clauses in the U.K.119Id. at 81 n.185. (which are similar to what is known in the U.S. as “big waiver”).120See David J. Barron & Todd D. Rakoff, In Defense of Big Waiver, 113 Colum. L. Rev. 265, 265 (2013); see also Daniel T. Deacon, Administrative Forbearance, 125 Yale L.J. 1548, 1551 (2016). It also had a substantial chunk on the history of judicial review in the U.K. and America,121See Jaffe, supra note 118, at 329–36. In this context, Jaffe was building on a co-authored work he had published with a scholar of the history of English administrative law. See Louis L. Jaffe & Edith G. Henderson, Judicial Review and the Rule of Law: Historical Origins, 72 L.Q. Rev. 345, 345 (1956). See generally Edith G. Henderson, Foundations of English Administrative Law: Certiorari and Mandamus in the Seventeenth Century (1963). a review of the law of “sovereign immunity” in the U.K.,122See Jaffe, supra note 118, at 197–212. a discussion of how courts in the U.K. review the subjective motives of administrative decisionmakers,123Id. at 352. a comparison between the law of unreviewability in American administrative law and so-called “privitive clauses” in the U.K.,124Id. at 357 n.170. and survey of the U.K. doctrine of “jurisdictional fact.”125Id. at 624–33. The book even contains some references to Canadian law about the scope of judicial review126Id. at 327 n.11 (quoting In re Workmen’s Compensation Act [1950] 2 D.L.R. 630). and a brief discussion of Italian, German, and French administrative law standing doctrines.127Id. at 477–80, 502–05 And Jaffe pursued his keen interest in comparative law also in a later book, English and American Judges as Lawmakers, which, as its title suggests, compared styles of judicial decision-making in the U.K. and the U.S., including, of course, in administrative law.128See generally Louis L. Jaffe, English and American Judges as Lawmakers (1969). Another important indication of Jaffe’s strong comparative awareness was that he reviewed the issuance of a new administrative law treatise in Australia. See generally Louis L. Jaffe, Book Review, 6 Syd. L. Rev. 148 (1968) (reviewing D.G. Benjafield & H. Whitmore, Principles of Australian Administrative Law (1968)).

Another influential name interested in administrative law comparison was Kenneth Culp Davis.129On Professor Davis’s contributions and enduring legacy, see, e.g., Ronald M. Levin, The Administrative Law Legacy of Kenneth Culp Davis, 42 San Diego L. Rev. 315, 315–17 (2005). In an important piece that preceded the APA, Davis advocated, for example, for experimentation with the use of written evidence in administrative hearings based on a similar English practice.130See Kenneth Culp Davis, An Approach to Problems of Evidence in the Administrative Process, 55 Harv. L. Rev. 364, 401–02 n.77 (1942). Davis also wrote an elaborate article showing deep knowledge of the U.K. system (including participating in exchange with scholars and visiting there) as well as extensive awareness of administrative law developments in French, German, and Swedish administrative law.131See Kenneth Culp Davis, The Future of Judge-Made Public Law in England: A Problem of Practical Jurisprudence, 61 Colum. L. Rev. 201, 201 (1961) [hereinafter Davis, A Problem]; see also Kenneth Culp Davis, English Administrative Law—An American View, in Public Law: Incorporating the British Journal of Administrative Law 139, 139 (J.A.G. Griffith & Geoffrey Marshall eds., 1962) [hereinafter Davis, An American View]; K.C. Davis, English Administrative Law: Another Word, in Public Law: Incorporating the British Journal of Administrative Law 1, 1 (J.A.G. Griffith & Geoffrey Marshall eds., 1963). Davis also wrote an early book review of a central English administrative law text. Kenneth Culp Davis, Book Review, 21 Tex. L. Rev. 216, 216 (1943) (reviewing Sir Cecil Carr, Concerning English Administrative Law (1941)). Everyone who’s in the know in the administrative law world has probably heard about Davis’s classic book, Discretionary Justice.132See generally Kenneth Culp Davis, Discretionary Justice: A Preliminary Inquiry (1969). But what isn’t usually remembered is that Davis followed up on that famous book by editing a volume of essays by legal academics from Europe exploring similar themes in their own domestic systems and offering comparative insights.133See generally Discretionary Justice in Europe and America (Kenneth Culp Davis ed., 1976). And what is even less remembered today is that Davis authored important work for the University of Pennsylvania Law Review on the institution of the ombudsman that was deeply inspired by comparative practice.134See Kenneth Culp Davis, Ombudsmen in America: Officers to Criticize Administrative Action, 109 U. Pa. L. Rev. 1057, 1057 (1961). His article was nestled within a more comparative context—it preceded two additional pieces published in the same volume on the ombudsmen offices in Sweden135See Stig Jägerskiöld, The Swedish Ombudsman, 109 U. Pa. L. Rev. 1077, 1077 (1961). and Denmark.136See Bent Christensen, The Danish Ombudsman, 109 U. Pa. L. Rev. 1100, 1100 (1961). That year, the Wisconsin Law Review even published an article by one of the Danish Ombudsmen himself. See Stephan Hurwitz, Denmark’s Ombudsmand: The Parliamentary Commissioner for Civil and Military Government Administration, 1961 Wis. L. Rev. 169, 169 (1961).

Finally, Walter Gellhorn, another important administrative law thinker of the post–New Deal era, was also engaged in serious comparative administrative law. His influential studies on tort liability for administrative decisionmakers were highly informed by “experience in some of the European states,” which was also regularly cited and discussed throughout his work (sometimes with co-authors).137Walter Gellhorn & C. Newton Schenck, Tort Actions Against the Federal Government, 47 Colum. L. Rev. 722, 738 (1947). Gellhorn also supported publications by foreign scholars on the same subject in the United States, including most prominently a study by Harry Street, a noted English scholar, which was published in the Michigan Law Review.138See Harry Street, Tort Liability of the State: The Federal Tort Claims Act and the Crown Proceedings Act, 47 Mich. L. Rev. 341, 341 (1949). At the time, two other leading English scholars also wrote important works that were published in American journals, further signifying the interest and open-ness of American audiences to foreign administrative law, at least if within the “Anglo-American tradition.” See generally Stanley de Smith, Delegated Legislation in England, 2 Western Pol. Q. 514 (1949); J.A.G. Griffith, The Constitutional Significance of Delegated Legislation in England, 48 Mich. L. Rev. 1079 (1950). And later in his career, Gellhorn, like Davis a few years before him, was also drawn to tackle the issue of administrative ombudsmen. He wrote an entire book on the subject based on an extensive study of no less than nine ombudsmen systems around the world (in Sweden, Norway, Finland, Denmark, New Zealand, Poland, the former Yugoslavia, and the U.S.S.R.).139See generally Walter Gellhorn, Ombudsmen and Others: Citizens’ Protectors in Nine Countries (1966). And, perhaps most surprisingly to contemporary readers, Gellhorn had also shown particular interest in Japanese administrative law140Walter Gellhorn, Settling Disagreements with Officials in Japan, 79 Harv. L. Rev. 685, 686 (1966). (and constitutional law).141See generally Walter Gellhorn, Comment on the Japanese Constitution (1959).

B.  Today: Decline

While Davis and Gellhorn’s separate studies on ombudsmen offices from the 1960s were strongly comparative, no one could seriously argue that their authors considered them central to domestic U.S. administrative law in the same way that earlier comparative work had been. And, indeed, by the time these studies were published, the decline of comparative administrative law in America was apparent. Most major contemporary scholars working since then were no longer in the business of incorporating foreign or comparative insights into their work, as Jaffe, Davis, and Gellhorn, for example, used to do.142See supra notes 115–41 and accompanying text. They were certainly not in the business of producing systematic studies that centered foreign law in relation to domestic U.S. administrative law as was done at the time of Goodnow and Freund.143See supra notes 54–71 and accompanying text. Even Jaffe, Davis, and Gellhorn appeared to have lost interest in comparison later in their careers. It was no longer, to draw on a previously cited term used by Felix Frankfurter, an “immediate concern” of theirs.144See Frankfurter, supra note 94, at 428.

Flagship law journals in America likewise lost interest in the publication of serious comparative administrative law scholarship as they regularly used to. Much of the very minimal present-day scholarship that does have a strong comparative administrative law hook, which is for the most part written by either established foreign scholars or graduate students who have arrived for academic training in the U.S., has migrated to outlets such as specialty comparative or international law journals.145See, e.g., Jack Beatson, Legislative Control of Administrative Rulemaking: Lessons from the British Experience?, 12 Cornell Int’l L.J. 199, 199 (1979); George A. Bermann, The Scope of Judicial Review in French Administrative Law, 16 Colum. J. Transnat’l L. 195, 195–98 (1977); Richard L. Herrmann, Procedural Due Process in Administrative Law: Some Thoughts from the French Experience, 1 U. Mich. J.L. Reform 45 (1968); Richard W. Parker & Alberto Alemanno, A Comparative Overview of EU and US Legislative and Regulatory Systems: Implications for Domestic Governance & the Transatlantic Trade and Investment Partnership, 22 Colum. J. Eur. L. 61, 61–62 (2015); Vincent Martenet, Judicial Deference to Administrative Interpretation of Statutes from a Comparative Perspective, 54 Vand. J. Transnat’l L. 83, 83 (2021); Maciej Bernatt, Transatlantic Perspective on Judicial Deference in Administrative Law, 22 Colum. J. Eur. L. 275, 275 (2016); Jacques deLisle & Neysun A. Mahboubi, Editor’s Note, 13 U. Pa. Asian L. Rev. (2018); Jacques deLisle & Neysun A. Mahboubi, Editor’s Note, 16 U. Pa. Asian L. Rev. 212, 212 (2021); He Haibo, How Much Progress Can Legislation Bring? The 2014 Amendment of the Administrative Litigation Law of PRC, 13 U. Pa. Asian L. Rev. 137, 137 (2018); Wang Jing, Judicial Review of Regulatory Documents in Administrative Litigation in China, 16 U. Pa. Asian L. Rev. 328, 355–58 (2021). These journals also occasionally published relevant work even prior to that time, mostly by foreign scholars. See, e.g., Barna Horvath, Rights of Man: Due Process of Law and Excès de Pouvoir, 4 Am. J. Compar. L. 539, 562 (1955); Hans G. Rupp, Judicial Review in the Federal Republic of Germany, 9 Am. J. Compar. L. 29, 39 (1960); Ernst K. Pakuscher, Administrative Law in Germany—Citizen v. State, 16 Am. J. Compar. L. 309, 309–10 (1968); Jean-Marie Auby, The Abuse of Power in French Administrative Law, 18 Am. J. Compar. L. 549, 560 (1970). And an inquiry into patterns of citations and references to foreign law across the federal bench also suggests significant signs of disappearance. Indeed, using the relevant databases it was impossible to find even one similar case pattern that resembled the discussion of the House of Lords’ Arlidge judgment in the years following the passage of the APA.146Indeed, I have searched through both Westlaw and LexisNexis for citations to “foreign,” “comparative,” “England,” the “United Kingdom,” “France,” “Germany,” the “European Union,” “Italy,” “Canada,” and “Australia” in any case that cites the APA and received zero relevant results. Attempts to mention the names of the judicial institutions in charge of administrative law in other countries—like the Conseil d’Etat in France or the House of Lords and later the English Supreme Court—have also yielded zero relevant results. Even a practice of “soft use”147For the distinction between “soft” and “hard” uses of foreign law, see Taavi Annus, Comparative Constitutional Reasoning: The Law and Strategy of Selecting the Right Arguments, 14 Duke J. Comp. & Int’l L. 301, 311–13 (2004). of foreign law in our administrative law by either courts or litigators seems to be nonexistent.148The only analog I was able to find is a reference in Justice Cardozo’s dissent in the famous case of Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), to a similarly famous governmental report in England, known as the Donoughmore Committee Report, about U.K. administrative law. See id. at 441 (Cardozo, J., dissenting). It is not surprising, then, why one scholar concluded earlier that “[a] survey of American administrative law scholarship at the close of the twentieth century reveals a field in apparent national isolation.”149Ohnesorge, supra note 54, at 50. Since roughly the mid to end of the 1960s and early 1970s, comparative administrative law has become at most “fringe[].”150Id. at 69.

To be sure, as this description itself suggests, there are exceptions to this pattern. The fact that administrative law comparison transformed into something fringe doesn’t mean that it was entirely “dead, dead, dead.”151Mark Tushnet, Survey Article: Critical Legal Theory (without Modifiers) in the United States, 13 J. Pol. Phil. 99, 99 (2005). Cf. Robert C. Ellickson, Trends in Legal Scholarship: A Statistical Study, 29 J. Legal Stud. 517, 525 n.21 (2000) (referring to a statement by Duncan Kennedy made in 1996 about Critical Legal Studies). Some prominent and junior domestic administrative law (or, more broadly, public law) scholars did occasionally dabble in administrative law beyond our borders,152See, e.g., Charles H. Koch, Jr., “Some Kind of Hearing” in England, 23 Wm. & Mary L. Rev. 219, 219 (1981); Frederick F. Shauer, English Natural Justice and American Due Process: An Analytical Comparison, 18 Wm. & Mary L. Rev. 47, 47–48 (1976); Jack M. Beermann, The Reach of Administrative Law in the United States, in The Province of Administrative Law 171, 184 (Michael Taggart ed., 1997); Tom Ginsburg, Comparative Administrative Procedure: Evidence from Northeast Asia, 13 Const. Pol. Econ. 247, 247 (2002) [hereinafter Ginsburg, Comparative Administrative Procedure]; Tom Ginsburg, The Judicialization of Administrative Governance: Causes, Consequences and Limits, in Administrative Law and Governance in Asia: Comparative Perspectives 1, 1 (Tom Ginsburg & Albert H.Y. Chen eds., 2009); Alfred C. Aman, Jr., Politics, Policy and Outsourcing in the United States: The Role of Administrative Law, in Administrative Law in a Changing State: Essays in Honour of Mark Aronson 205, 210 (Linda Pearson et al. eds., 2008); Cary Coglianese, Administrative Law: The United States and Beyond, in 1 International Encyclopedia of Social & Behavioral Sciences 109, 110–11 (James D. Wright ed., 2d ed. 2015); Martin Shapiro, Codification of Administrative Law: The U.S. and the Union, 2 Eur. L.J. 26, 26 (1996); Martin Shapiro, Judicial Delegation Doctrines: The U.S., Britain, and France, in The Politics of Delegation 173, 173 (Mark Thatcher & Alec Stone Sweet eds., 2003); Jerry L. Mashaw, Reasoned Administration: The European Union, the United States, and the Project of Democratic Governance, 76 Geo. Wash. L. Rev. 99, 99–101 (2007); Pojanowski, supra note 9, at 859–60; Stack, supra note 36, at 294–297; Richard B. Stewart, Environmental Statutory Interpretation in China and the United States, 5 N.Y.U. Envt’l L.J. 556, 556 (1996); Peter L. Strauss, Rulemaking in the Ages of Globalization and Information: What America Can Learn from Europe, and Vice Versa, 12 Colum. J. Eur. L. 645, 645 (2006); Jud Mathews, Agency Discretion, Judicial Review, and “Proportionality” in U.S. Administrative Law, in The Judge and the Proportionate Use of Discretion: A Comparative Study 160, 160 (Sofia Ranchordás & Boudewijn de Waard eds., 2016); Anya Bernstein, Porous Bureaucracy: Legitimating the Administrative State in Taiwan, 45 L. & Soc. Inquiry 28, 28–30 (2020); Stephen Breyer, Judicial Review of Questions of Law and Policy, 38 Admin. L. Rev. 363, 363 (1986); Christopher F. Edley Jr., Administrative Law: Rethinking Judicial Control of Bureaucracy 240–45 (1990); Stephen Breyer, Breaking the Vicious Cycle: Toward Effective Risk Regulation 70–72 (1993); Edward L. Rubin, Discretion and Its Discontents, 72 Chi.-Kent L. Rev. 1299, 1299–1300 (1997); Kent Barnett & Lindsey Vinson, Chevron Abroad, 96 Notre Dame L. Rev. 621, 621 (2020); Nathaniel L. Nathanson & Yasuhiro Fujita, The Right to Fair Hearing in Japanese Administrative Law, 45 Wash. L. Rev. 273, 273–74 (1970); Gillian E. Metzger, Agency Inaction in U.S. Administrative Law, in Droit comparé de la procédure administrative 665, 665 (Thomas Perroud ed., 2014); Jeffrey Lubbers, Notice-and-Comment Rulemaking Comes to China, Admin. & Reg. L. News, Fall 2006, at 5, 5–6; Reeve T. Bull, Market Corrective Rulemaking: Drawing on EU Insights to Rationalize U.S. Regulation, 67 Admin. L. Rev. 629, 629–30 (2015); René Reyes, Nondelegation Doctrine in Comparative Context: Britain’s Great Repeal Bill and the Shadow of Henry VIII, 166 U. Pa. L. Rev. Online 71, 71–72 (2017). and even participated in and sponsored symposia with foreign scholars on key administrative law issues of the day.153See, e.g., Paul R. Verkuil, Crosscurrents in Anglo-American Administrative Law, 27 Wm. & Mary L. Rev. 685, 685–86 (1986) (an essay in a broader Anglo-American symposium on administrative law); Thomas J. Schoenbaum, A Preface to Three Foreign Views of Vermont Yankee, 55 Tul. L. Rev. 428, 428–29 (1981) (same). In addition, as previously mentioned, there are some well-known contemporary U.S. scholars that do take a more frequent interest in administrative law comparison, especially Susan Rose-Ackerman at Yale, Peter Lindseth at the University of Connecticut, Francesca Bignami at George Washington, Michael Asimow at UCLA and Santa Clara, and, before his passing, Bernard Schwartz at NYU.154See supra notes 30–34 and accompanying text. I note that I mention Professor Bernard Schwartz on this particular list because, even though he passed away before scholars like Gellhorn and Davis did, in contrast to them Schwartz did consistently work on comparative administrative law throughout his career and all the way up until the end of the 1990s.

Still, it’s hard to escape the conclusion that these exceptions really do prove the rule. For one thing, the interest domestic scholars have expressed into what’s going on in administrative law outside American borders is quite minimal. Foreign law isn’t described in some of this work in great detail but is often addressed at an extremely high level of generality.155See, e.g., Breyer, supra note 152, at 70–71 (making very casual references to French administrative law); Edley, supra note 152, at 240–45 (same). For work that discusses foreign law at an extremely broad level of generality or that is somewhat frozen in time in its discussion of the state of foreign administrative law, see, e.g., Stack, supra note 36, at 297; Pojanowski, supra note 9, at 859–60; Cass R. Sunstein & Adrian Vermeule, The New Coke: On the Plural Aims of Administrative Law, 2015 Sup. Ct. Rev. 41, 41 (2015). Some of the work isn’t even fully comparative—more in the vein of single-jurisdiction or “areas studies.”156See, e.g., Bernstein, supra note 152, at 29–30 (study of administrative law and culture in Taiwan); Nathanson & Fujita, supra note 152, at 273 (study of administrative law and culture in Japan). A small portion of it also embraces only one (and, in my view, quite thin) tradition of comparison, namely—studies attempting to develop “general” theories of administrative law using stylized public choice or positive political theory tools.157For works in this tradition, see, e.g., Ginsburg, Comparative Administrative Procedure, supra note 152, at 247–48; J. Mark Ramseyer & Minoru Nakazato, Japanese Law: An Economic Approach 191–219 (1999); William Bishop, A Theory of Administrative Law, 19 J. Legal Stud. 489, 495 (1990); Nuno Garoupa & Jud Mathews, Strategic Delegation, Discretion, and Deference: Explaining the Comparative Law of Administrative Review, 62 Am. J. Comp. L. 1, 1 (2014). Furthermore, even those whose work is systematically comparative seem to be severely marginalized in contemporary debates and practice. These scholars work isn’t, for instance, seriously studied or cited by domestic scholars or courts. These scholars’ work, and comparative administrative law more generally, also doesn’t feature in today’s central administrative law case books or treatises used in law schools as comparative materials clearly did, for example, during the time of both Freund and Jaffe.158I note that state-level administrative law, which is, as mentioned before, another domain that is largely marginalized today in the field, further portraying our administrative law as parochial, see supra note 42, is extensively referenced in at least one leading case book. See Michael Asimow & Ronald M. Levin, State and Federal Administrative Law ix-xxi (5th ed. 2020). Finally, and as also mentioned before, some of the work by those who do engage in administrative law comparison today seems to be a kind of one-way street. It’s focused on what other systems might take away from looking at American administrative law,  not on what we in the U.S. might take from them.159As mentioned supra note 37, the work of Susan Rose-Ackerman is representative of the one-way street direction of some of the central contemporary works in comparative administrative law. See also Susan Rose-Ackerman, American Administrative Law Under Siege: Is Germany a Model?, 107 Harv. L. Rev. 1279, 1281 (1994) (asking if German administrative law can be borrowed in America and answering “no”). But it is by far not alone. Indeed, there are other examples of this one-way street phenomenon. For instance, Peter Strauss writes a survey book on U.S. administrative law primarily geared at foreign readers and which has been in continuous production. See Peter L. Strauss, Administrative Justice in the United States vii-xii (3d ed. 2016). In addition, administrative law scholars Ronald Levin and Jeff Lubbers’s well-known survey book on U.S. administrative law, geared for domestic U.S. audiences, has been translated to both Chinese, see Xingzhenfa He Xingzhen Chengxu Gaiyao (行政程序法精要) [Administrative Law and Process in a Nutshell] (Huang Lie (苏苗罕) trans., 1996)), and Japanese, see Gendai Amerika Gyōsei Hō (Keikichi Ohama & Takayoshi Tsuneoka trans., 1996)). Lubbers’s other work on American administrative law has been similarly translated for non-U.S. consumption. For example, his book A Guide to Federal Agency Rulemaking (5th ed., 2012) has been published in Chinese, see Meiguo Guizhang Zhiding Daolun (美国规章制定导论) (Jiang Pengtao trans., 2016) and an article of his has been published in Japanese in a leading Japanese legal journal. See Jeffrey S. Lubbers, Administrative Enforcement in the United States, 72 J.L. & Pol. 445 (2021). By contrast, there is, to the best of my knowledge, no similar case book or survey book that comes out regularly on any foreign jurisdiction’s administrative law and is meant for American audiences (like Strauss’s book on U.S. law is meant to be). Foreign administrative law materials are also never translated to English for consumption by U.S. audiences like Lubbers and Levin’s work has been translated for non-U.S. audiences. The only exception to this pattern that I am familiar with is perhaps Donald Kommers and Russell Miller’s book on the jurisprudence of the Federal Constitutional Court in Germany, which only indirectly discusses some issues of relevance to administrative law. See generally Donald P. Kommers & Russell A. Miller, The Constitutional Jurisprudence of the Federal Republic of Germany (3d ed. 2012). As this description suggests, though, this exception is obviously a very limited one. But that’s not real comparative law work. It’s more like preaching.

The contemporary marginalization of comparative administrative law becomes even clearer when one compares the current state of this field not just to its past, but also to what’s been going on in the adjacent field of constitutional law. In that field, cross-national comparison features much more broadly. There are more active constitutional law scholars in the U.S. who engage comparison systematically.160A partial list of scholars who consistently address comparative constitutional law includes: Tom Ginsburg, Mark Tushnet, Vicki Jackson, Sam Issacharoff, Mark Graber, Asli Bali, Madhav Khosla, Stephen Gardbaum, David Landau, Gary Jacobsohn, Frank Michelman, Jamal Greene, and Mila Versteeg. Some of these have also made independent contributions to domestic U.S. constitutional law (for example, Jackson, Tushnet, Greene, Graber, and Issacharoff) while others work more distinctively in the comparative constitutional law space (for example, Versteeg, Gardbaum, Bali, Ginsburg, and Khosla). Scholarship that draws on foreign systems’ constitutional arrangements to make sense of our own and propose reforms (sometimes quite radical) also appear prominently from time to time in major publication outlets.161For some of the most recent entries, see, e.g., Vicki C. Jackson, Constitutional Law in an Age of Proportionality, 124 Yale L.J. 3094, 3094 (2015); Jamal Greene, The Supreme Court 2017 Term—Foreword: Rights as Trumps?, 132 Harv. L. Rev. 28, 30–38 (2018); Madhav Khosla, Is a Science of Comparative Constitutional Law Possible?, 135 Harv. L. Rev. 2110, 2111–12 (2022) (book review). There are even a few prominent case books that put comparative constitutional law front and center.162See generally Vicki C. Jackson & Mark Tushnet, Comparative Constitutional Law (3d ed. 2014); Norman Dorsen, Michel Rosenfeld, András Sajó, Susanne Baer, & Susanna Mancini , Comparative Constitutionalism: Cases and Materials (3d ed. 2016); Stephen Ross, Helen Irving, & Heinz Klug, Comparative Constitutional Law: A Contextual Approach (2014). And for the relatively prolonged history of case books on comparative constitutional law, see Donald P. Kommers, Comparative Constitutional Law Casebooks for a Developing Discipline, 57 Notre Dame L. Rev. 642, 642 (1982). And some law schools also offer regular classes on the subject, either focusing on comparative constitutional law in general or, more concretely, on comparative constitutional design.163Among these schools, as far as I know, are Harvard Law School, Yale Law School, N.Y.U. School of Law, Columbia Law School, the University of Chicago Law School, and the University of Virginia Law School. Finally, Justices of the Supreme Court cite (or at least used to cite) comparative constitutional law and experience with some regularity, though, as alluded to before, they also passionately fight about whether they should.164See supra note 21 and accompanying text.

In administrative law, we don’t see anything remotely resembling this.165In addition to the various signs for comparative administrative law’s marginalization mentioned throughout this Section, I note that the only law school that has occasionally offered classes in comparative administrative law that I am aware of is Yale Law School, a fact that is primarily explained by Professor Rose-Ackerman’s presence on the faculty there. See also About Comparative Administrative Law Initiative, Yale L. Sch., https://law.yale.edu/study-law-yale/areas-study/comparative-administrative-law-initiative/about-comparative [https://perma.cc/F5Q6-CL8S]. N.Y.U. School of Law does occasionally offer classes that  take a somewhat comparative perspective to administrative law, largely given the fact that it houses several scholars who pioneered the field of so-called “global administrative law” (“GAL”). See Global Administrative Law, Inst. for Int’l L. & Just., https://www.iilj.org/gal [https://perma.cc/J257-D2AE]. I return to discuss GAL and its implications later below. See infra notes 351–55 and accompanying text. It’s as if the possibility of engaging in comparative administrative law in any meaningful capacity is almost entirely invisible today in America.

C.  Explanations for the Decline

What explains all this? Why has comparative administrative law been such a dominant enterprise at the birth of the modern field in America, continued to be meaningful all the way until roughly the end of the 60s and early 70s, and then transformed into nothing more than an underdog? Something that is truly “fringe” if not very close to being “dead, dead, dead”?

One answer needs to be ruled out right off the bat. It is not that at some point when the decline in comparison became evident other countries suddenly stopped to have their own administrative states or a self-contained body of law known as “administrative law.” To the contrary: administrative states in the world have gone from strength to strength, so much so that, as one scholar put it, it is “trite” to observe their global rise and centrality.166Michael Taggart, From ‘Parliamentary Powers’ to Privatization: The Chequered History of Delegated Legislation in the Twentieth Century, 55 U. Toronto L.J. 575, 575 (2005); see also Enrico Borghetto, Delegated Decree Authority in a Parliamentary System: The Exercise of Legislative Delegation in Italy (1987–2013), 24 J. Legis. Stud. 179, 179 (2018) (detailing the extensive rise of delegated legislation in Italy); Jeremy K. Kessler, Illiberalism and Administrative Government, in Law and Illiberalism 62, 64 (Martha Merrill Umphrey et al. eds., 2022) (remarking that “all industrial and post-industrial [liberal-democratic] nation states have featured administrative government”). And administrative law is now similarly an established—indeed, central—field in all post-industrial liberal (and non-liberal) democracies alike.167Though in some systems that lack a formal constitution, the field of administrative law is sometimes just referred to as “public law” or is lumped together—both in scholarship and teaching—with constitutional law. See generally, e.g., Mark Elliott & Robert Thomas, Public Law (3d ed. 2017). But still, we don’t see much administrative law comparison. Or, at least, we don’t see much comparative administrative law in the United States.

Again, why?

One explanation is simply that we no longer need it as much. Comparison is especially called for when creating something new, like writing a new constitution or constituting a new legal field.168See, e.g., Saunders, supra note 49, at 37–38 (speaking on the need for comparison in constitution making as “inevitabl[e]”). And for some examples of the pervasive use of comparisons in moments of constitution-making, see generally D.M. Davis, Constitutional Borrowing: The Influence of Legal Culture and Local History in the Reconstitution of Comparative Influence: The South African Experience, 1 Int’l J. Const. L. 181 (2003). Even Justice Scalia, who was a staunch critic of the use of comparative law in the field of constitutional law, agreed that comparison is indispensable at the stage of a country’s constitutional formation. See Printz v. United States, 521 U.S. 898, 921 n.11 (1997) (“We think such comparative analysis inappropriate to the task of interpreting a constitution, though it was of course quite relevant to the task of writing one.”). That question was important in the past when modern administrative law was just emerging. Like a kid who learns to ride a bike for the first time, we needed the help of those who were more mature and experienced. But today, we’ve already learned how to ride our administrative law bicycle. Comparison is simply much less called for. And it is even less called for when the sources of administrative law have themselves become indigenous to our own legal system, which happened for the U.S. most clearly with the passage of the APA.169This can clearly be gleaned from the fact that since the passage of the APA, the use of comparative administrative law already tailed off significantly. See supra note 113 and accompanying text.

Another explanation for the decline probably has to do with changing biographical and indeed demographical trends. The previous generation of scholars and practitioners of administrative law had close ties to foreign nations. They were often born abroad and educated there.170For example, Frank Goodnow was born and educated in Germany. Freund, while being born in America, returned to Germany with his German-born parents and completed his doctoral studies there. See Ohnesorge, supra note 54, at 58. They also spoke languages other than English and could thus easily consume foreign sources and scholarship.171Id. But today, that’s not the standard story of those who operate within the administrative law space. Most are now U.S. born and raised, speak fewer languages, and their ties to foreign nations are generally much weaker than those held by previous generations.172This can be gleaned not only from larger immigration trends throughout the 20th century in America, but also from the reality in which a J.D. degree from a top-ranked American law school is a strong indication of faculty hiring success. See, e.g., Milan Markovic, The Law Professor Pipeline, 92 Temp. L. Rev. 813, 813 (2020). My own informal impression, moreover, is that until very recently there was no active American administrative law scholar teaching in a U.S. law school who has been educated significantly abroad. I say that, of course, with a good dose of self-awareness and trepidation—as I am a scholar of administrative law who has gained much of my legal education abroad, and I have been recently hired to teach that subject in a U.S. law school (and after using this paper which calls for more comparative engagement and attentiveness as my job talk paper!).

The decline is likely also related to the changing politics of comparative administrative law. When we turned to comparison at first, the reason wasn’t only that we needed help to ride our administrative law bike for the first time. The reason was also that some had believed that to establish a field of administrative law was mission impossible. More specifically, Albert Venn Dicey, the eminent British scholar, had famously argued at the end of the nineteenth century that the concept of a distinctive form of administrative law such as the one that existed in France and in other continental systems is foreign to the U.K. and, by extension, also to other common law systems like the U.S.173See A.V. Dicey, Introduction to the Study of the Law of the Constitution 304–06 (8th ed. 1915). It breeds, Dicey said, perverse “collectivism.”174A.V. Dicey, Lectures on Relation Between Law and Public Opinion in England During the Nineteenth Century 258 (1905). Dicey’s administrative skepticism was widely known in America.175Many if not all the authors mentioned in Section I.A referred to Dicey’s denial of administrative law. But for another example, see Wyman, supra note 73, at 1–2. Moreover, it might be interesting to note that Dicey had spent time in the late nineteenth century at Harvard University. See also A.V. Dicey, The Teaching of English Law at Harvard, 13 Harv. L. Rev. 422, 422 (1900). And for supporters of the rise of administrative state at the turn of the century and later, the turn to comparative law was thus necessary, indeed indispensable, to fend off Dicey’s indictment on the field. To show that there can be an administrative law (and, for that matter, an administrative state) that is attractive and sound. For some, including especially Goodnow and Freund, the attempt involved showing, through comparison, that the kind of continental administrative law that Dicey was indicting was a caricature and that it was much more liberal and enlightened than he had portrayed it.176See, e.g., Frank J. Goodnow, The Executive and the Courts: Judicial Remedies Against Administrative Action, 1 Pol. Sci. Q. 533, 538, 544 (1886) (arguing that German and French administrative law are appropriate sources for American administrative law, notwithstanding apparent differences). For others, including most clearly Justice Frankfurter and those who, like him, endorsed the “traditional system of Anglo-American law,” it was to show, through comparison, that the common law itself (mainly in the United Kingdom but also in other “English-speaking” countries) can be adapted to coexist with an administrative state.177E.g., Frankfurter, supra note 72, at 614–15 (remarking how English law has eventually evolved to acknowledge the possibility of administrative law and noting how Dicey’s later writings have recognized that adaptation). With the fight largely settled and administrative law and the administrative state secured (for the time),178For why this “for the time” qualification is needed, see infra Sections II.C and III.B (discussing the rise of a judicially powerful critique of the constitutionality of the administrative state in the U.S. and its implications). comparison’s political function simply became much less potent.

Academic fads also probably contributed to the decline in comparative administrative law in America. When the field of modern administrative law was initially born, comparison was a prominent and highly regarded scholarly method. Indeed, political science departments used to have systematic interest in comparative politics (and comparative law as well), and so did the emerging subfield of public administration. But things changed mid-century.179See, e.g., Krishna K. Tummala, An Essay on Comparative Administration, 60 Pub. Admin. Rev. 75, 76 (2000) (book review) (highlighting the increasing influence of public choice in political science especially on the expense of comparative politics). The stronghold of comparative methods has waned to be replaced by the generalist methods of rational or public choice. Comparative public administration had also dramatically subsided.180Id. at 75 (documenting that after a remarkable rise of comparative work in public administration in the 60s, that work has gradually waned).

***

All these reasons surely played some important role. But they can’t possibly be the entire story. As we’ve seen, comparative constitutional law is alive and well today in America and beyond, a defined field even experiencing a sort of “renaissance.”181See generally Ran Hirschl, Comparative Matters: The Renaissance of Comparative Constitutional Law (2014). Why not something similar with respect to comparative administrative law?

One potential explanation for this imbalance might be that comparative administrative law hasn’t stuck because of its relatively low prestige when compared with constitutional law. Indeed, administrative law is sometimes said to be the “poor relation of public law; the hard-working, unglamorous cousin laboring in the shadow of constitutional law.”182Tom Ginsburg, Written Constitutions and the Administrative State: On the Constitutional Character of Administrative Law, in Comparative Administrative Law 60, 60 (Susan Rose-Ackerman & Peter L. Lindseth eds., 2017). A “boring”183William Funk, My Ideal ‘Casebook’ or What’s Wrong with Administrative Law Legal Education and How to Fix It, In a Nutshell (So to Speak), 38 Brandeis L.J. 247, 247 (2000). field not fit “for sissies.”184Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke L.J. 511, 511 (1989). Constitutional law, by contrast, is the “most prestigious field in the legal academy.”185Richard A. Posner, Overcoming Law 87 (1995). Another potential explanation might be related to the fact that Americans have become particularly averse to administrative comparison. This may be in part connected to broader cultural beliefs in the United States, which envision the country as a projector, a city on the hill, and a beacon for others.186See Mark Tushnet, When Is Knowing Less Better than Knowing More? Unpacking the Controversy over Supreme Court Reference to Non-U.S. Law, 90 Minn. L. Rev. 1275, 1291 (2006) (drawing on these metaphors to refer to the U.S. self-perception vis-à-vis the world). An exporter not an importer. But the apparently growing turn to administrative law “textualism” and “originalism” (and aversion to so-called “administrative common law”)187See supra note 10 and accompanying text. could be another potential indication of the imbalance with constitutional law. After all, these methods of interpretation signal an enhanced turn inward to our own unique national sources of law and administration—rather than to looking outwardly. Or, at least, the way transnational comparison could be squared with these now ascending methods for “doing” administrative law is quite restricted.188It would involve efforts to show, for example, the scope of comparison the “original” audience had in mind. Alternatively, it would limit the scope of comparative exploration to a domain in which elements like the “communicative content” of the APA leave room for more free-form “construction.” More broadly, originalism and textualism downplay the relevance of experience in the real world. But comparison is all about experience.

But even this can’t tell the entire story. At least within legal academia, administrative law is highly regarded and central and has been so for a while.189One indication of this, among many, is the rise in the popularity of classes on “[l]egislation and [r]egulation” and the fact that some schools don’t even offer constitutional law as a mandatory 1L class. See, e.g., John F. Manning & Matthew Stephenson, Legislation & Regulation and Reform of the First Year, 65 J. Legal Educ. 45, 45 (2015) (discussing the development of the legislation and regulation class, with particular reference to the experience at Harvard Law School). And the rise of administrative law textualism and originalism, while obviously an important trend, is rather ambiguous at this point. Not everyone working in the administrative law space endorse either of these.190For a particularly forceful (and, in my view, compelling) rejection of APA textualism and originalism, see Ronald M. Levin, The Evolving APA and the Originalist Challenge, 97 Chi.-Kent L. Rev. 7, 31 (2022). See also Gillian E. Metzger, Embracing Administrative Common Law, 80 Geo. Wash. L. Rev. 1293, 1293–94 (2012). It is also not entirely clear what this administrative law of “textualism” and “originalism” precisely entail.191For a recent discussion of the many ambiguities involved in a putatively “textual” approach to administrative law, see Kristin E. Hickman & Mark R. Thomson, Textualism and the Administrative Procedure Act, 98 Notre Dame L. Rev. 2071, 2072–75 (2023). And it should be noted that the rise of constitutional textualism and originalism didn’t prevent the emergence of comparative constitutional law—though, of course, their ascendancy is certainly part of what triggers the fight about the legitimacy of its use in the context of judicial decision-making. But, again, with respect to comparative administrative law, there isn’t even a fight.

This leaves a final potential reason for the decline of comparative administrative law. To see the issue, we need to go back a bit. In the general field of comparative law, there used to be a familiar divide between, on the one hand, public law and, on the other hand, private law. Comparison, it was believed, is simply much easier in the latter. Public law was considered “resistant” to comparative law.192Kahn-Freund, supra note 49, at 17. Its institutions or rules arise, so the belief went, “not only from deliberate design . . . [but] from both the history and underlying social problems [of specific nations], such as religious or linguistic diversity.”193John Bell, Public Law in Europe: Caught Between the National, the Sub-National and the European?, in Epistemology and Methodology of Comparative Law 259, 265 (Mark Van Hoecke ed., 2004). While in private law we could often assume some “shared understanding of political, social, and economic functions of the state,”194Mathias Siems, Comparative Law 34 (2d ed. 2018). we couldn’t assume the same thing when it comes to public law. Public law, in other words, was perceived as a unique expression of national values and beliefs and a nation’s idiosyncratic “spirit.”195William Ewald, Comparative Jurisprudence (II): The Logic of Legal Transplants, 43 Am. J. Compar. L. 489, 493–95 (1995) (discussing Savigny’s theory). In terms drawn from Friedrich Carl von Savigny, public law is emblematic of a nation’s spirit—its “Volkgeist.” Id. at 494. The idea, of course, resonates with Montesquieu’s description of the “spirit” of laws. For discussion of that concept and Montesquieu’s thought on this point, see Peter Stein, Legal Evolution: The Story of an Idea 15–17 (1980).

Of course, this sharp divide between private and public law is no longer strongly held (if it ever was) among comparativists. It is recognized, for instance, that private law is similarly afflicted with national values just like public law is.196See, e.g., Oscar G. Chase, Some Observations on the Cultural Dimension in Civil Procedure Reform, 45 Am. J. Compar. L. 861, 865–68 (1997). For recent examples of cutting-edge comparative work in private law that recognizes divergences in national private law cultures, see Yifat Naftali Ben Zion, Cleaning Up the Corporate Opportunity Doctrine Mess: A First Principles Approach, 80 Wash. & Lee L. Rev. 1609, 1609–10 (2023); Yifat Naftali Ben Zion, Good Faith & Loyalty: Reimagining Contracts from a Fiduciary Law Perspective, 98 Tul. L. Rev. 471, 473–77 (2024). And for studies that suggest that there may be a comparative difference across jurisdictions in views about how much private law is intertwined with nation states, see Ralf Michaels & Nils Jansen, Private Law Beyond the State? Europeanization, Globalization, Privatization, 54 Am. J. Compar. L. 843, 843 (2006). And, again, the modern field of comparative constitutional law has clearly emerged, globally and in America, notwithstanding the beliefs in public law’s idiosyncrasies.197Though, as David Fontana has shown, even that process was not entirely evident and took time at least in America. See generally Fontana, supra note 20. But what had in large part enabled this blurring of the sharp divide between private law and public law, and especially the rise of comparative constitutional law as a central field, was something more. The overall sense about constitutional law was that it had gone through a unique process that crystalized the fact that its “possibilities”198Tushnet, supra note 20, at 1225. were becoming significant. That despite national differences, there is a sense in which countries are all engaged in some kind of similar project broadly defined as “constitutionalism.”199In the past, that term was used to signal distinctively liberal-democratic forms of constitutionalism. Today, the domain seems to be enlarging to incorporate even non-liberal democracies. See, e.g., Mark Tushnet, Authoritarian Constitutionalism, 100 Cornell L. Rev. 391, 415 (2015). See generally Constitutions in Authoritarian Regimes (Tom Ginsburg & Alberto Simpser eds., 2014). Moreover, there was a pervasive claim that differences between nations’ constitutional laws have either begun to disappear or at least have softened in a way that makes comparative constitutional law useful, if not indispensable.

And, indeed, scholarship in comparative constitutional law has consistently shown just that. It talked, for instance, about the growing sense of similarities between nations that would make constitutional law comparison useful, identifying certain “paradigms”200Lorraine E. Weinrib, The Postwar Paradigm and American Exceptionalism, in The Migration of Constitutional Ideas 84, 110 (Sujit Choudhry ed., 2007). and elements of constitutional law that appear similar (if not “generic”) across nations.201David S. Law, Generic Constitutional Law, 89 Minn. L. Rev. 652, 659 (2005); see also David S. Law & Mila Versteeg, The Declining Influence of the United States Constitution, 87 N.Y.U. L. Rev. 762, 762–63 (2012) (discussing the increasing similarities and convergences across systems’ constitutional apparatus). Scholarship likewise suggested that the “globalization” of constitutional law is “inevitable,” pointing to pressures in the diffusion of similar norms and institutions of constitutional law.202E.g., Mark Tushnet, The Inevitable Globalization of Constitutional Law, 49 Va. J. Int’l L. 985, 988 (2009). But see Rosalind Dixon & Eric A. Posner, The Limits of Constitutional Convergence, 11 Chi. J. Int’l L. 399, 400 (2011). Even highly exceptional systems—and primarily, so the story goes, the U.S.—did not seem so exceptional if looked at more closely.203See, e.g., Stephen Gardbaum, The Myth and the Reality of American Constitutional Exceptionalism, 107 Mich. L. Rev. 391, 391 (2008). Civil society organizations, or non-governmental organizations (“NGOs”), at both the domestic and the transnational levels, were amplifying similar themes. They’ve created both formal and informal webs that continuously emphasized potential opportunities for cross-national learning in an increasingly “going global” constitutional law.204This has been especially the case with respect to the domain of constitutional law dealing with constitutional rights. See Benedikt Goderis & Mila Versteeg, The Diffusion of Constitutional Rights, 39 Int’l Rev. L. & Econ. 1, 1 (2014).

In stark contrast, the field of administrative law hasn’t gone through the same process. Instead, the overall impression appears to have been that while the possibilities of comparative constitutional law have been increasing with the years, the possibilities of comparative administrative law have not and may in fact have been decreasing. For instance, there was no softening of national administrative differences as has occurred in constitutional law. There were similarly no processes of globalization that had made the possibilities of administrative law seem clear. Rather, differences between nations’ administrative states and laws seem to have become sticky, persistent, and pervasive.205This sense was moreover intensified by the observation that while constitutional amendments seemed like a relatively common, if not frequent phenomena globally, changes in the organization of administration and administrative law were not. This observation had been made already in the early 20th century by the eminent German scholar Otto Mayer. See Otto Mayer, 1 Deutsches Verwaltungsrecht [German Administrative Law] VI (1924) (remarking that “Verfassungsrecht vergeht, Verwaltungsrecht besteht” meaning when “constitutional law passes, administrative law remains”); see also Sabino Cassese, New Paths for Administrative Law: A Manifesto, 10 Int’l J. Const. L. 603, 604 (translating same). But it has been confirmed to some important extent by recent data. See generally Zachary Elkins, Tom Ginsburg & James Melton, The Endurance of National Constitutions (2009) (showing a reasonably high level of change and variability in worldwide constitutional arrangements). These sticky differences in turn made it doubtful that administrative law comparison would yield real benefits that would be worth exploring. Rather, these differences would be costly and would even prove prohibitive—a real “handicap[] to accurate understanding.”206Bernard Schwartz, French and Anglo-American Conceptions of Administrative Law, 6 Mia. L.Q. 433, 436 (1952); see also Mirjan R. Damaška, The Faces of Justice and State Authority: A Comparative Approach to the Legal Process 1 (1986) (“An immense and bewildering subject opens up before one who contemplates the diversity of arrangements and institutions through which justice is variously administered in modern states. The range of diversity is such that it eludes expression in terms of a common vocabulary and makes us uncertain about the adequacy of our basic points of reference.”).

And to be sure, certainly at a surface level, and at various periods of time since the start of comparative administrative law’s demise described in Section I.A, it was easy to point out multiple significant-looking differences amongst various nations’ administrative states and laws. Take a look:

(1) Framework statutes: To start, in America, the APA could not be more central. It’s key to U.S.-based administrative law scholars as well as to U.S. administrative law practitioners’ understanding of the field.207This is true even if scholars do accept that there is much more beyond the APA. See, e.g., Daniel A. Farber & Anne Joseph O’Connell, The Lost World of Administrative Law, 92 Tex. L. Rev. 1137, 1137 (2014). It’s considered our administrative state’s mini-constitution. But in other countries, the idea of statutory codification of administrative law and procedure was, in the past, perceived to be entirely foreign. Indeed, Germany and France used to view administrative law codification with deep suspicion.208See Delphine Costa, Codification of Administrative Law: A French Oxymoron, in Codification of Administrative Law: A Comparative Study on the Sources of Administrative Law 128, 138 (Felix Uhlmann ed., 2023) (describing how the Conseil d’Etat “did not trust the transformation of judge-made law . . . into codified law”). They were committed to the development of administrative law mostly through courts and reliance on “general principles” and unwritten norms.209Marzia De Donno, The French Code “Des Relations Entre le Public et L’Administration”. A New European Era for Administrative Procedure, 9 Italian J. Pub. L. 220, 229 (2017). On the German resistance to codification of administrative law and its commitment to general unwritten administrative law principles, see Hermann Punder, German Administrative Procedure in a Comparative Perspective: Observations on the Path to a Transnational Ius Commune Proceduralis in Administrative Law, 11 Int’l J. Const. L. 940, 943, 958 (2013). On the French resistance to administrative law codification, see Jean-Bernard Auby, Why France Was Unaffected by the Austrian Codification of Administrative Procedure?, in The Austrian Codification of Administrative Procedure: Diffusion and Oblivion (1920-1970) 185, 185–190 (Giacinto della Cananea, Angela Ferrari Zumbini & Otto Pfersmann eds., 2023). Statutory administrative law texts like the APA were anathema, and the field was viewed as “fundamentally jurisprudential” in nature.210 See Costa, supra note 208, at 134 (quoting Rene Chapus, Droit Administratif Général 6, at n.11 (15th ed. 2001)).

(2) Constitutional structure and administration: The divide between parliamentary and presidential systems is, of course, familiar to us from constitutional law. But it is arguably much more critical in administrative law given how it seems to dramatically impact the administrative state’s entire operation. In parliamentary systems, political control over the administrative state is much more streamlined and concentrated than it is in the latter. Given the “fusion” between the legislature and the executive, there is much less of an incentive to draw on administration to get things done rather than on, for instance, legislation.211See, e.g., McNollgast, The Political Origins of the Administrative Procedure Act, 15 J.L. Econ. & Org. 180, 182 (1999). There is also less of a need to constrain administration in ways that are different from “normal” political dynamics.212Id. In presidential systems, by contrast, things look exactly the reverse. The separation of the legislature and the executive and, more broadly, the existence of multiple veto points make the administrative state much more important for policymaking apart from the legislative route.213This is a reality, of course, that to a large extent explains the rise of “presidential administration” in America. See Elena Kagan, Presidential Administration, 114 Harv. L. Rev. 2245, 2246 (2001). And the divergence of institutional interests between branches creates increased incentives to establish constraints over the administrative state outside of normal politics (including by reliance on a relatively elaborate system of administrative law).

(3) Centralization v. decentralization: We know that the degrees of centralization or decentralization of administration matter greatly for how administrative law works in practice.214See, e.g., Gillian E. Metzger, Agencies, Polarization, and the States, 115 Colum. L. Rev. 1739, 1740–41 (2015) (highlighting the pivotal role states play within the American administrative state and given its federalist structure). But here, too, there seemed to be substantial cross-national differences that made it look like administrative law comparison is not worth the candle. In some countries, such as Germany, Belgium, and Spain, there used to be a very high level of decentralization—indeed, most administration in these countries was done locally or regionally, rather than centrally.215See, e.g., Arthur B. Gunlicks, Administrative Centralization and Decentralization in the Making and Remaking of Modern Germany, 46 Rev. Pol. 323, 324 (1984). In other countries, such as France, most administration is done at the central level with very little regional or local independence.216See Jean-Bernard Auby, Lucie Cluzel-Metayer & Lamprini Xenou, Administrative Law in France, in Comparative Administrative Law: Administrative Law of the European Union, Its Member States and the United States 5, 9–11 (René Seerden ed., 4th ed. 2018). In the U.S., we are somewhere in the middle—focusing for the most part on various forms of cooperative federalism and cooperative administration.217For more recent discussions of this dynamic and how it plays out in the development of administrative policymaking, see David S. Rubenstein, Administrative Federalism as Separation of Powers, 72 Wash. & Lee L. Rev. 171, 171 (2015); Miriam Seifter, States as Interest Groups in the Administrative Process, 100 Va. L. Rev. 953, 954–61 (2014).

(4) Scope, underlying political economy, and visions of the state: The scope of the administrative state itself, as well as the political economy underlying it or, if you will, the general “vision” of the state as reflected in administrative arrangements, seemed throughout time to further diverge substantially across countries. For example, the possibilities of nationalization of economies and industries have been extremely limited in the United States. America, it was said, saw itself as a “steering” state that can, at most, intervene to regulate the market.218See Beermann, supra note 152, at 173 (discussing the limits of the “reach” of administrative law given political economy constraints in America). It moreover saw itself as a “reactive” state—one that provides a framework for social interactions, rather than directly or proactively managing them.219See, e.g., Damaška, supra note 206, at 73. But in other countries, the situation appeared quite different. Some countries did rely on nationalization much more substantially than America did.220See, e.g., Alfred C. Aman, Jr., Administrative Law in a Global Era 5–7 (1992). They were less in need of “steering” economies and societies, and more in the role of “directing” them given the high level of state control in markets that is the result of nationalized industries.221Id. For the metaphor of “steering” and how it differs from directing or even “providing, distributing, running, or voting,” see John Braithwaite, Cary Coglianese & David Levi-Faur, Can Regulation and Governance Make a Difference?, 1 Regul. & Governance 1, 6 (2007). Other jurisdictions also rejected an exclusive vision of reaction. They firmly endorsed a “positive” and “activist” state role, which doesn’t just create a thin framework for social interaction, but also proactively manages and coordinates it.222See, e.g., Damaška, supra note 206, at 80. Damaška uses the term “activist” state, but for the similar term of positive state, see Giandomenico Majone, From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance, 17 J. Pub. Pol’y 139, 139 (1997).

(5) Judicial systems and the place of administrative law: Perhaps most vividly because of how much the field of administrative law is traditionally associated with judicial review, there seemed to have been substantial cross-country variation in structures for judicial control of administration, as well as in how different countries view the place of administrative law within the legal system itself. In some systems, like France and countries that followed in its footsteps, judicial control of the administration is done through a uniquely designated system of administrative courts that is part of the executive branch, performs both advisory and adjudicative functions, and is composed of personnel drawn from the civil service who are trained separately from “ordinary” judges.223The difference has become especially stark in France since 1945 with the establishment of the National School of Administration (Ecole Nationale de l’Administration) as a separate entity from the respective school for judges in “ordinary” civil and criminal cases. See Georges Langrod, The French Council of State: Its Role in the Formulation and Implementation of Administrative Law, 49 Am. Pol. Sci. Rev. 673, 688–89 (1955). There was moreover a strong conceptual and doctrinal separation between administrative law and private law. This is the famous droit administratif that, as mentioned before, Dicey came out so strongly against and that was moreover rejected by those who supported the emergence of a distinctive “Anglo-American tradition” in administrative law.224See Dicey, supra notes 173–74 and accompanying text. In other countries, like Germany, administrative law is similarly perceived as a special body of law and different from other fields as in France. But the control over administrative law is nonetheless vested in uniquely designated courts of law, not executive institutions as they are in France and the other systems that build on droit administratif.225See John Bell, Judiciaries Within Europe: A Comparative Review 108–69 (2006). Finally, in yet other systems, particularly those like the United States and the United Kingdom (the “Anglo-American tradition” again), administrative law was entirely continuous with the regular court system. Administrative law disputes are therefore resolved by regular judges with regular (and general) training in law. Administrative law and private law are moreover not tightly if at all separated.226See, e.g., Carol Harlow, “Public” and “Private” Law: Definition without Distinction, 43 Mod. L. Rev. 241, 241–42 (1980) (emphasizing the weakness of the public and private law divide in common law systems).

(6) Civil society organization: We know that civil society organization is crucial for administrative law.227See, e.g., Richard B. Stewart, The Reformation of American Administrative Law, 88 Harv. L. Rev. 1667, 1669 (1975) (discussing the reformation of American administrative law in response to, and as a way to facilitate, civil society interventions into administrative policies); Schiller, supra note 7, at 1399–410 (discussing the rise of the pluralist paradigm in American administrative law from a historical perspective). But nations seemed to diverge substantially in that as well. In America, structures of organization are plural and diverse. We see a substantial amount of diverse civil groups with multiple different claims over policy and administrative law. But in European nations, and other countries—for example in Latin America—forms of “neo-corporatism” were quite powerful.228See, e.g., Joseph Szarka, Environmental Policy and Neo-Corporatism in France, 9 Env’t Pol. 89, 89 (2000). There wasn’t, in other words, a strong dynamic of pluralist policymaking. Civil society in those countries was traditionally quite weak, and the state used to work with a limited (and often state-funded) groups of stakeholders in making administrative policies.229Id. at 91.

(7) Bureaucratic ethos and tradition, and the bureaucracy’s place in the culture: Administrative law is also, in large part, the law of bureaucratic organizations. The way bureaucracies behave is thus central to the field.230See, e.g., Jerry L. Mashaw, Bureaucratic Justice: Managing Social Security Disability Claims 1 (1983). But countries’ bureaucracies appeared, again, to be dramatically divergent when compared to one another. On paper at least, national bureaucracies were trained differently, represented potentially different societal classes, possessed a different ethos toward the meaning of public service policy, and had different understandings of how much of their work is discretionary and political (and how much they work in environments that are themselves political and in constant interaction with political appointees).231See Martin Painter & B. Guy Peters, Administrative Traditions in Comparative Perspective: Families, Groups, and Hybrids, in Tradition and Public Administration 19, 20–23 (Martin Painter & B. Guy Peters eds., 2010); see also B. Guy Peters, Administrative Traditions: Understanding the Roots of Contemporary Administrative Behavior 1–3 (2021); Sabine Kuhlmann & Helmut Wollmann, Introduction to Comparative Public Administration: Administrative Systems And Reforms in Europe 325–44 (2d ed. 2019). So, for example, a law for the U.S. bureaucracy, which is penetrated by a high level of political appointees, seemed to be quite different from the kind of law appropriate for the Westminster bureaucracy depicted in Yes, Minister or the German Rechtsstaat bureaucracy which developed a high ethos of legalization and rule of law.232Painter & Peters, supra note 231, at 5. And a law for a cadre of professional French bureaucrats who were trained at a designated professional school and who have different understandings of what discretion means, would be different from the law that we would write or try to formulate for an American “street-level” official.233Id. See generally Michael Lipsky, Toward a Theory of Street-Level Bureaucracy (Inst. for Rsch. on Poverty, 1969) To add to that, societal reaction to the existence of a bureaucratic class that administrative states had made so central also seemed importantly split across nations. In America, a culture of bureaucratic skepticism was believed to be prevalent—some say it is perhaps part of our DNA.234See, e.g., Fareed Zakaria, Why Americans Hate Their Government, Wash. Post (Nov. 21, 2013), https://www.washingtonpost.com/opinions/fareed-zakaria-why-americans-hate-their-government/2013/11/21/0fd0d32c-52de-11e3-a7f0-b790929232e1_story.html [https://perma.cc/RG6H-RLCH]. But in other places, bureaucracies didn’t seem to necessarily raise similar concerns or passions. Bureaucracy in these countries was just a benign part of life.235Id.

(8) Regulatory culture and style: Countries moreover appeared to diverge in their regulatory culture much more broadly. In the U.S., a paradigm of “adversarial legalism” seems to be quite dominant, by which policy is formulated through the clashing of interests that are often channeled through the courts.236Robert A. Kagan, Adversarial Legalism: The American Way of Law 3 (2001). There has also been for a while now a generally favorable attitude toward regulation through rulemaking and formalized decision-making modes more broadly (even if the APA calls them “informal”).237See, e.g., Lars Noah, Governance by the Backdoor: Administrative Law(lessness?) at the FDA, 93 Neb. L. Rev. 89, 95 (2014) (arguing that the use of informal regulation has been on the rise and reflects deep lawlessness). But in other countries, the regulatory culture seemed quite distinct. Rather than adversarial it was sometimes characterized as “consensus-based.”238Richard B. Stewart, Accountability and the Discontents of Globalization: US and EU Models for Regulatory Governance 1 (Sept. 20, 2006) (unpublished manuscript), https://www.iilj.org/wp-content/uploads/2016/11/Stewart-Accountability-and-the-Discontents-of-Globalization-2006.pdf [https://perma.cc/7U9N-X3E6]. And rather than formalized, other countries seemed to be much more informal, and less rule bound.239See, e.g., David Vogel, National Styles of Regulation: Environmental Policy in Great Britain and the United States 146–93 (1986); Robert A. Kagan, American and European Ways of Law: Six Entrenched Differences, in European Ways of Law: Toward a European Sociology of Law 41, 47 (Volkmar Gessner & David Nelken eds., 2007). Regulation based on trust and more confidence in the “tap on the shoulder” or “good chaps” kind of process seemed to be pervasive outside America, including perhaps most clearly in the U.K.240See Vogel, supra note 239, at 146–93 (discussing the informal style of regulatory action in England).

(9) Legal culture and style: Legal styles—not only regulatory styles—also appeared to be dramatically different between jurisdictions. Though, as previously discussed, there is now a growing trend towards administrative textualism and originalism,241See supra notes 9–10, 184, and accompanying text. it is hard to deny that administrative law used to have a deeply pragmatic and theoretical cast in America. Indeed, American administrative law sometimes appeared to be in constant search of a theory—whether a democratic theory, moral theory, or something that is being hypothesized and tested empirically.242See, e.g., Matthew D. Adler, Justification, Legitimacy, and Administrative Governance, 5 Issues Legal Scholarship 1, 12 (2005) (highlighting how the search for administrative legitimacy in America has led administrative law scholarship to explore various theoretical and empirical paths to go beyond the merely doctrinal). “We are all [administrative law] realists now.”243This statement is a paraphrase from the well-known quip “we are all legal realists now.” E.g., Brian Bix, The Many Faces of Legal Realism, 2 Ordines 18, 20, 30 (2022). But other systems didn’t appear to have a similarly pragmatic or normative attitude toward the subject of administrative law. They were much more administratively doctrinal and technical than Americans have been for quite some time. The difference was especially striking when compared with Germany, which was indeed characterized by a strongly scientific and juridic style of “doing” administrative law (and “doing” law generally).244See Punder, supra note 209, at 944 (discussing Germany’s commitment to the scientific method in administrative law). But this was also the case with respect to our sibling from the “Anglo-American tradition,” the United Kingdom. In fact, when commenting on administrative law in the U.K. in the 1960s, Kenneth Culp Davis could barely disguise his aversion to the distinctively English legal style of the time.245See supra note 131 and accompanying text. He wrote, for example, that scholarship in the U.K. on administrative law needs to move from “bombast to realism”246Davis, An American View, supra note 131, at 139. and that  administrative law there more broadly suffers from a problem of “practical jurisprudence.”247Davis, A Problem, supra note 131, at 201. And to be sure, other countries didn’t always appreciate the American style of administrative law. The American realist, pragmatic, or moralistic jurisprudence both in general and specifically in administrative law was even ridiculed in the U.K. as nothing more than “Jazz Jurisprudence” for lacking sufficiently robust doctrinal chops.248C.K. Allen, Law in the Making 45 (3d ed. 1939); see also Neil Duxbury, English Jurisprudence Between Austin and Hart, 91 Va. L. Rev. 1, 62 (2005); Robert Stevens, Basic Concepts and Current Differences in English and American Law, 6 J. Legal Hist. 336, 344 (1985).

(10) Complexity: Finally, the complexity of the field probably also contributed to administrative law comparativism’s demise. Indeed, certainly compared with constitutional law, administrative law seems to have a “higher degree of technical complexity” in large part “due to a much greater amount of regulation and case law to be studied than in constitutional law.”249Jacques Ziller, Public Law, in Elgar Encyclopedia of Comparative Law 603, 604 (Jan M. Smits ed., 2006). Administrative law, in short, is distinctively hard or, as Justice Scalia described it in a term already mentioned before, a field not apt “for sissies.”250Scalia, supra note 184, at 511.

***

With such sense of deep and sticky divergence and complexity, and no similar move to what had occurred in constitutional law by which the possibilities of cross-national comparison have been so forcefully emphasized, it is not entirely surprising that the field of comparative administrative law died out or became nothing more than a sideshow. Cumulatively at least, the variances highlighted above all give the nagging sense that administrative law comparison is likely to prove particularly tricky, much more so than constitutional law. That it may not be worth the candle.

II.  WHY REVIVE?

Not every trend of the past requires reviving. Sometimes it’s better to leave things in the past and move on. And not everything that is on the fringe needs to move to center stage. Sometimes there are good reasons for leaving things well outside the spotlight. But that’s not the case with comparative administrative law. Reviving it to become more meaningful would serve valuable goals. Moving it from the periphery and closer to the core would put us in a better place to face the moment our administrative law finds itself in. This Part explains why.

A.  Why Compare?

Start at the beginning. Why even do comparative law? Why is it important, in other words, to study the way in which different jurisdictions’ legal arrangements and institutions diverge or converge?251See Sujit Choudhry, Globalization in Search of Justification: Toward a Theory of Comparative Constitutional Interpretation, 74 Ind. L.J. 819, 829 (1999). Academic work on this is broad, sophisticated, and complex.252For some key works that give an overview of the field, see generally The Oxford Handbook of Comparative Law (Mathias Reinmann & Reinhard Zimmermann eds., 2d ed. 2019); Geoffrey Samuel, An Introduction to Comparative Law Theory and Method (2014); Jaakko Husa, A New Introduction to Comparative Law (2015); Siems, supra note 194; Günter Frankenberg, Comparative Law as Critique (2016). But without doing too much violence to various important subtleties, it seems fair to identify four general uses for comparative law.

The first might be called genealogical.253See, e.g., Janet Halley & Kerry Rittich, Critical Directions in Comparative Family Law: Genealogies and Contemporary Studies of Family Law Exceptionalism, 58 Am. J. Compar. L. 753, 753 (2010). The history of nations strongly suggests that there were always important connections between jurisdictions—people moving across geographical borders, infusing their destination with legal ideas they brought with them in their metaphorical backpacks from back home (if not imposing them), or taking ideas to explore and implement (sometimes colonize) back home.254Alan Watson, Legal Transplants: An Approach to Comparative Law 22 (2d ed. 1993) (attributing to Roscoe Pound the saying that “[h]istory of a system of law is largely a history of borrowings of legal materials from other legal systems”). The study of comparative law can thus enable us to see patterns of movement and the diffusion of such ideas that we didn’t recognize before, thereby deepening our understanding of legal rules’ and institutions’ origins and evolution.

A second purpose of comparative law, probably closer to the core of the field, might be called reflective or critical. After all, we’re not bionic or faceless people. We usually work within confined domestic borders, studying how laws and legal institutions “of the place” can be explained, should be fixed, or could be influenced, how to decide according to their rules, and how to even think about them. We also care, often intimately, about our own geographic situation and the law around it. How could we not? But comparative law seems indispensable for even that type of process. Indeed, seeing how things work elsewhere in a foreign land can serve as a crucial “stimulus to legal self-reflection” about our own domestic predicament.255Choudhry, supra note 251, at 836. It provides us with a certain remoteness from our unique location and thus teaches us “to be more critical about the functions and purposes of the rules” we regularly study or operate by. 256Peter de Cruz, Comparative Law in a Changing World 19 (3d ed. 2007). Comparative law also teaches us not to “accept [these rules’] validity purely because they belong to [our] own system of law,”257Id. partly because the comparative enterprise “often picks up issues or makes connections that remain invisible”258Mary Ann Glendon, Paolo G. Carozza & Colin B. Picker, Comparative Legal Traditions in a Nutshell 8 (4th ed. 2016). and because that enterprise diffuses “false necessities.”259Id; Vicki C. Jackson, Methodological Challenges in Comparative Constitutional Law, 28 Pa. State Int’l L. Rev. 319, 320 (2010). For the idea of the value of comparison as a “dynamic,” as opposed to “static,” reflection on domestic law, see Rosalind Dixon, A Democratic Theory of Constitutional Comparison, 56 Am. J. Compar. L. 947, 949 (2008). By way of comparison, and looking at what’s different and what’s the same across borders, we can also gain a better understanding of what it is exactly that makes us unique and special, not exactly like everyone else. For it is through comparison that we can often more readily realize the existence of “competing political visions and contradictory normative ideals” as they are reflected in the law.260Günter Frankenberg, Critical Comparisons: Re-thinking Comparative Law, 411 Harv. Int’l L.J. 411, 452 (1985). Following comparison, we can then get back and reflect on how our own laws and institutions express those ideals or rather fail them.

Doing comparative law also has other relevant side benefits that support this key goal of self-criticism and self-reflection. For one thing, comparative law can be an important part of liberal education in law, in the sense that knowing something meaningful about how other countries in the world “do law” is part of the relevant knowledge that any sensible and mature lawyer should possess.261See, e.g., James Gordley, Comparative Law and Legal Education, 75 Tul. L. Rev. 1003, 1003 (2001); Tushnet, supra note 20, at 1309. And learning about others can be a crucial background condition that would allow us to enter into conversations with others in the world, conversations which, in turn, can enable the kind of learning and reflection that is a central promise of comparative law (in large part because it signals both collaboration with others and respect for them).262For an exposition that highly relies on the values of transnational collaboration and respect as a source for improving self-criticism and learning, see Jackson, supra note 21, at 111–12.

A third use of comparative law may be understood as directly reformist or institutional. We do comparison as a technique of self-improvement. We ask: If other countries are facing what seems like a similar legal problem or a challenge to a legal institution, and they’ve found an arrangement that seems to work for them quite well, perhaps it could also work for us? Indeed, comparative law is sometimes offered as a way to figure out “which solution of a legal problem is the best”263Konrad Zweigert & Hein Kötz, An Introduction to Comparative Law 8, 46 (Tony Weir trans., 2d ed. 1987). or is “clearly superior.”264O. Kahn-Freund, Comparative Law as an Academic Subject 22 (1965). Or, if not the best or clearly superior, then at least a solution that’s less of an “imperfect alternative”265See generally Neil K. Komesar, Imperfect Alternatives: Choosing Institutions in Law, Economics, and Public Policy (1994). from what we presently have such that it would be sensible for us to “transplant,”266See generally Watson, supra note 254. “migrate,”267Sujit Choudhry, Migration as a New Metaphor in Comparative Constitutional Law, in The Migration of Constitutional Ideas 1, 19–21 (Sujit Choudhry ed., 2006). or “borrow”268Nelson Tebbe & Robert L. Tsai, Constitutional Borrowing, 108 Mich. L. Rev. 459, 462–67 (2010). it in some form and after proper adaptation.

Finally, and even if solutions that exist in comparative law can’t really be transplanted, migrated, or borrowed in any form in the short-term, perhaps because the legal culture in a specific country makes it entirely unsuitable for the other country, that doesn’t mean that doing comparative law is pointless. In these situations, the final use of comparative law kicks in. Comparative law can be a technique of cultural transformation. Doing comparative law can be a move within the given legal culture that tries to adapt or complicate it to make it more amenable in the future for desirable change. Both public and official discussion of the possibility of learning from other countries and even transplanting their ideas in some form act as a kind of constructive “irritant”269I draw this term from Gunther Teubner, Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences, 61 Mod. L. Rev. 11, 12 (1998). and a technique to proactively engineer legal culture to make it in the future something else that could potentially be better.270Cf. Oren Tamir, Constitutional Norm Entrepreneuring, 80 Md. L. Rev. 881, 881–82 (2021) (discussing ways norm entrepreneurs might operate to change deeply embedded norms).

As may be expected, comparativists often fight, vigorously, about which goal amongst these is the most important or valuable and which may even be dangerous. On one end of the spectrum, there are so-called “universalists”271Choudhry, supra note 251, at 833. who endorse an “ideology of similarity.”272I draw this term from Christoph Schönberger, Verwaltungsrechtsvergleichung: Eigenheiten, Methoden und Geschichte, in Handbuch ius Publicum Europaeum, Bd. IV: Verwaltungsrecht in Europa: Wissenschaft 493, 500 (Armin von Bogdandy et al. eds., 2011) (English translation on file with the author and cited with permission). They believe that, despite apparent differences, many of us are essentially the same. Consequently, universalists are drawn to the most ambitious reformist, institutional, and cultural transformative goals of doing comparative law (or, at least, they feel reasonably confident in doing so).273For work in the vein of the universalist tradition, see, e.g., Mauro Cappelletti, The “Mighty Problem” of Judicial Review and the Contribution of Comparative Analysis, 53 S. Cal. L. Rev. 409, 412 (1980); Jeremy Waldron, Foreign Law and the Modern Ius Gentium, 119 Harv. L. Rev. 129, 132 (2005) (arguing that comparative law and particularly interactions and exchanges between courts of different nations can help create a new kind of “natural law”). By contrast, there are so-called “particularists”274Choudhry, supra note 251, at 830. who endorse an “ideology of difference.”275Schönberger, supra note 272, at 500. They claim that “there are differences in detail” between legal systems “that are so profound they call into question the extent of a shared foundation of legal thought.”276George P. Fletcher, The Universal and the Particular in Legal Discourse, 1987 BYU L. Rev. 335, 342 (1987). For particularists, comparative law is at most a reflective and critical enterprise, not a reformist or transformative one. Transplantation or borrowing from one system to another, they argue, is utterly impossible.277See, most famously, Pierre Legrand, The Impossibility of ‘Legal Transplants’, 4 Maastricht J. Eur. & Compar. L. 111, 116–18 (1997). In fact, particularists occasionally worry that even reflection and self-critique through comparative law would have unfortunate consequences (especially that of tacit colonization and further marginalization of non-Western cultures and traditions of law).278See generally David Kennedy, The Methods and the Politics, in Comparative Legal Studies: Traditions and Transitions 345 (Pierre Legrand & Roderick Munday eds., 2003) (developing a general critique of comparative law that emphasizes the potential subordinating and colonizing effect it can have rather than emancipatory effects).

We need not take a decisive stand on each of these poles right now. As we will soon see,279See infra Section II.E. a sensible comparative approach in general, and to administrative law in particular, moves away from the poles to take a position someplace in the middle (though, for reasons that will also be evident later, and in the administrative law context at least, probably closer to the particularist pole than to the universalist one). But before we get to all that, something else needs to be said.

B.  The (Renewed) Possibilities of Comparative Administrative Law

All the goals of doing comparative law just discussed are general in nature. As such, they apply in principle to any field of law, including, of course, to administrative law. But with respect to this specific field, something seems to be standing in the way. As we saw in Part I.C, the demise of comparative administrative law was not just coincidental.280See supra Section I.C. Rather, it was explained to some important extent at least by a strong sense that the possibilities of doing comparative administrative law are quite limited. That, especially when compared with constitutional law, cross-national differences between systems’ administrative laws remain persistent and deep. And that, again in contrast to constitutional law, there was no similar globalization of administrative law that made the prospects of comparison promising.

It has been so for a while, but we are now finally at a point where we can decisively say that this is no longer true. The possibilities of comparative administrative law are now evident and clear once more, very much like they have been for some time now in the field of comparative constitutional law. Indeed, just as in constitutional law, differences between national systems’ administrative laws and structures have similarly begun to “fade”281Bignami, Comparative, supra note 32, at 155. or at least are now much more “fluid.”282John S. Bell, Comparative Administrative Law, in The Oxford Handbook of Comparative Law 1250, 1258 (Matthias Reimann & Reinhard Zimmermann eds., 2d ed. 2019). And as with constitutional law, administrative law has also gone through a roughly similar process of globalization or “universality.”283Jeffrey Jowell, The Universality of Administrative Justice?, in The Transformation of Administrative Law in Europe 55, 62–64 (Matthias Ruffert ed., 2007). The conditions are now finally and securely ripe for the revival of comparative administrative law.

1.  Cross-National Administrative Law Fluidity

To see this, begin with the fading of cross-national differences or their fluidity. Section I.C identified multiple dimensions along which jurisdictions seemed to differ from each other in the ways they organize administrative states and laws. But looking more closely now, and with the benefit of the passage of time, a much more blurred picture is revealed.

(a) Framework statutes: To begin, while in the past many systems outside the U.S. rejected the idea that administrative law should be grounded in a framework statute a la the APA, that is no longer the case. The introduction of framework administrative law statutes is now a clear and decisive global trend.284For discussion at an early stage in the context of Europe, see generally Sabino Cassese, Legislative Regulation of Adjudicative Procedures, 3 Eur. Rev. Pub. L. 15 (1993). And for a recent confirmation of the trend in Europe, see Giacinto della Cananea, The Common Core of European Administrative Laws 72 (2023). For the same trend in Latin America, see Allan Brewer-Carias, Administrative Procedure and Judicial Review in Latin America, in Judicial Review of Administration in Europe 65, 67 (Giacinto della Cananea & Mads Andenas eds., 2021) (remarking that “[i]n almost all Latin American countries, the rules of administrative procedure are regulated through special Administrative Procedure Laws”). Germany was early to adopt the change, despite strong resistance initially in the late 1970s.285See generally Verwaltungsverfahrensgesetz [VwVfG] [Administrative Procedure Act], May 25, 1976, Bundesanzeiger [BAnz] (Ger.). And many others have followed in its footsteps, both in Europe and in Latin America, with the latest addition being France in 2015.286See generally Code des relations entre le public et l’administration [C.R.P.A.] [Code on the Relations between the Public and the Administration] (Fr.).

(b) Constitutional structure and administration: The divide between parliamentary and presidential systems, arguably more important for administrative law than for constitutional law, is also not as stark as it used to be. In parliamentary systems in Europe and elsewhere, there is a clear trend whereby traditional parties have weakened, exemplified by both the appearance of new smaller parties in parliaments across the globe287See, e.g., David P. Baron, Comparative Dynamics of Parliamentary Governments, 92 Am. Pol. Sci. Rev. 593, 596 (1998) (discussing the rise of smaller parties across Europe’s parliamentary systems). and by the noted empowerment of so-called “backbenchers.”288See, e.g., Meg Russell, The Policy Power of the Westminster Parliament: The Empirical Evidence, U.K. Const. L. Ass’n (Dec. 4, 2015), https://ukconstitutionallaw.org/2015/12/04/meg-russell-the-policy-power-of-the-westminster-parliament-the-empirical-evidence [https://perma.cc/ZP77-6AX2] (highlighting how the rise of backbenchers has weakened the government’s parliamentary policy power in the U.K.). This obviously makes it much harder for the government of the day to operate through parliamentary channels to get its policy created and, accordingly, complicates claims that branches in parliamentary systems are inescapably fused.289See, e.g., Andrew Edgar, The Westminster Model in Comparative Administrative Law: Incentives for Controls on Regulation-Making, 38 U. Tasmania L. Rev. 47, 57–58 (2019). The need for administrative law and constraints on the power of administration seem therefore much more pronounced than they used to be even for parliamentary systems. The rise of empowered prime ministers in various parliamentary democracies who manage empowered independent offices that aim to execute policies that come directly from prime ministers themselves, rather than their cabinets, is another indication of the possible growing “presidentialization” of parliamentary systems.290See generally The Presidentialization of Politics: A Comparative Study of Modern Democracies (Thomas Poguntke & Paul Webb eds., 2005). And to be sure, the same blurring of the lines exists on the presidential side as well. Here, the rise of “separation of parties, not powers”291Daryl J. Levinson & Richard H. Pildes, Separation of Parties, Not Powers, 119 Harv. L. Rev. 2312, 2312 (2006). coupled with the reality of frequently divided government (at least in the U.S.) also puts pressure on the idea that presidential systems are dramatically different from parliamentary ones.292For a recent illustration of the complex dynamics, see Gregory A. Elinson, Intraparty Conflict and the Separation of Powers, 25 U. Pa. J. Const. L. 1307, 1318–21 (2024). Dynamics expected in theory to occur only in one type of system appear regularly in both, complicating the idea that administrative states or laws always work in extremely divergent ways depending on constitutional structure.293On the general blurring of differences between parliamentary and presidential systems, see Richard Albert, The Fusion of Presidentialism and Parliamentarism, 57 Am. J. Compar. L. 531, 531–32 (2009). See generally Eric C. Ip, Judging Regulators: The Political Economy of Anglo-American Administrative Law (2020) (arguing that similarly suggests how modern developments have eroded differences between parliamentary and presidential systems in the context of administrative law, and as applied to the United States and England).

(c) Centralization v. decentralization: Differences in the degree of centralization of administrative states worldwide are much murkier today as well. Most clearly, there is a growing trend of further centralization even in the most ambitiously decentralized administrative systems.294But for the trend of some decentralization in France, see John Bell & François Lichère, Contemporary French Administrative Law 59–60 (2022). This centralization is expressed either through formal processes, by which some systems have cut back on the independence of decentralized units to make decisions themselves.295On the recent strong centralization trends in Spain, see Carmen Navarro & Francisco Velasco, From Centralisation to New Ways of Multi-Level Coordination: Spain’s Intergovernmental Response to the COVID-19 Pandemic, 48 Loc. Gov’t Stud. 191, 194–95 (2022). Or, as is often the case in the U.S., this is expressed through informal patterns by which the decentralized units implicitly delegate or are dictated from above the content of their policies within the dynamics of central/local cooperation, or in light of the rise in power in the role of chief executives.296On the changes that occurred, for example, in Germany’s federalism structures in recent years, and the more intense focus on centralization, see André Kaiser & Stephan Vogel, Dynamic De/Centralization in Germany, 1949–2010, 49 Publius: J. Federalism 84, 108–10 (2017). Even the U.S. has now gone through a substantial (even if sometimes opaque) process of centralization given the more dominant role of the presidency in administration.297See Jessica Bulman-Pozen, Administrative States: Beyond Presidential Administration, 98 Tex. L. Rev. 265, 298–315 (2019) (discussing the increased, even if somewhat implicit, role of the presidency in the state/administration dynamic).

(d) Scope, underlying political economy, and visions of the state: Conflicting views of political economy and the domain of the administrative state vis-à-vis the market also substantially changed with time. It is now a familiar story that social democracies around the world have been endorsing more and more patterns of privatization and delegation to private entities or the market.298See Taggart, supra note 166, at 613–20 (discussing the rise of “privatization” in the U.K.). See generally Stephen K. Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (1996) (detailing the rise of market economy ideology and privatization across advanced economies around the world). They have, like the U.S., also embraced a rhetoric of government in the role of “steering” and “regulating” rather than “planning” and “directing.”299See Michael Taggart, Globalization, ‘Local’ Foreign Policy, and Administrative Law, in Inside and Outside Canadian Administrative Law: Essays in Honour of David Mullan 259, 274 (Grant Huscroft & Michael Taggart eds., 2006); see also Giandomenico Majone, From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance, 17 J. Pub. Pol’y 139, 156 (1997). And they have moved from being ambitiously “positive” states to being more “reactive” ones. But it is fair to say that even the U.S. has now become more complex and varied than in the past. Discussions of moving the U.S. economy and society to patterns more evident in social democracies, including by endorsing “public options” and national ownership,300See, e.g., Saule Omarova & Todd Tucker, Industrial Policy Requires Public, Not Just Private, Equity, Democracy J. (Mar. 27, 2023), https://democracyjournal.org/arguments/industrial-policy-requires-public-not-just-private-equity [https://perma.cc/VEC4-RA2L]. are a much more substantial theme in American politics today than they used to be.301See Steve Lohr, U.S. Not Always Averse to Nationalization, Despite Its Free-Market Image, N.Y. Times (Oct. 13, 2008), https://www.nytimes.com/2008/10/13/business/worldbusiness/13iht-nationalize.4.16915416.html [https://perma.cc/L4HM-EQFB]. There are also increasing calls that seek to transform the U.S. into becoming a much more “positive” and “innovative” state than in the past.302In my view, recent developments in the U.S. like the so-called Chips Act and the Inflation Reduction Act, both passed in 2022, are arguably quite strong signals for a potential openness in America for a much more robust and positive political economy by the state. See, e.g., Peter Baker, For Biden, Celebrating What a Law Did Rather Than What It Did Not, N.Y. Times (Aug. 16, 2023), https://www.nytimes.com/2023/08/16/us/politics/biden-inflation-reduction-act.html [https://perma.cc/VQ9B-NF45]; Jeanne Whalen, A New Era of Industrial Policy Kicks Off with Signing of the Chips Act, Wash. Post (Aug. 9, 2022, 5:00 AM), https://www.washingtonpost.com/us-policy/2022/08/09/micron-40-billion-us-subsidies [https://perma.cc/5SAW-4HVB]. See generally Beth Simone Noveck, The Innovative State, 150 Dædalus 121 (2021).

(e) Judicial system and the place of administrative law: Most dramatically perhaps, the differences between the way systems adjudicate administrative law disputes and how they perceive administrative law itself have also gradually faded. In France, the idea of a droit administratif in its clearest form has dimmed. Most conspicuously, the Conseil d’Etat, which is the supreme adjudicative body for administrative law disputes in France, its “nerve center,”303 Costa, supra note 208, at 134. has gained both formal and informal independence through the years that make it hard to say, notwithstanding its location within the executive branch, that it is dramatically different from an independent court.304Separation between the advisory and adjudicatory functions of the Conseil d’Etat was achieved by 1995 at the latest. See Pierre Delvové, Le Conseil d’État, Cour Suprême de l’Ordre Administratif [The Council of State, the Supreme Court of the French Administrative System], 123 Pouvoir 51, 59 (2007). The Conseil d’Etat’s body of law, and French administrative law generally, are also increasingly developing a “liberal” sensibility that makes it not that different from conceptions familiar from common law systems relying on the rule of law.305As one example of this, since 1979, French law has recognized a broad duty of providing reasons to individuals. Prior to that, reason-giving was required only when a statute specifically mandated it. But today, “reasons have to be given where civil liberties are restricted, penalties imposed, conditions are imposed on authorisation, existing rights are restricted or withdrawn, time limits [are] set or benefits refused when the requisite conditions are met.” Bell & Lichère, supra note 294, at 23. This occurs in part because of a recent revolution in the Conseil d’Etat’s philosophy and jurisprudence.306Id. at 30–32 But it is also being encouraged by the growing importance and prestige of the Conseil Constitutionnel, which is known for a more explicitly liberal and civil rights–based jurisprudence.307Id. In Germany, while the separated and unique system of administrative courts persists, it too has been importantly transformed. The penetration of the general court system to the administrative one is growing in Germany—especially in light of the jurisprudence of the Federal Constitutional Court which, like the Conseil Constitutionnel in France, tends to constitutionalize further and further areas of administrative decision-making, making German administrative law less distinct from other forms of law.308For a discussion of the complex dynamics of the gradual constitutionalization of German administrative law, see generally Ferdinand Wollenschläger, Constitutionalisation and Deconstitutionalisation of Administrative Law in View of Europeanisation and Emancipation, 10 Rev. Eur. Admin. L. 7 (2017).

And lastly, common law systems are themselves exhibiting transformations that make them much less distinct or different from their continental siblings. Australia, for example, now endorses a model of administrative tribunal adjudication that is constitutionally housed within the executive branch rather than in a separate judicial branch even though it retains commitment to adversarial adjudication and impartiality, which are centrally common law in nature.309See Peter Cane, Judicial Review and Merits Review: Comparing Administrative Adjudication by Courts and Tribunals, in Comparative Administrative Law 426, 444 (Susan Rose-Ackerman & Peter L. Lindseth eds., 2010) (highlighting the fact that Australian administrative law tribunals are housed under the Executive branch of government). And the U.S., too, no matter how some may view this as shocking, reveals some important droit administratif–kind of features. We are familiar, for example, with the fact that the D.C. Circuit is a rather specialized de facto administrative law court, even if informally and by geographical chance.310See generally Patricia M. Wald, Paul Verkuil, Jeremy Rabkin, Lloyd Cutler, Arthur E. Bonfield & Thomas M. Susman, The Contribution of the D.C. Circuit to Administrative Law, 40 Admin. L. Rev. 507 (1988) (discussing the unique place of the D.C. Circuit in administrative law, making it a de facto systematic expert in all administrative law issues). For a recent claim that the D.C. Circuit operates in similar ways to the French Counseil d’Etat, see generally Andrew Hammond, The D.C. Circuit as a Conseil D’État, 61 Harv. J. on Legis. 81 (2024). And the reality that most administrative law adjudications today—perhaps in spite of original intentions—occur outside the confines of the APA and its prescribed procedures, is important in this context as well.311See, e.g., Emily S. Bremer, Reckoning with Adjudication’s Exceptionalism Norm, 69 Duke L.J. 1749, 1752 (2020). That reality means that adjudication throughout the American administrative state is much less judicialized in nature and thus a so-called staple of the Anglo-American tradition of common law–like administrative law adjudication. With the recent jurisprudence of the Supreme Court that insists on what seems like an ever-growing presidential control over the administrative law adjudication apparatus,312See, e.g., Adam B. Cox & Emma Kaufman, The Adjudicative State, 132 Yale L.J. 1769, 1783–97 (2023) (discussing the growing presidentialization of administrative adjudication in the jurisprudence of the Roberts Court and its implications to various values including, primarily, adjudicative independence). the movement away from the “pure” Anglo-American tradition of administrative law into something more familiar in continental administrative law is even doubly evident.

(f) Civil society organization: The organization of civil society in nation states has also changed to become less sharply divergent and more globally fluid than in the past. The neo-corporatist model, prevalent in European nations and other countries around the globe, has weakened.313See generally Organizing Interests in Western Europe: Pluralism, Corporatism, and the Transformation of Politics (Suzanne D. Berger ed.,1981) (describing an earlier account of the changing nature of civil society organization). We see for example the growth of a more pluralist and robust civil society in previously corporatist nations. That growth results in higher expectations that civil society will penetrate policymaking much more substantially and will not suffice with the previous state according to which civil society had only a minimal involvement outside state-funded and subsidized networks.314Suzanne Berger, Introduction, in Organizing Interests in Western Europe, supra note 313, at 1, 4–6. By contrast, scholarship has exposed that corporatism also lives in some pockets of U.S. administrative law policy, whether in explicit form (such as in the banking and energy industries)315See, e.g., Daniel E. Walters & Andrew N. Kleit, Grid Governance in the Energy-Trilemma Era: Remedying the Democracy Deficit, 74 Ala. L. Rev. 1033, 1037 (2023); Saule T. Omarova, Bankers, Bureaucrats, and Guardians: Toward Tripartism in Financial Services Regulation, 37 J. Corp. L. 621, 631–32 (2012); David T. Zaring, The Corporatist Foundations of Financial Regulation, 108 Iowa L. Rev. 1303, 1360–66 (2023). or more implicitly (once we do a deep dive into the organization of allegedly pluralist civil society groups).316See, e.g., Miriam Seifter, Second-Order Participation in Administrative Law, 63 UCLA L. Rev. 1300, 1352–63 (2016).

(g) Bureaucratic ethos and tradition, and the bureaucracy’s place in the culture: Pressure is also mounting on the distinctiveness of nations’ separate bureaucratic traditions. Recent studies show, for example, that even a bureaucratic tradition and style that had internalized a commitment to a highly legalized way of working, such as the German bureaucratic tradition of the Rechsttaat is, in practice, not that divorced from being political and discretionary in ways familiar to us in America.317See Werner Jann & Sylvia Veit, Politics and Administration in Germany, in Public Administration in Germany 145, 150 (Sabine Kuhlmann et al. eds., 2021). The Westminster bureaucracy of a professionalized mandarin class hailed by people like Frankfurter318See supra note 87 and accompanying text. had also gone through substantial changes—including by the increase of the use of politicized bureaucracy (also known as “special advisers” or, briefly, SPADs).319See generally Heath Pickering, Marleen Brans & Athanassios Gouglas, The Institutionalisation of Ministerial Advisers in Westminster Governments (1970-2019): A Systematic Review and Thematic Synthesis (June 28, 2019) (unpublished manuscript), https://www.ippapublicpolicy.org/file/paper/5d0b57425a033.pdf [https://perma.cc/JG7M-YH52]. Even the famous bureaucratic universities or training centers that exist in some countries in Europe no longer possess the same prestige they used to have and may be facing reforms in some countries.320See, e.g., Natalie Huet, Macron Waves Goodbye to France’s Elite School for Top Civil Servants, Euronews (Aug. 4, 2021), https://www.euronews.com/2021/04/08/macron-waves-goodbye-to-france-s-elite-school-for-top-civil-servants [https://perma.cc/ZBF4-G5VB]. By contrast, in the U.S., despite the environment of high politicization and discretion, ideas about an ethos of bureaucratic independence and the existence of unique accountability of the civil service to standards of professionalism and rule of law,321See Paul R. Verkuil, Valuing Bureaucracy: The Case for Professional Government 97–100 (2017). For a very recent entry in this line of scholarship, see generally Anya Bernstein & Cristina Rodríguez, The Accountable Bureaucrat, 132 Yale L.J. 1600 (2023). which are said to be distinctive to bureaucracies across the Atlantic, also seem to be powerfully present. Even the normal cultural dispositions states used to have toward the bureaucracy are revealed to be more complex. The American public, perhaps surprisingly, does seem to show an impressive level of trust in the civil service.322For a recent surprising finding, see Brian D. Feinstein, Legitimizing Agencies, 91 U. Chi. L. Rev. 919, 982–84 (2024). And in other countries, such as the U.K., the image of bureaucrats running wild is similarly much stronger than in the past—perhaps part of what Yes, Minister was, in truth, all about.323See, e.g., Christopher Booker & Richard North, The Mad Officials 52–54 (1994).

(h) Regulatory culture and style: It is also not true anymore that regulatory styles and cultures so dramatically diverge across states or regions. Studies now show that a culture of “adversarial legalism” has likely emerged in Europe as well, even if it is distinct in some way from its American counterpart (and is hence dubbed “Eurolegalism”).324See Francesca Bignami & R. Daniel Kelemen, Kagan’s Atlantic Crossing: Adversarial Legalism, Eurolegalism, and Cooperative Legalism in European Regulatory Styles, in Varieties of Legal Order: The Politics of Adversarial and Bureaucratic Legalism 81, 82–83 (Thomas F. Burke & Jeb Barnes eds., 2017). An attraction to more formalized styles of regulation is evident as well even in countries such as the U.K, in which the tap on the shoulder style of regulation seemed quite strong in the past.325See, e.g., Carol Harlow & Richard Rawlings, Law and Administration 275–80 (3d ed. 2009) (discussing the increased “rulification” of English administrative law). And even in America, while its commitment to rules and legalism is rhetorically and institutionally strong, the picture is also much more mixed. For instance, rules in the U.S. also have “unrules” and much of the regulatory action may in fact occur there.326Cary Coglianese, Gabriel Scheffler & Daniel E. Walters, Unrules, 73 Stan. L. Rev. 885, 894–96 (2021). In addition, studies on the implementation of rules show that rules continue to be in many instances much more flexible and informal despite other pretensions.327See Daniel E. Ho, Does Peer Review Work? An Experiment of Experimentalism, 69 Stan. L. Rev. 1, 82 (2017) (conducting an empirical study which suggests that despite administrative law’s “standard answer” to “guiding line-level discretion has been to write more rules,” evidence highlights that “[d]ue to time and practical constraints, frontline inspectors have limited capacity to absorb, administer, and implement complex rules.”). European-style consensual regulation is also clearly a theme in America today.328 See generally, e.g., Jody Freeman, Collaborative Governance in the Administrative State, 45 UCLA L. Rev. 1 (1997).

(i) Legal culture and style: In similar spirit, it is simply no longer the case that we can contrast so forcefully between legal styles and cultures across nations. As mentioned before, Germany, for example, has long committed itself to a form of “scientific jurisprudence” that seemed, to American eyes, quite bizarre.329See Punder, supra note 209, at 945. But its pragmatism, empiricism, and openness to value choices in “doing” law (in general) and “doing” administrative law (in particular) is evident in some pockets and is in fact expanding, partly in response to changes in domestic academic fads in Germany, but also partly due to the previously mentioned increased influence of the Federal Constitutional Court.330See Larissa Vetters, Judith Eggers & Lisa Hahn, Migration and the Transformation of German Administrative Law: An Interdisciplinary Research Agenda 5–6, 10–11 (Max Planck Inst. for Soc. Anthropology, Working Paper No. 188, 2017), https://www.eth.mpg.de/pubs/wps/pdf/mpi-eth-working-paper-0188 [https://perma.cc/FMZ3-3PX8] (illustrating the growing openness in Germany for “realist” influences on administrative law judging, practice, and thinking). Kenneth Culp Davis’s indictment of administrative law jurisprudence in the U.K. as “impractical” and unnecessarily “bombast[ic]” is also no longer accurate.331Davis, An American View, supra note 131, at 140. The turn to pragmatism (what is sometimes called the “functional style”)332Martin Loughlin, The Functionalist Style in Public Law, 55 U. Toronto L.J. 361, 362–63 (2005). and to value-laden reasoning333For a more contemporary example, see Paul Daly, Understanding Administrative Law in the Common Law World 1–31 (2021) (developing and defending a “values-based” approach to administrative law in common-law systems of England, Australia, Canada, and Ireland). For a somewhat dated illustration of this, see Paul P. Craig, Public Law and Democracy in the United Kingdom and United States of America (1990) (discussing the differences between English and American public law systems, including systems of administrative law, from the perspective of democratic and political theory). in administrative law is now evident everywhere in the U.K. and across the common law world (even if some still try to sling arrows at it in favor of more of old-school English formalism and doctrinalism).334See, e.g., Christopher Forsyth, Of Fig Leaves and Fairy Tales: The Ultra Vires Doctrine, the Sovereignty of Parliament and Judicial Review, 55 Cambridge L.J. 122, 122–23 (1996). For some comparative studies that suggest some of the nuances in approach between English and American jurisprudence, see generally Richard A. Posner, Law and Legal Theory in England and America (1996); P.S. Atiyah & Robert S. Summers, Form and Substance in Anglo-American Law: A Comparative Study of Legal Reasoning, Legal Theory, and Legal Institutions (1987). In fact, when one looks cross-jurisdictionally, it is the American system, not the U.K., that now could be described by Davis as bombastic and lacking appropriate realism, in large part given the endorsement of more and more textualism and originalism, including, as we’ve seen, in administrative law.335See, e.g., supra notes 187–88 and accompanying text.

2.  The Globalization of Administrative Law

There are many potential developments that might help explain why these cross-national differences have been fading away gradually in all the ways I have flagged above (or, at least, why they’ve become more fluid). Some of these explanations are likely “bottom-up” and reflect real changes that exist within national societies and administrative systems to which law and institutions ultimately respond. Moreover, some of these can be the “top-down” consequences of the globalization of constitutional law.336Evident, for example, by the increasing influence of the Federal Constitutional Court in Germany and the Conseil Constitutionnel in France. See supra notes 306–07 and accompanying text. But it can’t be seriously doubted that some of the process is also explained by more top-down globalization of the field of administrative law itself. Indeed, we live today in a world where administrative law has been universalized to some important extent.

Perhaps the most distilled example of this emerging and increasing administrative law globalization is the European Union (“EU”). To be sure, the EU doesn’t codify or require its members to adopt similar systems of administrative law.337For past attempts in the direction of EU codification, now apparently neglected, see European Parliament Resolution of 15 January 2013 with Recommendations to the Commission on a Law of Administrative Procedure of the European Union, 2015 O.J. (C 440) 17–23. The starting point at the EU is one of administrative plurality. But as many scholars have noted, there is undoubtedly an evident trend of at least “gradual convergence” of administrative laws of EU member states.338Carol Harlow & Richard Rawlings, National Administrative Procedures in a European Perspective: Pathways to a Slow Convergence, 2 Italian J. Pub. L. 215, 215, 252–58 (2010). For a less restrained view that doesn’t see the process of pan-European convergence as merely “gradual,” see Jürgen Schwarze, The Convergence of Administrative Laws of the EU Member States, 4 Eur. Pub. L. 191, 193–95 (1998). This occurs through various formal mechanisms that operate in the EU to exert pressure on member states, including the development of “general principles” of administrative law by EU courts (both the European Court of Justice in Luxembourg and the European Court of Human Rights in Strasbourg), the existence of soft law principles of “good administration” identified by the EU ombudsman, and sector-specific EU regulation, which frequently imposes domain-specific requirements on member states. But this gradual “Europeanization”339See generally Mariolina Eliantonio, Europeanisation of Administrative Justice? The Influence of the ECJ’s Case Law in Italy, Germany, and England (2009). of administrative law across Europe also occurs through more informal means—including especially the existence and influence of various networks of European-based scholars who work to distill what they argue is a “common core”340Administrative Justice Fin de Siècle: Early Judicial Standards of Administrative Conduct in Europe (1890–1910) 4 (Giacinto della Cananea & Stefano Mannoni eds., 2021); Giacinto della Cananea & Mauro Bussani, The “Common Core” of Administrative Laws in Europe: A Framework for Analysis, 26 Maastricht J. Eur. & Compar. L. 217, 229–43 (2019); Giacinto della Cananea & Mads Andenas, Administrative Procedure and Judicial Review: A “Common Core” Research, in Judicial Review of Administration in Europe 4, 16 (Giacinto della Cananea & Mads Andenas eds., 2021). of administrative law across European states and the existence of “Pan-European principles of good administration.”341Ulrich Stelkens, The Common Core of European Administrative Laws and the Pan-European General Principles of Good Administration, in Judicial Review of Administration in Europe, supra note 340, at 21, 22.

Intra-EU pressures and attempts at globalizing European administrative law systems to move them in similar directions are highly salient, both formally and informally. They are also the subject of intense scholarly and practical debate.342For an important collection of essays dealing with the issue, see generally Administrative Law in Europe: Between Common Principles and National Traditions (Matthias Ruffert ed., 2013). But it would be wrong to think that the globalization of administrative law is limited to that regional context alone. It exists much beyond. We are now familiar in the administrative law world of the reality whereby “international aspects of regulation” penetrate to the level of domestic regulation in a variety of ways, both in the United States and outside of it.343Richard B. Stewart, Administrative Law in the Twenty-First Century, 78 N.Y.U. L. Rev. 437, 455 (2003). As various scholars have observed, “international norms [continuously] reshape decision-making processes within domestic bureaucracies.”344Daphne Barak-Erez & Oren Perez, Whose Administrative Law Is It Anyway—How Global Norms Reshape the Administrative State, 46 Cornell Int’l L.J. 455, 455 (2013); see also Jason Marisam, The Internationalization of Agency Actions, 83 Fordham L. Rev. 1909, 1911–12 (2015); Richard B. Stewart, The Global Regulatory Challenge to U.S. Administrative Law, 37 N.Y.U. J. Int’l. L. & Pol. 695, 695–96 (2005). But what is important to note here is that this sort of international penetration into the domestic is not done only with respect to substantive norms of regulation—constraining the type of choices domestic countries have with respect to how exactly to regulate a market or render services. Increasingly, international bodies are interested in influencing administrative law processes themselves—including the way administrative agencies conduct hearings, provide reasons, allow for public participation, formulate general policies, facilitate administrative decision-making independence, guarantee transparency, and evaluate regulatory decision-making.

The Organisation for Economic Co-operation and Development (“OECD”) is one central international body that has made decisive moves in this direction.345See, e.g., James Salzman, Decentralized Administrative Law in the Organization for Economic Cooperation and Development, 68 L. & Contemp. Probs. 189, 190–95 (2005); Cary Coglianese, Administrative Law: Governing Economic and Social Governance, in Oxford Research Encyclopedia of Economics and Finance 3 (2022). In a series of documents, the OECD has addressed various administrative law issues ranging from agency independence, to sound public governance, and more generally, regulatory policy, identifying principles of administrative law at a high level of generality that should be best practices for all its member states—including integrity, openness, inclusiveness, accountability, and more.346See generally OECD, Guiding Principles for Regulatory Quality and Performance (2005) (noting how OECD has addressed administrative law issues); OECD, Cutting Red Tape: Comparing Administrative Burdens Across Countries (2007) (same); OECD, Regulatory Impact Analysis: A Tool for Policy Coherence (2009) (same); OECD, Recommendation of the Council on Regulatory Policy and Governance (2012); OECD, Procedural Fairness and Transparency: Key Points (2012) (same); OECD, OECD Best Practice Principles for Regulatory Policy: The Governance of Regulators (2014) (same); OECD, Framework for Regulatory Policy Evaluation (2014) (same); OECD, The Governance of Regulators: Being an Independent Regulator (2016) (same); Org. for Econ. Coop. & Dev., Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust (2017); OECD, OECD Regulatory Policy Outlook 2018 (2018) (same); OECD, Draft Policy Framework on Sound Public Governance (2018) (same); OECD, OECD Regulatory Policy Outlook (2021) (same). The World Trade Organization (“WTO”) works on similar issues as well, consistently pushing an administrative procedural reform agenda through the various formalized tools it possesses.347For the specific role of the WTO in incentivizing this sort of harmonization on the international level, see Gregory Shaffer, How the WTO Shapes the Regulatory State, in Comparative Law and Regulation: Understanding the Global Regulatory Process 447, 447–48 (Francesca Bignami & David Zaring eds., 2016); Sabino Cassese, Global Standards for National Administrative Procedure, 68 L. & Contemp. Probs. 109, 113–16 (2005); David Livshitz, Updating American Administrative Law: WTO, International Standards, Domestic Implementation and Public Participation, 24 Wis. Int’l. L.J. 961, 975–81 (2006); Richard B. Stewart & Michelle Ratton Sanchez Badin, The World Trade Organization: Multiple Dimensions of Global Administrative Law, 9 Int’l J. Const. L. 556, 556–57 (2011). And for a general discussion of “procedural fairness” in the context of global competition law, see D. Daniel Sokol, The Case for Global Best Practices in Antitrust Due Process and Procedural Fairness, in Antitrust Procedural Fairness 4 (D. Daniel Sokol & Andrew T. Guzman eds., 2019). But, to be clear, this is really just the tip of the iceberg. In virtually any international regulatory domain from global competition law to global environmental law, a central focus goes beyond norms of substantive regulation and penetrate, if not center on, the organization of the administrative apparatus or its procedures.348For an extensive survey of the way international institutions control procedural aspects of administrative action worldwide, see Joel P. Trachtman, International Legal Control of Domestic Administrative Action, 17 J. Int’l Econ. L. 753, 755 (2014). For the focus in the World Bank on concepts of “good governance” and support for public participation, see Francesca Bignami, Theories of Civil Society and Global Administrative Law: The Case of the World Bank and International Development, in Research Handbook on Global Administrative Law 325, 326, 333–43 (Sabino Cassese ed., 2016). In fact, the regulation of administrative procedure seems so internationally central nowadays that some scholars have been calling for the explicit embrace of a “global due process”349Gerald L. Neuman, Whose Constitution?, 100 Yale L.J. 909, 919–20 (1991). norm or a “cosmopolitan administrative law”350Giulio Napolitano, Going Global, Turning Back National: Towards a Cosmopolitan Administrative Law?, 13 Int’l J. Const. L. 482, 482 (2015). by which international bodies, laws, and transnational NGOs will pressure nation-states to develop similar administrative law principles to the benefit of a more universalized, cosmopolitan, and open world.

A final indication for the contemporary globalization of administrative law is probably the rise of the so-called Global Administrative Law (“GAL”) movement in the first decade of the twenty-first century.351See Benedict Kingsbury, Nico Krisch & Richard B. Stewart, The Emergence of Global Administrative Law, 68 L. & Contemp. Probs. 15, 15–18 (2005); Sabino Cassese, Administrative Law Without the State? The Challenge of Global Regulation, 37 N.Y.U. J. Int’l L. & Pol. 663, 668–70 (2005). In contrast to previous examples that speak to how global institutions impact domestic administrative law and institutions, the GAL movement is more centrally focused on global institutions themselves.352Kingsbury et al., supra note 351, at 17 (defining GAL as comprising the “mechanisms, principles, practices, and supporting social understandings that promote or otherwise affect the accountability of global administrative bodies” (emphasis added)). What the GAL movement suggests is that general principles of administrative law—ones that we can see in several systems in some form—either already guide global institutions in their own struggle to achieve normative or sociological legitimacy, or that they should embrace general administrative law principles to achieve that sort of legitimacy. GAL, in other words, assumes that there is something to be called administrative law that crosses national borders, a kind of “due process beyond the state”353See generally Giacinto della Cananea, Due Process of Law Beyond the State: Requirements of Administrative Procedure (2016). or “international administrative law.”354Harrop A. Freeman, International Administrative Law: A Functional Approach to Peace, 57 Yale L.J. 976, 976–78 (1948). GAL’s whole premise can’t be squared with a sense of inevitable complexity, and even impossibility, for comparative administrative law. There exists, GAL scholars contend, some form of a global administrative law “baseline,”355Daniel C. Esty, Good Governance at the Supranational Scale: Globalizing Administrative Law, 115 Yale L.J. 1490, 1561 (2006). which either draws from the ability to compare systems and assume some common core amongst them or which draws on the standards of globalized administrative law that bodies like the OECD or the WTO endorse and push national systems to adopt.

3.  The Net Result

All this hopefully goes to show that administrative law has indeed been going through a significant process of both cross-national fluidity and internationalization. That process is clearly no longer unique within public law, as it may have been in the past, to the exclusive domain of constitutional law. Constitutional law’s “unglamorous cousin,” administrative law, has finally matured as well, breaking more decisively now from its previous geographical shackles or silos. These shackles were in large part responsible for the demise of comparative administrative law.

Of course, it is also important not to take the point here about this cross-national fluidity and globalization of administrative law too far. For one thing, the normative underpinnings of the globalization project, both in general and in administrative law particularly, are highly disputed (a point to which we also need to be aware, as we will soon see, when “doing” comparative law).356See infra Section II.D. In addition, there is now a well-known “ ‘backlash’ against global norms and institutions”357Peter G. Danchin, Jeremy Farrall, Jolyon Ford, Shruti Rana, Imogen Saunders & Daan Verhoeven, Navigating the Backlash Against Global Law and Institutions, 38 Austl. Y.B. Int’l L. 33, 33 (2021); see also Eric A. Posner, Liberal Internationalism and the Populist Backlash, 49 Ariz. St. L.J. 795, 795–97 (2017). that we must consider, and which may at a minimum complicate the sense of even gradual convergence amongst nations and systems. What’s more, the globalization project of administrative law, in the EU and beyond, didn’t erase all significant national differences. Differences across countries and regions clearly remain, and some of them are meaningful (as portions of the discussion above already suggested358For example, the development of the term “Eurolegalism” to explain changed regulatory styles is a strong indication that changes are far from clear-cut and may be importantly subtle. See Bignami & Keleman, supra note 324 and accompanying text. and as the discussion further below, in Part III, will moreover suggest).359See infra Section III.A (discussing the differences between systems’ commitments to public participation in general policies as a unique legitimating element of their administrative state). At bottom then, it is certainly possible that the processes of globalization and the massaging of cross-national administrative law differences have been weaker when compared with the parallel processes that occurred with respect to constitutional law. Consequently, there may be something real in the idea that administrative law more deeply reflects the image of a particular country and its “spirit” than even constitutional law does.360See supra note 195 and accompanying text. See generally Ginsburg, supra note 182 (arguing that administrative law is more distinctively representative of countries’ divergent traditions than constitutional law). I make the argument that administrative law is potentially more reflective of a country’s true constitutional ethos in a work in progress. See generally Oren Tamir, Administrativizing Constitutional Law: Why the Solution to the Counter-Majoritarian Difficulty Is Hiding in Plain Sight (2024) (unpublished manuscript) (on file with author).

But even with all these important caveats in place, the point certainly is that the sort of change I have been describing that did occur with respect to administrative law in recent years is a meaningful one. It highlights that it is now simply much less convincing—even farfetched—to say that comparative administrative law is not worth the candle as we may have been able to say in the past. As a result of the administrative law fluidity and globalization that had clearly occurred, comparative administrative law is surely possible now. At a minimum, we now clearly have a sort of cross-national “lingua franca” for administrative law—by which we can trace more easily and comfortably the way administrative law processes work across systems, whether these processes are about hearing, participation, or reason-giving; whether they are about making rules or adjudications; or whether they concern the need to allow for decisional independence, political dependency, or the technologies of evaluating regulatory policymaking.361For a claim in the American context that administrative law can similarly be distilled into several components, see Kevin M. Stack, An Administrative Jurisprudence: The Rule of Law in the Administrative State, 115 Colum. L. Rev. 1985, 1989–93 (2015). More ambitiously perhaps, we can now see that even if nations still importantly diverge in their evident “fluidity” and flirtation with globalization, they do seem to be committed, overall, to something we may think of as a joint “administrative law project.” That project is, on the one hand, a project of creating a body of law that facilitates national administrative states that “get things done”—that is, enables them to achieve various policy goals that are of interest to state organs as effectively and successfully as possible and through reliance on administrative bureaucracies. On the other hand, that project is also unified in the need to have a body of law for an administrative state that could ultimately be squared with other values liberal-democratic states seem to prize, whether these values are the rule of law, representative and participatory democracy, or the protection of rights.

And, indeed, precisely because of this change and transformation that had already occurred in the field of administrative law, it is not at all surprising then that recent years have suddenly begun to signal some initial signs in the direction of a comparative administrative law revival, abroad and even in America. Indeed, more and more work that takes comparative administrative law seriously is beginning to appear, with various scholars now unapologetically announcing that administrative law is comparative law’s “next frontier.”362Janina Boughey, Administrative Law: The Next Frontier for Comparative Law, 62 Int’l & Comp. L.Q. 55, 55–56 (2013). To name just a few examples: Since 2010, there is a comparative administrative law handbook which is now in preparation for its third edition. See generally Comparative Administrative Law (Susan Rose-Ackerman & Peter L. Lindseth eds., 1st ed. 2010); Id. (Susan Rose-Ackerman et al. eds., 2d ed. 2017); Id. (Blake Emerson et al. eds., 3d ed. forthcoming 2024). In 2021, a new comparative administrative law handbook was published, see generally The Oxford Handbook of Comparative Administrative Law (Peter Cane et al. eds., 2021). A new handbook on comparative judicial review in administrative law of countries in Europe and the EU has now also appeared for the first time. See generally Cases, Materials, and Text on Judicial Review of Administrative Action (Chris Backes & Mariolina Eliantonio eds., 2019). And the challenges brought by the COVID pandemic have also triggered important comparative administrative law work recently. See generally Cary Coglianese & Neysun A. Mahboubi, Administrative Law in a Time of Crisis: Comparing National Responses to COVID-19, 73 Admin. L. Rev. 1 (2021). For a recent call for the special need for increasing the emphasis on comparative administrative law in Latin America, see Hector A. Mairel, The Need for Comparative Administrative Law: Studies in Latin America, 6 Comp. L. Rev. 1 (2015). And for further recent additions to the currently growing scholarship on comparative administrative law, see generally The Principle of Effective Legal Protection in Administrative Law: A European Perspective (Zoltán Szente & Konrad Lachmayer eds., 2017); The Ombudsman in the Modern State (Matthew Groves & Anita Stuhmcke eds., 2022); Legitimate Expectations in the Common Law World (Matthew Groves & Greg Weeks eds., 2017). There are now also more conferences devoted to the topic, especially across Europe and the common law world.363In Europe, given the intensity and high focus on the subject of EU administrative law, as well as the influence of the research group on the “common core” of European administrative law, regular events are being held. See Meetings, Common Core Eur. Admin. L., http://www.coceal.it/index.php?option=com_content&view=article&id=17&Itemid=116 [https://perma.cc/9BF2-LMZL]. And across the common law world, there is now a biannual “public law” conference that brings together administrative law scholars from England, Ireland, New Zealand, Australia, and South Africa (as well as other common-law jurisdictions). These conferences also tend to produce edited collections of the papers presented at these conferences. See generally The Unity of Public Law?: Doctrinal, Theoretical and Comparative Perspectives (Mark Elliott et al. eds., 2018); Public Law Adjudication in Common Law Systems: Process and Substance (John Bell et al. eds., 2016). These conferences represent the emergence of growing transnational networks of scholars who have a systematic interest in comparing administrative states and laws. Even some American law schools that had previously ignored the existence of comparative administrative law have started lately to sing a different tune.364Harvard Law School, which has traditionally never offered classes on any issue related to comparative administrative law, now (since 2022) offers a new seminar and reading group on related themes. See Constitutional Dimensions of the Administrative State: Comparative Perspectives, Harv. L. Sch., https://hls.harvard.edu/courses/constitutional-dimensions-of-the-administrative-state-comparative-perspectives-2 [https://perma.cc/ZLZ7-UUL7] (a course taught by Professor Vicki C. Jackson). In fact, even comparative public administration seems to be “back in.”365Jamil E. Jreisat, Comparative Public Administration Is Back in, Prudently, 65 Pub. Admin. Rev. 231, 231 (2005); see also Jody Fitzpatrick, Malcolm Goggin, Tanya Heikkila, Donald Klingner, Jason Machado & Christine Martell, A New Look at Comparative Public Administration: Trends in Research and an Agenda for the Future, 71 Pub. Admin. Rev. 821, 821 (2011); Simon Procher, Culture and the Quality of Government, 81 Pub. Admin. Rev. 333, 333 (2019); Frtiz Sager, Christian Rosser, Céline Mavrot & Pascal Y. Hurni, A Transatlantic History of Public Administration: Analyzing the USA, Germany, and France (2018).

And it is at this point that we must go back to the general values of comparative law, discussed in Section II.A. Now that the path for doing comparative administrative law has been reopened for all to see, these various goals start to seep back in, so to speak. Like they were for the pioneers of the field and those who followed in their footsteps in America, the uses of comparative law would prove a real asset for our own domestic field of administrative law today. Not taking advantage of them, on the backdrop of the already occurring change, would be a huge mistake.

To start, doing comparative administrative law would help us in the historical-genealogical sense.366See supra notes 253–55 and accompanying text. Through comparative administrative law we might, for example, better understand the origins of our American system of administrative law, perhaps discovering that some of it isn’t entirely indigenous but in fact originates from a different soil. It was brought to us at the time when the pioneers of the field of administrative law were, as Section I.A discussed, “self-consciously” exploring foreign law.367Early work in this spirit already suggests this as a promising direction. As legal-historian Rephael Stern has shown in a forthcoming article, notwithstanding the widespread belief that regulation by rulemaking is a distinctively American invention, it appears as though rulemaking was a partial deliberate case of institutional and legal transplantation from the U.K. See generally Rephael G. Stern, The Lost English Roots of Notice-and-Comment Rulemaking, 134 Yale L.J. (forthcoming 2025) (on file with the Southern California Law Review) (suggesting that this historical insight about the transnational origin of notice-and-comment rulemaking might have practical institutional payoffs for today). For similar historical contributions that suggest that central features of our administrative state draw important inspiration from comparative law and practice, see generally Rosenblum, supra note 5 (arguing that the roots of presidential administration drew on comparative lessons); Emerson, supra note 3 (suggesting that the origins of notice-and-comment rulemaking may originate from continental traditions and ideas, especially in Germany).

Doing comparative administrative law will also contribute to our ability to reflect on our own domestic administrative law and critique it.368See supra notes 252–57 and accompanying text. After engaging in comparative administrative law, we might for instance stop taking some of the present arrangements we work by in administrative law so obviously and strictly and perhaps begin to imagine alternative trajectories instead. We might also be able to see more sharply which components of our own administrative law are unique and reflect our own particular national predicament. What is it, in other words, that’s distinctive about America and the way it “does” administrative law? How exactly do we balance the competing impulses underlying the field of administrative law and our own “administrative law project”:369See supra note 361–62 and accompanying text. having administration that gets things done but also being attentive to the demands of democracy, rule of law, and rights? Comparative administrative law can moreover help us see more crisply if our current administrative law truly abides by those ideals or rather fails them, and how, as Goodnow put it, to better face our “modern complex social conditions.”370Goodnow, supra note 11, at iv.

Doing comparative administrative law can also prove useful for consideration of beneficial institutional and legal reforms.371See supra notes 260–65 and accompanying text. Maybe we will be able to get fresh ideas for how to improve our own administrative law, and better calibrate its animating ideals, from looking at other systems and “borrowing” them (after, of course, suitably adapting them). Maybe the experience in other systems can give us the confidence needed to make changes that we were thus far hesitant to pursue or can serve as a test case for the kind of experience we were lacking. And even if direct reform or borrowing is not in the cards today, perhaps because our administrative law culture might be too resistant to it, we needn’t necessarily despair. As we saw, doing comparative law can serve as a means for pushing our administrative law culture (and general legal culture more broadly) in the direction of change, to “irritate” or “entrepreneur” it, so that it would eventually be able to change in what might possibly be highly desirable directions.372See supra notes 269–70 and accompanying text.

C.  Comparison in an Age of Administrative, and Democratic, Pressure

The possibilities of comparative administrative law are now finally looking promising again after years in which they appeared quite gloomy. But there is in fact reason to think that the possibilities of administrative law comparison, and the benefits we would draw from it, are particularly urgent today.

As anybody who has been paying even minimal attention to the field should know very well, our administrative state is under intense pressure today. It is attacked from all sides, and some of its central tenets are rapidly eroding. On the political right, administrative law is being challenged for allowing agencies to “run amok” without sufficient legal and political supervision and accountability.373Jennifer Huddleston, Supreme Court Considers Case Against Agencies Run Amok, Regul. Rev. (Nov. 22, 2022), https://www.theregreview.org/2022/11/22/huddleston-supreme-court-considers-case-against-agencies-run-amok [https://perma.cc/HG4K-EXHT]. Our newly constituted Supreme Court is not only reflecting much of this attack, but also seems to be spearheading it. Indeed, the Court is now tinkering substantially with various components of administrative law. It has reshaped entire structures of administrative adjudication and agency design to supposedly improve political accountability in the administrative state.374See, e.g., Lucia v. SEC, 138 S. Ct. 2044 (2018); Seila Law LLC v. CFPB, 140 S. Ct. 2183 (2020); United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021); Collins v. Yellen, 141 S. Ct. 1761 (2021); West Virginia v. EPA, 597 U.S. 697 (2022). And for discussion, see generally Cox & Kaufman, supra note 312. And the Court is also clipping the wings of the relatively broad interpretive freedom agencies used to enjoy by announcing a newly revamped “major questions” doctrine375See West Virginia v. EPA, 597 U.S. 697, 732 (2022). and, as we have seen and will soon see again, by reevaluating the validity of Chevron deference.376See Biden v. Nebraska, 143 S. Ct. 2355 (2023). With this Court, even more may be in the cards in the near future.

But make no mistakes: administrative law is also being attacked from the political left though, of course, for very different reasons. It is argued, for example, that our administrative law suffers from a “procedure fetish” that makes it overly obsessed with the niceties of process on the expense of actually achieving real results that would improve people’s wellbeing.377See Nicholas Bagley, The Procedure Fetish, 118 Mich. L. Rev. 345, 346, 400–01 (2019). It is argued as well that administrative law is not nearly as democratic and participatory as it claims to be.378See, e.g., Neil Komesar & Wendy Wagner, The Administrative Process from the Bottom Up: Reflections on the Role, If Any, for Judicial Review, 69 Admin. L. Rev. 891, 916–21 (2017) (discussing a “minoritarian bias” in administrative law). And finally, critics mostly from the political left argue that there are pockets in our administrative state of deeply troubling bureaucratic oppression, such as in the context of the increasingly growing surveillance or national security state or in the field of immigration.379See, e.g., Jill E. Family, Regulated Immigrants: An Administrative Law Failure, 66 How. L.J. 1, 36–37 (2022); Margaret B. Kwoka, The Procedural Exceptionalism of National Security Secrecy, 97 B.U. L. Rev. 103, 125–37 (2017). For another account of the dark sides of the administrative state, in particular how it may enhance and preserve racial discrimination and injustice, see generally Bijal Shah, Administrative Subordination, U. Chi. L. Rev. (forthcoming 2024); Joy Milligan, Plessy Preserved: Agencies and the Effective Constitution, 129 Yale L.J. 924 (2020).

Scholars, commentators, and policymakers are now intimately and persistently engaged in inquiring how to respond to the current malaise.380See generally The Administrative State in the Twenty-First Century: Deconstruction and/or Reconstruction, 150 Dædalus , Summer 2021, at 5, 5–241 (Mark Tushnet ed.). But comparative administrative law could be an important sort of response, or, at least, an asset in considering what kind of responses we should ultimately devise. As suggested before, comparative administrative law can enable us to see better which elements in our administrative law are deeply intertwined with our own distinct situation in America. But that sort of inquiry seems particularly valuable in the face of the pressures the field is facing. It can indicate to us which components in the current critique or attack on the legitimacy of the administrative state, from either the right or the left (or maybe the center), are seriously misguided, failing to see more fully or faithfully the conditions that brought our administrative law to where it is today. Alternatively, and more provocatively perhaps, this type of comparative administrative law inquiry can help us realize when the present critique of our administrative law might actually have a point. By looking at others, maybe we will suddenly recognize places where our administrative law is currently missing opportunities to restrain administrative governance more robustly for the sake of a much-needed protection of democratic and legal values or rights (as argued by critics from both the political right and the left).381See, e.g., Christopher DeMuth, Can the Administrative State Be Tamed?, 8 J. Legal Analysis 121, 121–22 (2016) (an example on the Right); Shalini Bhargava Ray, Immigration Law’s Arbitrariness Problem, 121 Colum. L. Rev. 2049, 2050–54 (2021) (an example on the Left). Conversely, maybe by looking elsewhere we will be able to identify “pockets” where our administrative law is in fact excessively restrictive; that it could and maybe should release some of its grasp over administration for the sake of achieving desirable governmental goals more effectively and speedily (as argued mostly by critics on the left).382See, e.g., Bagley, supra note 377, at 345; see also Cristina M. Rodríguez, The Supreme Court 2020 Term—Foreword: Regime Change, 135 Harv. L. Rev. 1, 9 (2021) (elaborating and defending a vision of public law that centers the value of “making the government work for the people”).

Turning to comparative administrative law at this moment of pressure and stress can go beyond the mere diagnostic and reflective. As discussed before, comparative administrative law might offer useful suggestions for reform or borrowings. But in the current climate, something like this can be just what the doctor ordered. Because other countries are also engaged in a roughly similar “administrative law project” of finding the right balance between the need to enable the administrative state as well as restrain it, it is not at all farfetched to think that these countries had possibly landed on an arrangement, a framework, or a construct that does this effectively and that is missing in America. As a result, considering whether to export or at least build on any of these can thus prove important; it will enable us to adapt our own administrative law at this particular time of pressure such that contending forces in it might possibly “come to rest.”383Wong Yang Sung v. McGrath, 339 U.S. 33, 40 (1950). And, again, even if American administrative law culture would prove resistant to immediate transplantations from abroad (notwithstanding how suitably adapted we would make them), drawing on comparative administrative law can help us to potentially nudge our legal culture to move it to a place where stress will be diffused and resolved.

It is true that in America we’re used to telling ourselves a story according to which there’s something unique about our administrative state and what appears like its persistent legitimacy crisis.384See, e.g., James O. Freedman, Crisis and Legitimacy: The Administrative Process and American Government 3–15 (1978) (referencing how the American administrative state is haunted by a “recurrent sense of crisis”). But that exceptionalist story is decidedly false. Administrative states around the world also go through episodic shocks and crises just like we do. In the not too remote past, the major shock might have been the rise of the deregulatory movement, which clearly challenged many administrative states around the globe.385See, e.g., Taggart, supra note 166, at 613–20 (discussing how deregulation dramatically changed central tenets of the operation of the English administrative state and across Europe as well). In earlier times, the legitimacy crisis of the administrative state might even have been more dramatic. See Lindseth, The Paradox, supra note 31 at 1347–48 (discussing the crisis of fascism as expressed in the administrative law of France and Germany). But today, the source of the shock is deeply related to what appears to be a crisis of constitutional democracy around the world as well as to the effects of the global COVID pandemic.386See Constitutional Democracy in Crisis? 1–9 (Mark A. Graber et al. eds., 2018). On the one hand, constitutional democracies and administrative states around the globe are now being attacked for failing to be fully representative of the people themselves. They tend, as the attack goes, to benefit only a relatively thin layer of elites who are also deeply entrenched within the structure of the state, including by gaining control of the administrative apparatus (the so-called “deep state”).387See generally Democratic Backsliding and Public Administration (Michael W. Bauer et al. eds., 2021); B. Guy Peters & Jon Pierre, Populism and Public Administration: Confronting the Administrative State, 51 Admin. & Soc’y 1521 (2019). On the other hand, constitutional democracies and administrative states in various nations are also accused of being deeply ineffective—not doing enough to respond and achieve various policy goals or solve the challenges of a global pandemic, including by not letting the administrative apparatus do more (or by relying on administrative states that aren’t sufficiently agile and responsive but instead are overly static and pejoratively “bureaucratic”).388On the connection between the crisis of constitutional democracies and lack of governmental and administrative effectivity, see Richard H. Pildes, The Neglected Value of Effective Government, 2023 U. Chi. Legal. F. 185, 213–16 (2023); Samuel Issacharoff, Democracy Unmoored: Populism and the Corruption of Popular Sovereignty 37–53 (2023).

The current crisis in our own administrative law may in fact be just an expression, an instantiation, of this more global phenomenon as it translates to the conditions of the place. And to the extent that this is really the case, engaging in serious comparative administrative law seems doubly important. Not doing it might even be borderline irresponsible. If other states are also facing similar pressures on their own respective administrative law projects episodically and at this time, engaging in comparative administrative law can open the door for insights that we could not have gained before by just looking under the lamppost. Maybe other systems’ reactions to the current pressure on their own respective administrative states may prove provocative also for our own moment of crisis. Maybe they can offer solutions or devices that we may build on at home. And even if not (or not just yet), engaging in dialogue with comparative administrative law can be helpful in and of itself. We can learn from these types of conversations about other efforts being done and challenges being raised, further greasing the wheels of self-reflection and self-criticism of our own administrative law arrangements. Joining in conversations with others can even have a desirable cathartic effect—realizing that we’re not alone in sensing distress and trying to meet the challenges it puts on us. For those who seem to reject the legitimacy of administrative law in America—what has been called “anti-administrativism”389Gillian E. Metzger, The Supreme Court 2016 Term—Foreword: 1930s Redux: The Administrative State Under Siege, 131 Harv. L. Rev. 1, 3–8 (2017).—engaging in more globalized administrative law conversations, which would expose that many other systems face similar conflicts or pressures and engaged in a familiar administrative law project, might even complicate if not entirely challenge these beliefs.

D.  Costs and Risks: Administrative Comparison’s Misuse and Abuse

Comparative administrative law carries with it substantial promise in a world where its possibilities again seem real, and where administrative states (and constitutional democracies more broadly) are under pressure worldwide. But like almost everything else that’s good, it is not cost-free. Comparative administrative law might be seriously “misused.”390See Kahn-Freund, supra note 49 at 20; Saunders, supra note 49 at 41. And at this specific point in time, it might even be seriously “abused.”391See generally Dixon & Landau, supra note 41.

Start with the fact that even with the best of intentions, grave comparative administrative law missteps can occur. After all, comparison demands that we learn about other systems that we likely don’t know enough about, don’t speak their language, or don’t fully understand their legal and political cultures. But that’s a REALLY difficult task, certainly when done individually and the broader and more globally encompassing one’s comparative aspirations end up being. Consequently, any inference that we would make based on comparative administrative law is at risk of being exposed as simply erroneous or problematically selective. That inference didn’t get the foreign law “right” or is based on a too thin pool of countries that can’t really be said to support it. Alternatively, in light of these challenges of doing comparative law, any inference that we would make based on it could be exposed as an instance of “shallow comparativism,”392See Cheryl Saunders, Comparative Constitutional Law in the Courts: Is There a Problem?, 59 Current Legal Probs. 91, 125 (2006) (citing N K v. Minister of Safety & Sec. 2005 (6) SA 419 (CC) at 24–25 (S. Afr.)). in which the comparator, even if they didn’t err or weren’t problematically selective, had inadvertently omitted variables in law, politics, and culture that make their inference utterly unreliable.393On the problem of omitted variables in comparative law, see, e.g., Christoph Engel, Challenges in the Interdisciplinary Use of Comparative Law, 69 Am. J. Compar. L. 777, 782 (2021) (arguing that the problem of “omitted variables looms . . . large” in comparative law). In fact, given the more qualified process of convergence that had occurred with respect to administrative law, compared with constitutional law,394See supra Section I.B. there is reason to think that the risks of errors, selectivity, and shallow comparativism might be especially acute here.

For obvious reasons, the costs of errors, selectivity, and shallow administrative law comparison dramatically increase the more one seeks to draw on it for goals that transcend the mere reflective or analytical and venture into the more reformist and transformative goals of doing comparative law—whether in the institutions of law themselves or the overall administrative law culture. After all, if done erroneously or shallowly, comparative administrative law won’t likely suggest directions for useful reforms in present administrative law arrangements or for beneficial ways to push domestic culture. Rather, it could end up recommending something that doesn’t fit one’s domestic administrative state or law, won’t be understood there, or will create severe problems down the road. Similarly, the costs (as well as the likelihood) of errors, selectivity, and shallow administrative law comparativism further increase the more the use of comparison leaves legal academic circles and penetrates other domains, such as the judicial and governmental ones. After all, these environments are not normally characterized by the same academic disciplinary norms that reinforce important “quality controls” that can help guarantee robust contextual administrative law comparativism.395See generally Saunders, supra note 392 (discussing extensively the risks of comparison in the judicial setting). Time constraints, specific goal orientation pressures, and politics begin to slip in more clearly and explicitly, increasing the chances that comparative recommendations may not be sufficiently robust, will cause blunders if pursued, or will reflect unattractive (or at least disputed) political agendas.

And to be clear, comparative law can certainly have a political agenda that is far from appealing. And comparative administrative law, of course, is not immune from that either. We have actually seen it already in Part I.B, in the discussion of how Albert Venn Dicey invoked comparative administrative law negatively to arguably stymie the development of the administrative state across the common law world when the modern field was struggling to be born.396See supra notes 173–75 and accompanying text. Only counter-administrative law comparativism that exposed Dicey’s suggestion that administrative law is impossible as shallow and politically motivated seemed to have helped with that. However, we can also see the potentially troubling politics of comparative administrative law from more recent examples. For instance, we’ve seen before that there is now a global trend for the introduction of APA-like statutes around the world.397See supra notes 284–86 and accompanying text. While some celebrate this as one of the valuable aspects of administrative law globalization, this trend’s impact may, in practice, be much more ambiguous. In some jurisdictions, like in Latin America, this move might have created unrealistic expectations of what administrative states can in fact deliver or achieve.398See José Ignacio Hernández G., Administrative Procedure Acts in Latin America, Regul. Rev. (Nov. 3, 2022), https://www.theregreview.org/2022/11/03/hernandez-administrative-procedure-acts-in-latin-america [https://perma.cc/8MFW-PV25]. For broader questions about the sensibility of applying a universalistic framework of administrative law in the Latin American region, see generally Luis Eugenio Gracía-Huidobro & Sebastián Guidi, Baena’s Mirage: Lights and Shades of Comparative Administrative Law in Latin America, 19 Int’l J. Const. L. 1291 (2021). It might have even diverted resources from places where they may be more urgently needed.399See Hernández G., supra note 398. But see Migai Akech, Globalization, the Rule of (Administrative) Law, and the Realization of Democratic Governance in Africa: Realities, Challenges, and Prospects, 20 Ind. J. Glob. Legal Stud. 339, 344–48 (2013) (describing what appears like a more promising take). In addition, the GAL movement, which, as previously discussed, argues that global administrative law norms already shape (or should shape) global institutions, has also been forcefully criticized for contributing to the undesirable elimination of national administrative law pluralism amongst systems in favor of a far from clear vision of administrative universality.400See, e.g., Carol Harlow, Global Administrative Law: The Quest for Principles and Values, 17 Eur. J. Int’l L. 187, 188–89 (2006). The GAL movement was moreover criticized for its cherry-picking tendencies, focusing mostly on Western administrative law systems, as well as for its push for globally replicating administrative law norms that increase power and resource inequalities.401Id. at 193.

The costs and risks of administrative law comparison discussed so far (of being erroneous, shallow, selective, and its ability to draw on comparison in the service of unattractive, universalizing, and other political agendas) are general ones. But it should be noted that they may in fact be more expressed today. As we have seen, both in the U.S. and around the world, constitutional democracies and administrative states seem to be facing a current crisis.402See supra Section II.C. There are significant calls to make them much more responsive to the people themselves rather than to a thin layer of elites. Alternatively, there are calls to increase the efficacy of the administrative state to address policy issues of the day.

As argued before, that crisis can prove fruitful and potentially lead to desirable change. We need not assume the status quo ante was necessarily best or that the current crisis is “exogenous” to existing conditions. Doing comparative administrative law can be an important way to see that and capitalize on the crisis constructively.

Nonetheless, with the current environment of polarized politics and other trends that suggest growing support for an authoritarian style and program of politics, this crisis also highlights certain risks as well. The possibilities of reform afforded by the current moment can open the door not only for improvement, but also to eroding what we can think of as the “minimum core” of the administrative law project.403I draw this term from Rosalind Dixon & David Landau. See Rosalind Dixon & David Landau, Competitive Democracy and the Constitutional Minimum Core, in Assessing Constitutional Performance 268, 268 (Tom Ginsburg & Aziz Huq eds., 2016). On one hand, the desire to make democracies and administrative states more responsive to the people themselves can lead to moves that would eliminate the effective space for the kind of independent and hopefully expert judgment that is at the core of the administrative law project. On the other hand, the desire to increase the effectivity of the state apparatus (and perhaps to make it a tool for an increasingly transparent authoritarian project) can lead states to take steps that would create virtual black boxes or increase the reach of the so-called “deep state.” It would make administrative states effectively closed off from democratic and political contestation.

Comparative administrative law can potentially be recruited for exactly these kinds of “malicious”404Mathias Siems, Malicious Legal Transplants, 38 Legal Stud. 103, 104–05 (2018). and “abusive”405Dixon & Landau, supra note 41, at 3. goals. By drawing on arrangements that exist elsewhere and which appear benign from afar but will affect these kinds of changes, comparative law can provide these moves with a façade of legitimacy that they would not otherwise have. In such cases, comparative administrative law transforms into a tool that proactively aids attempts to erode the “minimum core” of administrative law, not truly advance a constructive discussion about reasonable arrangements and improvements in various countries’ administrative laws that are protective of that indispensable core.

E.  The Right Approach: Modesty and Experimentalism

Despite the costs, and without denying their seriousness, it would be wrong to say that these costs utterly condemn the practice of comparative administrative law. The benefits of engaging and reviving it are, as Sections II.B & II.C argued, likely substantial both in general and today. And it is simply far too quick to think that the risks of misuse and abuse can’t be handled in a manner that is subtler, and more sophisticated, than just backing away from doing it at all.

Of course, at the end of the day, there is no alternative to a considered contextual judgment about the virtues (and vices) of specific attempts at doing administrative law comparison. We can never escape judgment, and we especially can’t escape judgment in a discipline that is likely to stay in large part scholarly in nature. With that said, it does seem useful to at least try and identify the basic outlines of an approach to comparative administrative law that could potentially steer ongoing and future work in this vein in a promising direction. Such an approach could serve as a kind of convenient heuristic for the field to rely on, or coordinate around, as it hopefully continues to grow and comes together in the years ahead. Such an approach could moreover prevent at least the most egregious comparative administrative law missteps—or supply a common vocabulary to criticize it.

As the discussion up to this point already implicitly suggests, the approach I have in mind clearly rejects the extreme poles of universalism and particularism discussed in Section II.A. Taking my cue from many other scholars who are working in the field of comparative constitutional law,406See, e.g., Vicki C. Jackson, Constitutional Engagement in a Transnational Era 1–15 (2010) (defending an approach of comparative constitutional “engagement”); Tushnet, supra note 20, at 1228, 1285–1306 (defending drawing on constitutional law comparison through a process of “bricolage”); Choudhry, supra note 251, at 835–38 (articulating a theory of “dialogic” constitutional comparison). my view is also that we should take the middle road between these poles with respect to comparative administrative law. However, because of (1) what I take to be the real potential costs of shallowness, cherry-picking, excessive universalism and, at this time at least, abuse of comparative administrative law;407See supra Section II.D. (2) because the field of comparative administrative law, at least in America, is admittedly only at initial stages of being revived (after years of lying dormant);408See supra Section I.C. and (3) because the field of administrative law appeared to have gone through a more qualified process of globalization than constitutional law did (which makes comparative administrative law potentially more complex and challenging),409See supra Section II.B. the approach I endorse here is somewhat closer to the particularist pole. It emphasizes more of the so-called “ideology of difference.”410See Schönberger, supra note 272.

I will call the approach I have in mind a modest and experimentalist one. And under it, comparative administrative law should proceed from a position of caution. This means that in doing comparative administrative law both analysts and practitioners should be expected to be highly contextual. They cannot assume too readily similarities amongst systems, notwithstanding the globalization trend and the observed cross-national fluidity in divergences between administrative laws and states. Assuming something like this would clearly be shallow and thus impermissible. And it would be inappropriate given the real likelihood of errors and problematic selection effects, among other things. Instead, comparative administrative law calls on those who perform it to seriously work through the dimensions of potential difference between nation-states—whether they are in law, politics, culture, or any other relevant dimension—to identify how things that appear the same may not necessarily be so. This also means that comparative administrative law’s most natural and secure use, if not purely historical or genealogical, is mostly as a source of self-reflection and critique.

That said, a modest and experimentalist approach to comparative administrative law doesn’t completely shy away from making recommendations for useful reforms based on comparative law—influencing the institutions of administrative law directly or the overall legal culture in which those institutions (or the administrative state more broadly) are embedded. It is just that such an approach insists again on caution. More specifically, this approach insists that the following four conditions be met before any institutional reform or cultural move should be taken seriously:

First, that there would be good reasons to think that the cross-jurisdictional differences that help explain sources of difference may not be that substantial. That, in other words, when looked at context sufficiently, there is a basis for assuming some measure of substantial similarity, including because of processes of globalization and fluidity that already occurred in the administrative law space (or for any other reason).

Second, a modest and experimentalist approach insists that before any more reformist or transformative move is explicitly made or is taken seriously, the comparator would point out reasons, rooted in the particularities of the domestic system, that would support such a move. These reasons must of course pay attention to the overall domestic administrative law legal framework, whatever that may be. But they should go as much as is sensible and possible beyond that—again, to the general political, cultural, and institutional environment in which the administrative framework is embedded, too. To be clear, this is not to say that comparators cannot rely on more universalistic reasons or on the already occurring processes of administrative law fluidity and globalization discussed before. In a more global environment, which builds on cross-national cooperation, this may sometimes be desirable. However, a modest approach does insist that reliance on these elements would importantly be intermediated by a keen sense of understanding of the possibility of national administrative differences. It also insists that the values inherent in administrative law pluralism (and the risks of excessive or, at a minimum, too rapid universalism) would be recognized.

Third, a modest and experimentalist approach to comparative administrative law requires that drawing on foreign solutions as either inspiration for direct reforms or as a means of cultural transformation isn’t likely to be abusive and severely undermine the basic constitutional function, or the “minimum core,” of the administrative law project in the destination jurisdiction. This means, as the previous Section suggested, that the use of comparative law can’t bring about (or wouldn’t be highly likely to bring about) one of two possible results: It can’t, for one thing, cause a situation whereby the reception of the foreign institution or rule (even if adapted) would in effect deny the existence of an administrative state or some form of “supplementary bureaucratic law making in the ongoing regulatory enterprise.”411Bruce Ackerman, The New Separation of Powers, 113 Harv. L. Rev. 633, 696 (2000). Indeed, an overall system of law that does not account at all for the possibility of an administrative state is, under current conditions, “inadequate to contemporary law.”412Brian Z. Tamanaha, A Realistic Theory of Law 126 (2017). At the same time, the exportation of an administrative law solution from someplace else that would ultimately make the administrative state an effective “black box,” one that cannot be penetrated especially by democratic critique and voice, would be impermissible as well. It will create a true “deep state” that is similarly beyond any reasonable project of a democratic and liberal administrative law.

Finally, and even if a comparative analogy has crossed the threshold of sufficient contextualism, domestic justification, and non-abusiveness, a modest and experimentalist approach to administrative law comparison insists that drawing on the foreign solution as suggesting direct reforms or as a basis for a move to transform a given culture should be done experimentally. Of course, the invocation of administrative law comparison as a form of dispersing information and knowledge can, in itself, be an important technique for achieving reform and cultural transformation. And, certainly when the information circulated abides by the previous conditions of this modest approach to comparative administrative law, it is always fine.

But the experimentalism label does take a more concrete meaning when one draws on comparative law to cause more immediate change in legal institutions. More specifically, an experimentalist approach endorses one of two options. The first option is to draw on the foreign solution in administrative law only incrementally, in small steps.413See Michael Asimow, A Comparative Approach to Administrative Adjudication, in The Oxford Handbook of Comparative Administrative Law 577, 591 (Peter Cane et al. eds., 2021). This means that those who seek to draw on foreign law should, for example, let it “percolate” for a while in domestic administrative law discourse before making any further concrete moves.414For a discussion of the value of percolation more broadly in law, see Michael Coenen & Seth Davis, Percolation’s Value, 73 Stan. L. Rev. 363, 368–69 (2021) (distinguishing between informational and institutional values of percolation). Alternatively, if not wait for percolation, those who seek to draw on comparative administrative law should at least limit the scope or immediate implications of the reliance on the foreign solution until more experience is accumulated. Only then, if the experience is supportive and confirms the desirability of the initial comparative inspiration, further expansions can occur. The second experimentalist option, by contrast, permits to move quickly rather than gradually. It allows, in other words, to lean more forcefully on the foreign source and adopt it domestically, without the limitations of incrementalism. At the same time, however, this second option insists that it would be both possible and easy to quickly reverse and change course if that leap of faith is ultimately discovered, once facts and experience are gathered, to be ill-advised in hindsight.415See, e.g., Charles F. Sabel & William H. Simon, Destabilization Rights: How Public Law Litigation Succeeds, 117 Harv. L. Rev. 1016, 1019 (2004) (developing an argument that adjudication in public law should regularly involve moves that stabilize and destabilize and more broadly guarantee trial and error in the law).

***

To be absolutely clear: this is not a panacea. Even under the modest and experimentalist approach I have outlined here, mistakes will be made, and reasonable disagreements about how precisely to apply that approach and what it yields in specific cases will surely surface. Nonetheless, at this stage of the development of the field, this approach does seem to provide a general outline or heuristic for productive and responsible comparative administrative law engagement. Guided by this modest and experimentalist attitude, the likelihood of reviving comparative administrative law and accruing its benefits (rather than its costs) seems much more secure.

III.  ILLUSTRATIONS

Saying is often easier than doing. And so, this Part goes beyond the saying and into the “doing” of comparative administrative law. More concretely, this Part zooms-in on two doctrinal domains within our administrative law to illustrate the kinds of payoffs we can derive from reviving comparative administrative law (in general) and from the modest and experimentalist approach to performing it that Part II has defended (in particular).

It should go without saying the domains I will be focusing on here are not the only administrative law domains that would benefit from taking on a comparative lens. And in the discussion that will soon begin in earnest, I will only be able to draw on a relatively small selection of jurisdictions, such as the U.K., Canada, Italy, France, Israel, Germany, and the European Union. But given the present state of marginalization of the field of administrative law comparison, we must start somewhere. And my hope is that the doctrinal domains that I will be centering on here are sufficiently central, and the benefits from the comparative discussion are sufficiently meaningful, that these illustrations will help encourage in the future more work in comparative administrative law. That work, in turn, will hopefully expand our horizons even further and farther—both thematically and geographically.

Section III.A, immediately below, zeros-in first on the law regulating the use of non-legislative rules or, as they’re more widely known today, certainly in the U.S., guidance documents. Section III.B then takes on Chevron deference. It critiques Justice Gorsuch’s opinion in Buffington that invoked comparative administrative law to undermine Chevron, exposing its shallow, cherry-picky, and abusive nature. And it suggests how the Court’s future analysis, either in Loper Bright and Relentless or, more likely perhaps, well beyond, as well as the entire domestic administrative law community could usefully draw on comparative administrative law to both rectify Buffington’s failures in the short-term and more productively reflect on the future of Chevron deference in the longer term.

A.  Domesticating Administrative Guidance

1.  Some Background

Here’s a story everyone familiar with American administrative law can surely now recite. That story is about the American administrative state’s evolution.416For a terrific exposition, see Reuel E. Schiller, Rulemaking’s Promise: Administrative Law and Legal Culture in the 1960s and 1970s, 53 Admin. L. Rev. 1139, 1143–55 (2001). And it proceeds in two steps. In the first step, administrative agencies regulated in ways not so different from common law courts. That is, agencies drew on adjudications. Beginning in the 1960s and 1970s, however, things gradually changed. Agencies turned to regulate not as if they were courts and on an individual, case-by-case basis, but rather as if they were legislatures—that is, through the issuance of legislative rules.417Id. at 1141. Most clearly, they used the process skeletally described in the APA for informal rulemaking or notice-and-comment rules.418See 5 U.S.C. § 553. This process includes a publication of notice on a proposed rule, accepting comments from the wider public about the rule, and then publishing a final version of the rule that responds to the comments.

Today, rules are often described as the “core policymaking apparatus within the administrative state.”419Bridget C.E. Dooling & Rachel Augustine Potter, Rulemaking by Contract, 74 Admin. L. Rev. 703, 705 (2022). And they are celebrated as “one of the greatest inventions of modern government.”420See Levin, supra note 129, at 324 (quoting Kenneth Culp Davis). But this story has a very big hole in it. It’s incomplete at best. For in addition to legislative rules, another trend seems evident today: agencies’ turn not to legislative rules but to nonlegislative rules or, as they’re more widely known today, guidance documents.

Guidance is an extraordinarily diverse category. And it is both similar to and different from rules. Like rules, guidance is also general and prospective. The use of guidance is not going back to the pre-1960s and 1970s world of regulatory decision-making by adjudications. But unlike rules, guidance doesn’t have the full “force of law.” Its key characteristic, in other words, is its provisionality. Agencies can quickly issue guidance and change it because, as the APA says, guidance documents are exempt from the notice-and-comment process.421See 5 U.S.C. § 553(b)(3)(A). In this Article, I refer mostly to guidance as the category of documents the APA describes as “general statements of policy.” The second related category that the APA deals with and provides an exemption for are “interpretative rules,” which raise a different suite of questions than I am able to address here. For an argument that interpretative rules should be treated in similar ways to “general statements of policy,” see Ronald M. Levin, Rulemaking and the Guidance Exemption, 70 Admin. L. Rev. 263, 315–51 (2018). Moreover, to formally enforce guidance, agencies cannot just rely on it as is. Rather, they would need to crystalize it in a separate “final” agency action, such as an enforcement decision.422See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 301–02, 302 n.31 (1979) (highlighting that the difference between rules and guidance is that the latter lacks the force of law).

Within our administrative state, guidance is “oceanic.”423Nicholas R. Parrillo, Federal Agency Guidance: An Institutional Perspective, Report for the Administrative Conference of the United States 35 (2017), https://www.acus.gov/sites/default/files/documents/parrillo-agency-guidance-final-report.pdf [https://perma.cc/WMB9-TAB2]. The number of guidance documents available now “dwarf[s] that of actual regulations by a factor of twenty, forty, or even two hundred.”424Nicholas R. Parrillo, Federal Agency Guidance and the Power to Bind: An Empirical Study of Agencies and Industries, 36 Yale J. on Regul. 165, 167–68 (2019). In short, instead of a world of “rules, rules, rules”425Ho, supra note 327, at 78. we may more accurately be living in a world of “guidance, guidance, guidance.” We have entered a potential third step in our administrative state’s evolution.

The use of guidance has clear advantages in the administrative state. It can serve an important function of “internal administrative law”—a tool by which agency principals can streamline, control, or guide inferiors to make sure that general agency policies are consistently enforced and that the overall level of decisional quality is adequate, for example.426For an interesting analysis and revival of the concept of “internal administrative law,” see Gillian E. Metzger & Kevin M. Stack, Internal Administrative Law, 115 Mich. L. Rev. 1239, 1249–50 (2017). From the perspective of the public itself, guidance can serve important rule of law values, such as notice, or as a means for translating sometimes highly complicated technical documents to much simpler language (as an act of “official helpfulness,” so to speak). Most ambitiously, and most in line with the third-step evolutionary story, guidance can be seen as the optimal regulatory tool in today’s administrative state, far surpassing the attractiveness of rules. After all, in a world such as ours where empirical and normative uncertainty is vast and knowledge is dispersed, agencies that aim to move more tentatively and with a willingness to learn “on the go” from experience will quite naturally be drawn, and perhaps should more regularly be drawn, to regulation by guidance.427For arguments suggesting that guidance should have this more ambitious role in the administrative state, see Jeremy Kessler & Charles Sabel, The Uncertain Future of Administrative Law, 150 Dædalus 188, 188–93 (2021); Tim Wu, Agency Threats, 60 Duke L.J. 1841, 1848–54 (2011) (defending the use of guidance as a form of ideal threats under conditions of high uncertainty).

But guidance also carries with it genuine risks. Guidance, in other words, also calls for its “domestication.”428I draw the term from Strauss, supra note 51, at 768–73. For one thing, though guidance is supposed to be in some key sense provisional, there is a concern that in practice it won’t be so. That, in other words, it will act as though it has the full force of law, either because the agency itself will rigidly treat it that way429See Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like—Should Federal Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1316–17 (1992) (arguing that agencies are prone to treat guidance as binding even though they are not supposed to). or because regulated parties, and broader features of the regulatory environment and culture, will effectively make it so.430See Parrillo, supra note 424, at 265 (arguing that the binding nature of guidance stems less from strategic or problematic agency behavior but rather from the regulatory environment itself). If that’s the case, though, guidance will not only lose its justification as such; but it will also have the additional effect of circumventing the notice-and-comment process. As Justice Kagan once remarked, it would be an “end run around [it.]”431Oral Argument at 11:27 (Dec. 1, 2024), Perez v. Mortg. Bankers Ass’n, 575 U.S. 92 (2015) (No. 13-1041), https://www.oyez.org/cases/2014/13-1041 [https://perma.cc/D6E2-7HLV] (comments made by Justice Elena Kagan). A second risk that arises with respect to guidance is that, even if it is importantly provisional rather than excessively rigid as if it were firm law, administrative guidance will still clearly have important effects on behavior. Indeed, the whole point is that guidance would have such behavioral effects or otherwise it would not have its supposed advantages. But, if guidance has these effects, there is a substantial risk that the guidance would be legally defective or arbitrary in ways that would matter well before the agency finalizes its actions based on it (if it ever will). As a result, there is at least some persuasive case for controlling the risks of guidance in advance of its final enforcement.432Both from the perspective of a regulated industry that might not have the ability to resist abiding by the guidance before it is even tested in court, and perhaps more importantly, by regulatory beneficiaries who may consider the guidance to be too lenient. For emphasis on this last concern, see generally Nina A. Mendelson, Regulatory Beneficiaries and Informal Agency Policymaking, 92 Cornell L. Rev. 397 (2007).

As things now stand, our law has chosen one particular path to respond to the first concern triggered by guidance. More concretely, recognizing the potential for guidance to become rigid and rule-like, and an “end run” around notice-and-comment, lower courts have adopted the “practically binding” test to sort between valid and invalid guidance.433See Sunstein, supra note 52, at 496–97, 513–15; Levin, supra note 421, at 273–75 (describing the “practically binding” test as the “binding norm” test). Under this test, petitioners can bring a suit against agency guidance claiming that because it is “practically binding” it is, in fact, a rulemaking in disguise. And, if their claim is successful, courts will invalidate the guidance document and require it, because it is a rule, to go through the regular notice-and-comment procedure.434See Sunstein, supra note 52, at 496–97.

In stark contrast, our law has so far been much less responsive to the second concern. Though there is case law from the Supreme Court and lower courts that suggest a much more pragmatic approach to the requirements of “finality” (and ripeness) in administrative law, which would allow courts to review on a pre-enforcement basis at least some guidance documents for legal defects and arbitrariness even if they are not “practically binding,”435See, e.g., FTC v. Standard Oil Co. of Cal., 449 U.S. 232, 239 (1980) (highlighting, partly on the basis of prior case law, including Abbot Labs v. Gardner, 387 U.S. 136, 140 (1967), how the approach to the finality requirement is meant to be “flexible” and “pragmatic”); Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 435–36 (D.C. Cir. 1986) (iterating that the approach to finality is indeed “flexible” and “pragmatic”). the dial seems to have turned. A more formalistic or “legalistic” trend seems quite common, especially in the lower courts,436See, e.g., CEC Energy Co. v. Pub. Serv. Comm. of the Virgin Islands, 891 F.2d 1107, 1110 (3d Cir. 1989) (listing, among the requirements for recognizing an agency’s action as “final,” an inquiry into whether “the [agency’s] decision has status as law” which would in effect eliminate the possibility of the pre-enforcement reviewability of guidance that isn’t practically binding); Minard Run Oil Co. v. U.S. Forest Serv., 670 F.3d 236, 248 (3d Cir. 2011) (requiring as a condition for satisfying the “finality” requirement actions that are accompanied by immediate formal legal effects, like “serious penalties attached to noncompliance,” with the end result of excluding pre-enforcement review of guidance); Tenn. Valley Auth. v. Whitman, 336 F.3d 1236, 1248 (11th Cir. 2003) (determining that the fact that the guidance has effects that make it equivalent to a rule with a force of law is “mandatory” for a plaintiff to satisfy the requirement of “finality” under the APA). which tends to deny the reviewability of guidance on a pre-enforcement basis just because it is guidance that lacks, definitionally, the force of law.437For some potential, and, in the view defended here, desirable change in more recent jurisprudence, see infra note 589 and accompanying text. As it now stands, the only secure way one can get guidance to the point of judicial review is by drawing on the “practically binding” test or by waiting up to the point of enforcement.

Not surprisingly, this situation has triggered calls for change. On one hand, some—mostly on the right of politics—emphasize the risks of abusing guidance as a form of “shadow regulation” and “arm-twisting” outside the constricts of notice-and-comment.438See, e.g., Anthony, supra note 429, at 1373–74 (criticizing the use of guidance documents with practical binding effects as a subversion of the notice-and-comment rulemaking process); Philip Hamburger, Is Administrative Law Unlawful? 260 (2014) (arguing that guidance is a means of “extortion,” imposing “under-the-table threats of . . . judicial nature”); Lars Noah, Administrative Arm-Twisting in the Shadow of Congressional Delegations of Authority, 1997 Wis. L. Rev. 873, 874. They thus call on courts to hone in on guidance and more severely constrain its potential abuse, including by continuing its enforcement of the “practically binding” test (and even tightening it further), as well as to broaden the possibilities for pre-enforcement review of guidance’s potential illegality and arbitrariness.439See, e.g., Richard A. Epstein, The Role of Guidance in Modern Administrative Procedure: The Case for De Novo Review, 8 J. Legal Analysis 47, 49 (2016). These calls also provide impetus for the political branches to take ambitious steps to limit the use of guidance documents.440See, e.g., Memorandum from the Attorney General on Prohibition on Improper Guidance Documents 1 (Nov. 16, 2017), https://www.justice.gov/opa/press-release/file/1012271/dl [https://perma.cc/4KQZ-P34Z] (mandating that guidance documents should not be used “for the purpose of coercing persons or entities outside the federal government”).

On the other hand, others, mostly on the political left and center, have recently taken a dramatically different view. While they too recognize the potential risks of guidance, they also don’t believe that judicial review is the right way to go, so to speak, to immunize against the relevant risks. In their eyes, courts have done quite badly on this front. Litigation over the “practically binding” test has, it is believed, proven too erratic and confusing, and the courts’ approach too skeptical about the legitimate uses of guidance.441This is, for instance, the view of Nicholas R. Parrillo, Gillian Metzger, and Kevin Stack. See Parrillo, supra note 424, at 167–68; Metzger & Stack, supra note 426, at 1295 (arguing that “courts should abandon their current approach of treating agency attempts to bind internal agency officials as grounds for characterizing an agency rule as a legislative rule requiring notice and comment.”). The expansion of reviewability of guidance on legality and arbitrariness grounds at the pre-enforcement stage is also, for many of them, out of the question.442See Metzger & Stack, supra note 426, at 1295–96 (arguing that “courts should not treat guidance that aims to structure agency discretion as necessarily triggering review under APA section 5” and that “[j]udges rarely have expertise or institutional competency in identifying good internal management structures or understanding internal agency dynamics”). To domesticate guidance, as this view suggests, we largely need to look outside of the courts and to bureaucratic, industry, and civil society practices (and incentives).443See Parrillo, supra note 424, at 181–84 (developing a managerial approach to hone in the risks of guidance, which he calls “principled flexibility” and which, at the end of the day, is perceived to be “largely beyond judicial competence”).

2.  Enter . . . Comparative Law

What might comparative law teach us about this highly conflicted, even polarized, but hugely consequential area of our administrative law?

The use of comparative law should not be entirely surprising in this context. Indeed, the modern turn to guidance as a key, perhaps leading, regulatory tool in today’s administrative state is not a distinctively American phenomenon. It exists elsewhere, too. In spades. For example, France, Germany, and Italy also seem to have adopted, with increasing force and intensity, the use of administrative guidance as an “intermediate” solution between “discretionary and bound administration.”444G. della Cananea, The ‘Core’ of Administrative Law: An Outsider’s View, Brit. Ass’n of Compar. L. (May 27, 2022), https://british-association-comparative-law.org/2022/05/27/the-core-of-administrative-law-an-outsiders-view-by-g-della-cananea/#_ftnref10 [https://perma.cc/C6QJ-W7QP]. On the recent increase in the use of guidance in German administrative law, see Matthias Knauff, Coronavirus and Soft Law in Germany: Business as Usual?, 12 Eur. J. Risk Regul. 45, 45–46 (2021); in Italian administrative law see Flaminia Aperio Bella, Christiana Lauri & Giorgio Capra, The Role of COVID-19 Soft Law Measures in Italy: Much Ado About Nothing?, 12 Eur. J. Risk Regul. 93, 93–94 (2021); and in French law, see Claude Barreix, Soft Law in the French Public Administration, 2 Advances Soc. Scis. Rsch. J. 111, 111 (2015). And guidance exists to a similar and growing extent in common law systems—including the U.K., Canada, and Australia,445For the U.K., see infra notes 448–61 and accompanying text. For Canada, see, e.g., Lorne Sossin & Chantelle van Wiltenburg, The Puzzle of Soft Law, 58 Osgoode Hall L.J. 623, 624–28 (2021). And for Australia, see generally Greg Weeks, Soft Law and Public Authorities: Remedies and Reform (2016). and perhaps most prominently now, in the European Union as well.446See, e.g., K.C. Wellens & G.M. Borchardt, Soft Law in European Community Law, 14 Eur. L. Rev. 267, 296–308 (1989) (describing the ascendency of soft law as a primary mean for advancing EU goals). See generally Research Handbook on Soft Law (Mariolina Eliantonio et al. eds., 2023). These diverse legal jurisdictions, very much like us, also often seem to be “puzzle[d]” by guidance and its appropriate treatment given its complex status as provisional yet highly impactful law in today’s administrative state.447See Sossin & van Wiltenburg, supra note 445 at 624.

How might these jurisdictions’ choices about how guidance should be domesticated illuminate our own? To respond to this question, let me dig a little bit deeper here into one specific jurisdiction before returning to a broader geographical context. Focus for the moment on what James Landis called “our British cousin[]”448Landis, supra note 99, at 1. from the “Anglo-American tradition” of administrative law: the U.K.

The U.K., like the U.S., has a hierarchy of norms. At the top stands primary legislation, which is passed by the two houses of the British parliament. Then, there is secondary legislation. Secondary legislation is formulated and passed by the executive after some form of parliamentary supervision is supplied, which can range from very minor (laying before parliament with no need for active approval) to more robust (requiring active approval by a parliamentary committee). The kind of supervision that applies to secondary legislation is prescribed in the U.K. in a statute—the Statutory Instruments Act.449Statutory Instruments Act 1946, 9 & 10 Geo. 6 c. 36 (U.K.). For an excellent and lucid summary of the state of parliamentary supervision of secondary legislation, see Jeff King, The Province of Delegated Legislation, in The Foundations and Future of Public Law: Essays in Honour of Paul Craig, supra note 27, at 145, 152–54. This Act also requires publication of secondary legislation. Finally, there is also the possibility of issuing guidance, though the term more familiar for it in the U.K. (and, for that matter, many other common law systems) is different and ranges from “quasi-legislation,” “soft law,” “policies,” “tertiary rules,” or sometimes—though it would have been absolutely confusing in the U.S. context—just “rules.”450See, e.g., Adam Perry, The Flexibility Rule in Administrative Law, 76 Cambridge L.J. 375, 375–78 (2017). Occasionally, the issuance of guidance in the U.K. is prescribed in statutes themselves. But sometimes decisionmakers have claimed that the power to issue guidance is simply inherent.

In 1944, the increased use of guidance by the administration in the U.K. was described as “recent.”451R.E. Megarry, Administrative Quasi-Legislation, 60 L.Q. Rev. 125, 126 (1944). By 1986, however, U.K. scholars began detecting a “discernible . . . retreat from [formal regulation] in favour of government by informal rules.”452Robert Baldwin & John Houghton, Circular Arguments: The Status and Legitimacy of Administrative Rules, 1986 Pub. L. 239, 239 (1986). Indeed, guidance is now a “fact of public life” in the U.K.453Richard Rawlings, Soft Law Never Dies, in The Cambridge Companion to Public Law 215, 215 (Mark Elliott & David Feldman eds., 2015). The number, variety, complexity, and impact of guidance in the U.K. again dwarfs that of formal regulations.454See, e.g., Robin Creyke & John McMillan, Soft Law v Hard Law, in Administrative Law in a Changing State 377, 377 (Linda Pearson, Carol Harlow & Michael Taggart eds., 2008). And, just as in the U.S., guidance in the U.K. also comes in a variety of forms, including codes of practice, circulars, directions, and rules, among other labels.455See Paul Craig, Administrative Law 399 (6th ed. 2008) (describing the various terms used in the U.K. to refer to guidance). The administrative state in the U.K. is likely well into its third step, just as we might be in America.

How did the law in the U.K. respond to this emergence and rise of guidance? As it happens, there has been quite a bit of change there.

The initial reaction to guidance and its “accretion”456Megarry, supra note 451, at 126. in the U.K. was quite negative. As one scholar described it, guidance’s “problems of legitimation” were much of what had been emphasized.457For this term, see Robert Baldwin, Governing with Rules: The Developing Agenda, in Administrative Law and Government Action: The Courts and Alternative Mechanisms of Review 157, 168 (Genevra Richardson & Hazel Genn eds., 1994). Guidance generally faced a “cold climate”458Christopher McCrudden, Codes in a Cold Climate: Administrative Rule Making by the Commission for Racial Equality, 51 Mod. L. Rev. 409, 438 (1988). and was looked at with “positive suspicion.”459H.W.R. Wade, Anglo-American Administrative Law: Some Reflections, 81 L.Q. Rev. 357, 377 (1965). The primary concern in the U.K. was not so far from our own concerns in America about guidance: that its increased use would essentially displace the reliance on proper primary or secondary legislation to direct behavior, thus circumventing Parliament or elected politicians more broadly.460See, e.g., Patchett v. Leathem (1948) 65 T.L.R. 69, 70 (“Whereas ordinary legislation, by passing through both Houses of Parliament or, at least, lying on the table of both Houses, is thus twice blessed, this type of so-called legislation [guidance] is at least four times cursed. First, it has seen neither House of Parliament; secondly, it is unpublished and is inaccessible . . . thirdly it is a jumble of provisions, legislative, administrative or directive in character, and sometimes difficult to disentangle one from the other; and fourthly, it is expressed not in the precise language of an Act of Parliament . . . but in the more colloquial language of correspondence, which is not always susceptible of the ordinary canons of construction.”). As one contemporary commentator in the U.K. captured the issue, memorably: guidance seems like no less than a “retreat from law.”461See generally Satvinder S. Juss, Rule-Making and the Immigration Rules—A Retreat from Law?, 13 Statute L. Rev. 150 (1992).

The manifestation of this initial negativity toward guidance in the U.K. wasn’t, as we might have expected from our own experience with the APA, the Statutory Instruments Act. As it happens, courts in the U.K. have taken a rather simpleminded approach early on to the classification of what is to be considered secondary legislation and thus subject to the parliamentary scrutiny and publication requirements of the Act, and what is not. That simplistic approach simply looked at how the executive itself defines its legal actions. Only those actions that were explicitly recognized by the executive as statutory instruments would be subject to the Act.462See Craig, supra note 455, at 367 (describing this simpleminded approach to the Statutory Instruments Act).

With this path blocked, the initial positive suspicion toward guidance found its way into law in the U.K. through a different route, more deeply within the common law tradition. That route was the so-called “no-fettering” principle that courts in the U.K. innovatively embraced.463See, e.g., Chris Hilson, Policies, the Non-Fetter Principle and the Principle of Substantive Legitimate Expectations: Between a Rock and a Hard Place?, 11 Jud. Rev. 289, 289–90 (2006). The classic statement of the “no fettering” principle stems from R v. Port of London Authority, ex p Kynoch, Ltd.  [1919] 1 KB 176, 184. This principle established in administrative law across the U.K. a relatively strong presumption that discretion must be retained in areas where legislation or secondary legislation allow for it. Discretion, in other words, can’t presumptively be “fettered” by the issuance of guidance. Such fettering could only occur through hard law—that is, through primary or secondary legislation.464Unless, of course, parliament clearly authorized differently.

And, indeed, courts in the U.K. at first implemented this suspicious presumption toward guidance quite forcefully and ambitiously. It was not uncommon, for example, to find a court invalidating guidance as such based the “no-fettering principle,” seeing it as per se illegal.465See Hyman v. Rose [1912] AC 623 (HL) 631 (appeal taken from Eng.). For a supportive academic view of this sort of treatment, see R.F.V. Heuston, Policy and Discretion in Licensing Cases, 15 Mod. L. Rev. 353, 354 (1952) (describing guidance as a “local self-imposed law” rather than “the general law of the land”) . Alternatively, courts in the U.K. would occasionally deprive guidance of any real content. They did so by insisting, invoking the “non-fettering principle,” that decisionmakers could use guidance as at most one relevant consideration in their decisions.466See Mark Elliott & Jason N.E. Varuhas, Administrative Law: Text and Materials 175 (5th ed. 2017) (citing Stringer v. Minister of Hous. and Loc. Gov’t [1970] 1 WLR 1281; Merchandise Transport Ltd. v. British Transport Comm’n [1962] 2 QB 173; and Sagnata Investments Ltd. v. Norwich Corp. [1971] 2 QB 614). Alternatively, invoking the “no-fettering principle” once again, courts in the U.K. required agencies to conduct an individualized, full-blown hearing in each and every case where a decisionmaker was seeking to apply prior guidance.467See generally, e.g., R v. Port of London Auth., ex p Kynoch, Ltd. [1919] 1 KB 176.

As should be clear, this was a highly restrictive approach. It basically emptied guidance from much of what makes it attractive as a tool of internal administrative law or as a platform for building experimentalist regulation, for example. In many ways, the approach in the U.K. during this initial stage seems even stricter than the practice by which courts invalidate guidance today in America for being “practically binding.”468See, e.g., Levin, supra note 421, at 296 (describing how lower courts implementing the “practical[ly] binding” test sometimes show more pragmatism); Parrillo, supra note 424, at 171 n.20 (highlighting the fact that the jurisprudence of lower courts in applying the “practically binding” test tends to give most of the weight to the use of mandatory language in guidance documents).

But then the approach in the U.K. to domesticating guidance dramatically changed. In an important case called British Oxygen, the House of Lords—then the U.K.’s apex court—ushered in a new era with respect to the domestication of guidance.469British Oxygen Co. v. Minister of Tech. [1971] AC 610 (HL) 624 (appeal taken from Eng.). British Oxygen disavowed the previous approach that viewed guidance as either entirely illegal or something that can at most be used as one consideration among many as a condition for its validity (or if it is subject to individualized hearings).470See Aileen McHarg, Administrative Discretion, Administrative Rule-Making, and Judicial Review, 70 Current Legal Probs. 267, 272 (2017). Instead, British Oxygen created, in effect, what seems like a reverse presumption: that guidance is legal so long as there are conditions that allow decisionmakers to “listen[] to any applicant who has something new to say.”471R (Gujra) (FC) v. Crown Prosecution Service [2012] UKSC 52 [76], [2013] 1 AC 484. In other words, all decisionmakers need to do to make guidance presumptively legal is to show that there are paths for at least considering the need for exceptions.472See also Christopher Chiam, The Future of the Fettering Rule in Judicial Review, 38 U. Tas. L. Rev. 27, 28 (2019) (describing how policies and guidance are now legal so long as they’re used flexibly).

With the House of Lords’ judgement in British Oxygen, the judicial barriers in English law to the use of guidance have been significantly lifted. Guidance could be freely issued, and even given a substantial role in administrative decision-making, without immediate fear of judicial hostility. Since British Oxygen, guidance has been clearly seen as part of “good administration.”473British Oxygen Co. v. Minister of Tech. [1971] AC 610 (HL) 624 (appeal taken from Eng.). In a separate line of cases, U.K. courts have even clarified that issuance of guidance doesn’t require explicit statutory authorization; such authorization is indeed almost always implied in governing statutes.474See, e.g., R (New London Coll. Ltd.) v. Sec’y of State for the Home Dep’t [2013] UKSC 51 [18], [2013] 1 WLR 2358.

All that didn’t mean, though, that courts in the U.K. have entirely retreated from the fray of domesticating guidance. The “no-fettering principle” and its potential to erect difficulties to guidance did not die with British Oxygen. Rather, the principle has now been transformed. Instead of acting as a strong presumption against its use—making any guidance that seems to bind discretion outside of the process of primary or secondary legislation immediately suspect—the no-fettering principle has become a way for judges to review, in concrete cases, whether the degree of fettering (or bindingness) expressed by guidance is a permissible one in the circumstances at hand—a true incident of “good administration” rather than abuse.475See, e.g., Shona Wilson Stark, Non-Fettering, Legitimate Expectations and Consistency of Policy: Separate Compartments or Single Principle?, in The Frontiers of Public Law 443, 444 (Jason Varuhas & Shona Wilson Stark eds., 2020) (remarking that the principle of non-fettering is highly individualistic and encourages “all features of every individual case to be taken into account.”).

As one prominent commentator reports, in applying this newly transformed and highly flexible version of the “no-fettering principle,” courts in the U.K. largely tend to look at the “substantive nature of the decision to be made” as well as the overall “administrative context.”476McHarg, supra note 470, at 273. And unsurprisingly, the results in various cases therefore tend to highly diverge. In some cases, such as those that involve high-volume adjudication477See, e.g., William Wade & Christopher Forsyth, Administrative Law 276 (11th ed. 2014) (noting how courts in the U.K. are much more at ease in seeing binding guidance in the context of high-volume decision-making). or when there’s a strong need for controlling large and dispersed lower-level decisionmakers, courts in the U.K. have acknowledged the legitimacy of a high degree of fettering of discretion via guidance—with very little need for exception and individuation.478See, e.g., R (S) v. Chief Constable of Yorkshire [2004] UKHL 39 (upholding, under the no-fettering principle, a general policy of retaining fingerprint and DNA samples because it was regarded as unrealistic and impractical to require each case to be examined individually). Indeed, in these circumstances, even “blanket policies” were ruled as legally permissible.479McHarg, supra note 470 at 275–76 (discussing the possibility that even blanket policies will survive judicial review under the no-fettering principle). In fact, in an astonishing reversal from the initial approach to the “no fettering principle,” in some cases courts in the U.K. have even suggested that the issuance of guidance might be mandatory; that strong fettering would be required as a matter of law.480See, e.g., Nzolameso v. City of Westminster [2015] UKSC 22 [40], [2015] 2 All ER 942; see also McHarg, supra note 470 at 288 (discussing the ascendancy of a law mandating the use of guidance in the U.K.). The “no-fettering principle,” in other words, has sometimes been transformed in the U.K. into what two leading scholars have dubbed a positive “fettering rule.”481Elliott & Varuhas, supra note 466, at 181.

By contrast, in issues in which fragile interests seem to be at stake, courts in the U.K. have ruled that a high level of individuation rather than fettering would indeed be required. Alternatively, they have ruled that decisionmakers need to do more to make sure that they remain open-minded and able to make either exceptions or total revisions to policies inscribed in guidance (including by actively encouraging applications for revisions).482See McHarg, supra note 470, at 273–74 (mentioning case law on child welfare or refugees as examples of areas which courts in the U.K. have seen as highly sensitive and that would thus require a high level of individuation); Att’y Gen. ex rel Tilley v. The Mayor and Burgesses of the London Borough of Wandsworth [1981] 1 WLR 854 (Eng.).

In short, administrative law in the U.K. has seen a crucial transition with respect to the meaning and application of the “no-fettering principle” as a restraint on the use of administrative guidance. From a rigid administrative law ground that invalidated such guidance whenever it “fetters” (or binds) discretion in any meaningful sense, the no-fettering has transformed into a much gentler tool, one that evaluates the reasonableness of the degree of fettering expressed in the guidance and the administrative regime it builds in particular contexts.

But this still leaves another important question yet unresolved: At what point in time would this judicial review of guidance under the transformed “no-fettering principle” in the U.K. be allowed? And what about other potential defects in guidance documents, such as illegality or arbitrariness? Could courts in the U.K. review them on a pre-enforcement basis? Or would these issues have to wait until the guidance is actually applied in a more formalized, final legal action? As we have seen,483See supra notes 435–37 and accompanying text. this is another crucial issue for guidance domestication, one on which U.S. law has recently given a very particular legalistic/formalistic response: for pre-enforcement review, pretty clearly no.484See infra notes 485–91 and accompanying text.

As it happens, here, too, there has been a significant evolution in U.K. administrative law. At first, the idea of facial reviewability of guidance prior to its application in individual circumstances was anathema in the U.K., at least on grounds other than the previously discussed “no-fettering principle.” Indeed, initially, courts were wedded to the idea that review (or “jurisdiction,” as it is sometimes called in the U.K.) is crucially reliant on whether the action creates legal rights and obligations. Guidance, law in the U.K. implied, was not perceived as creating such. Review of guidance, at least when it is not impermissibly fettering, would thus be too abstract. As one senior commentator put it, allowing such pre-enforcement, abstract review would cause judicial review to “burst through its logical boundaries.”485H.W.R. Wade, Judicial Review of Ministerial Guidance, 102 L.Q. Rev. 173, 175 (1986).

Yet in an important case called Gillick,486Gillick v. West Norfolk and Wisbech Area Health Authority [1986] AC 112 (HL) 112 (appeal taken from Eng.). fifteen years after British Oxygen, the House of Lords again dramatically changed tack. In Gillick, the House of Lords clarified that even though allowing review of guidance on a pre-enforcement basis is a “significant extension of the court’s power of judicial review,” there are circumstances where it would and should be allowed.487Id. at 193. After all, the regime initiated by British Oxygen with the “no-fettering principle” now recognizes the possibility that guidance can have significant effects even if it is more provisional than hard law. As a result, extending judicial review was a natural progression.

After Gillick, then, courts in the U.K. became much more “proactive” than they previously were.488See John Laws, Judicial Remedies and the Constitution, 57 Mod. L. Rev. 213, 219 (1994). Judicial review has exactly burst through its previous logical bounds (showing, perhaps, yet again, that the life of the law isn’t really “logic”).489Cf. Oliver Wendell Holmes, Jr., The Common Law 5 (Routledge 2019) (1881) (“The life of the law has not been logic: it has been experience.”); Wade, supra note 485, at 175. However, the precise circumstances where courts in the U.K. would allow review of guidance on this pre-enforcement basis remained somewhat unclear after the House of Lords’ judgment. Acknowledging that its move was exceptional and fraught, Gillick spoke about the need for caution and to allow review on that basis in limited cases.490See Elliott & Varuhas, supra note 466, at 526. For example, Gillick limited that form of review to clear errors of law.491Gillick v. West Norfolk and Wisbech Area Health Auth. [1986] AC 112, 192–94 (HL) (appeal taken from Eng.). It also spoke about the need for courts to disallow this review when issues of morality are at stake (as they were in Gillick).492At issue in Gillick was guidance issued by a health agency with respect to the use of contraceptives. Id. at 112–13. Today, however, scholars in the U.K. seem to agree that this restrictive approach has given way. As one commentator has observed, review of guidance on this pre-enforcement basis post-Gillick is now “regularly” granted.493See McHarg, supra note 470, at 284; see also R (Pfizer Ltd.) v. Sec’y of State for Health [1999] EWHC (Admin) 504 [26]. And it is granted for what appears like a variety of claims, including the illegality of the guidance (for example, whether it correlates with any statutory dictates), its correlation with the “no-fettering principle” (flexibly applied as discussed before), and, finally, the substantive reasonableness of the guidance—which is the U.K.’s equivalent to our own somewhat unique arbitrariness review under the APA.

To be sure, this generosity with respect to pre-enforcement review of guidance under administrative law in the U.K. is not assured. Courts in the U.K. occasionally do flex their muscles. But as things stand today, it seems safe to say that pre-enforcement review would most likely be granted at least if courts view the underlying issue as possessing “sufficient public importance.”494David Elvin, Hypothetical, Academic and Premature Challenges, 11 Jud. Rev. 307, 324 (2006). So, for example, in a case called Royal College of Nursing (“RCN”), which Gillick heavily relied on, the House of Lords emphasized the reality that the content of the guidance is going to affect “several thousand[]” procedures and is likely to be adhered to by the public as a reason for allowing pre-enforcement review.495Royal Coll. of Nursing of the U.K. v. Dep’t of Health and Soc. Sec. [1981] AC 800 (HL). In both Gillick and RCN, the House of Lords also emphasized the prospect of future sanctions from not following guidance, especially of the criminal variety, as support for its pre-enforcement reviewability.496Though, as Professors Elliott and Varuhas suggest, the inexistence of criminal sanctions is far from conclusive. Elliott & Varuhas, supra note 466, at 527 (citing R (UK Renderers Association Ltd.) v. Sec’y of State for the Env’t, Transp. and Regions [2001] EWHC (Admin) 675); see also Royal Coll. of Nursing of the U.K. [1981] AC 800 (HL); Gillick [1986] AC 112 (HL). And finally, in a recent judgment, the U.K. Supreme Court (which replaced the House of Lords as the country’s apex court) ruled that review of administrative guidance would be granted if it “imposes requirements which mean that it can be seen at the outset that a material and identifiable number of cases will be dealt with in an unlawful way.”497R (A) v. Sec’y of State for the Home Dep’t [2021] UKSC 37 [63], [2022] 1 All ER 177 (on appeal from Eng.). This judgment has practically overruled a previous test that was used by lower courts according to which review might be granted if a policy gives “rise to an unacceptable risk of unlawful decision-making.” R (Suppiah) v. Home Sec’y [2011] EWHC 2 (Admin) 2844 [135].

***

Admittedly, this is a somewhat flat survey of extant law in the U.K. with respect to guidance domestication. But it should nonetheless prove provocative for present purposes. What it demonstrates is that the U.K. has landed on an approach to the domestication of guidance that seems importantly different than the American approach. First, courts in the U.K. no longer view guidance that binds as presumptively suspicious as U.S. law does. Indeed, they don’t fuss as we do about whether guidance is ‘“practically binding’” or not as a condition for its procedural validity and as a kind of surrogate safeguard for the potential abuse of the legislative or rulemaking process. Rather, courts in the U.K. easily recognize that guidance can permissibly fetter and indeed bind so long as it leaves genuine room for exceptions. Second, American and U.K. courts take a different approach to the timing of judicial review of guidance as well as to its substance. In the U.S., the approach today tends to be quite formalistic and legalistic. Guidance that is not “practically binding” will likely be reviewed only at the point when it is crystallized in a separate “final” and formal agency action. By contrast, in the U.K., the approach is much more consistently pragmatic and expansive. Courts in the U.K. do submit guidance that is sufficiently important (for example, because of its substantial practical effects or because of high likelihood for abuse) to review on a pre-enforcement basis notwithstanding that it lacks the force of law. And at that stage, courts in the U.K. also inquire not only into the sensibility and reasonableness of the degree of fettering (bindingness) in the particular guidance at hand but also into whether it suffers from any major illegality or arbitrariness defects.

3.  Lessons, Take I: Explaining and Justifying Differences

What can this comparison tell us?

As I have already argued, a sensible comparative approach to administrative law is a modest and experimentalist one.498See supra Section II.E. As such, it must always begin from a position of caution. That position recognizes that, despite increased globalization and cross-national administrative law fluidity, there remain differences that counsel against suggesting immediate similarity or against pointing too quickly in the way of administrative law reform based on comparative administrative law.

And indeed, it is not hard to think, certainly at surface level, of important differences between the U.S. and the U.K. These differences can explain the variance in our approaches to the domestication of guidance. Perhaps they can help justify it, too.

(a) The APA and general principles of administrative legitimacy: To begin, the current approach to guidance domestication in our system strongly relies on the APA. But, notwithstanding the general global trend, discussed above,499See supra Section II.B.2. of introducing administrative framework statutes (worldwide APAs), the U.K. still doesn’t have an APA-like statute. The Statutory Instruments Act is not a good analogy here. While it requires publication and parliamentary scrutiny of secondary legislation, it doesn’t require notice and, more importantly, a duty to receive and respond to comments from the public.500See, e.g., Bates v. Lord Halisham [1972] 1 WLR 1373, 1378 (“Many of those affected by delegated legislation, and affected very substantially, are never consulted in the process of enacting that legislation; and yet they have no remedy.”). Of course, the duty to respond extensively to comments doesn’t appear explicitly in the APA but is more an interpretation of it or an expression for an enduring “administrative common law” legacy in our administrative law. See, e.g., Ronald M. Levin, The Evolving APA and the Originalist Challenge, 97 Chi.-Kent L. Rev. 7, 22 (2022) (“The text of the APA, however, says nothing about a duty to respond to comments.”). In fact, the idea of general and broad public involvement in formulating general policies is traditionally viewed with deep skepticism in the U.K. Indeed, the animating legitimating principle of the administrative state in the U.K. is more traditionally political, relying on the normal representative democratic process, and particularly the accountability of the government and regulatory departments to parliament.501See Beatson, supra note 145, at 201–02 (highlighting the animating role of the principle of parliamentary sovereignty for the administrative state in the U.K.). The U.K. hasn’t traditionally centered on values that America today makes key as legitimating forces of its administrative state such as public deliberation or a desire to make the administrative process pluralistic and a surrogate for the democratic process writ large.502On the differences between the so-called Westminster model of administrative legitimacy, as exists in the U.K., which embraces the idea of parliamentary sovereignty, and the American model of administrative legitimacy that is more pluralistic and perhaps deliberative, see generally Andrew Edgar, The Westminster Model in Comparative Administrative Law: Incentives for Controls on Regulation-Making, 38 U. Tas. L. Rev. 47 (2019). This means that the values that would be fulfilled by the present American approach to domesticating guidance, which procedurally invalidates any guidance that “practically binds” to insist on a quasi-legislative and publicly open process, would not be the same in the U.K.

(b) Statutes v. common law: Furthermore, the Statutory Instruments Act also doesn’t have an APA equivalent that addresses judicial review and that explicitly speaks of a requirement of finality.503See 5 U.S.C. § 704. Rather, the changes in the jurisdictional boundaries of courts in the U.K., brought about by the House of Lords’ judgment in Gillick which, as we’ve seen, blessed pre-enforcement judicial review of guidance, occurred based on a “pure” common law background.504For further indication of the common law nature of Gillick, see Allison L. Young, Judicial Review of Policies—Clarification of a Judicial Retreat?, U.K. Const. L. Ass’n (Aug. 5, 2021), https://ukconstitutionallaw.org/2021/08/05/alison-l-young-judicial-review-of-policies-clarification-or-judicial-retreat [https://perma.cc/L9CW-HFH3] (discussing the recent developments in the case law fleshing out Gillick without any reference to any positive legal source). This, it might be thought, could be an important explanation for the variance in legal regimes as between the U.K. and the U.S. It makes the change that occurred in the U.K. to expand judicial review of guidance to the pre-enforcement stage potentially more legitimate or permissible compared to our system. Indeed, contrary to the United Kingdom, the U.S. currently seems more wedded to the need to abide by (or take very seriously) statutory law (as indicated by discussions expressing aversion to “administrative common law”).505See supra note 10 and accompanying text.

(c) Constitutional structure: The fact that the U.K. is a parliamentary system, not a presidential one, seems important here too. The British government used to possess relatively tight control of Parliament. This, coupled with the fact that the procedure for issuance of secondary legislation is regularly much more lenient than notice-and-comment (which is sometimes described as “ossif[ying]” the regulatory process),506See, e.g., Thomas O. McGarity, The Courts and the Ossification of Rulemaking: A Response to Professor Seidenfeld, 75 Tex. L. Rev. 525, 528 (1997) (citing Thomas O. McGarity, Some Thoughts on “Deossifying” the Rulemaking Process, 41 Duke L.J. 1385, 1385–86 (1992)). could mean that the incentives to abuse guidance to circumvent the normal legislative route are much weaker in the U.K. than they are in the U.S. As a result, a stricter approach to the domestication of guidance doesn’t seem to be similarly needed in the U.K. as it may be in America.507On the increased incentives to draw on subregulatory guidance given the challenges of policymaking in a presidential system and the difficulties with respect to rulemaking, see, e.g., Todd D. Rakoff, The Choice Between Formal and Informal Modes of Administrative Regulation, 52 Admin. L. Rev. 159, 163 (2000).

(d) Culture and politics: Cultural and political elements, broadly understood, may be relevant as well. As is sometimes noted, the U.K. didn’t seem to exhibit the same cultural aversion to bureaucracy as we exhibit in the U.S.508See, e.g., Taggart, supra note 166, at 613 (describing the U.K. at the turn of the 1980s as reflecting a “comfortable post-war consensus as to the proper role of the state as collective provider of almost every need, from cradle to grave, of the vast majority of the population, and [of the state] as the engine to forces of the economy by virtue of its substantial ownership or control of the means of production and distribution” (quoting Rodney Austin, Administrative Law’s Reaction to the Changing Concepts of Public Service, in Administrative Law Facing the Future: Old Constraints and New Horizons 1 (Peter Leyland & Terry Woods eds., 1997)). This is perhaps in large part because of the greater political control that politics may have over the bureaucracy. Given its parliamentary and constitutional structure, most agencies in the U.K. are directly accountable to ministers who are themselves members of the legislature.509See, e.g., Peter Cane, Controlling Administrative Power: An Historical Comparison 130 (2016) (describing this structural difference between the U.S. system and the U.K.). The famous so-called “independent” agencies that we see more often in the U.S. don’t exist to the same degree in the U.K.510Id. (highlighting the reality by which arm’s-length agencies, which possess substantial independence from the political executive, is considered exceptional in a system like the U.K.). But this cultural and political divergence can also be the result of the higher standing of the civil service in the U.K. or because of, yet again, generally more favorable attitudes toward regulation in British society than back home in the U.S.511See, e.g., Taggart, supra note 166, at 613.

(e) Judicial role and the costs of judicial review: A final important difference between the U.K. and the U.S. in this context is about the courts. The approach in the U.K. to the domestication of guidance, as we’ve seen,512See supra notes 475–81, 492–96 and accompanying text. gives judges quite a bit of discretion to police guidance on a case-by-case basis. Assuming guidance leaves room for exceptions, courts can rule on the question of the appropriate level of structuring (fettering) of administrative discretion in the guidance and how much it can be rigid or flexible.513See supra notes 483–85 and accompanying text. They can also review guidance for adherence to requirements of illegality and non-arbitrariness. And, crucially, they can do all that not just when the guidance is actually applied but also on a pre-enforcement basis.514See supra notes 483–85 and accompanying text. But giving American courts such a task could be seen as deeply perverse and contrary to conceptions of the appropriate judicial role. On this view, courts have no business in our system in policing the optimal level of constraint in guidance documents. All they can do is safeguard, definitionally, that the line isn’t crossed from nonbinding guidance to binding rule, which is precisely what the “practically binding” test aims to do. And American courts also can’t review “abstract” motions. That would substantially exceed the adversarial nature of our system, sometimes associated also with Article III of the Constitution, and would detach courts too much from the grounding in actual controversies.515See U.S. Const. art. III.

But even if the U.K.’s regime for guidance domestication isn’t so contrary to perceptions about proper judicial role in the U.S., this is still not the end. There may be instrumental and institutional reasons to think that the regime in the U.K. won’t work positively here. Maybe judges in the U.S. will simply make more mistakes than judges in the U.K. in applying such body of law, for example, by failing to identify the optimal amount of bindingness that would be permitted in specific guidance documents. The famous Vermont Yankee decision is an indication that at least the Supreme Court believes that this sort of enterprise in which courts would decide independently which procedures are appropriate for agencies to use beyond the skeletal requirements of the APA is unjustifiably costly.516See Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 525 (1978). And maybe the litigious nature of the U.S. system (its commitment, as we’ve seen, to “adversarial legalism”),517See supra note 236 and accompanying text. the complexity of a federal and substantially larger system such as ours (with many different levels of courts and which controls a much larger population and consequential regulatory activity),518See, e.g., Peter L. Strauss, One Hundred Fifty Cases Per Year: Some Implications of the Supreme Court’s Limited Resources for Judicial Review of Agency Action, 87 Colum. L. Rev. 1093, 1118–21 (1987). and the more expressed judicial hostility toward the administrative state in America (anti-administrativism),519On the increased judicial hostility to administration in America, see generally Metzger, supra note 389. will make the costs of such a flexible guidance domestication regime seen in the U.K. simply too high for us at home.

***

All this certainly seems plausible on its face. But note just how much we have potentially gained from this comparative exercise. With this comparison in mind, we can now see that the regime of guidance domestication that we have, with its reliance on a ‘“practically binding’” test and a rather legalistic aversion nowadays from pre-enforcement review of guidance, could be understood to reflect the kinds of differences we’ve seen with the U.K., and which make our circumstances potentially unique. This includes (1) our need to defend the kind of values that animate the APA of notice and public participation in administrative policymaking; (2) the existence in our system of a statutory APA that is not only central but also provides what appears perhaps like meaningful statutory instructions for courts; (3) the stronger incentives that may exist in the American presidential system to circumvent the possibly “ossified” rulemaking process through the use of guidance; (4) the desire to give some expression in administrative law to views reflecting at least some skepticism toward free-wheeling bureaucratic discretion (and a general uneasiness about the administrative state more broadly); and, finally, (5) the existing regime may be explained and justified because it makes sure that the judiciary retains its appropriate role in our particular system of governance (or that the law the judiciary is empowered to implement doesn’t make the overall scheme of administrative law in America overly costly).

Looking at domestic sources alone might have given us clues in this direction for explaining and justifying our regime of guidance domestication in similar terms.520The account that comes closest to justifying the present regime in similar terms is Levin, supra note 421. But comparative law certainly makes them much more conspicuous.

4.  Lessons, Take II: Critique and Reform?

Once all that is said and done, though, it still seems possible to consider how many of the differences just highlighted between the United Kingdom and the United States may be less powerful than they initially appear. After all, a modest and experimentalist approach to administrative law comparison doesn’t mean that we must rigidly assume that all administrative systems are inescapably different. That would be false in a world where, as we’ve seen in Part II.B,521See supra Section II.B. administrative law is experiencing some apparent fluidity and globalization. What a modest and experimentalist approach requires is only that we be careful and appropriately contextual before we make any judgment about similarity notwithstanding this more global and fluid background.

And indeed, holding onto this careful message and working contextually, the idea that we should simply look at the comparison with the U.K.’s approach to guidance domestication to say “thanks, but no thanks”—or to justify the present differences between us and them—could certainly be complicated. There is more similarity than the previous description suggests. The general fluidity and globalization of administrative law are felt in this context too.

(a) General principles of administrative legitimacy—redux: Start with the domestic perspective of the U.K. While it is true that the U.K.’s regime of secondary legislation doesn’t involve anything like the notice-and-comment process, it is still illuminating that the U.K. hasn’t opted for retaining a stronger “no-fettering principle” that would have directed more guidance to the path of primary or secondary legislation in the event that the guidance is “practically binding” (or “fettering”). After all, such a move would have been in line with the animating principle of parliamentary sovereignty that provides, so it seems, much of the legitimacy to the administrative state in the U.K.

(b) Statutes v. common law—redux: The idea that the form of pre-enforcement review of guidance documents courts in the U.K. now perform is easier to digest, so to speak, compared to the U.S.’s form of pre-enforcement review because here we have a statutory “finality” requirement also seems highly questionable. The opening up of judicial jurisdiction in Gillick to review guidance on a pre-enforcement basis was a dramatic move for the courts in the U.K. The perception of review of this kind substantially expanded on the traditional view of what it means to have judicial review in U.K. administrative law. Following it, as we’ve seen, caused judicial review to “burst through its logical boundaries.”522Wade, supra note 485, at 175. A requirement of finality, in other words, was similarly deeply entrenched in the U.K. even if it did not manifest in the form of statutory law as it does in America.

(c) Constitutional structure—redux: Moreover, and as suggested already in Part II in a more global context,523See supra Part II.B. the U.K.’s parliamentary nature is much more ambiguous in its implications than might be initially thought. Parties in the U.K. appear weaker than in the past, a phenomenon that partly manifests itself by the increasing power of U.K. backbenchers as well as by the increase in the number of parties that get seats in the British parliament today.524See generally Russell, supra note 288 (describing the challenges of policymaking in England under current realities). The primary and secondary legislative process in the U.K., too, is to some degree polarized and virulent—not that different at times from the “blood sport” description we see with respect to rulemaking in the U.S.525Thomas O. McGarity, Administrative Law as Blood Sport: Policy Erosion in a Highly Partisan Age, 61 Duke L.J. 1671, 1671 (2012). The incentives to use guidance at the expense of primary or secondary legislation may thus not be that weak even in the U.K. As we saw, in the U.K. guidance too has been characterized as a “retreat from law.”526Juss, supra note 461, at 150. For a paper documenting the increased attraction of guidance or “soft law” in the U.K., see Carol Harlow, Law and Public Administration: Convergence and Symbiosis, 71 Int’l Rev. Admin. Sci. 279, 279 (2005).

(d) Politics and culture—redux: As furthermore suggested in Part II,527See supra Part II.B. there is reason as well to question at least the degree or intensity of any relevant cultural and political gaps between administrative cultures across countries in general, including the U.K. and America in particular. Indeed, the “Anglo-American tradition” seems closer here too. While a deeply libertarian, Tea Party, “anti-administrativist” culture is perhaps absent in the U.K., or is at least less politically salient, there is certainly a tradition, perhaps growing, of suspicion toward bureaucracy in the U.K. Dicey’s declaration, mentioned before,528See supra notes 173–74 and accompanying text. that the U.K. doesn’t have administrative law still haunts the country.529See, e.g., Martin Loughlin, Evolution and Gestalt of the State in the United Kingdom, in 1 The Max Planck Handbooks in European Public Law 451, 452–53 (Sabino Cassese et al. eds., 2017). The British state and administration are still treated in some, perhaps growing, quarters with ambivalence.530Id. at 492.And U.K. administrative law scholars have famously highlighted the existence, sometimes prevalence, of what they call “red light,” rather than “green light,” approaches to administrative law.531See Harlow & Rawlings, supra note 325, at 1–48. These approaches aim to mostly constrain the administrative state—not empower it. They’re akin to a “libertarian administrative law”532Cass R. Sunstein & Adrian Vermeule, Libertarian Administrative Law, 82 U. Chi. L. Rev. 393, 393 (2015). U.K.-style.

Finally, the sympathy to retaining unbounded bureaucratic discretion and preferring regulatory informality is also probably no longer as strong as it used to be in the contemporary U.K. Administrative culture in the U.K. has been to a large extent “rulified” and legalized, as many have remarked,533See, e.g., Harlow & Rawlings, supra note 325, at 95–139. and as the previously described evolution of the no-fettering rule in fact further suggests (given the way that the no-fettering principle has sometimes been transformed in practice to a “fettering rule” whereby courts can make the issuance of guidance mandatory).534See supra note 477 and accompanying text.

***

All this indicates then that it is far from obvious to say that the U.K. didn’t have similar reasons to land on the kind of regime that we have in America, one that requires any “practically binding” guidance to go through the primary or at least secondary legislative process and that would deny judicial review at the pre-enforcement stage. It could have possibly gone that way. Yet, it didn’t.

To be sure, things in the U.K. are far from static. There are currently rumblings in the direction of some reform of the U.K. apparatus concerning administrative guidance. The use of guidance in the U.K. during the COVID-19 pandemic has created pushback and concerns over abuse, including that the present state of the law is too permissive and allows “government by decree.”535K.D. Ewing, Covid-19: Government by Decree, 31 King’s L.J. 1, 16 (2020). Similar issues have also been raised in other systems, including Australia. See, e.g., Matthew McLeod, Distancing from Accountability? Governments’ Use of Soft Law in the COVID-19 Pandemic, 50 Fed. L. Rev. 3, 3 (2022). This connects to a more general sense in the U.K. today, clearly evident in elite discourse, that there are good reasons to tighten parliamentary sovereignty over the British executive and administrative state, which includes strengthening legislative supervision of guidance.536See, e.g., Alexander Horne & Michael Torrance, Parliament as Scrutineer: Parliamentary Oversight of the Law-Making Process, in A Research Agenda for Administrative Law 85, 97 (Carol Harlow ed., 2023); Alexandra Sinclair & Joe Tomlinson, Plus ça change? Brexit and the Flaws of the Delegated Legislation System 6 (2020), https://publiclawproject.org.uk/resources/plus-ca-change-brexit-and-the-flaws-of-the-delegated-legislation-system [http://perma.cc/TK4E-D338]. See also King, supra note 449, at 161–69 (describing the “inadequacy of parliamentary scrutiny” of delegated legislation, particularly in the context of the European Union (Withdrawal) Act 2018). Finally, the U.K. has recently also seen cycles of critics pointing to the need to cabin an alleged over-aggressiveness by the courts, both in general but also especially in administrative law.537In 2020, the English government initiated an Independent Review of Administrative Law (“IRAL”) process given concerns of judicial overreach in administrative law. The IRAL panel submitted its final report in 2021 and the government ultimately followed up with a legislative bill that implemented some of the panel’s recommendations, which was also approved in parliament. For details, see Independent Review of Administrative Law, GOV.UK, https://www.gov.uk/government/groups/independent-review-of-administrative-law [https://perma.cc/65KS-6BMJ].

Nonetheless, at least so far, these contemporary rumblings haven’t resulted in a call for the kind of solution for the domestication of guidance that we see in the U.S. Indeed, there is no dominant voice today in the U.K. debates that suggests that courts will go back to invalidate any guidance that is “fettering” or “practically binding”; backtrack from policing the no-fettering principle in a highly flexible and contextual way; or entirely close the courts’ doors on pre-enforcement review of guidance for illegality and arbitrariness. Rather, at most, reflecting the kind of fluidity and potential globalization of administrative law we’ve seen in Section II.B, 538See supra Section II.B. these calls have so far been trying to build on some elements of the regime of guidance domestication that is familiar from the U.S., though in a much subtler way.

For instance, one proposal has been to establish legal requirements to publication of guidance that would “compensate” for the lack of direct applicability of the Statutory Instruments Act. In the U.S., this of course exists already by virtue of the APA.539See 5 U.S.C. § 553(b)(A). But in the U.K., given the current legislative framework, that work has mostly been done through development of new judicial requirements, which legal scholars seem to generally be supportive of and even proactively encourage.540See, e.g., McHarg, supra note 470, at 286–88.

More interestingly perhaps, another proposal that has been floating around in the U.K. as a solution to the tensions and risks that have arisen lately with respect to the use of guidance is to enforce, in that context, some requirement for broad public participation or, as it is more commonly referred to there, “consultation.”541Id. at 301–02. The belief seems to be that, especially given the lack of any parliamentary supervision on guidance, consultation can be an important surrogate that would counter the risks of its abuse and enhance guidance’s legitimacy.542Id. And the belief seems moreover to be that the U.K. system, too, would benefit from expanding the repertoire of legitimating moves it uses with respect to its administrative state in ways that go beyond mere political and legislative accountability to more of the deliberative and quasi-democratic legitimizing principles and move broadly familiar in the U.S. context.543See, e.g., Carol Harlow & Richard Rawlings, Populism and Administrative Law, in The Making and Re-Making of Public Law (Eoin Carolan et al. eds., forthcoming 2024) (manuscript at 3), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4414379 [https://perma.cc/RF2K-YYHH]. For a similar argument coming from an Australian scholar, see Andrew Edgar, Administrative Regulation-Making: Contrasting Parliamentary and Deliberative Legitimacy, 40 Melb. U. L. Rev. 738, 738 (2017).

To be clear: This call to increase public “consultations” in the U.K. isn’t being made with respect to every administrative guidance.544See, e.g., Harlow & Rawlings, supra note 543, at 20 (speaking of consultation with respect to meaningful regulatory actions). And the form of consultation being envisioned as a remedy for guidance’s risks and costs, and as part of a renewed effort to think about its domestication, doesn’t necessarily or always look exactly like the American notice-and-comment process.545Id. (highlighting that consultations need not be in a format that’s all encompassing or terribly rigid); Consultation Principles: Guidance, Gov.UK (March 19, 2018), https://assets.publishing.service.gov.uk/media/5a79b500ed915d07d35b781b/code-of-practice.pdf [https://perma.cc/64CG-LGYL]. But when the issue centers on guidance that is sufficiently important, and when the agency itself hasn’t already made a real effort to engage broader audiences, then perhaps yes. And though most of the U.K. discourse has so far been centered on politics—in the sense that it is claimed that increase in the use of “consultations” in developing guidance should come from either the legislature or the government rather than courts546The official position of law in the U.K. is that the rules of “natural justice” that require hearing do not apply to general policymaking, and thus, absent something like a U.K. APA, there is now no general common law legal obligation to consult. See Bates v. Lord Hailsham [1972] 1 WLR 1373. (and it should be noted that at least the U.K. government has, in fact, taken some steps in that direction)547See, e.g., U.K. Cabinet Off., Consultation Principles (2018) (general guide encouraging consultations and determining best practices for engaging them); The Environmental Permitting (England and Wales) Regulations 2016, SI 2016/1154 (a statutory instrument mandating consultation in matters of environmental permitting). —this is not the final word yet. Though courts in the U.K., including its Supreme Court, have so far been resistant to infer duties of broad public consultation on guidance independently,548See R (ex rel. Moseley) v. London Borough of Haringey [2014] UKSC 56 [23] (Lord Wilson); McHarg, supra note 470, at 302 (arguing that a judicial duty to consult with respect to guidance should not be ruled out). some judges and scholars did emphatically gesture in the direction of having courts recognize judicial obligation for consultation.549For discussion, see Alistair Mills, An Update on Consultation, 20 Jud. Rev. 160, 170 (2015). It is quite possible therefore that in the future, and even without further concrete steps from either Parliament or the government, U.K. courts will decide to leap ahead.

5.  Expanding the Comparative Gaze: Domesticating Guidance Across the Globe

Up to this point I have spoken about where the U.K. seems to be with respect to administrative guidance. But before going back to the U.S. armed with that knowledge, it is worth pointing out at this stage the fact that the U.K.’s previously existing and presently evolving regime of guidance domestication, which is edging somewhat closer to what we are familiar with in the U.S., doesn’t live in global isolation. To the contrary: if we broaden our comparative gaze, we find a lot that looks very much the same. The fluidity and globalization of administrative laws and systems is broader in reach.

For example, in Italy, the law on guidance (also known as circolari administrative) has long maintained that it is unreviewable on a pre-enforcement basis because it lacks any legal effects.550See Mariolina Eliantonio, Judicial Review of Soft Law Before the European and the National Courts: A Wind of Change Blowing from the Member States?, in EU Soft Law in the Member States 283, 292 n.48 (Mariolina Eliantonio et al. eds., 2021) (citing TAR Lazio, Sez II, 30 Aug. 2012, n. 7395). However, courts there have noted recently an important exception, ruling that guidance will be reviewable so long as it is not purely “internal” and also addresses regulated entities themselves.551Id. at 292 (citing TAR Lazio, Sez I, 13 February 2019, n. 2800). In these cases, Italian courts will then opine on either the legality or substantive reasonableness of the guidance, as well as on whether the guidance is sufficiently provisional or rather too rigid.

France, too, has evolved in very similar directions. It has moved from completely prohibiting judicial review of guidance (known as “circulaires” or “droit souple”) because they lack any formal legal force,552Id. at 293. to its very minimal review,553See CE Ass., Jan. 29, 1954, 07134, Rec. Lebon 54. This decision, which is also known as Notre-Dame du Kreisker, opened the door for pre-enforcement review of guidance if it goes beyond “mere interpretation,” not very different from how our law sometimes distinguishes between “interpretive rules” and “policy statements” within the broader category of guidance. to slightly wider,554See CE Sect., Dec. 18, 2002, 233618. In this decision, also known as Duvignères, the Conseil d’État opened the door for reviewability of guidance, but only if it contains “mandatory forms.” Id. to now allowing pre-enforcement review on various administrative law grounds so long as guidance has “significant effects” or will “significantly influence” the behavior of regulated entities and administrators.555This language is taken from two cases of the Conseil d’État from 2016: CE Ass., Mar. 21, 2016, 368082, Rec. Lebon, and CE Ass., Mar. 21, 2016, 390023 (Société Fairvesta International GmBH). Though at the time these judgments were rendered there was some uncertainty as to whether they will be applied again, the Conseil d’État has since applied it in other cases, including in a case from 2019: CE Ass., July 19, 2019, 426389. A similar situation now also occurs at the EU level, where, in contrast to the past, guidance can now be reviewed on a pre-enforcement basis and for a variety of causes so long as the guidance is capable of “affecting the interests of” a person or is “bringing about a distinct change in . . . [a person’s] position.”556The language is taken from the European Court of Justice’s judgment in Case C-60/81, IBM v. Comm’n of the Eur. Comtys., 1981 E.C.R., 2639, ¶ 9, https://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=60/81&td=ALL [https://perma.cc/JW8G-AF4X]. It should be noted, though, that the approach to reviewability of guidance at the EU level actually has roots in a previous judgment of the European Court of Justice (the “ECJ”) in Case C-22/70, Comm’n of the European Comms. v. Council of the European Comms., 1971 ECR 263, ¶ 41, https://curia.europa.eu/juris/liste.jsf?num=C-22/70 [https://perma.cc/YC97-XZZT]. In that case, the ECJ emphasized that reviewability in EU courts must be open to “all measures adopted by [EU] institutions, whatever their nature or form.” See id. ¶ 42. To be clear, the case law of the EU is far from consistent, and there are disagreements about how broad or narrow the reach of that test should be, including by calling for reforming this test. But at present, no one seems to be calling for the EU to completely abolish the idea of pre-enforcement review of guidance. Finally, in Canada, courts have similarly opened the door for pre-enforcement reviewability of guidance in a wide variety of cases. They too are no longer troubled by their definitional informality.557See Sossin & van Wiltenburg, supra note 445, at 640. A similar situation also seems to be happening in Switzerland. See Alexandre Flückiger, Soft Law Instruments in Public Law, in Swiss Public Administration: Making the State Work Successfully 121, 133–34 (Andreas Ladner et al. eds., 2019).

But there’s actually more here. All these countries and jurisdictions (France, Italy, the EU, and Canada) are not only getting closer to the U.K. in allowing for pre-enforcement review of guidance in sufficiently important contexts. Like the U.K. again, all these countries and jurisdictions also exhibit similar discussions about the need to supplement pre-enforcement judicial review with “consultation” mandates—opening up guidance for public input.558For an extensive comparative survey covering the aforementioned jurisdictions, see Fabrizio De Francesco & Jale Tosun, The Enactment of Public Participation in Rulemaking: A Comparative Analysis, 29 Swiss Pol. Sci. Rev. 21, 21 (2022). In most jurisdictions, such public consultations, it is believed, should originate from political institutions such as legislatures and executives or administrative agencies themselves.559For the governmental attempts to encourage consultation in Canada, see Policy Statement and Guidelines for Public Participation – Dep’t of Justice, Gov’t of Can. (Sept. 7, 2021), https://www.justice.gc.ca/eng/cons/pol.html [https://perma.cc/CKS3-5NWR]. For an extensive discussion, though somewhat dated, of the efforts done across Europe to increase participation in development of general policies, including with respect to guidance, see generally Joana Mendes, Participation in EU Rule-Making: A Rights-Based Approach (2011). But, as in the U.K., the possibility of developing obligations to consult with the public judicially, rather than merely politically, is not at all foreclosed.560For an impassioned argument that courts beyond the United States should decidedly take this step, see generally Susan Rose-Ackerman, Democracy and Executive Power: Policymaking Accountability in the US, the UK, Germany, and France (2021).

6.  Back to Critiquing and Reforming the U.S.

As should be clear, there are important differences between the U.K., the U.S., and these other systems or jurisdictions that I have just mentioned. The EU is a supranational entity, and France is a semi-presidential system, for example. The regimes for guidance domestication in each of these systems are moreover not precisely the same, as the various tests used in these systems to allow for the reviewability of guidance briefly summarized above also indicate.561For example, the Italian judicial system’s willingness to allow pre-enforcement review of guidance that is not purely internal could lead to different results from the French or European approaches which are not similarly limited. And I of course did not even mention many other systems or countries whose administrative law and regime for guidance domestication may be entirely different.562In particular, it appears that Germany has not yet allowed for pre-enforcement review of guidance documents. See Eliantonio, supra note 550, at 299. To the extent that the increased similarity between these countries or jurisdictions is itself an indication of the increased globalization of administrative law, it thus highlights yet again how that process is potentially fragile and obviously complex.563See supra Section II.B.3.

Nonetheless, after exploring more in depth the U.K. administrative law system and its specific approach to guidance domestication, and supported by this very minimal introduction—a sketch really—of foreign guidance domestication regimes beyond the U.K. (which seem to point in quite similar directions), we do seem to be on a more secure footing at this point to go back home, to the U.S., and start asking: are the kinds of differences highlighted before that significant also from our own perspective in the U.S.? Can they truly explain the divergence in the approaches to guidance domestication between the U.K. and these other jurisdictions and the American approach? Can they justify them?

And, as I think is fair to say, the answer at a minimum seems much less certain.

(a) The APA and general principles of administrative legitimacy—redux (II): We’ve seen, for example, that the APA and its animating values of public participation in policymaking by agencies can potentially support the present approach to guidance domestication in America. But the APA also clearly says that guidance is exempt from notice-and-comment rulemaking, thereby signaling that the participatory values the APA reflects—and which our broader culture emphasizes—are potentially much more qualified.564See 5 U.S.C. § 553(b)(A). They must be considered not in isolation, but along with the existence of contrasting values like the previously existing political accountability of agencies to the political branches, which, as discussed, is exactly what can explain the more lenient approach in the U.K. to guidance domestication. The move that we have seen in the U.K. and in other systems to encourage “consultation” with respect to guidance565See supra notes 537–57 and accompanying text. also suggests that the participatory values that our system prizes need not necessarily come from judicial enforcement of notice-and-comment procedures. They can come from other avenues, such as the political branches themselves or perhaps even through agency “self-regulation.”566Elizabeth Magill, Agency Self-Regulation, 77 Geo. Wash. L. Rev. 859, 861 (2009).

(b) Statutes v. common law—redux (II): We’ve also seen that the present divergence in approaches may be dependent on the statutory requirement that exists in America with respect to finality. But the reality is that the APA’s “finality” provision doesn’t have an essentially restrictive meaning. As previously pointed out, in the past, courts did appear to take a much more pragmatic approach to the finality (and ripeness) requirements.567See supra notes 432–33 and accompanying text. That more pragmatic approach could have squared with pre-enforcement review of at least some key guidance documents notwithstanding that they lack the force of law just as we see in the U.K. and across other jurisdictions. This certainly puts under tension the suggestion that pre-enforcement review of guidance is in some deep tension with the judicial role in the U.S. A Gillick moment can potentially occur (or reoccur) even in the U.S. and with the kind of statutory APA that we have and that the U.K. lacks.

(c) Constitutional structure—redux (II): We’ve seen that the stricter approach that we have in the U.S. to domesticating guidance could have been furthermore explained by the potentially increased incentives to bypass the legislative and rulemaking processes, which seem harder to succeed at compared to primary and secondary legislation in the U.K. parliamentary system. But even that’s not crystal clear. Some suggest that the “ossification” thesis with respect to the rulemaking process in the U.S. is far from persuasive.568See, e.g., Adrian Vermeule, Our Schmittian Administrative Law, 122 Harv. L. Rev. 1095, 1144 (2009). And, as we’ve seen, administrative agencies may potentially possess sufficient incentives to, again, “self-regulate”569Magill, supra note 566, at 890, 892, 896, 900–02. and act prudently notwithstanding the temptations of guidance compared to rules. Letting agencies more freely issue guidance that is “practically binding” does not so obviously open-up opportunities for inevitable abuse.

(d) Politics and culture—redux (II): Even the cultural and political divergences that might have been thought to explain and justify the existing variance between the U.K. and the U.S.’s approach to guidance domestication does not hold so clearly. We have seen this before with respect to the U.K.’s more complex disposition today about the administrative state.570See supra notes 524–31 and accompanying text. But the same is true in the U.S. as well. A culture of fear of bureaucracy or the administrative state probably exists, and is certainly vocal, but there is also a counter-American culture nowadays that’s supportive of bureaucracy and is comfortable in relaxing some of the restraints it faces today in the name of achieving governmental arrangements that get things done.571See generally, e.g., Metzger, supra note 389 (criticizing recent ascendent attacks on the administrative state and even developing an account of the administrative state’s mandatory constitutional status); Bagley, supra note 377 (criticizing even the core-liberal commitment to administrative procedure, which, Bagley argues, bogs down government from achieving valuable goals more effectively and rapidly). That counter-culture can also support the conclusion that there is no need for the strict approach of invalidating guidance whenever it “practically binds” and that it is fine to let bureaucracies experiment with legitimate uses of guidance that have various degrees of effects on behavior.

(e) Judicial role and the costs of judicial review—redux (II): Finally, the judicial challenges in managing a regime of guidance domestication that’s more flexible and discretionary, and which permits courts to perform review on a pre-enforcement basis, as in the U.K., is not necessarily prohibitive in the U.S. I have already mentioned how pre-enforcement review of guidance documents could have been squared with the more pragmatic conception of the judicial role that underlined past case law.572See supra note 564 and accompanying text. But it is not at all clear that the costs of the U.K. regime for domesticating guidance would necessarily be so negative even in the U.S., either today or in the future. Though the U.S. administrative state’s environment is highly litigious and comparatively broad and complex, the idea that judges in the U.S. necessarily can’t flexibly and responsibly intervene or at least provide some input into the soundness of a guidance regime on all its components, as U.K. judges do,573See supra notes 449–79 and accompanying text. also seems unnecessarily extreme. It ignores more pragmatic trends in our jurisprudence and history of administrative law, which suggests that judges can potentially make responsible, sufficiently grounded, decisions in administrative law that are not entirely hostile to it.574See, e.g., Pojanowski, supra note 9, at 875–82 (identifying, though criticizing, a strong pragmatic strand of administrative law jurisprudence Pojanowski dubs “administrative pragmatism”).

***

And . . . it is at this point that we must return to the kind of path that a modest and experimentalist approach to comparative administrative law charts. Now that we’ve seen, in a much more refined and contextual fashion, that the differences between the U.K. and the U.S. with respect to guidance domestication may not be so extreme, and that there is some substantial basis for potential cross-national similarity or at least fluidity, even a modest and experimentalist approach can license us to be a bit bolder. We might at least consider some change, or moving in the direction of change, based on the comparison. More specifically, we may consider such a move so long that it passes the further benchmarks that a modest and experimentalist approach recommends, and previously discussed in Section II.E, namely—that there are strong domestic reasons that support it, that the direction of change isn’t abusive, and that the change is pursued experimentally. And, indeed, these benchmarks all seem to be met or at least could plausibly be met.

Domestic justification: To begin, our contemporary approach to guidance domestication does seem to be highly unsatisfactory. The “practically binding” effects test has led to a confused jurisprudence and endless and potentially highly costly litigation.575See Levin, supra note 421, at 266 (citing the pervasive belief according to which litigation on the distinction between guidance and rules has become “fuzzy,” “tenuous,” “blurred,” and even “enshrouded in considerable smog” (quoting Cmty. Nutrition Inst. v. Young, 818 F.2d. 943, 946 (D.C. Cir. 1987)). It has also created perverse incentives whereby both agencies and regulated parties are motivated to either strategically deny the real binding effects of guidance (the agency’s perspective) or exaggerate them (the private sector’s perspective).576On these negative strategic effects of the “practically binding” test, see Kessler & Sabel, supra note 427, at 199. In the meantime, the unwillingness of courts to engage in pre-enforcement review for any guidance that survives the “practically binding” effects test, notwithstanding how much we know that guidance can lead to real world effects, creates a real potential for abuse of both regulated parties and regulatory beneficiaries.577Especially on the “beneficiary” side’s costs, see generally Mendelson, supra note 432.

The U.K. approach seems on its face better on all fronts. By adopting a reverse presumption to that the U.S. has today (according to which guidance is always procedurally valid, even if it binds, so long as it leaves genuine room for exceptions), the U.K. approach greatly simplifies the U.S. approach. It will allow U.S. law to capture the real advantages of guidance in the modern administrative state, including as a tool for “internal administrative law,” official helpfulness, and, most ambitiously, the optimal vehicle for regulation in general.578See supra notes 426–27 and accompanying text. And it will rid the litigation around guidance of the perverse incentives for strategic maneuvering around the actual effects of guidance—by both agencies and private industry. At the same time, the U.K. approach isn’t at all blind to the genuine risks underlying the use of administrative guidance. As we’ve seen, under this approach, courts will still retain a meaningful role in its domestication. So long as the guidance is sufficiently important, for example because of its substantial practical effects or because of reasonably ascertainable risks for its abuse (as U.K. courts have themselves suggested in their own jurisprudence),579See supra notes 494–97 and accompanying text. courts will retain power to review guidance on a pre-enforcement basis. And at that point, courts could not only review the guidance for illegality or arbitrariness; they could also review the reasons for why agencies designed the particular guidance regime they have and whether these reasons are enough, or rather whether they raise questions regarding whether the guidance shouldn’t be either more binding (perhaps because of an increased need for decisional consistency in the context of mass adjudication) or less binding (perhaps because the need for more experimentation, openness and learning).580See supra notes 494–97 and accompanying text. In fact, under the U.K. approach, and though pushing it a bit further from where it stands today, courts might even possibly nudge, in appropriate cases, agencies to enhance broader participation or “consultation” with the broader public outside the notice-and-comment process.

Yes, it is undeniably true that in the current polarized climax of our administrative law, the U.K. approach seems to disappoint contending forces on all sides.581See supra notes 438–43 and accompanying text. On the right of politics, opponents of administration will lose the constraining effects of a the practically binding test, especially when it is applied aggressively by courts to invalidate guidance and steer it to the notice-and-comment process. Conversely, on the center and the left, by endorsing the U.K. approach, proponents of administration will lose the ability to get courts completely out of the way before the enforcement of guidance and to rely only on managerial, political, and generally non-judicial controls.

That much is again beyond doubt. At the same time, we shouldn’t also ignore the fact that the U.K. approach can serve a kind of middle ground between these visions—a “fierce compromise,” if you will582Shepherd, supra note 2, at 1557, 1681.—where both sides both gain something as well as lose something. The political right again clearly loses the “practically binding” test with its strong restrictive “teeth” toward agencies; but it emphatically gets a much more secured and confident way to bring courts to review guidance on a pre-enforcement basis—possibly getting courts more seriously into the business of policing guidance than at present. And the political left and center again will clearly lose the ability to get the courts completely out of the way and to rely solely on extrajudicial mechanisms of accountability. At the same time, however, supporters of administrative guidance also achieve, under the U.K. approach, a judicial framework that is much less suspicious and critical of guidance as such and is much more contextual and nuanced.

Given these bipartisan qualities, the U.K. approach might not just be an improvement on the status quo, as suggested before. It can also suggest a kind of solution where contending forces in our system could finally “come to rest”583Wong Yang Sung v. McGrath, 339 U.S. 33, 40 (1950). in the present intense fight over the legitimacy of administrative state (at least as it applies to the context of guidance).

If all this is not enough, it should also be noted that the U.K. approach to guidance domestication is not entirely foreign to us in the U.S. It has some strong domestic support too. For instance, some American administrative law scholars have argued already that the best approach to deal with guidance, and which optimizes on both its benefits and costs, is exactly to subject guidance, on a pre-enforcement basis, to substantive review,584See Mark Seidenfeld, Substituting Substantive for Procedural Review of Guidance Documents, 90 Tex. L. Rev. 331, 373 (2011); Kessler & Sabel, supra note 427, at 190. Cf. Blake Emerson, The Claims of Official Reason: Administrative Guidance on Social Inclusion, 128 Yale L.J. 2122, 2134 (2019) (arguing that the legality of the use of guidance should hinge on higher demands “for reasoned justification”). as well as to apply a reason-giving requirement on the procedural choices agencies make with respect to whether to use guidance in the first place585See M. Elizabeth Magill, Agency Choice of Policymaking Form, 71 U. Chi. L. Rev. 1383, 1414–15 (2004) (arguing for a reason-giving requirement on a choice to use guidance). or how exactly to structure a particular guidance regime.586See, e.g., Kessler & Sabel, supra note 427, at 200 (arguing for a State Farm inquiry process for guidance). Some scholars have furthermore joined forces in recommending a clear and resounding revival of the more pragmatic approach courts used to apply to the “finality” requirement in the APA.587See, e.g., Kessler & Sabel, supra note 427, at 199; Seidenfeld, supra note 584, at 375–80. They have even similarly suggested the kinds of tests that the U.K. system draws on in its own guidance domestication regime, which looks at the effects of guidance as a criterion for its reviewability on a pre-enforcement basis rather than one that affects its validity.588See, e.g., William Funk, The Proper Use of the “Practically Binding Effect” Test, Yale J. on Regul.: Notice & Comment (May 8, 2019), https://www.yalejreg.com/nc/the-proper-use-of-the-practically-binding-effect-test-by-william-funk [https://perma.cc/5448-P99H]. Recent jurisprudence, including from the Supreme Court, might in fact be showing signs of this kind of pragmatic revival as well.589See, e.g., Sackett v. EPA, 566 U.S. 120, 131 (2012); U.S. Army Corps of Eng’rs v. Hawkes Co., 136 U.S. 1807, 1815–16 (2016); Nat’l Org. of Veterans’ Advocs., Inc. v. Sec’y of Veteran Affs., 981 F.3d 1360, 1365 (Fed. Cir. 2020). Finally, there are even calls that suggest that it won’t be at all farfetched to move the needle a bit and try to encourage agencies to engage in a broader participatory process for key guidance documents beyond the notice-and-comment process.590See Nicholas R. Parrillo, Should the Public Get to Participate Before Federal Agencies Issue Guidance? An Empirical Study, 71 Admin. L. Rev. 57, 124 (2019) (recommending an agency-by-agency or document-by-document approach to participation). These calls are not yet judicial exactly. But maybe they will themselves evolve.

Abusiveness: Moving ahead with the benchmarks a modest and experimentalist approach recommends, building on the U.K. approach to guidance domestication quite clearly wouldn’t prove abusive. That approach doesn’t block any chance for agencies to exercise independent judgment, for example. To the contrary, the U.K. regime of guidance domestication seems to expand it over the present status quo which leads agencies to need to hide and respond strategically to litigation on the issue of procedural invalidation under the “practically binding” test. At the same time, the powers courts would retain under such a regime would clearly not create an administrative state that is effectively (and on a wholesale level) a “black hole.”591Even one commentator who believes that administrative law will inevitably contain some “black holes” is nonetheless of the belief that “black holes” are supplemented by some “grey holes” which do provide some space for standard institutional supervision, including by courts. See Adrian Vermeule, Our Schmittian Administrative Law, 122 Harv. L. Rev. 1095, 1096 (2009) (though, on this author’s account, the grey holes tend to be systematically weak). This more flexible regime that exists in the U.K. still preserves a meaningful place for courts to intervene. And it provides courts with tools to enhance agencies’ openness to democratic contestation and political supervision even further, including most clearly by requiring agencies to explain their choice of how they structured guidance regimes (and potentially by compelling some forms of public participation in guidance development).

Experimentalism: Finally, drawing on the U.K. approach to domesticate guidance shouldn’t be done swiftly and fully. A modest and experimentalist approach indeed strongly counsels against that. While, as we have seen just now, there is some measure of substantial similarity between the U.K. and the U.S., we can’t rule out that in practice the weight of the differences between the countries will be the one that would be more substantial. Maybe, for example, American culture is indeed more hesitant at present toward bureaucracy than U.K. culture is, such that building on the approach seen across the pond too forcefully would prove problematic and disharmonic with the present administrative culture here. And maybe a more rigid, and less flexible, judicial regime with respect to guidance domestication correlates better with judicial practice and cultural and professional expectation from the judiciary in the U.S. Maybe also our judges in America can’t be trusted today to exercise sound judgment with respect to guidance domestication in the vein that the U.K. approach requires.

Given this, the appropriate way to start moving along in the direction of the U.K. approach to guidance domestication is again not as a blunderbuss but rather, as I argued in Section II.E, experimentally. This means at a minimum that the possibility of moving our law of guidance domestication in the direction of what we see in the U.K. should now become central and widely discussed, “percolating” until its attractions will become evident (or not). But, as we’ve seen in Section II.E, this does not at all overrule the possibility of at least some careful, either incremental or easily revisable, moves by judicial and other decisionmakers to already today bring us more in line with the U.K. approach.

B.  Chevron: Today and in the Future

1.  Comparative Administrative Law’s “Constitutional Moment”?

In the context of guidance domestication, it was important to provide some background to ground the ensuing discussion. It was also necessary to justify the need for taking a comparative approach to the issue in the first place more thoroughly. With the next doctrinal domain, things are much simpler. After all, who hasn’t heard of Chevron, arguably the most famous doctrine in all American administrative law? Anyone who presumes to know anything about anything in the field probably can recite Chevron’s two-step framework by heart. Even if just awoken from their sleep, they will quickly and sharply respond that, under Chevron, courts are instructed to defer to agency interpretations of statutes if, drawing on traditional tools of statutory construction, they find that Congress hasn’t spoken to the issue at hand (Step I); and if an agency’s proposed interpretation is ultimately a reasonable one (Step II).592In case someone still needs a refresher despite all this, see Kenneth A. Bamberger & Peter L. Strauss, Chevron’s Two Steps, 95 Va. L. Rev. 611, 624–25 (2009) (rehearsing the basics and justifying them).

Similarly, after the Court’s decision in Buffington, there is moreover no need to explain why comparative administrative law might be important with respect to Chevron deference. In his dissent in Buffington, Justice Gorsuch himself invoked comparative administrative law—maybe for the first time since the Supreme Court’s decision in Morgan I from 1936593Morgan v. United States (Morgan I), 298 U.S. 468, 482 (1936).—suggesting that the fact that other systems “declined to adopt” something like Chevron reinforces the conclusion that we in the U.S. should back away from it as well.594Buffington v. McDonough, 143 S. Ct. 14, 22 (2022) (Gorsuch, J., dissenting). Now that the Court dramatically agreed to take the question it refused to take on in Buffington—concerning the continued validity of Chevron—in two cases called Loper Bright and Relentless to be decided during the October 2023 term and in fact any day now (!), it is not at all farfetched to think that comparative administrative law might be invoked yet again.

On the surface, one might think that all these developments bode well for comparative administrative law. After years of its marginalization, certainly in the U.S.,595See supra Section I.C. comparative administrative law could not have asked for a better opportunity to come into the spotlight. It is referred to (and will potentially be referred to again) by no less than our highest Court, just like comparative constitutional law makes occasional appearances in the Court’s jurisprudence. Indeed, those Supreme Court appearances might have played an important role in bringing forth the revival of comparative constitutional law in the first place.596For two of the cases most associated with the comparative constitutional law revival at the Supreme Court, see Printz v. United States, 521 U.S. 898 (1997) (“federalism” limits on the U.S. government’s power) and Roper v. Simmons, 543 U.S. 551 (2005) (death penalty). One might think that Loper Bright and Relentless are finally going to be comparative administrative law’s moment.

On further reflection, however, the initial excitement should be seriously tempered. Justice Gorsuch’s Buffington opinion isn’t a good exercise in comparative administrative law. To the contrary: it gives the entire enterprise a bad rap. To the extent that the Court might follow Justice Gorsuch’s lead in Loper Bright and Relentless, things will be even more unfortunate. Comparative administrative law might be revived, but its “constitutional moment” won’t be a good one. We will have to look at this moment with some measure of embarrassment.

2.  Yes, No Chevron Abroad

To be sure, Justice Gorsuch certainly appears to be on stable ground at least when we observe things at surface level. Looking at numerous foreign legal regimes in terms of how their respective courts treat agencies’ proposed interpretations of statutes does seem to suggest that Chevron is not exactly universally popular. As one of the articles that Justice Gorsuch cited in Buffington noted, there’s nothing exactly like “Chevron abroad.”597Barnett & Vinson, supra note 152, at 621, 674–75.

Take Germany for example. The German administrative law system doesn’t recognize anything like Chevron. Rather, in general, German judges retain “thorough judicial control” on questions of statutory interpretation (and interpretation more generally).598See Nigel G. Foster & Satish Sule, German Legal System & Laws 256–57 (3d ed. 2002). While German law does recognize an exception according to which, in cases where courts confront “indefinite legal terms,” they should provide some “margin of appreciation” to agencies’ interpretations,599Id. that exception is an incredibly narrow one in practice.600Hermann Pünder & Anika Klafki, Administrative Law in Germany, in Comparative Administrative Law: Administrative Law of the European Union, Its Member States and the United States 49, 89 (René Seerden ed., 4th ed. 2018). Even if it sounds to American ears that statutes are quite often “indefinite,” in Germany, with its distinctive legal culture, that term is understood very differently.601A point somewhat lost in the otherwise interesting analysis in Barnett & Vinson, supra note 152, at 641–42. For another discussion of the concept of discretion, and its much more narrow scope in Germany compared to the U.S., see Jan S. Oster, The Scope of Judicial Review in the German and U.S. Administrative Legal Systems, 9 German L.J. 1267, 1269 (2008). It applies only exceptionally and minimally, such as in “examinations in schools and universities, . . . hiring and assessments of civil servants,” and “complex technical assessments.”602Pünder & Klafki, supra note 600, at 89. Nothing more ambitious than that.

Or take the U.K. Law in the U.K. similarly doesn’t recognize a general rule of deference to executive interpretations of statutes. To the contrary: the rule in the U.K. now is that courts “say what the law is.”603Cass R. Sunstein, Beyond Marbury: The Executive’s Power to Say What the Law Is, 115 Yale L.J. 2580, 2591–93 (2006). The leading authority for this proposition is R v. Hull Univ. Visitor, ex p Page [1993] AC 682 (HL). Historically, English courts used to be more permissive. More specifically, prior to 1969, English courts used to give some interpretive leeway to administration, at least when their interpretive errors were considered “non-jurisdictional.” Today, however, the distinction between jurisdictional and non-jurisdictional errors has disappeared. See Anisminic Ltd v. Foreign Comp. Comm’n [1969] 2 AC 147 (HL); Stephen Sedley, Lions Under the Throne: Essays on the History of English Public Law 45–69 (2015). The only place where courts in the U.K. have recognized the possibility of deference on questions of law is when interpretations of statutory terms are made by the U.K. tribunal system which conducts the lion’s share of administrative adjudication in the U.K.604See generally R (Cart) v. Upper Tribunal [2011] UKSC 28, [2012] 1 AC 663; R (Jones) v. First Tier Tribunal [2013] UKSC 19, [2013] 2 AC 48. This may be an important exception, certainly more than the one that exists in Germany for “indefinite legal terms.” But it is still quite narrow (among other things because the English adjudicative system operates in a highly judicialized fashion and because it doesn’t capture the many consequential forms of administrative policymaking outside the tribunal system).605See, e.g., Peter Cane, Administrative Tribunals and Adjudication 269–72 (2010) (discussing important differences and characteristics of the U.K. tribunal system).

Continue across seas and oceans to Australia. There, too, no matter how broadly you might look, you won’t see any Australian Chevron in sight. The idea of explicit judicial deference to the administration on questions of law in Australia would be almost heretical. The High Court in Australia holds to the view that the principle of constitutional separation of powers there mandates a strong Marburyesque control of judges over statutory interpretation in general.606Janina Boughey, A Perspective from a Jurisdiction Without a Doctrine of Deference: Australia, Blogger: Balkinization (Oct. 2, 2023), https://balkin.blogspot.com/2023/10/a-perspective-from-jurisdiction-without.html [https://perma.cc/AFX3-L3CH]. No deference is allowed.607See, e.g., Margaret Allars, Chevron in Australia: A Duplicitous Rejection?, 54 Admin. L. Rev. 569, 583 (2002). In fact, in a famous judgment from 2000, called Enfield, the Australian High Court, explicitly referring to Chevron, has rejected the possibility of having an indigenous Chevron doctrine in Australia.608Corp. of the City of Enfield v, Dev. Assessment Comm’n [2000] HCA 5, ¶ 41 (Austl.).

Go now to Israel. The Israeli administrative law system similarly doesn’t have anything like Chevron. Judges there have full control over determining the meaning of statutory terms applied by executive departments. The issue is entirely and fully judicially led.609See, e.g., Margit Cohn, Judicial Deference to the Administration in Israel, in Deference to the Administration in Judicial Review: Comparative Perspectives 231, 266 (Goubin Zhu ed., 2019). In fact, as in Australia, the Israeli Supreme Court also had an opportunity to opine on the possibility of an Israeli Chevron (or, more accurately, an Israeli Auer doctrine) that acknowledges some place for explicit interpretive deference to the executive as late as 2021.610Auer v. Robbins, 519 U.S. 452, 457–58 (1997). But, again as in Australia, the Court said emphatically no and declined the invitation.611CivA 4960/18 Seligman v. Phoenix Ins. Corp. (2021) (Isr.).

Go now to France. There, the situation is again very much the same. What in French is sometimes called the “État de droit” (roughly, the principle of a “state committed to law”) is understood by French courts, and especially the Conseil d’Etat, to require total judicial control over statutory interpretation.612See, e.g., Martenet, supra note 145, at 116–17.

Finally, expand your gaze to the European Union. No surprise there as well: European courts also deny the existence of any formal deference to administration on questions of law.613See, e.g., Paul Craig, Judicial Review of Questions of Law: A Comparative Perspective, in Comparative Administrative Law 389, 400–01 (Susan Rose-Ackerman et al. eds., 2d ed. 2017).

We could have potentially gone even farther and wider to other places, but we would have likely come back with very similar results.614See generally Deference to the Administration in Judicial Review: Comparative Perspectives (Guobin Zhu ed., 2019) (discussing administrative deference regimes in Argentina, Australia, China, Czech Republic, Denmark, the EU, Finland, Hong Kong, Israel, Italy, Japan, the Netherlands, New Zealand, Poland, Singapore, Sweden, and the United States); Judicial Review of Administrative Discretion in the Administrative State (Jurgen de Poorter et al. eds., 2019) (surveying the law in the EU, the Netherlands, and the U.K.).

3.  The Shallowness of the Comparative Analogy

Despite all this, at the end of the day, Justice Gorsuch’s comparativism in Buffington is deeply mistaken. The reality that other systems don’t have something like Chevron doesn’t support in any way or manner its overruling. It doesn’t even support the need for us to cut back on Chevron under existing conditions. Saying something like this is exactly the kind of example of the blunders that occur when doing VERY BAD comparative law. It obviously fails the test of a modest and experimentalist approach that I have argued is especially called for in the field of comparative administrative law.615See supra Section II.E.

Most clearly, Justice Gorsuch’s Chevron comparativism is shallow as shallow can be. He didn’t engage even in a minimal attempt to point out various crucial contextual differences amongst jurisdictions when he invoked the broad statement that other systems refused to adopt Chevron as a reinforcement for his call that so should we.616It is true that Justice Gorsuch’s invocation of comparative administrative law in Buffington was very brief. It was limited to one sentence, and it was accompanied by references to academic work including Barnett & Vinson, supra note 152, at 651; Eduardo Jordao & Susan Rose-Ackerman, Judicial Review of Executive Policymaking in Advanced Democracies: Beyond Rights Review, 66 Admin. L. Rev. 1, 8 (2014); Bernatt, supra note 145, at 313. But given the consequences of his position and given moreover how the academic references he cites are themselves pointing to the relevant more contextual and refined analysis, the critique of his invocation of comparative administrative law does seem fair. And it is certainly fair preemptively to the extent that otherwise this sort of shallow analysis might very well repeat itself in the pending Loper Bright and Relentless cases. Cumulatively at least, these differences significantly complicate any ability to infer something strong from that supposed refusal at present. To the contrary: they seem to strongly condemn such inference.

Start with the fact that many of the systems that Justice Gorsuch supposedly had in mind, including the ones discussed before which he might not have had in mind, are parliamentary systems. In such systems, the closer inter-branch connection makes it much easier for the political branches, in principle at least, to respond to determinations of statutory meaning by courts if they believed courts erred. And that response is more likely to represent the agencies’ view that was judicially rejected because, again, the government (which closely supervises agencies) usually controls the legislature.617See supra Section I.C. What’s more, and this encompasses also non-parliamentary systems (like France or the EU), evidence suggests that legislatures in other jurisdictions are more functional than the American Congress, which is notoriously known as a dysfunctional one (in large part perhaps because of its high degree of polarization and partisanship).618See, e.g., Graham K. Wilson, Congress in Comparative Perspective, 89 B.U. L. Rev. 827, 829 (2009).

Continue with the fact that, as we’ve already seen in the context of the discussion of the regime of guidance domestication in the U.K.,619See supra Section III.A. other jurisdictions don’t necessarily have similar processes for formulating general policies as we do in America. Indeed, the notice-and-comment process is somewhat globally unique certainly in its scope and legal foundations. In most other countries, agencies formulate general policies without public notice and participation. They submit such policies to other kinds of processes, more political or traditional in nature, like internal executive branch scrutiny procedures as well as to the attention and sometimes confirmation of their legislatures.620For an illuminating discussion about the kinds of political mechanisms that are used abroad to safeguard the act of rulemaking, see generally Michael Asimow, Gabriel Bocksang Hola, Marie Cirotteau, Yoav Dotan & Thomas Perroud, Between the Agency and the Court: Ex Ante Review of Regulation, 68 Am. J. Compar. L. 332 (2020). To the extent that agencies in other jurisdictions engage in more public comment procedures, it is much less systematic and spotty. It can result from specific statutory obligations they have in certain substantive statutes or because they seek such public engagement voluntarily.621See Rose-Ackerman, supra note 560, at 146–83. Though a movement to intensify the process of public engagement in general policymaking in other countries may be under way, as we also saw previously in the discussion of guidance,622       See supra notes 537–57 and accompanying text; see also Melissa Johns & Valentina Saltane, Citizen Engagement in Rulemaking: Evidence on Regulatory Practices in 185 Countries 2 (World Bank Grp., Working Paper No. 7840, 2016). it should be noted that it is far from complete and still deeply uncertain.

This divergence can help explain why we don’t see Chevron abroad and do see it here. In jurisdictions that lack notice-and-comment procedures, more robust judicial review can “compensate” in some important sense for the more closed nature of the policymaking apparatus. By contrast, in America, where notice-and-comment is the default for development of general policymaking, such compensation is not similarly required. And while Chevron of course applies more broadly to agency decision-making beyond notice-and-comment, since Mead,623See generally United States v. Mead Corp., 533 U.S. 218 (2001) (establishing what is now known as Chevron Step Zero, that is—that Chevron will only apply in cases where Congress authorizes an agency to speak with “the force of law”). it is at least more likely to apply in that specific setting.

Justice Gorsuch’s invocation of comparative administrative law to elevate Chevron skepticism in America also ignores how judiciaries diverge across nations and systems. Germany for example has a specialized system of administrative law courts which are moreover divided to subject matters (like a labor administrative law court or a tax administrative law court).624See Pünder & Klafki, supra note 600, 78–81. Israel and the U.K. have general, non-specialized courts as they’re both part of the so-called common law or “Anglo-American tradition” of administrative law (as Justice Frankfurter has called it).625On the common law nature of the Israeli administrative law system, see Daphne Barak-Erez, English Administrative Law in the Holy Land: Tradition and Independence, in Judicial Review of Administrative Action Across the Common Law World: Origins and Adaptation 159, 159 (Swati Jhaveri & Michael Ramsden eds., 2021). But their highest judicial instances don’t have discretionary dockets.626See, e.g., Stephen Gardbaum, What Makes for More or Less Powerful Constitutional Courts?, 29 Duke J. Compar. & Int’l L. 1, 10–13 (2018) (discussing the comparative differences between apex courts’ control over their dockets and how it affects the legal system and their standing in it). This means that denying Chevron in those systems isn’t likely to create, even in the short term, inconsistent applications of the law. In the U.S., in contrast, things are quite different. Our judicial system is a generalist one and is also highly dispersed (indeed, our country is much bigger than many). And our Supreme Court has a highly discretionary docket (that also seems to gradually shrink with the years). As a result, Chevron seems to better protect consistency in statutory law under our unique American conditions.627See Strauss, supra note 518, at 1132 (emphasizing the virtues of federal legal consistency as a result of Chevron on the background of a diffuse judicial system like the U.S.).

Jurisdictions also diverge between them with respect to how they go about interpreting statutes in general. In many other jurisdictions outside the U.S., purposive, pragmatic, or dynamic theories of interpretation are well accepted and grounded. Indeed, courts outside America are quite comfortable looking to text, context, and purpose when they construct statutes.628For a somewhat dated account of various countries’ judicial approaches to statutory interpretation, but that is still roughly true today, see generally Interpreting Statutes: A Comparative Study (D. Neil MacCormick & Robert S. Summers eds., 1991). They don’t proudly announce, as we in the U.S. are doing now, that “we’re all textualists now.”629Harvard L. Sch., The Scalia Lecture: A Dialogue with Justice Kagan on the Reading of Statutes, YouTube (Nov. 17, 2015), https://youtu.be/dpEtszFT0Tg?feature=shared&t=509 [https://perma.cc/MEY7-HGRS] (Justice Kagan commenting that she thinks “we’re all textualists now” is more true than the famous phrase “we’re all realists now”). This divergence also substantially complicates our ability to infer something clear about the lack of Chevron abroad. For one thing, the dominance of purposivism outside the U.S. could mean that courts and agencies’ views about how to read statutes may not be so divergent. The type of reasoning expected from both courts and agencies about how to read statutes could be the same. They might very well reach similar conclusions compared to a system such as ours in which agencies may be more purposive while courts more textualist.630For this interpretive divergence between courts and agencies, and a defense of that divergence in the American context, see, e.g., Michael Herz, Purposivism and Institutional Competence in Statutory Interpretation, 2009 Mich. St. L. Rev. 89, 116–21 (2009). In addition, the dominance of purposivism, pragmatism, or dynamism outside the U.S. means that the consequences of having something like Chevron there would not have meant what we would expect from it here. If purposivism is the reigning statutory interpretation paradigm, courts under Chevron could have concluded that it is unreasonable for agencies to just rely on the simple meaning of the text. That they actually need to stretch the text given a statute’s context or purpose.631See, e.g., Jordao & Rose-Ackerman, supra note 616, at 18–21 (raising the possibility of textual stretching in jurisdictions committed to purposivist statutory interpretation theories).

Finally, and not entirely unrelatedly to the point about theories of statutory interpretation, the kind of judicial culture of strong hostility to the administrative state that we see in America, is generally quite foreign outside of it. Judges don’t generally see administration as such a threat to the rule of law in many other liberal democracies. Rather, they “trust[] and accept[]” administration.632Eberhard Schmidt-Aβmann & Christoph Möllers, The Scope and Accountability of Executive Power in Germany, in The Executive and Public Law: Power and Accountability in Comparative Perspective 268, 286 (Paul Craig & Adam Tomkins eds., 2006). They often see it not only as constitutionally permissible, but even mandatory.633On the constitutional concept of a positive state in Germany and Canada, see Dieter Grimm, Proportionality in Canadian and German Constitutional Jurisprudence, 57 U. Toronto L.J. 383, 391 (2007). Deep “anti-administrativism”634Metzger, supra note 389, at 3. hasn’t, in other words, gone global just yet. This means that even without an explicit Chevron regime, courts are more likely than not to reach the same conclusions as the administration did (even if they would need to do more “work,” so to speak, to get there, including by performing de novo statutory interpretation). More broadly, this means that the consequences of a legal regime that has no Chevron are simply much less meaningful than in a system like our own that does exhibit some vivid measure of judicial “anti-administrativism.”

All this highlights just how plainly erroneous it was to suggest, as Justice Gorsuch did in Buffington, that the comparative absence of Chevron indicates that we could also easily say goodbye to it here, or even just cut it back. Justice Gorsuch ignored all the institutional and contextual details that matter, or should matter, when one tries to engage in (serious) comparative administrative law.

4.  The Cherry-Pickiness of the Comparative Analogy

But Justice Gorsuch’s comparative shallowness in Buffington in fact stretches even beyond that. Justice Gorsuch’s suggestion that Chevron doesn’t exist abroad misses the fact that interpretive deference is actually a growing theme in foreign jurisdictions, which is gradually gaining some important adherence. Indeed, even though the consequences of having Chevron abroad would be different, as we just saw, that does not mean that systems are not drawn to it.

So, for example, in the U.K. where the possibility of judges deferring to executive interpretations has been emphatically rejected (at least outside the context of interpretations by administrative tribunals),635See supra notes 603–05 and accompanying text. there are now scholarly voices that suggest that extending deference in the U.K. beyond that context would be overall desirable.636See Paul Craig, Administrative Law 509–10 (9th ed. 2021) (arguing that the English approach of refusing judicial deference is not “logically compelled” and that at least with respect to statutory terms susceptible to multiple interpretations the “ordinary courts’ interpretation . . . will not necessarily be better than that of the primary decision-maker”). In Israel, as discussed before, the Supreme Court has recently rejected something like Auer deference explicitly.637See supra note 611 and accompanying text. But the decision itself was only 5-4 against. And given broader changes that were occurring in Israeli constitutional politics, it is not without question that the tables will in the end turn.638See, e.g., Hadas Gold, Richard Allen Greene & Amir Tal, Israel Passed a Bill to Limit the Supreme Court’s Power. Here’s What Comes Next, CNN: Meanwhile in the Middle East (July 24, 2023, 10:51 AM), https://www.cnn.com/2023/07/24/middleeast/israel-judicial-reforms-vote-explained-mime-intl/index.html [https://perma.cc/E8P2-UUZR] (discussing the major reforms that are presently occurring in Israel with respect to the judicial system). More broadly speaking, other jurisdictions also have various techniques to grant deference to agencies even if on a formal level they don’t have anything like Chevron. And scholars sometimes note that courts rely on these techniques more systematically or with more enthusiasm than in the past. For instance, European courts have sometimes resorted to classifying issues that could have been classified as “legal” matters, which get no deference, to “factual” or merit issues that do.639See Craig, supra note 613, at 401. Australia has also arguably seen similar techniques with more intensity.640For discussion of such maneuvering in the Australian context, see Janina Boughey, Re-Evaluating the Doctrine of Deference in Administrative Law, 45 Fed. L. Rev. 597, 612 (2017). And similarly with other jurisdictions and places.641See, e.g., Alison L. Young, Fact/Law – a Flawed Distinction?, U.K. Const. L. Blog. (May 21, 2013), https://ukconstitutionallaw.org/2013/05/21/alison-l-young-factlaw-a-flawed-distinction [https://perma.cc/GV58-VV8X]; Paul Daly, The Unfortunate Triumph of Form over Substance in Canadian Administrative Law, 50 Osgoode Hall L.J. 317 (2012).

This movement I have just described toward embracing more judicial deference to agencies in interpretive affairs, whether explicitly or implicitly, is of course not entirely surprising given the globalization and fluidity process previously detailed in Section II.B. To the extent, for example, that legislative policymaking has become harder even in parliamentary systems, the attractiveness of something like Chevron increases dramatically there, too.

Related to the moves that we’re seeing in the direction of having more Chevron-like features in other systems around the world, it should be noted that Justice Gorsuch’s broad comparative statement in Buffington, that other systems “declined to adopt” something similar, does seem to have quite a big hole in it.642Buffington v. McDonough, 143 S. Ct. 14, 14–22 (2022). That statement ignores the situation that is occurring in the legal system of our neighbor, Canada, which, though it doesn’t have something exactly like Chevron, is not that incredibly far away from getting one.

Indeed, Canada seems to be one of two other jurisdictions in the world (as far as I know at least)643The other jurisdiction is South Africa, though I do not discuss that jurisdiction here in large part because the regime of deference there is characterized by features of the unique post-Apartheid regime there that make the comparative exercise deeply complex. See, e.g., Geo Quinot, Deference in South African Administrative Law, Blogger: Balkinization (Oct. 3, 2023), https://balkin.blogspot.com/2023/10/deference-in-south-african.html [https://perma.cc/M7QN-K6SK]. This contribution is in fact part of a broader symposium that took place after the acceptance of this article for publication and which the author of the present article co-edited. See Susan Rose-Ackerman & Oren Tamir, The Chevron Doctrine Through the Lens of Comparative Administrative Law: Introduction to a Symposium, Blogger: Balkinization (Sept. 27, 2023), https://balkin.blogspot.com/2023/09/the-chevron-doctrine-through-lens-of.html [https://perma.cc/3AK9-XED4]; Susan Rose-Ackerman & Oren Tamir, Comparative Administrative Law: Is the US an Outlier? A Concluding Essay, Blogger: Balkinization (Oct. 17, 2023), https://balkin.blogspot.com/2023/10/comparative-administrative-law-is-us.html [https://perma.cc/PJX8-29HW]. that, like us, explicitly and unapologetically recognizes that judges do not get to exclusively “say what the law is”644Sunstein, supra note 603, at 2591–93. when administrative agencies that oversee statutes interpret them. In other words, like in the United States, judges also need to defer to reasonable statutory interpretations by agencies.

Canada’s modern acceptance of interpretive deference dates back in some sense already to 1979, even prior to our own Chevron.645See C.U.P.E. v. N.B. Liquor Corp., [1979] 2 S.C.R. 227, 228 (Can.). But that principle is now firmly and clearly grounded in Canadian administrative law—confirmed once more in a seminal recent decision by the Canadian Supreme Court from 2019 in a case called Vavilov.646Canada (Minister of Citizenship and Immigr.) v. Vavilov, [2019] 4 S.C.R. 653, para. 313 (Can.).

Interestingly for present purposes, and importantly as well, Canada’s own deference regime might be said to have gotten closer to the Chevron-regime with time. In the past, deference in Canada was closer to what we know in the United States from Skidmore.647Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (“We consider that the rulings, interpretations and opinions of the Administrator under this Act, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.”). The duty to defer was recognized. But to decide when to defer (and how strongly that deference ought to be), Canadian courts used to engage in a more contextual inquiry which looked for example to the kind of expertise that agencies possess (in general and in the particular instances) or to the specific provisions they seek to interpret.648See Pushpanathan v. Canada (Minister of Citizenship and Immigr.), [1998] 1 S.C.R. 982, paras. 32–41 (Can.). Courts’ analysis of the deference question at the time was labeled “functional and pragmatic.”649Id. at para. 49.

The Canadian Supreme Court tried to go more rule-like and was edging slowly closer to Chevron in its judgment in a case called Dunsmuir from 2008.650Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, para. 72 (Can.). There, the Court specifically walked back from the “functional and pragmatic” approach that it had endorsed before. Rather, it simplified the inquiry into when Canadian courts should defer to reasonable interpretations by agencies. Under this reformed framework, which the Canadian Supreme Court called the “standard of review analysis,”651Id. at para. 63. courts should defer to agencies’ interpretations of statutes if they’re reasonable in all cases except in “certain categories of issues where the promotion of certainty, finality, and predictability trumped the values served by deference.”652Audrey Macklin, A Short History of Standard of Review, in Administrative Law in Context 307, 320 (Colleen M. Flood & Paul Daly eds., 4th ed. 2022). The Canadian Supreme Court moreover identified four “non-exhaustive” categories where deference should not be accorded under this standard, and courts should engage in de novo review:653Id. First, when the issue presents a question of law “of central importance to the legal system as a whole.”654Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, para. 60 (Can.). Second, in constitutional questions.655Macklin, supra note 652, at 320. Third, in what the Canadian Supreme Court called in Dunsmuir “true” questions of jurisdiction in which an agency “must explicitly determine whether its statutory grant of power gives it authority to decide a particular matter.”656Id. (citing Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, para. 59 (Can.)). Finally, “questions regarding the jurisdictional lines” between two or more agencies.657Id. (citing Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, para. 60 (Can.)).

Dunsmuir’s attempt to create more of a rule-like framework for deference didn’t fully succeed, however. One important reason for that was that the Canadian Supreme Court justified deference to administration in Dunsmuir based on agencies’ expertise.658See Paul Daly, Big Bang Theory: Vavilov’s New Framework for Substantive Review, in Administrative Law in Context 327, 339 (Colleen M. Flood & Paul Daly eds., 4th ed. 2022). But that led to various instances where courts and litigators started to question whether agencies’ decisions in specific instances truly reflect expertise and to the denial of a more deferential judicial inquiry.659Id. at 339–44.

And so, in 2019, Vavilov, the Canadian Supreme Court entered the fray again edging even closer to Chevron. In Vavilov, the Court strengthened its holding in Dunsmuir, highlighting that the rationale underlying deference isn’t expertise as such (or isn’t expertise in a manner that justifies denying review of the reasonableness of the agency’s proposed interpretation and transforming the analysis to de novo judicial review).660Canada (Minister of Citizenship and Immigr.) v. Vavilov, [2019] 4 S.C.R. 653, para. 30 (Can.). Rather, the Vavilov Court said that the justification for deference to reasonable interpretations is grounded in legislative choice; that the “very fact that the legislature has chosen to delegate authority” is what justifies deference to reasonable agency interpretations.661Id. As a result, a relatively strong presumption of deference is now the law of the land in Canada.662See Daly, supra note 658, at 339. The only cases that the Court said could justify courts to not review agencies’ interpretations under a deferential standard are when the legislature specifically mandated differently or when the rule of law requires it.663More precisely, when a statute either explicitly provides a right of appeal to a court of any sort or when it explicitly mandates on the standard of review. See Vavilov, [2019] 4 S.C.R. at paras. 34, 36. And though the “rule of law”664Id. at para. 53. category is a broad standard, the Court’s understanding of the category seems minimal and encompasses cases that raise “constitutional questions, general questions of law of central importance to the legal system as a whole and questions regarding the jurisdictional boundaries between two or more administrative bodies.”665Id.

To clarify once more: Canada’s deference regime, even following Vavilov, is not precisely like Chevron. There are important differences here. Most clearly, the Vavilov doctrine doesn’t have a two-step framework like Chevron, but rather deference on interpretive issues is granted holistically without insisting that courts first determine if terms are ambiguous or not. Moreover, deference in Canada is only achieved after a court conducts “reasonableness” review. And that review can be somewhat rigorous, not that far in fact from the kind of analysis we see U.S. courts perform sometimes under State Farm666Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983). and its requirement of “reasoned decisionmaking.”667For an illuminating discussion of the Canadian approach to reasonableness post-Vavilov and how it resembles the “reasoned decisionmaking” standard in American administrative law, including given the emphasis on actual reason-giving by the administrative agency as a condition for deference under a reasonableness standard, see Paul Daly, Vavilov and the Culture of Justification in Contemporary Administrative Law, 100 Sup. Ct. L. Rev. 279, 283–84 (2021). See also Janina Boughey, The Culture of Justification in Administrative Law: Rationales and Consequences, 54 U. Brit. Colum. L. Rev. 403, 412–15 (2021). And, of course, to the possibility that Chevron itself could contain an inquiry into “reasoned decisionmaking,” see Ronald M. Levin, The Anatomy of Chevron: Step Two Reconsidered, 72 Chi.-Kent L. Rev. 1253, 1263–1271 (1997). In addition, Canadian courts may exemplify more confidence than courts in the United States to intervene rather than to defer under this reasonableness analysis, for example, because they’re aware that there is more of a possibility in the Canadian system for Parliament to respond and correct erroneous interventions,668For the metaphor of judicial and political “dialogue” in Canada, which is strong in constitutional law but arguably spills over also to the context of administrative law, see Kent Roach, Sharpening the Dialogue Debate: The Next Decade of Scholarship, 45 Osgoode Hall L.J. 169, 171–77 (2007).  or because the legal culture in Canada seems more trusting in general in the ability of judges to improve administration.669See, e.g., David Dyzenhaus, The Politics of Deference: Judicial Review and Democracy, in The Province of Administrative Law 279, 306–07 (Michael Taggart ed., 1997) (describing the approach of Canadian courts to deference as “deference as respect” and contrasting it with an approach, more American in nature, of “deference as submission”); see also Yoav Dotan, Deference and Disagreement in Administrative Law, 71 Admin. L. Rev. 761, 772–74 (2019) (distinguishing between “disagreement deference” and “avoidance deference”).

Still, the fact that Canada, as well as other jurisdictions like Israel or the EU and maybe even the U.K. and Australia, are also moving in the direction of enhancing their own deference regimes (either explicitly or more implicitly) is telling. It indicates once again just how superficial Justice Gorsuch’s invocation of comparative administrative law in Buffington was. It failed to recognize that even systems that seem on paper at least to have less of a reason to increase deference to administration are nonetheless drawn to do so.

5.  The Abusiveness of the Comparative Analogy

But Justice Gorsuch’s comparative move in Buffington has one last flaw worth emphasizing. Not only was it shallow and even selective and cherry-picky; it was also likely abusive.

We should not be naïve. Justice Gorsuch’s opinion in Buffington did not come from nowhere. As we’ve seen before, we are in a context where there is an intense attack on our administrative state, trying to cut its wings further and further.670See supra Section II.D. Unsurprisingly, Chevron deference is a crucial arena where this battle is being fought. And Justice Gorsuch’s move in Buffington was a clear attempt to advance that cause. By referring to foreign practice, Justice Gorsuch tried to appear as though the consequences of overruling Chevron or significantly cutting it back would be completely benign. After all, if other systems don’t have it, and those systems survive just fine, why can’t we? But cutting back on Chevron significantly now would not be benign. Not only do other jurisdictions have arguably good reasons that we lack to not adopt Chevron (as we have seen), but Chevron also seems quite important at present to maintain the “minimum core” of our constitutionally legitimate administrative state.671See supra Sections II.D–II.E; Harlow, supra note 400, at 189–95 and accompanying text.

Recall how the overall Chevron regime today exactly looks. First, we have Mead that limits the domain of Chevron only to cases where delegations have the “force of law.”672United States v. Mead Corp., 533 U.S. 218, 226–27 (2001). Second, and as a result of very recent developments, we have a new and potentially highly expansive “major questions” doctrine that denies deference and requires affirmative congressional legislation before an agency can proceed in issues that have significant political or economic ramifications.673West Virginia v. EPA, 142 S. Ct. 2587, 2595 (2022). For analysis, see Daniel T. Deacon & Leah M. Litman, The New Major Questions Doctrine, 109 Va. L. Rev. 1009 (2023) (identifying the emergence of the “new “ major questions doctrine and framing it as a clear statement rule). Third, we also have a judiciary that is more and more confident in finding when congress directly speaks to the question at hand, under Chevron Step I, in large part because the judiciary is more textualist today (and more eager to narrow statutes’ domain).674See, e.g., Jeffrey A. Pojanowski, Without Deference, 81 Mo. L. Rev. 1075, 1081–85 (2016) (arguing that a world with Chevron and a world without Chevron would not be that different given the way judges have been feeling increasingly more comfortable to find that statutes are unambiguous under Chevron’s Step I); see also Scalia, supra note 184, at 521 (indicating that he himself as a judge used to find “that the meaning of a statute is apparent from its text”); Victoria Nourse, Loper Bright in Larger Interpretive Perspective: Is This Justice Scalia’s Court Anymore?, 31 Geo. Mason L. Rev. 601, 608 (2024) (reporting on ongoing empirical work which suggests that the Roberts Court’s textualist tendency is reliably tilted toward narrowing statutes’ domain). Finally, we have a judiciary that has grown much more hostile of the administrative state, if not entirely skeptical of its constitutionality.675See generally Metzger, supra note 389 (describing the judicial hostility of the current Roberts Court to the administrative state); see also Jarkesy v. SEC, 803 F.3d 9, 24–25, 29–30 (D.C. Cir. 2022).

With all this in the background, it becomes increasingly hard to see how further significant cutbacks on the already frail deferential Chevron regime aren’t really about “just” making our administrative law more restrictive toward administration and thus more protective of, say, values like the rule of law or private liberty, which can be reasonably disputed. Rather, it becomes more and more convincing to see such a move as one whose goal is to entirely shrink the space for independent administrative action in the context of statutory interpretation and therefore threaten what Section II.E argued was the administrative state’s “minimum core.” The invocation of comparative practice to suggest otherwise—as though the further cutbacks on Chevron are plain vanilla or just an incident of innocent learning from others in a potentially more global dialogue—is deeply misleading. And when it is done in such a shallow, acontextual, and selective way (as it was in Justice Gorsuch’s opinion in Buffington), it begins to look like a textbook case for an “abusive” use of comparative administrative law.676See supra Section II.E.

For all these reasons, it should be clear why Justice Gorsuch’s comparativism in Buffington ought to be emphatically rejected. Comparative administrative law doesn’t support anything like what he had suggested. It is actually quite the reverse.

And in the forthcoming Loper Bright and Relentless cases, coming any day now, this is exactly what the Supreme Court should say. If the Court in Loper Bright and Relentless wishes to go ahead and significantly cut-back on Chevron or overrule it, without any further changes in our law, it is welcome to do so. But it should at least expose itself to criticism rather than hide behind the posture of shallow, acontextual, and abusive comparative administrative law.

6.  Beyond Buffington, Loper Bright, and Relentless: The Future of Chevron Through the Lens of Comparative Law

Once all this is said and done, though, the fact that comparative administrative law can’t justify today either overruling or even dramatically shrinking Chevron deference, shouldn’t mean that this will be so forever and ever. For one thing, as previously suggested, what makes the invocation of comparative administrative law as support for such dramatic consequences potentially abusive are the factors in the existing regime of Chevron deference, which cumulatively characterize such a move as unreasonably limiting—including the existence of a revamped major questions doctrine or a highly restrictive form of textualism. As a result, and at least to avoid that specific charge, the Court could significantly restrain the potential implications of this new major questions doctrine,677For an argument suggesting what this author believes are highly productive ways to constrain the major questions doctrine and making it a respectable doctrinal tool in the U.S. context, much like it exists in other places around the world, see Oren Tamir, Getting Right What’s Wrong with the Major Questions Doctrine, 62 Colum. J. Transnat’l L. (forthcoming 2024). or soften its rigid, statutory domain–reducing, textualism. This would at least make the consequences of such a move not so dramatically harmful (even if it won’t, I hasten to emphasize, make that move attractive overall).

In addition, and more importantly for my purposes here, the reality according to which so many different systems refused to endorse something exactly like Chevron should prove nonetheless provocative. It triggers the question of whether we might in the future at least be better off without Chevron as well, or at least whether we should not try and move in this direction modestly and experimentally.

And, indeed, it would be wrong to think (as some seem to have boldly argued)678See Nicholas R. Bednar & Kristin E. Hickman, Chevron’s Inevitability, 85 Geo. Wash. L. Rev. 1392, 1443 (2017). that Chevron is in some sense “inevitable” for us. To the contrary: Chevron didn’t necessarily get us to a good place, even if today, under present conditions, cutting back on it would be harmful and abusive. Chevron, after all, didn’t create a simple or stable regime. The inevitable discussions about its varying steps zero, one, one-and-a-half, or two is a strong indication of that, as well as the cottage industry of commentary that has developed around it trying to figure out those steps ad nauseam.679See, e.g., Jack M. Beermann, End the Failed Chevron Experiment Now: How Chevron Has Failed and Why It Can and Should Be Overruled, 42 Conn. L. Rev. 779, 809–41 (2010).

Moreover, and I think much more importantly, it is unclear as well if the Chevron framework channeled the kinds of debates that would be productive and healthy to have in our administrative law—about the place of administration in society and what it should achieve—into a constructive framework. Yes, Chevron is sometimes described as a manifestation of legal realism, reflecting the fact that law sometimes “runs out.”680See, e.g., Cass R. Sunstein, Beyond Marbury: The Executive’s Power to Say What the Law Is, 115 Yale L.J. 2580, 2591–93 (2006); Adrian Vermeule, Neo-?, 133 Harv. L. Rev. F. 103, 108–10 (2020). And, certainly for this present author, realism is an attractive feature. But, in all honesty, Chevron isn’t deeply realist at all. Quite the contrary. Chevron still preserves a rather strict, indeed highly formalistic, division between law and politics, suggesting that some things are appropriately law (like discerning when Congress speaks directly to an issue) and some things are not (with increasing frequency, basically anything beyond that).681For a brilliant, though unfortunately neglected, classic that makes this persuasive argument, see generally Keith Werhan, The Neoclassical Revival in Administrative Law, 44 Admin. L. Rev. 567 (1992). As a result, and at least given the way our legal culture has evolved, Chevron created a kind of dynamic that systematically removes the discussion in our administrative law away from what really matters, or what should matter.

On one hand, conservatives and those who are worried about robust administration from the political right are increasingly drawn to thicken the “law” side in Chevron, relying on textualist or other formalistic machinations to suggest how law, properly understood, doesn’t “run out” and constrain administration (mostly at Step I).682Jeffrey Pojanowski, Comment, The Future of Chevron Deference: Of Zombie Fungus and Acoustic Separation, Yale J. on Regul. (June 21, 2018), https://www.yalejreg.com/nc/the-future-of-chevron-deference-of-zombie-fungus-and-acoustic-separation-by-jeffrey-pojanowski [https://perma.cc/7P6Q-ANCK]. Instead of relying on more prescriptive reasons to suggest why administration should in fact be constrained (because it may be arbitrary or unjustifiably harsh on private entrepreneurship or freedom), their formalistic language tends to either ignore those reasons at all or is simply hiding the ball. For their part, liberals and progressives from the center and the left of politics also face an unattractive choice of their own under present conditions: they can rely on the more prescriptive side of Chevron, which calls for policy considerations and reasons grounded in effects on the real world of policymaking, and thus bite the bullet in the face of the conservative formalistic game (mostly at Step II). That might have worked well in the past. But in the face of an increasingly formalistic bench, not anymore. As a result, progressives have turned to a second option—embracing their own version of formalism or “progressive textualism” that again hides the ball (even if it sophisticatedly shows that formalism can reach attractive results for progressives as well).683Kevin Tobia, Brian G. Slocum & Victoria Nourse, Progressive Textualism, 110 Geo. L.J. 1437, 1443–44 (2022).

Judges in administrative law are either playing the same game or are caught in the same dilemma. And the fights continue ahead with no resolution in sight, even enhancing our system’s polarization between conservatives and progressives, supporters of judicial review and critics, and more.684For an account of the various attacks on deference in the administrative state, see generally Christopher J. Walker, Attacking Auer and Chevron Deference: A Literature Review, 16 Geo. J.L. & Pub. Pol’y 103 (2018).

A more faithfully realist and potentially constructive framework for our system might therefore be one that would indeed do away with Chevron root and branch. Instead of assuming a formalistic division between law and policy, as Chevron does with the two-step it imposes, an alternative framework could be something more like we see today in Canada following the Canadian Supreme Court’s judgment in Vavilov. According to this approach, any issue of statutory interpretation should start with a presumption of deference, with no Step I or Step II or anything before, after, or in between. However, working on the background of this strong deferential presumption, which of course reflects and admits the value of agency decision-making as a general matter, judges would still be able to review the “reasonableness” of agencies’ statutory interpretation and, specifically, if agencies have given, in the jargon familiar to us from the State Farm case and its progeny, a “reasoned explanation” for their interpretive choices, including an explanation that sensibly combines or mixes between considerations that stem from either text, structure, and precedent (on the one hand) or from policy (on the other hand). And, if courts end up finding that these explanations are wanting (that is, and again using the relevant jargon, that they’re not sufficiently “reasoned”), agencies will then be able to go back to the board and try again; that is—see if they can on another try earn the judicial deference the presumption should regularly afford to them (including by presenting a more persuasive mix between the socio-legal, socio-technical, and socio-political reasons for their actions).

This sort of Canadian-inspired framework for administrative deference does appear to me to have the potential to move us into a more constructive place on the issue of judicial review of agencies’ statutory interpretation choices. It gets rid of the artificial and formalistic distinctions that Chevron perversely creates. It channels discussions about statutory interpretation not to what law or policy truly is and binary tradeoffs between them, but rather to the questions of the appropriate reasons and justifications for administrative action, recognizing that law and politics exist on all sides. And, again quite importantly, this framework also has something important for all sides in the currently deeply polarized environment of our administrative state, imagining a new place where, once again, contending forces might potentially “come to rest.”685Wong Yang Sung v. McGrath, 339 U.S. 33, 40 (1950).

True, under this new, Canadian-inspired framework, critics of administration from mostly the right of politics do not get judges who always determine “what the law is.”686Sunstein, supra note 603, at 2591–93. Deference is recognized, accepted, and entrenched. Agencies can moreover get a second chance to come back with more forceful reasoning. But, under this new Canadian-inspired approach, critics of administration do get to preserve judicial review of administration across the board, without pockets of deep or absolute deference where law supposedly “runs out.”

And true, under this new, Canadian-inspired framework, supporters of administration from mostly the left and center of politics lose the form of authoritative deference with its complete immunity from judicial intervention that agencies may enjoy today under Chevron. But, at the same time, supporters of administration do emphatically earn under this new Canadian-derived framework a strong and robust presumption of deference across the board. And they also get a framework that is overall much more sympathetic to a view of law and administration that is pragmatic, prescriptive, and sincere (rather than hides the ball).

This all strikes me as powerful reasons in favor of a Canadian -inspired approach to deference. And to the need for us to seriously consider, also from a perspective that is sympathetic to administrative power, discarding Chevron going forward.

But, of course, the fact that this kind of Canadian-inspired framework may sound theoretically attractive on paper, so to speak, doesn’t mean we can bring it here right away. A modest and experimentalist approach strongly counsels against that. After all, as we have seen, there are meaningful differences between the United States and Canada (and, for that matter, many of the other jurisdictions that have something different than Chevron), including a potentially more functional legislature, more purposive rather than formalist legal culture, and a judiciary that is not as deeply hostile to the administrative state as ours may presently be. The circumstances that make the Canadian approach work there don’t necessarily exist here.

Precisely because of this, the thought that the Loper Bright and Relentless cases would themselves be a potential vehicle to move the needle in this direction of a regime of deference seen in Canada, looks naïve. Indeed, the possibility for imagining a new deference regime that expands the possibilities of deference and does away with formalistic unhelpful distinctions between law and politics, seems to be deeply oppositional to the current “anti-administrativist” mood at the Court. This sort of anti-administrativist mood is likely the fact that explains why the Court has taken Loper Bright and Relentless in the first place.

That doesn’t mean, though, that this will be the case for now and until the end of times. Our legal culture isn’t static. It may be evolving as we speak. For instance, there is pressure on the Court to change, and that pressure may be growing (including by, in my view, not entirely obsolete discussions of “court reform”). Possibilities for meaningful reconsideration of our public law, including our administrative law, may be on the horizon—in ways that differ from where our present Court is trying to move us. If so, and to the extent that the Canadian approach does have presumptive appeal for this potential, though only dimly seen at this stage, future, there is no reason why we can’t start working to bring it about. A modest and experimentalist approach to comparative administrative law suggests not only that we perhaps should, but also how we could do it, no matter what the Court itself ends up saying in Loper Bright and Relentless—whether it eliminates Chevron, dramatically cuts it back or leaving it as a corpse.

IV.  PATHS FOR REVIVAL

My goal in the lengthy discussion leading up to this point has been to convince readers that it is both possible and desirable to revive comparative administrative law. That we need to make it a meaningful enterprise today, just as it was for the pioneers of the field and those who followed in their immediate footsteps. The “foreign point of view,” as Frank Goodnow called it, in our administrative law is truly missing these days.687See Goodnow, supra note 11, at v. And it is entirely to our detriment.

Assuming for the moment that I have succeeded in the ambitious task I have set to myself here, another question becomes important, though: How exactly can we bring this revival about?

Of course, as previously mentioned,688See supra Section II.B. there are already some promising signs that illustrate that comparative administrative law is starting to come to its own again, building on the increased fluidity and globalization of the field as detailed in Part II.B. Moreover, there is something slightly misleading about the question I’m asking. After all, the most important way to help bring comparative administrative law’s revival is not by fiat. Rather, it is to convince other people that it is both possible and worthwhile simply by doing it well. Nonetheless, given how much the enterprise happens to be marginalized in the discussion today in the U.S., it does seem valuable to consider some more institutional and systemic ways that could support and enhance the chances that we would indeed see the revival of comparative administrative law prevail.689Cf. Fontana, supra note 20, at 46–53 (considering institutional ways to enhance the attention being paid to comparative constitutional law). Given all that I had said above about both the virtues of the enterprise and its increased possibilities, taking such steps to nudge the rebirth of the field has, at a minimum, a strong presumptive case.

(1) The law school curriculum: One obvious place to start with here is in law schools. As previously mentioned, comparative administrative law isn’t currently being taught in most law schools on a regular basis.690See supra note 165. And comparative materials are moreover not integrated to the central casebooks or treatises in administrative law.691See supra note 159 and accompanying text. But there’s no strong reason why this can’t change, at least modestly or gradually. Offering an elective law school class or seminar on comparative administrative law would obviously be ideal.692In the vein of the classes offered occasionally at Yale and N.Y.U. School of Law, and the recent development at Harvard. See supra notes 165, 364, and accompanying texts. But even incorporating some foreign materials to general administrative law classes and to the central casebooks or treatises would be a significant improvement on the status quo. Law schools that already offer the possibility of comparative constitutional law classes or seminars might moreover consider whether the content of these classes should be adapted to include more on comparative administrative law.693See supra note 163 and accompanying text. In the future, it won’t be totally out of the question to consider replacing general comparative constitutional law classes, at least if they’re not supplemented by a separate comparative administrative law class, with a different class that would unify and mesh themes from both constitutional law and administrative law—perhaps with the new title of comparative public law. Such a change will obviously coincide with the trend evident across a growing number of law schools to move constitutional law away from the 1L curriculum and to replace it with mandatory LegReg or their iterations.694See, e.g., Manning & Stephenson, supra note 189, at 49. It will also coincide more broadly with the importance of administrative law even to the traditional common law subjects.695For one example of how the reality of administration should also impact other traditional common-law 1L classes, see Roderick M. Hills, Jr. & David Schleicher, What Is Property Law in an Age of Statutes and Regulation?: A Review of Property: Principles and Policies by Thomas Merrill, Henry Smith and Maureen Brady, 79 N.Y.U. Ann. Surv. Am. L. 89, 92–97 (2023).

(2) Scholarship: A related place worth going to for increasing the chances for the desired revival of comparative administrative law would obviously be the production of scholarship itself. In preparing classes, casebooks, or treatises, it should be reasonably easy for domestic U.S. public law scholars to draw on the now slowly increasing body of work in comparative administrative law—which is already in large part written in English.696See supra note 362 and accompanying text. But, of course, for the comparative administrative law field to truly catch on and achieve its promise, it’s important not just to draw on the existing pool. We need to work to expand it; that is, to create more scholarship in comparative administrative law that would complicate and broaden what we already know.

Given the present status quo of marginalization and the potential challenges of doing comparative administrative law, this is no small feat. But that doesn’t mean that there is no way to address the challenge. An especially important avenue to explore is to encourage and initiate co-authoring with foreign scholars.697For the theme in general in academia, see Annelise Rile, From Comparison to Collaboration: Experiments with a New Scholarly and Political Form, 78 L. & Contemp. Probs. 147, 147–50 (2015). Indeed, some of the most important contributions in the field of comparative administrative law, in the past and more recently, are a result of cross-national or cross-linguistic scholarly collaboration. For example, Professor Bernard Schwartz cooperated with the major English public law scholar Professor H.W.R. Wade to produce a still illuminating book that systematically compares the English and American administrative law systems in the 1970s.698See generally Bernard Schwartz & H.W.R. Wade, Legal Control of Government: Administrative Law in Britain and the United States (1972) (comparing the administrative systems and work of the judiciaries in the U.K. and the United States). And Professor Susan Rose-Ackerman699See, e.g., Susan Rose-Ackerman, Stefanie Egidy & James Fowkes, Due Process of Lawmaking: The United States, South Africa, Germany, and the European Union 1 (2015); Susan Rose-Ackerman & Edgar Andrés Melgar, Hyper-Presidential Administration: Executive Policymaking in Latin America, 64 Ariz. L. Rev. 1097, 1097–98 (2022); Jordao & Rose-Ackerman, supra note 616, at 1–2. and Michael Asimow700See, e.g., Asimow & Dotan, supra note 33, at 1. are more contemporary examples of scholars who consistently engage in scholarly collaborations with foreign scholars (with, I should add, substantial merit). In an ideal world, many domestic administrative law scholars will begin engaging in similar collaborations themselves. The previously discussed reality whereby more and more conferences are conducted specifically on comparative administrative law, and the emergence of transnational scholarly networks that engage in work of administrative comparison (especially in the European context),701See supra note 363 and accompanying text. suggests that the possibilities of academic collaborations are already meaningful and out there waiting to be exploited.702For another recent example of a fruitful scholarly contribution across the Pacific Ocean, see generally Andrew Edgar & Kevin M. Stack, Parallel Incorporation and Public Law, 21 Int’l J. Const. L. 734 (2023); Andrew Edgar & Kevin Stack, The Authority and Interpretation of Regulations, 82 Mod. L. Rev. 1009 (2019). And for a general argument for the need to increase scholarly collaboration to make comparative constitutional law more sustainable, see Rosalind Dixon, Toward A Realistic Comparative Constitutional Studies?, 64 Am. J. Compar. L. 193, 199 (2016).

(3) The bar and the government: Moving beyond law schools and the halls of the legal academy, there are other institutions that can assist in facilitating the likelihood of the comparative administrative law revival as well. The American Bar Association (“ABA”), and particularly its Administrative Law & Regulatory Practice section, is one such institution.703See Section of Administrative Law & Regulatory Practice, Am. Bar Ass’n, https://www.americanbar.org/groups/administrative_law [https://perma.cc/L6BH-QBQ8]. Today, the ABA’s interest in administrative law comparison is quite slim, probably a reflection of the general marginalization of the field today. Interestingly, however, that has not always been the case. Indeed, Professor Ronald Levin704See generally Ronald M. Levin, Frank Emmert & Christoph T. Feddersen, Administrative Law of the European Union: Judicial Review (George A. Bermann et al. eds., 2008). has collaborated in the past, under the ABA’s auspices, with other co-authors to produce a valuable book on the administrative law of the EU.705See generally Peter L. Lindseth, Alfred C. Aman & Alan Charles Raul, Administrative Law of the European Union: Oversight (George A. Bermann et al. eds., 2008). And the ABA actually has a richer past of administrative law comparison.706See Christopher J. Rowe, The American Bar Association Looks to England, 1924 and 1957, 61 Am. J. Legal Hist. 385, 388 (2021). This demonstrates that the ABA in principle certainly has the capacity be an institutional force for the acceleration and better assimilation of comparative administrative law into our system.

Another, and perhaps even more central, institution that should be of focus here is the Administrative Conference of the United States (“ACUS”), which is, of course, an enormously influential body in the administrative law space.707See, e.g., Gillian E. Metzger, Administrative Law, Public Administration, and the Administrative Conference of the United States, 83 Geo. Wash. L. Rev. 1517, 1534–39 (2015); Michael Herz, ACUS—and Administrative Law—Then and Now, 83 Geo. Wash. L. Rev. 1217, 1218–19 (2015). Alas, ACUS too has rarely drawn on comparative administrative law in its influential work, even though its position to bring in different scholars as well as practitioners from the field, and to influence the field’s trajectories, is in some sense unparalleled.708As far as I am aware, out of the many reports and recommendations issued by ACUS since its founding, only four refer to comparative practice. See Administrative Conference Recommendation 2011–6, International Regulatory Cooperation, 77 Fed. Reg. 2259, 2259 (Jan. 17, 2012); ACUS 2012–7, Agency Use of Third-Party Programs to Assess Regulatory Compliance, 78 Fed. Reg. 2491, 2941 (Jan. 15, 2013). The report looks at the role of the International Organization for Standardization (“ISO”) and other international standard setting organizations. See Lesley K. McAllister, Third-Party Programs to Assess Regulatory Compliance 1–3 (2012), https://www.acus.gov/sites/default/files/documents/Third-Party-Programs-Report_Final.pdf [https://perma.cc/V2B7-7S6B]; Federal Agency Cooperation with Foreign Government Regulators (Recommendation No. 91–1), 56 Fed. Reg. 33841, 33842 (July 24, 1991); Administrative Conference Recommendation 2016–15, The Ombudsman in Federal Agencies, 81 Fed. Reg. 94312, 94316 (Dec. 23, 2016). There is no reason, though, why ACUS can’t change tack on that, too—either by mandating more projects that draw on administrative law comparison or bringing in experts from foreign jurisdictions to react, respond, and enrich its various reports and recommendations. Finally, the Office of the Attorney General of the United States (“AG Office”) has a somewhat more hidden role in contemporary administrative law. It is officially in charge of the interpretation and the implementation of the APA across the federal government. And on occasion it does use its role to express its views about broad administrative law issues of the day (even quite controversially).709See Memorandum from the Off. of the Att’y Gen. on the Prohibition on Improper Guidance Documents (Nov. 16, 2017), https://www.justice.gov/opa/press-release/file/1012271/download [https://perma.cc/J22M-PCVA]. But the AG Office also has the capacity for much more,710See, e.g., Aram A. Gavoor & Steven A. Platt, U.S. Department of Justice Executive Branch Engagement on Litigating the Administrative Procedure Act, 75 Admin. L. Rev. 429, 477 (2023). including more in the context of comparative administrative law. It can, for example, establish an office or unit engaged in comparative administrative law, which would also encourage potential cross-national collaborations (perhaps building on the experience of the recent trend toward more and more APAs around the world). And it can moreover work to increase and facilitate collaborations between federal agencies at home and abroad in other ways as well.

(4) The judiciary: Even if only some of those institutional paths will be pursued, it is quite likely that we will also begin to see some change in litigation practices as well. After all, the kinds of changes I have described in law school teaching, scholarship, and bar and governmental practices will create a much more favorable environment for judges and litigators to advance arguments drawing on comparative administrative law. At the same time, there’s no reason why judges themselves can’t proactively contribute to this sort of effort too. In the field of constitutional law, there was once talk about the growth of transnational networks of constitutional judging or a “global community of courts.”711Anne-Marie Slaughter, A Global Community of Courts, 44 Harv. Int’l L.J. 191, 192–94 (2003). Constitutional courts’ judges were “seeking information, guidance, stimulation, clarification, or even enlightenment . . . [which were] keeping the judicial mind open to new ideas.”712Laurie W.H. Ackermann, Constitutional Comparativism in South Africa: A Response to Sir Basil Markesinis and Jörg Fedtke, 80 Tul. L. Rev. 169, 183 (2005). Without necessarily arguing that we need to go back to the heydays of that particular movement, partly because of some of the costs of excessive universalism that attended it at the time, it is not out of the question to think seriously about the need and desirability of some form of a cross-national administrative law network of judges that would indeed help keep the “judicial mind open to new ideas.”713Id. There is, in fact, some precedent for that in the U.S. in particular. Indeed, the Schwartz and Wade book previously mentioned was a result of an exchange that was initiated by the Judicial Conference of the United States and included Chief Justice Burger and Justice O’Connor.714For a description of the project, see Warren E. Burger, The Seventh Anglo-American Exchange: Our Spiritual Cousinage, 27 Wm. & Mary L. Rev. 633, 634–37 (1986). It doesn’t seem beyond the pale to revive this sort of tradition.

***

As should be clear, the foregoing doesn’t exhaust the menu of institutional options that we might deliberately endorse for reviving comparative administrative law.715A suggestion of relevance not from the point of view of the United States, but of other systems, that is worth noting here is that courts that produce judgments that are not in English will make sure that there is an English translation available for broader global consumption. See Martin Gelter & Mathias Siems, Networks, Dialogue or One-Way Traffic? An Empirical Analysis of Cross-Citations Between Ten of Europe’s Highest Courts, 8 Utrecht L. Rev. 88, 93 (2012). But it is certainly a good place to start. Change in any of the directions flagged above in how we teach the subject of administrative law in law schools, in how we do research and write in this field, and in how we practice and adjudicate disputes involving administration would be a highly welcome one. And given past precedents and the already morphed global environment, these changes are not at all outside our grasp.

CONCLUSION

In a justly famous article, Felix Frankfurter once described Frank Goodnow and Ernst Freund, whom he also called the “pioneer[s]” of the field of administrative law, as “lonely watchers in the tower.”716Frankfurter, supra note 72, at 616. In that, Frankfurter was obviously referring to the fact that Goodnow and Freund were largely alone at the turn of the twentieth century in realizing that the field of administrative law even exists. However, given how much Goodnow and Freund were both discovering the field of administrative law based on keen observation of developments in other countries, Frankfurter’s quip should be understood slightly more narrowly. He wasn’t identifying Goodnow and Freund as just “watchers.” They were comparative administrative law watchers.

Today, contrary to Goodnow and Freund’s time (and even Frankfurter’s), no one doubts that administrative law is a “thing,” even an incredibly important one. Indeed, nowadays administrative law has many, many watchers crowding the tower. But as far as keeping up with and taking seriously the administrative law of other countries and jurisdictions other than our own, Frankfurter’s observation still rings true. In America, the field of comparative administrative law is one that is occupied by very few watchers. As I tried to show here, this wasn’t always the case. But, alas, it clearly is now.

My claim here has been that this situation calls for quite urgent change. Comparative law should be much more on our radar in administrative law than it is today. The possibilities of doing comparison have incredibly increased in a more globalized and cross-nationally fluid world. Its benefits are substantial, both in general and especially in times of administrative and democratic pressure. And while comparison always carries with it important risks of misuse (and even abuse), there is no reason why we should walk away from the enterprise instead of embracing it with appropriate caution.

This Article is a first stab at trying to put some meat on these general claims by illustrating what a cautious approach to comparative administrative law (which, as I have suggested, is a modest and experimentalist one) can teach us in two central doctrinal domains of law and administration: the domestication of administrative guidance and Chevron deference. But, of course, this is just the tip of the iceberg. Further comparative study of other domains in our administrative law (and of different jurisdictions than the ones that I have referred to or am able to refer to) can yield even more insights.

As is always the case, the question of whether we will take the necessary steps to rid ourselves of our administrative law parochialism, and do so responsibly, is ultimately up to us. The coming Loper Bright and Relentless cases at the Supreme Court could prove to be a test case for exactly that. For my part, I certainly hope that we will and that the watchers will once again stop being so lonely.

97 S. Cal. L. Rev. 801

Download

* Associate Professor of Law, University of Arizona James E. Rogers College of Law. LL.M. & S.J.D., Harvard Law School. For help and constructive feedback on the general ideas and “moves” in the Article, as well as on earlier drafts, my heartfelt thanks go to Michael Asimow, Beau Baumann, Anya Bernstein, Francesca Bignami, Christian Burset, Mariolina Eliantonio, Blake Emerson, Lawrence David, Gráinne de Búrca, Jill Family, Liz Fisher, Neli Frost, Luis Eugenio Garcia-Huidobro, Tom Ginsburg, Daphna Gluck, Ben Heath, Sam Issacharoff, Vicki Jackson, Tomer Kenneth, Jeremy Kessler, Larry Lessig, Peter Lindseth, Jeff Lubbers, Yseult Marique, Yifat Naftali Ben-Ziyon, Susan Rose-Ackerman, Chuck Sabel, Rafi Stern, Thomas Streinz, Robert Thomas, Mark Tushnet, Dan Walters, Joseph Weiler, Ilan Wurman, and David Zaring. I am also very grateful to the participants in the AALS Administrative Law Section 2024 New Voices Session and in the European Administrative Law Dialogues Program hosted by Maastricht University for valuable feedback, to the many people who discussed this (very long!) paper with me during job interviews and workshops, and to the tireless editorial staff of the Southern California Law Review, volumes 97 and 98, for their incredible work in preparing this (again, very long!) Article to print. As always, errors are mine alone.

The Federal Reserve and the Constitution

In a number of important cases restricting the authority and independence of federal agencies, the Supreme Court’s conservative majority has adopted reasoning that, if applied consistently, could have more far-reaching consequences for the administrative state. To explore the limits of the Court’s evolving doctrines, this Article shows how their application might lead to a conclusion that the structure or mandate of the Federal Reserve, as created by Congress, is unconstitutional. On the assumption that at least some of the conservative Justices would not want to reach this result, the Article goes on to survey strategies available to the Court for avoiding such an outcome. It explains how, if a constitutional challenge to the Federal Reserve were to reach the Court, its choice among these strategies would further delineate the reach of its campaign against the administrative state. Even in the absence of an actual challenge, this exercise reveals how the Court’s political philosophy is shaping its jurisprudence.

INTRODUCTION

The low intensity offensive against the administrative state that has been waged by the conservative Justices of the Supreme Court for well over a decade has escalated in the last several terms. The campaign has two prongs. One is the restriction of agency authority derived from enabling legislation. The other is the invalidation of structural measures that insulate decisions of government officials from the political control of the President. The first is exemplified by the potentially very broad “major questions doctrine” announced by the Court in West Virginia v. EPA1See West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022). and the possible revival of the long dormant non-delegation doctrine heralded by Justice Gorsuch’s dissent in Gundy v. United States.2See Gundy v. United States, 139 S. Ct. 2116, 2133–35 (2019) (Gorsuch, J., dissenting). The second is reflected in the trio of decisions invalidating for-cause removal protections for officials in agencies that Congress had chosen to make independent,3See Collins v. Yellen, 141 S. Ct. 1761, 1782 (2021); Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2207–08 (2020); Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 507 (2010). and in United States v. Arthrex,4See United States v. Arthrex, Inc., 141 S. Ct. 1970, 1988 (2021). One must, in fairness, note that although Justice Thomas is in some respects the most aggressive of the Justices in the Court’s offensive against the administrative state, he dissented from Chief Justice Roberts’s opinion for the majority in Arthrex. which gave a political appointee authority to review certain decisions of patent law judges that Congress had insulated from direct political influence.

While the battle lines have thus been drawn, it remains unclear how much territory the conservative Court aims to capture. The rhetoric and logic of some of these opinions seem to extend far beyond the holdings and practical effects of the decisions themselves. An important open question is where the Court will stop. In this article I take up that question indirectly by examining what is perhaps the strongest candidate for a limiting case—the Federal Reserve.

In his famous foretaste of Legal Realism, Justice Holmes observed that common law rights and duties are “nothing but prophecies” of what courts will do when presented with a specific case.5Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 458 (1897). So too with a judicially-centered view of constitutional law. An assertion that an act of Congress is “constitutional” or “unconstitutional,” as opposed to whether it should be, is coherent only if it rests on a more or less convincing prediction of how the Supreme Court would rule on the matter.6Holmes’s second famous point in his address—the impact of a prediction as to how a court would rule on a “bad man”—is less, though by no means completely, irrelevant to constitutional law. Id. at 459. I believe, as I suspect most readers do, that even the current Court is unlikely to rule unconstitutional the delegation of monetary policy to the Federal Open Market Committee (“FOMC”)—an independent entity that includes nongovernmental officials as well as the Board of Governors of the Federal Reserve System (the “Board”), an independent government agency. At least on first inspection, however, this prediction is discordant with some of what the Court has already said about the Appointments Clause and the removal power. Were the conservative Justices’ intimations of further expansion of the removal power doctrine and revival of the non-delegation doctrine to be realized, the dissonance with the Federal Reserve’s structure would only grow. If my intuition is correct, and the Court would decline to follow some of the logic in earlier opinions to a conclusion that the Federal Reserve was unconstitutional, then its rationale for pulling up short of this outcome would itself be revealing of the limits of the emerging doctrines and, perhaps, of the political philosophy lying behind them.

The Article proceeds as follows: Part I provides some background on the mandate and structure of the Federal Reserve. Part II evaluates that mandate and structure in light the evolving separation of powers doctrines of the Court’s conservative majority and reaches the following conclusions:

First, although a majority of the Justices have indicated interest in reviving the non-delegation doctrine, the streak of nearly ninety years without a statute being declared an excessive delegation continues. Should the conservative Justices move beyond their talk in Gundy to action, the broad delegation of authority to the FOMC in the Federal Reserve Act would almost surely raise a constitutional question.

Second, the status of the nongovernmental members on the FOMC is most vulnerable to constitutional challenge. The FOMC includes as five of its voting members the presidents of regional Federal Reserve Banks, who are not appointed by the President and confirmed by the Senate. Indeed, they are not even employees of the U.S. government. They could well be adjudged principal officers of the United States, in which case their presence on the FOMC would be unconstitutional as a violation of Article II.

Third, because the Court has not to this point ruled that traditional multi-member independent agencies are unconstitutional infringements on the President’s removal power, the Board continues to enjoy for-cause removal protection. However, if the Court were to follow through on the logic of its recent opinions, as explicitly urged by some of its conservative members, the Board would presumptively be just as vulnerable as every other independent federal agency.7A recent court of appeals decision raised the prospect of another potential constitutional challenge to the FOMC, and the Federal Reserve System more generally. In Community Financial Services Association of America v. Consumer Financial Protection Bureau, 51 F.4th 616, 642–43 (5th Cir. 2022), cert. granted, 143 S. Ct. 978 (2023), the Fifth Circuit broke with the conclusion reached by at least six other federal courts and declared that the statutory method for funding the Consumer Financial Protection Bureau (“CFPB”) (a portion of the budget of the Federal Reserve, transferred directly from the Fed) violates the Appropriations Clause because it is not approved by Congress. See id. at 644. Since the Federal Reserve itself is funded by the interest it earns on securities and various fees it charges private financial institutions for its services, the holding of the Fifth Circuit threatened to implicate the Fed as well (notwithstanding the Court’s efforts to distinguish the CFPB). Although at the time of this writing the case had not been decided, the comments of several conservative Justices during oral argument suggested that the Court will not be receptive to the argument that the CFPB funding scheme violates the Appropriations Clause. Transcript of Oral Argument at 51, 67–68, 82, Consumer Fin. Bureau v. Cmty. Fin. Servs. Ass’n of America, 143 S. Ct. 981 (2023) (No. 22-448). Hence, I do not include an analysis of this issue in this Article.

Part III discusses why and how, notwithstanding these apparent constitutional vulnerabilities, the Court might well not hold the core delegation to, and structural features of, the Federal Reserve to be unconstitutional. As to why—members of the Court’s conservative majority may be more favorably inclined toward a central bank than other economic regulatory agencies. A more tangible consideration is the difficulty the Court would have in fashioning a remedy for the supposed unconstitutionality of the FOMC structure or mandate that did not risk major disruption to monetary policy, and thus the U.S. economy.

As to how, there are two means of avoidance that are at least arguably consistent with the revealed doctrinal inclinations of the conservative Justices. First, the Court may literally avoid the merits through denying standing to likely plaintiffs. A fairly restrictive standing doctrine of the sort now embraced by the Court would preclude challenges to the FOMC mandate and, quite possibly, to the status of the Reserve Bank presidents.

Second, the Court may find that, on the merits, the Federal Reserve enjoys an exception to the doctrines the Court’s majority has been building. This second way itself has two branches. One is based on the history of the regulation of money going all the way back to the First Bank of the United States. The other rests on perceived functional differences between the Federal Reserve and other independent agencies—an “anomaly,” as then Judge Kavanaugh once described it.8PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 175, 192 n.17 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting).

Part IV builds on the detailed doctrinal analysis of Part II and Part III to discuss the constitutional choices of the Court that would be revealed by the possible outcomes of challenges to the Federal Reserve’s mandate or structure. If the Court refrains from further incursions on congressional decisions to delegate authority to independent agencies, the mandate and structure of the FOMC would be largely insulated from constitutional attack, at least as a practical matter. In that event, some limits on the Court’s separation of powers campaign would have been established.

But what if the Court extends its separation of powers doctrines further? Cass Sunstein and Adrian Vermeule have argued that one of the Court’s recent removal cases was driven not by originalism or any other interpretive method based on the text of the Constitution, but by “judgments, grounded in abstract principles, about what would make the constitutional order the best that it could be.”9Cass R. Sunstein & Adrian Vermeule, The Unitary Executive: Past, Present, Future, 2020 Sup. Ct. Rev. 83, 117 (2021). Assuming the Court wishes to avoid interfering with the statutory independence of the nation’s central bank, even as it pushes those principles further into the statutory organization of the U.S. government, then it will reveal not just its political philosophy, but some of its specific policy preferences. In granting the Federal Reserve exceptional status, the Court would be making choices that either seem arbitrary or that quite overtly appropriate the legislative role of making policy judgments. Finally, were the Court unexpectedly to find some part of the Federal Reserve’s mandate or structure unconstitutional, it would signal an escalation of its campaign against the administrative state and its strong resolve to remake the U.S. government.

* * *

Two additional points should be stated at the outset. First, my aim in this article is not to make a normative argument on the constitutionality of the Federal Reserve. Instead, my aims are to analyze that set of issues as a positive matter against the backdrop of the Court’s separation of powers jurisprudence and to consider what that analysis reveals about the ideological and policy dispositions of the Court underlying that jurisprudence. But this focus should not be confused with the view that the Federal Reserve’s mandate or structure should be captured by the Court’s evolving doctrines. On the contrary, like so many others, I find Justice Kagan’s arguments in her dissent in Seila Law convincing: Congress should have broad, though not unbounded, leeway in deciding how to structure the agencies it creates.10Equally compelling is Justice Scalia’s explanation in Whitman v. American Trucking Associations of why a non-delegation doctrine is essentially impossible for the Court to apply. Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 472 (2001).

Second, the Article focuses solely on these constitutional considerations. Nothing here should be read to suggest that the structure of the FOMC is or ought to be sacrosanct. There are good reasons to consider a range of changes, especially to the Reserve Banks and the status of their presidents. But decisions on whether the country should have an independent central bank, and how independent it should be, properly lie with Congress, not the Supreme Court.

I.  STRUCTURE AND MANDATES OF THE FEDERAL RESERVE

The “Federal Reserve” actually consists of two separate policymaking entities created by statute. The awkwardly named “Board of Governors of the Federal Reserve System” is recognizable as one of the many independent regulatory agencies in the U.S. government. The Federal Reserve Act provides for seven members who are appointed by the President and confirmed by the Senate for fourteen-year terms1112 U.S.C. § 241. and then enjoy for-cause removal protection.12Id. § 242. The Board has a number of regulatory and programmatic responsibilities. Most prominent are certain authorities for providing emergency liquidity to the financial system13Sections 10A and 10B of the Federal Reserve Act authorize the Reserve Banks, under the direction of the Board, to extend short-term loans against good collateral to solvent banks. 12 U.S.C. §§ 347a–b. Section 13(3) of the Federal Reserve Act permits the Federal Reserve, in “unusual and exigent circumstances,” to create “broad-based” programs of lending to non-banks. 12 U.S.C. § 343(3)(A). Any program—usually referred to as a “facility,” created by the Federal Reserve under this authority must be approved by the Secretary of the Treasury. 12 U.S.C. § 343(3)(B)(iv). Credit may be extended under any 13(3) program only to solvent debtors and must be backed by appropriately discounted debt instruments. and the regulation of bank holding companies and certain insured depository institutions.1412 U.S.C. § 1813(q)(3) specifies that the Board is the regulator for state banks that are members of the Federal Reserve system, all bank holding companies, and certain other bank-related entities. Like the two agencies with which the Board shares bank regulatory authority, it regularly engages in notice-and-comment rulemakings and formal adjudications under the Administrative Procedure Act. And, like those two other agencies, it is self-funding and thus not subject to the congressional appropriations process.15Section 10(3) of the Federal Reserve Act gives the Board power to levy an assessment on the Federal Reserve Banks to pay for the Board’s expenses. 12 U.S.C. § 243. The Reserve Banks, in turn, derive their revenue primarily from interest on securities acquired in open market operations. Other sources of income include priced services provided to depository institutions—such as check clearing, funds transfers, and automated clearinghouse operations. Fed. Rsrv. Pub. Educ. & Outreach, The Fed Explained: What the Central Bank Does 4 (11th ed. 2021), https://www.federalreserve.gov/aboutthefed/files/the-fed-explained.pdf [https://perma.cc/L6XK-X9M5]. Net earnings in excess of expenses and other obligations are returned to the Treasury. Id. As indicated at note 7, a pending case challenging the statutory funding mechanism for the CFPB could have implications for the non-appropriated funding capacity of the Federal Reserve. See Cmty. Fin. Servs. Ass’n of Am. v. Consumer Fin. Prot. Bureau, 51 F.4th 616, 644 (5th Cir. 2022), cert. granted, 143 S. Ct. 978 (2023).

The FOMC, by contrast, is an institutionally unique policymaking entity within the U.S. government. The FOMC sets monetary policy for the United States. While it considers itself an “agency” for purposes of the Administrative Procedure Act,16Regulations governing FOMC practice, including Freedom of Information Act (“FOIA”) requests, are at 12 C.F.R. §§ 270–81. it is not an organization unto itself. Instead, it consists of representatives of the constituent entities of the Federal Reserve System. It has no employees. Its staff work is done by employees of the Board and the Reserve Banks.17See Rules of Organization § 5, Fed. Open Mkt. Comm. (as amended effective Sept. 30, 2016), https://www.federalreserve.gov/monetarypolicy/files/fomc_rulesorganization.pdf [https://perma.cc/S6C5-HAPW]. Its voters include all members of the Board plus, on a rotating basis, five of the presidents of the twelve Reserve Banks.18Technically, under 12 U.S.C. § 263(a), the first vice president of a Reserve Bank could be the designated member of the FOMC, but in practice it is always the president. Only the president of the Federal Reserve Bank of New York has a permanent vote on the FOMC. By convention, the others rotate through four other voting positions once every two or three years. Section 12A of the Federal Reserve Act states only that the boards of directors of specified groups of two or three Reserve Banks shall elect a representative annually. 12 U.S.C. § 263(a). In theory, then, the boards of the Boston, Philadelphia, and Richmond Reserve Banks could decide each year which one of their three presidents would represent them on the FOMC that year. By long-established convention, the presidents of the Reserve Banks grouped together by Section 12A rotate as FOMC members. That is why, despite the fact the statutory election has not taken place, the portion of the Board’s website devoted to the FOMC lists the voting members for future years. Thus, when the Board is at full strength, there are at any given time seven Board votes and five Reserve Bank votes.1912 U.S.C. § 263(a). The remaining seven Reserve Bank presidents nonetheless attend and participate fully (except for voting) in all FOMC meetings.

The Reserve Banks themselves are organizationally unusual. They are not “agencies” of the U.S. government. Neither the presidents nor staff of the Reserve Banks are government employees. However, both their distribution of profits and governance differ substantially from that of private corporations. They were created through a somewhat circuitous process outlined by Congress in Section 4 of the Federal Reserve Act.20Federal Reserve Act, Pub. L. No. 63-43, § 4 ¶¶ 1–3, 38 Stat. 251, 254 (1913) (uncodified). Their paid-in capital comes from private banks that are required or choose to become member banks of the Federal Reserve system. Reserve Banks make money principally through seigniorage on cash transactions in securities, interest paid on securities held by the Federal Reserve, and fees charged for various financial services. The member banks are entitled to a dividend, which is calculated roughly as a preferred stock dividend would be—as a percentage of the paid-in capital of each bank.2112 U.S.C. § 289. All remaining “profits” of the Reserve Banks, beyond those necessary to meet their expenses, and that of the Board, are turned over to the Treasury Department.22Id. Since the creation of the CFPB in 2010, a portion of Federal Reserve Revenues is allocated to fund that agency. Id. § 5497.

By law, the nine members of the boards of directors of each Reserve Bank consist of three representatives of the member banks (Class A directors), three representatives of non-banking interests selected by the member banks (Class B directors), and three representatives of the public selected by the Board (Class C directors).23Id. § 302. The chair of each Reserve Bank is appointed by the Board from among the Class C directors. In practice, Reserve Bank presidents suggest the three public members and chair after consultation with the Board. With the approval of the Board, the Class B and Class C directors select the president of the Reserve Bank, who is generally the representative of that Bank on the FOMC.24Id. § 341. Both the Board25Id. § 248(f). and the board of directors of a Reserve Bank26Id. § 341. have statutory authority to remove its president.

Congress has legislated the objectives of monetary policy—“to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”27Id. § 225a. See infra Section II.A. For decades the FOMC’s principal means for managing monetary policy was through “open market operations”—the purchase and sale of short-term U.S. government obligations.28The FOMC’s core statutory authority is to direct the twelve regional Federal Reserve Banks “[t]o buy and sell in the open market . . . any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States.” Id. § 355(2). Open market operations directly affect interest rates on these risk-free obligations, which in turn affect all interest rates in the economy.29The Federal Reserve’s purchase of securities on the open market increases the supply of money by creating “reserves” for the institutions selling those securities. During the Global Financial Crisis of 2007–2009, the FOMC quickly used open market purchases of Treasuries to lower its target short-term interest rate to what was effectively zero. At the “zero lower bound,” the traditional policy approach of managing short-term rates had reached its limit. The FOMC consequently engaged in “quantitative easing”—that is, the purchase of longer duration securities in an effort to bring longer-term rates down as well.30In normal times, changes in short-term rates engineered by the FOMC affect longer-term rates as well, though rarely in the exact proportion of the change in short-term rates.

The resulting enormous increase in reserves meant that when the FOMC was ready to begin cautiously raising rates in late 2015, traditional open-market operations would not have produced the scarcity of reserves in the federal funds market that would result in higher lending rates in the economy as a whole. Consequently, the FOMC has changed to the use of “administered rates” to set policy.31For an explanation, see Ben S. Bernanke, 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to COVID-19 248–52 (2022). The Federal Reserve sets its interest rate on reserves32Throughout most of the Federal Reserve’s history, it was not authorized to pay interest on reserves. In 2006, Congress granted that authority, which was originally to have become effective in 2011. See Financial Services Regulatory Relief Act of 2006, Pub. L. No. 109-351, Title II, § 201(a), 120 Stat. 1966, 1968 (2006) (codified at 12 U.S.C. § 461(b)(12)(A)). However, in light of the gathering financial crisis in 2008, Congress accelerated the effective date. See Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, Title I, § 128, 122 Stat. 3765, 3796 (2008) (uncodified). (and in separate facilities in which certain non-bank financial firms can participate)33This is the overnight reverse repurchase facility (the “ON RRP”). As explained by the Federal Reserve:

The FOMC sets an overnight reverse repurchase agreement offering rate (ON RRP rate), which is the maximum interest rate the Federal Reserve is willing to pay in an ON RRP operation. When an institution uses the ON RRP facility, it essentially makes a deposit at the Fed overnight, receiving a government security as collateral. The next day, the transaction is “unwound”—the Fed buys back the security, and the institution earns interest on the cash it deposited at the Fed. . . . In general, any counterparty to the facility should be unwilling to invest funds overnight in money markets at a rate below the ON RRP rate.

Fed. Rsrv. Pub. Educ. & Outreach, supra note 15, at 37.
to establish floors below which the recipients of the interest will have no incentive to lend to households and businesses.

The FOMC is, if not the most independent policymaking organization in the U.S. government, certainly among the top few. Because its operations are funded by the Reserve Banks and the Board, which are themselves self-funding, it is not subject to the congressional appropriations process. Its deliberations are exempted from the Government in the Sunshine Act3412 C.F.R. § 281.1; see 5 U.S.C. § 552b(c)(9)(A) (exempting from obligation to open deliberations to the public any meeting involving information “the premature disclosure of which would [] in the case of any agency which regulates currencies, securities, commodities, or financial institutions, be likely to [] lead to significant financial speculation in currencies, securities, or commodities . . . .”). and, to a considerable extent, from the Freedom of Information Act.35See 5 U.S.C. § 552(b)(1)–(9) (listing categories of records exempt from disclosure); see also 12 C.F.R. § 271.15(a)(1)–(8). Monetary policy activities and communications may not be audited by the Government Accountability Office.3612 U.S.C. § 3910(a)(3). Finally, to repeat, members of the Board may be removed by the President only for cause, and Reserve Bank presidents are neither appointed nor removable by the President.37There is some question as to whether the Federal Reserve Act permits the President to remove the Chair and Vice Chairs, who are appointed to those specific positions for terms of four years, even in the absence of cause. See infra note 356. Were the President to successfully remove a Chair or Vice Chair, however, that individual would still enjoy for-cause removal protection as a Member of the Board.

The unusual structure of the Federal Reserve System was established in the original Federal Reserve Act, as signed into law in 1913. However, while the original framework of twelve nongovernmental regional Reserve Banks and a governmental Board in Washington providing coordination and oversight has endured in the intervening century, much else has changed. Because recent Supreme Court decisions have assessed the pedigree of an agency in determining its constitutionality, Parts III and IV will discuss relevant features of Federal Reserve history and of its antecedents—the two Banks of the United States created in the nation’s early decades. Here, as a prefatory matter, I make a few general points to provide some context for the discussions to follow.

First, the motivation for creation of the Federal Reserve differs from that of the now prominent central banks that predated it. While the Bank of England and Banque de France were established to help the governments of those countries finance wars, the Federal Reserve was a response to a series of financial panics that culminated in the Panic of 1907. Thus, the availability of credit throughout the economy and the preservation of financial stability were central to the original mission of the Federal Reserve. The legacy of sectional and political disputes over credit helps explain its peculiar decentralized structure, while the experience of private clearinghouse efforts to mobilize private bank resources in the face of credit crunches helps explain its peculiar public-private character.38See Donald R. Wells, The Federal Reserve System: A History 7–20 (2004) (discussing brief accounts of conflicts over the creation of the Federal Reserve); Eugene Nelson White, The Regulation and Reform of the American Banking System, 1900–1929, at 1983–99 (1983). The most extensive treatment remains one written less than a decade after passage of the Federal Reserve Act, by a former academic who had advised the congressional committees drafting the Act and then became the Board’s first secretary. Henry Parker Willis, The Federal Reserve System: Legislation, Organization and Operation 520 (1923).

Second, the authority of the Federal Reserve is more centralized and governmental today than at its creation. For its first two decades, the Reserve Banks—especially the Federal Reserve Bank of New York—had the upper hand in determining Federal Reserve policies, which often varied across Reserve Banks. New Deal legislation increased Board authority—including requiring Board approval of the Presidents of the Reserve Banks—and entrenched a single, unified approach to monetary policy decisions by formally establishing the FOMC and removing the autonomy of individual Reserve Banks to make their own decisions on the rates at which liquidity can be extended to member banks. While changes in the intervening eighty years have been more incremental, they have almost uniformly enhanced Board authority at the expense of Reserve Bank prerogatives. Still, despite proposals in the 1930s to nationalize the Reserve Banks or to make their Presidents subject to the Article II appointment process, no change in the basic structure of the System was made then. Nor, despite periodic revival of such proposals, has any been made since.

Third, notwithstanding a formal ruling by the Attorney General at the inception of the Federal Reserve that the Board was independent of the Treasury Department,39Attorney General T.W. Gregory relied on both the structure of the Federal Reserve Act and its legislative history in concluding that the Board was a distinct entity from the Treasury and was intended to be such. Off. of the Att’y Gen., Opinion Letter on Status of Federal Reserve Board (Dec. 19, 1914), as reprinted in First Annual Report of the Federal Reserve Board for the Period Ending December 31, 1914 (1915), https://fraser.stlouisfed.org/files/docs/publications/arfr/1910s/arfr_1914.pdf [https://perma.cc/RAV4-37NY]. both its de jure and de facto independence have varied over time. Until the New Deal legislation, both the Treasury Secretary and Comptroller of the Currency were ex officio members of the Board, with the Treasury Secretary as chair. Even after the Administration officials were removed from the Board, statutory authorities that gave Treasury the authority to create money on its own afforded Administrations leverage over the Federal Reserve.40See infra notes 324–27 and accompanying text. This legal influence was buttressed by political pressures on the Federal Reserve to keep interest rates low in order to support government financing of both World Wars and New Deal spending programs.

Even following the 1951 Fed-Treasury Accord, which obliquely freed the Fed from a commitment to peg rates at a level desired by Treasury,41See Wells, supra note 38, at 91–95. various Presidents and Treasury Secretaries have successfully influenced FOMC decisions, and Fed Chairs in particular. The posture of reasonably scrupulous presidential respect for Fed independence—which today many consider a norm to have been breached by President Trump—was arguably a historical anomaly during a period covered by the presidencies of Clinton, Obama, and both Bushes.42President Biden has reverted to the practice of the four pre-Trump presidents and scrupulously avoided any public statement that might be seen as interfering with the Fed’s monetary policy independence. Finally, during periods of financial stress, close coordination between the Federal Reserve and Treasury has understandably been the rule, rather than the exception. Now that some of the Board’s emergency liquidity authorities require the agreement of the Secretary,43Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 1101(a), 124 Stat. 1376, 2113–14 (2010) (current version at 12 U.S.C. § 343(3)(B)(iv)). that coordination has a legal, as well as practical, foundation.44Although the special authorities in question belong to the Board, rather than to the FOMC, decisions on use of these powers are analytically and practically related to decisions on extraordinary monetary policy action under stressed conditions.

II.  CONSTITUTIONAL PROBLEMS

A.  Non-Delegation

As recently as a few years ago, a non-delegation issue would not have appeared in a discussion of possible constitutional infirmities in the structure and operation of the Federal Reserve. Indeed, it would have appeared on none but the most comprehensive lists of constitutional issues associated with any agency. In his opinion for the Court in Whitman,45Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 463 (2001). Justice Scalia had seemingly put to rest any lingering question as to whether a congressional grant of authority to an agency might be found to lack an “intelligible principle” and thus be an unconstitutional delegation. But Justice Gorsuch’s dissent in Gundy v. United States,46Gundy v. United States, 139 S. Ct. 2116, 2131–48 (2019) (Gorsuch, J., dissenting). which now appears to command the support of a majority of the Court,47Four other Justices have expressed either sympathy or support for Justice Gorsuch’s opinion. Chief Justice Roberts and Justice Thomas joined his dissent. Id. Justice Alito concurred in the judgment but indicated that he would be willing to revisit the delegation doctrine. Id. at 2131 (“If a majority of this Court were willing to reconsider the approach we have taken for the past 84 years, I would support that effort.”) (Alito, J., concurring). Justice Kavanaugh, who had just joined the Court and took no part in the consideration or decision in Gundy, nonetheless went out of his way to indicate sympathy for the Gorsuch opinion by adding a statement to the Court’s denial of cert. in a case several months after Gundy was decided. Paul v. United States, 140 S. Ct. 342, 342 (2019) (“Justice Gorsuch’s thoughtful Gundy opinion raised important points that may warrant further consideration in future cases.”) (Kavanaugh, J., concurring). has raised the prospect of breathing life into the non-delegation doctrine for the first time in ninety years.

It remains to be seen whether this prospect will in fact be realized, or whether the Court will ultimately demur in the face of the same problem of defining the limits of an intelligible principle (or some other test for valid delegations) that bedeviled it for all those decades following Schechter48A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 538 (1935). and Panama Refining.49Panama Refining Co. v. Ryan, 293 U.S. 388, 429–30 (1935). Until the Court’s intentions become clearer, though, at least some consideration of the non-delegation issue—as expressed in Justice Gorsuch’s dissent—seems warranted in assessing the constitutional status of any agency with broad authority.50It is possible that the Court’s conservative majority may avoid the definitional problems inherent in a non-delegation doctrine by devising or expanding other doctrinal checks on administrative agencies. In West Virginia v. EPA, 142 S. Ct. 2587 (2022), for example, the Court majority put forth a rather open-ended “major questions” doctrine that suggested there may be substantial limits on agency authority even where statutory text appears to grant broad administrative powers. While the potential reach of the doctrine is difficult to derive from Chief Justice Roberts’s opinion in West Virginia, the FOMC’s discretion to balance maximum employment and price stability does not appear to be a prime candidate for negation under that doctrine. Although the exercise of monetary policy is certainly important economically, and can provoke political controversy at times, the FOMC’s mandate is clear from both the text and the legislative history of the 1997 amendment to the Federal Reserve Act. In exercising this discretion, the FOMC is not invoking an old statute to justify new authority in ways unanticipated by Congress, as the Court argued the Environmental Protection Agency (“EPA”) had done in West Virginia. The FOMC’s broad authority to decide between important, sometimes conflicting macroeconomic policy goals would certainly be implicated by any serious revival of the doctrine.

Until 1977, Congress had never articulated a standard to guide monetary policy decisions by the Federal Reserve.51The original Federal Reserve Act granted the Reserve Banks and the Board various powers and imposed various limitations on the exercise of those powers, but included no explicit standard for guiding the exercise of those powers. As to the purpose of these powers, from which such a standard might have been inferred, all that was provided was the introductory language of the Act: “An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.” Federal Reserve Act, Pub. L. No. 63-43, 38 Stat. 251 (1913) (emphasis added). In the brief, but significant, Federal Reserve Reform Act of that year, Congress specified the monetary policy objectives:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.52Federal Reserve Act, Pub. L. No. 95-188, § 202, 91 Stat. 1387, 1387 (1977) (codified at 12 U.S.C. § 225a). Section 204 of the Act required that the Chair and Vice Chair of the Board be separately nominated by the President and confirmed by the Senate for four-year terms. Previously the President had simply designated individuals to serve in these roles from the Members of the Board already confirmed for fourteen-year terms. Id. § 204.

When assessed against the statutory standards considered in the line of decisions between Schechter and Gundy, the Federal Reserve’s “dual mandate” of maximum employment and stable prices seems unremarkable.53Although the statute apparently includes three aims, the conventional view is that because “long-term interest rates can remain low only in a stable macroeconomic environment,” Congress has in fact given the Federal Reserve a “dual” mandate. Frederic S. Mishkin, Governor, Fed. Rsrv. Bd., Monetary Policy and the Dual Mandate (Apr, 10, 2007), https://www.federalreserve.gov/newsevents/speech/mishkin20070410a.htm [https://perma.cc/LDW9-2GDB]. True, Congress has given the Federal Reserve broad discretion, both to determine what “maximum employment” and “stable prices” mean in concrete terms and to strike a balance between the two objectives when they may conflict.54Economists discussing central bank “independence” sometimes distinguish between “goal” independence and “instrument” independence, following the taxonomy introduced by the distinguished monetary policy economist and former central banker Stanley Fischer. Stanley Fischer, Modern Central Banking, in The Future of Central Banking 262, 292 (1995). Goal independence, as the term suggests, is the ability of a central bank to set its own goals, whereas instrument independence is the “discretion and power to deploy monetary policy to attain its goals.” Id. Fischer further notes that the Federal Reserve is given multiple goals, which at least in the short run may be in conflict. Id. at 265–66. Former Fed Chair Ben Bernanke characterizes the Federal Reserve as having “de facto policy independence.” Bernanke, supra note 31, at 405. Indeed, the genesis of the amendment was the view of many in Congress that the Federal Reserve needed to weight employment goals more substantially. However, as aptly summarized by Justice Scalia in Whitman,55Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 474­–75 (2001). the Court has found statutes with objectives as broad as achieving the “public interest” to meet the intelligible principle test.

How, though, might the dual mandate fare if the non-delegation doctrine is put back in play? At present the best starting point for answering that question is Justice Gorsuch’s view of the limits of permissible delegations, as explained in his Gundy dissent. He gives us a detailed application of his position only for the Sex Offenders Registration and Notification Act (“SORNA”)—the statute challenged in Gundy.56This analysis is not especially illuminating in considering regulatory delegations, insofar as it rests on Justice Gorsuch’s interpretation that SORNA authorized the Attorney General to decide which previously convicted sex offenders were subject to its terms, not just the details of how those terms would apply to all such offenders. Justice Kagan’s plurality opinion construed the Attorney General’s discretion much more narrowly, based on her conclusion that SORNA reflected a congressional decision that all prior offenders register under the Act and thus that the “Attorney General’s discretion extends only to considering and addressing feasibility issues.” Gundy v. United States, 139 S. Ct. 2116, 2124 (2019). Gorsuch’s interpretation that SORNA allowed the Attorney General to determine the scope of what is, in effect, a status offense set up a favorable test case for those interested in reviving the non-delegation doctrine. Still, his dissent is composed mostly of criticism of the evolution of the “intelligible principle” test set forth by the Court nearly a century ago in J.W. Hampton, Jr., & Co. v. United States57J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). and, as such, contains an outline of what he believes to be the salient considerations in formulating a more robust test.

First, drawing from cases decided prior to J.W. Hampton, Justice Gorsuch identifies what he considers the three limited forms of delegation permitted by the Court until the intelligible principle test “began to take on a life of its own.”58Gundy, 139 S. Ct. at 2139 (Gorsuch, J., dissenting). Two are relevant for present purposes—“fill[ing] up the details” of a congressional policy decision and making “the application of . . . [a congressional] rule depend on executive fact-finding.”59Id. at 2136. The most far-reaching permissible delegation in the cases he favorably cites to illustrate these principles is found in United States v. Grimaud, a 1911 decision upholding a statute authorizing the Secretary of Agriculture to adopt rules regulating the “occupancy and use” of public forests to protect them from “destruction” and “depredations.”60United States v. Grimaud, 220 U.S. 506, 509 (1911).

Second, after rejecting the “mutated version” of the contemporary intelligible principle doctrine, but suggesting that some cases decided under that test might “be consistent with more traditional teachings” of the nineteenth and early twentieth centuries,61Gundy, 139 S. Ct. at 2139–40 (Gorsuch, J., dissenting). Justice Gorsuch suggested that the tariff cost equalization statute at issue in J.W. Hampton itself might have “passed muster under the traditional tests.” Id. at 2139. It is unclear from his brief description whether he understood how much discretion the apparently determinate standard of “cost equalization” left to the President—so much that the President had scope for deciding whether to implement a relatively protectionist or free-trade import policy. See Daniel K. Tarullo, Law and Politics in Twentieth Century Tariff History, 34 UCLA L. Rev. 285, 319–22 (1986). If so, then Justice Gorsuch’s contemplated revival of the non-delegation doctrine would likely pose less of a threat to the Administrative State than some have feared. Justice Gorsuch enunciates something approaching a test:

To determine whether a statute provides an intelligible principle, we must ask: Does the statute assign to the executive only the responsibility to make factual findings? Does it set forth the facts that the executive must consider and the criteria against which to measure them? And most importantly, did Congress, and not the Executive Branch, make the policy judgments? Only then can we fairly say that a statute contains the kind of intelligible principle the Constitution demands.62Gundy,139 S. Ct. at 2141 (Gorsuch, J., dissenting).

At first glance, application of this test would suggest significant, if not major, problems for the Federal Reserve Act. While the Federal Reserve’s dual objectives of stable prices and maximum employment often call for the same policy response, the most important decisions occur precisely at moments when those objectives are in actual, or at least arguable, conflict. Thus, monetary easing was obviously indicated in 2009, when employment was well below anyone’s estimate of its “maximum” levels, and it was the risk of deflation that threatened price stability. But the two objectives were in at least short-term conflict in the early 1980s, when unemployment and inflation were both well above historical levels. Less dramatically, in the recent past there has been vigorous debate both within the FOMC and among outside commentators as to how quickly monetary policy should be eased to reduce the risk of a future recession, as opposed to maintaining a more restrictive policy in order to guard against inflation reaccelerating.63In fact, monetary policy debates can be even more complicated. Through much of 2021, for example, most members of the FOMC opined that the inflationary spike would prove transitory after the supply shocks associated with COVID-19 abated, and thus the apparent conflict between the two sides of the FOMC’s dual mandate was illusory. Jerome H. Powell, Chair, Fed. Rsrv. Bd., Monetary Policy in the Time of COVID (Aug. 27, 2021), https://www.federalreserve.gov/newsevents/speech/powell20210827a.htm [https://perma.cc/QA39-HNZL]. Conversely, quite a number of non-FOMC observers anticipated that COVID-induced constraints on both supply and demand meant that inflation would continue. These kinds of debates over evaluation of the state of the economy invariably elide into policy choices. Olivier Blanchard, In Defense of Concerns Over the $1.9 Trillion Relief Plan, Peterson Inst. for Int’l Econ Blog (Feb. 18, 2021, 5:15 AM), https://www.piie.com/blogs/realtime-economics/defense-concerns-over-19-trillion-relief-plan [https://perma.cc/5XMD-2YNF]. For these latter two instances, Congress did not provide a standard to guide the Federal Reserve in making the policy judgment either to maintain an accommodative monetary policy to foster higher employment at the risk of continued price instability, or instead to tighten policy to restrain inflation at the risk of lowering achievable levels of employment in the near to medium term.

Despite this ostensible inconsistency of the FOMC’s policy discretion with Justice Gorsuch’s provisional test for constitutional delegations, the wording of his summary of “traditional teachings”64Gundy, 139 S. Ct. at 2140 (Gorsuch, J., dissenting). on the subject might be read to suggest that the dual mandate could fall on the permissible side of that yet-to-be-well-defined line. In stating the “fill up the details” and “executive fact-finding” forms of acceptable delegations, he refers respectively to statutes “regulating” and “governing” private conduct.65Id. at 2136 (emphasis added). Four of the five cases he cites as examples clearly involved government regulation of private conduct. The fifth involved discretion of the federal courts to adapt state law procedures in hearing common law cases for which state law provided the rule of decision. Wayman v. Southard, 23 U.S. 1, 31, 43 (1825). While not the typical way in which the government regulates private conduct, the case involved execution of a judgment in a private dispute and thus did result in a judgment affecting the rights of private parties. One might draw from this formulation the negative inference that delegations not involving the regulation of private conduct are less constrained by constitutional considerations. As explained in the discussion of standing doctrine in Section III.B., the FOMC’s monetary policy does not “regulate” or “govern” private conduct—at least not directly. Monetary policy is executed through trading in government securities and adjustments in the interest rates the Federal Reserve itself pays on bank reserves and short-term borrowing from certain classes of non-bank financial firms. So perhaps it would fit within what at this moment remains an inchoate possible exception to the Gorsuch test for impermissible delegations.

At present, of course, there is no way to know if this distinction is one that Justice Gorsuch means to be significant. If so, there is something peculiar about the outcome: delegation to the FOMC of authority to balance growth and price stability goals for the entire country through massive open market purchases and sales of government debt could be acceptable, while determinations by the War Department under a statutory standard allowing the government to recover “excessive profits” from military contractors during the Second World War might not be.66The excessive profits case is Lichter v. United States, 334 U.S. 742 (1948), criticized by Justice Gorsuch as one in which the “intelligible principle” standard was misleadingly argued as controlling. Gundy, 139 S. Ct. at 2139 n.60 (Gorsuch, J., dissenting). He is unclear as to whether he believes the result to have been incorrect, but the Lichter Court does indeed appear to rely on J.W. Hampton, Lichter, 334 U.S. at 785 (citing J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394 (1928)), and Justice Gorsuch does not include the case as one that would have been correct under “traditional teachings.”

Still, Justice Gorsuch’s emphasis in Gundy on the delegation doctrine’s role in preserving “liberty” at least mildly supports this reading.67Like other of his conservative colleagues on the Court, Justice Gorsuch seems to regard corporate profits as a “liberty” interest rather than a property interest. He asserts that the non-delegation doctrine springs from the framers’ belief that the “new federal government’s most dangerous power was the power to enact laws restricting the people’s liberty,”68Gundy, 139 S. Ct. at 2134 (Gorsuch, J., dissenting). and that it is “one of the most vital of the procedural protections of individual liberty found in our Constitution.”69Id. at 2145. More importantly, perhaps, this distinction aligns with standing doctrine. As explained later in this Article, plaintiffs challenging the constitutionality of the FOMC have generally been denied standing, at least in part because the FOMC did not take any action specifically and directly affecting them. Similar reasoning might lie behind a delegation doctrine that applied most stringently to rules directly regulating the conduct of citizens.

Finally, it is perhaps worth noting that Congress could, if it were so inclined, legislate a monetary policy goal that would come closer to, if not meet, the embryonic test for permissible delegations set forth by Justice Gorsuch in Gundy. This possibility might affect the disposition of the Court majority associated with that opinion to conclude that current law failed that test. However, as a practical matter, Congress could do so only if it embraced a conservative monetary policy. To see why, it is necessary to understand at least the broad strokes of two longstanding, and sometimes conflated, debates among monetary policy economists and practitioners concerning the desirability of monetary policy rules.

The first is whether a dual mandate is appropriate, as opposed to a single mandate instructing a central bank to pursue price stability. One traditional position in this debate begins from the premise that monetary policy cannot itself expand the productive potential of the economy, which is determined by structural features such as productivity gains and the efficiency of labor markets. Hence, those taking this position argue, central bank attention to employment is at best inefficacious and at worst inflationary. The second debate is whether, assuming that monetary policy should have only a single objective, that objective should be expressed as a quantified benchmark to guide the central bank. In the past, advocates for this position urged the adoption of a target for the growth of the money supply. While a monetary aggregate target is embraced by relatively few contemporary economists and policymakers, there is considerably more support for an inflation target. Indeed, many major central banks have, as a formal matter, only the single mandate of price stability. And some of those are given a quantified inflation target by their governments.70For example, the European Central Bank and the Bank of England have the single mandate of price stability. The Bank of England is given its target by the government, while the European Central Bank can—like the Federal Reserve, set its own target. As a practical matter, there may actually be a good bit of flexibility in their implementation of their mandates, allowing them to take account of growth and employment considerations. See, e.g., David Miles, Inflation, Employment, and Monetary Policy: Objectives and Outcomes in the UK and U.S. Compared, 46 J. Money, Credit & Banking 155, 155 (Supp. II 2014).

Were the Federal Reserve Act amended to establish a single mandate—instructing the FOMC to target, say, 2% inflation—it would fit much more comfortably into Justice Gorsuch’s comments on acceptable delegations. 71In its early years the Federal Reserve did not conduct a monetary policy as we would recognize that function today. Furthermore, in providing an “elastic currency,” the Fed was constrained by the legal obligation created in § 16 of the Federal Reserve Act to convert its notes into gold upon demand. Until President Roosevelt took the United States off the gold standard in 1934, this requirement limited the Federal Reserve’s capacity to create money. Congress would have made the key policy “judgment” that the country should be aiming for 2% inflation. The FOMC, at least in theory, would not need to balance that policy against other policy aims. Instead, it would be doing something closer to Gorsuch’s “executive fact-finding.” Is inflation materially over (or under) 2%? Or, a bit more subtly, are economic conditions such that inflation is likely to deviate significantly from that target in the coming months unless monetary policy is adjusted?

The problem, of course, is that this more confined delegation is possible only if Congress makes the policy decision to elevate a price stability goal above employment and growth goals. But what if Congress takes one of the other sides in the long-running debates over monetary policy? A majority of legislators might, for example, agree with economists who believe that an exclusive focus on price stability may, under some economic conditions, allow hysteresis effects to take hold—that is, the persistent shortfall in aggregate demand will negatively affect the production potential of the economy. As a result, those holding this position believe an insufficiently accommodative monetary policy during recessions may reduce maximum achievable employment over the medium term.72Hysteresis effects occur if a persistent shortfall in aggregate demand negatively affects the production potential of the economy. The hypothesis of hysteresis effects is contrary to the traditional economic view that there is a natural rate of output and unemployment that demand management does not change. The concept is still a contested one in economics, though prominent economists—including a Chair of the Federal Reserve—have suggested that economic performance in the aftermath of the Global Financial Crisis supports it. See Janet L. Yellen, Chair, Fed. Rsrv. Bd., Macroeconomic Research After the Crisis, Remarks at “The Elusive ‘Great’ Recovery: Causes and Implications for Future Business Cycle Dynamics” 60th annual economic conference sponsored by the Federal Reserve Bank of Boston (Oct. 14, 2016), https://www.federalreserve.gov/newsevents/speech/yellen20161014a.htm [https://perma.cc/6XUU-VWGL]. For a recent examination of the evidence for hysteresis, see generally Francesco Furlanetto, Antoine Lepetit, Ørjan Robstad, Juan Rubio-Ramírez & Pȧl Ulvedal, Estimating Hysteresis Effects (Divs. of Rsch & Stats. and Monetary Affs. Fed. Rsrv Bd., D.C., Working Paper 2021-059, 2021), https://www.federalreserve.gov/econres/feds/files/2021059pap.pdf [https://perma.cc/GPP5-44J4]. If hysteresis is present, it has important implications for monetary policy:

To the extent that hysteresis is present, it implies that deviations in output from its optimal level are much longer-lasting and thus more costly than usually assumed. The implication is straightforward, namely that monetary policy should react more strongly to output movements, relative to inflation. For example, by being more aggressive early on, this would reduce the increase in unemployment, and by implication, reduce the increase in the number of long term unemployed. It also implies that stabilizing inflation is definitely not the optimal policy: to the extent that an increase in actual unemployment leads to an increase in the natural rate, the unemployment gap, and by implication inflation, will give a misleading signal about the degree of underutilization of resources in the economy.

Olivier Blanchard, Eugenio Cerutti & Lawrence Summers, Inflation and Activity – Two Explorations and Their Monetary Policy Implications (IMF, Working Paper No. WP/15/230, 2015), https://www.imf.org/external/pubs/ft/wp/2015/wp15230.pdf [https://web.archive.org/web/20230413144519/https://www.imf.org/external/pubs/ft/wp/2015/wp15230.pdf].
Similarly, legislators might believe that some inflationary (or disinflationary) bursts have idiosyncratic causes that will abate without leading to sustained upward pressure on overall price levels. Under these circumstances, forcing central banks to raise interest rates to dampen demand and thus relieve inflationary pressures would be unnecessary to maintain price stability, but damaging for short-term employment and growth.

As these two examples illustrate, it would be quite rational for Congress to conclude that a single-minded focus on achieving 2% inflation in all circumstances would be suboptimal policy. Further, Congress might recognize the impracticality of trying to specify in advance all situations in which deviation from the target would be desirable, or of itself revisiting the inflation target whenever economic conditions seem to be changing. But if one formulation of Justice Gorsuch’s limited view of permissible delegations is to be taken at face value, Congress would not be able to delegate this policy preference for balancing higher inflation against higher unemployment within a particular configuration of economic circumstances.73Even a single mandate with a specified inflation target may give a central bank considerable discretion. A central bank can, for example, plausibly indicate that it is focused on medium term price stability, since monetary policy operates only with variable lagged effects on the real economy, some of which are difficult to estimate with precision. A central bank might decide, for example, to begin raising rates even though current inflation is at target (or, conversely, to lower rates even though current inflation is above target). Much depends on the central bank’s analysis of where the economy is headed given current macroeconomic conditions and forces.

B.  Appointment and Removal

There are distinct constitutional issues raised by the structure of the FOMC and its constituent entities—one pertaining to the Board and others to the Reserve Bank presidents. The former is not specific to the Board, since it involves the broader question of whether the Court might abandon nearly ninety years of precedent and find traditional multi-member agencies with for-cause removal protection to be unconstitutional. The other issues, though, are very much specific to the unique status of Reserve Bank presidents in the American administrative landscape. Precisely because the status and role of Reserve Bank presidents differ so much from those of the officials at issue in the Court’s recent appointments and removal cases, the analysis here is necessarily not a straightforward application of the doctrines enunciated in those opinions. But it does not require a bold extrapolation of their analyses to conclude that, in their monetary policy capacity, the presidents are principal officers under the Constitution. If that is the case, the structure of the FOMC is unconstitutional because the Reserve Bank presidents are not nominated by the President and confirmed by the Senate.

1.  Removal of Members of the Board of Governors

As with application of the delegation doctrine to monetary policy, the for-cause removal protection afforded members of the Board by the Federal Reserve Act would until recently not have been thought much of an issue at all.74The Federal Reserve Act states that Members of the Board shall serve a fourteen-year term “unless sooner removed for cause” by the President. 12 U.S.C. § 241. This language differs from the “inefficiency, neglect of duty, or malfeasance in office” language used in both the legislation creating the CFPB and in the original Federal Trade Commission Act, which was essentially contemporaneous with the Federal Reserve Act. Federal Trade Commission Act, ch. 311, § 1, 38 Stat. 717, 718 (1914) (codified at 15 U.S.C. § 41 (2018)). Jane Manners and Lev Menand suggest that, if anything, the “for cause” formulation gives the President a somewhat wider scope for removal than does “inefficiency, neglect of duty, or malfeasance in office.” Jane Manners & Lev Menand, The Three Permissions: Presidential Removal and the Statutory Limits of Agency Independence, 121 Colum. L. Rev. 1, 63 n.363 (2021). It seems unlikely that this difference would affect the current Court’s consideration of the issue. Its opinions in Free Enterprise, Seila Law, and Collins v. Yellen have certainly said nothing to suggest so. And perhaps it will prove not to be one. But, just as Justice Gorsuch’s dissent in Gundy raises the possibility that the Court may depart from its longstanding accommodating view of the delegation doctrine, so Chief Justice Roberts’s majority opinion in Seila Law75Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2199 (2020). raises the possibility that the Court may upend the traditional understanding that Humphrey’s Executor v. United States76Humphrey’s Ex’r v. United States, 295 U.S. 602, 620 (1935). This case held constitutional a provision of the Federal Trade Commission Act protecting FTC Commissioners from removal by the President prior to the end of their statutory terms except for “inefficiency, neglect of duty, or malfeasance in office.” Id. (quoting 15 U.S.C. § 41). sanctions for-cause removal protection for principals of independent multi-member agencies such as the Federal Trade Commission (“FTC”) and the Federal Communications Commission (“FCC”).

Seila Law involved a constitutional challenge to the structure of the CFPB. Congress established the CFPB with a single director appointed for a five-year term and removable only for cause. In his majority opinion holding this structure unconstitutional, Chief Justice Roberts neither had to, nor did, address directly whether the contemporary form and authority of multi-member independent agencies raise constitutional concerns. In his opinion a decade earlier in Free Enterprise Fund77Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477 (2010). he had simply left Humphrey’s Executor aside.78Id. at 483. In fact, Chief Justice Roberts described Humphrey’s Executor as indicating that the removal power fashioned in Myers v. United States, 272 U.S. 52 (1926), was “not without limit” and “that Congress can, under certain circumstances, create independent agencies run by principal officers appointed by the President, whom the President may not remove at will but only for good cause.” Id. at 479. In Seila Law, however, he went out of his way to characterize that case as an “exception” to the general rule of broad removal authority that he believes Myers v. United States79Myers, 272 U.S. at 127. had created. While he affirmed that “we do not revisit Humphrey’s Executor or any other precedent today,”80Seila Law, 140 S. Ct. at 2198. In his opinions in a case raising the same issue, then-Judge Kavanaugh had also characterized Humphrey’s Executor as an exception to the Myers rule. PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 164 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting); PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1, 5 (D.C. Cir. 2016), vacated, 2017 WL 631740 (D.C. Cir. 2017). his opinion suggests that the “exception” it created might be a fairly narrow one. If so, the reach of that precedent may be considerably less than has been widely assumed for decades.

In defining the scope of the Humphrey’s Executor “exception” to the Myers rule, Chief Justice Roberts emphasized what he took to be the narrow reading of the FTC’s authority given by the Court in that case. Specifically, he noted that the Humphrey’s Executor Court described the FTC as possessing legislative and judicial powers, not executive power. He went on to point out that the Court had explicitly abandoned that view in Morrison v. Olson81Morrison v. Olson, 487 U.S. 654, 690 (1988). and left readers to draw the inference that the rationale for Humphrey’s Executor is no longer valid. The Chief Justice further maintained that the Humphrey’s Executor Court had a more circumscribed view of the FTC’s authority than is associated with it (and many other agencies) today.82Seila Law, 140 S. Ct. at 2215 (demonstrating the FTC was understood by the Humphrey’s Executor Court as acting “as a legislative agency in ‘making investigations and reports’ to Congress and ‘as an agency of the judiciary’ in making recommendations to courts as a master in chancery”). The Chief Justice dismissed Justice Kagan’s objection that the FTC in the 1930s actually had more far-reaching powers by stating that “what matters is the set of powers the Court considered as the basis for its decision, not any latent powers that the agency may have had not alluded to by the Court.” Id. at 2200 n.4. Especially since none of this was necessary to decide whether the single-headed CFPB was constitutional, one finishes reading his depiction of the Humphrey’s Executor exception with at least some doubt as to whether it covers the modern-day FTC or other influential agencies.83In his opinion concurring in the non-remedial parts of the Chief Justice’s opinion, Justice Thomas—joined by Justice Gorsuch—said as much: “But with today’s decision, the Court has repudiated almost every aspect of Humphrey’s Executor.” Seila Law, 140 S. Ct. at 2212 (Thomas, J., concurring in part and dissenting in part). Also, in his D.C. Circuit opinions, then-Judge Kavanaugh had noted there was a “strong argument” that independent agencies violate Article II. PHH Corp., 881 F.3d at 179 n.7 (Kavanaugh, J., dissenting); PHH Corp., 839 F.3d at 34 n.15. It was only his understanding (and that of most other people prior to Seila Law) that Humphrey’s Executor established the constitutionality of the traditional independent agencies whose members enjoy for-cause removal protection that forced him—as a lower court judge—to distinguish the CFPB from those agencies.

These doubts are strengthened by the way in which the Chief Justice frames the question of the CFPB’s constitutionality. He quotes some of the broadest statements from Chief Justice Taft’s opinion in Myers on the need for the President to be able to control those executing the laws, in order to fulfill the President’s own duty to see that the laws are faithfully executed.84Seila Law, 140 S. Ct. at 2213. Furthermore, in drawing a sharp contrast between the powers of the CFPB and those of the FTC in the 1930s—or at least those he believes the Myers Court understood the FTC to have—Chief Justice Roberts indirectly suggests there may be constitutional problems with the modern administrative agencies:

[T]he CFPB Director is hardly a mere legislative or judicial aid. Instead of making reports and recommendations to Congress, as the 1935 FTC did, the Director possesses the authority to promulgate binding rules fleshing out 19 federal statutes, including a broad prohibition on unfair and deceptive practices in a major segment of the U.S. economy. And instead of submitting recommended dispositions to an Article III court, the Director may unilaterally issue final decisions awarding legal and equitable relief in administrative adjudications. Finally, the Director’s enforcement authority includes the power to seek daunting monetary penalties against private parties on behalf of the United States in federal court—a quintessentially executive power not considered in Humphrey’s Executor.85Id. at 2200.

Had the Chief Justice wanted only to emphasize the anti-novelty principle86For a review and critique of the apparent view of a Court majority that novelty in a statute implicating federalism or separation of powers concerns is constitutionally suspect, see Leah M. Litman, Debunking Antinovelty, 66 Duke L.J. 1407, 1407 (2017). he had invoked in Free Enterprise, he need not have focused on the authorities of the agency itself, but only their concentration in a single director. It is possible that, in adding this color about the CFPB’s authority, Chief Justice Roberts was simply looking to buttress rhetorically his rather formalistic argument later in the opinion that “[a]side from the sole exception of the Presidency, [the constitutional] structure scrupulously avoids concentrating power in the hands of any single individual.”87Seila Law, 140 S. Ct. at 2202. Indeed, the Chief Justice does not make clear whether Myers principles, novelty, and inconsistency with his political theory of American government are each sufficient grounds for the Seila holding. But, as Justice Thomas observed in his separate opinion, “with today’s decision, the Court has repudiated almost every aspect of Humphrey’s Executor.”88Id. at 2212 (Thomas, J., concurring in part and dissenting in part). Given the Chief Justice’s proclivity for step-by-step, rather than sweeping, undoing of longstanding constitutional doctrine, it is conceivable that in a head-on challenge to a contemporary “multimember body of experts, balanced along partisan lines,”89Id. at 2199 (majority opinion). he would find that the modern FTC does exercise “executive power” and thus falls outside his interpretation of the Humphrey’s Executor “exception.”

While the members of the Board of Governors in their FOMC roles may not exercise these kinds of powers, they (and not the Reserve Bank presidents) have broad statutory authority to regulate banking organizations that, if anything, exceeds the powers of the CFPB described in the above quote.90See Fed. Rsrv. Pub. Educ. & Outreach, supra note 15, at 62–82 (explaining the broad regulatory authority of the Board of Governors). Were the Court to take the step hinted at by Chief Justice Roberts and urged by Justice Thomas, and invalidate for-cause removal protection for the principals of a multi-member agency that exercises executive authority, the Board of Governors would join many other agencies in the crosshairs of ensuing constitutional challenges.91In fact, the Board may not meet one of the other apparent conditions for inclusion in the Humphrey’s Executor exception: It is not by statute “balanced along partisan lines.” Seila Law, 140 S. Ct. at 2189, 2199. Unlike the Federal Trade Commission Act, and many other statutes creating independent Commissions, the Federal Reserve Act does not limit the number of Board members who may be from one party. Even so, the Board has not traditionally been regarded as a partisan agency. Indeed, histories of the Fed recount the unhappiness of various Presidents that the Chairs and Board members whom they had appointed were not following the wishes of the Administration. See, e.g., A. Jerome Clifford, The Independence of the Federal Reserve System 242–45 (1965) (describing that of President Truman); Stephen H. Axilrod, Inside the Fed: Monetary Policy and Its Management, Martin through Greenspan to Bernanke 44 (2009) (describing that of President Johnson); see also Burton A. Abrams, How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes, 20 J. Econ. Persps. 177, 177 (2006) (describing that of President Nixon).

2.  The Status of Reserve Bank President

Up until the last several years, few would have thought there was even a modicum of doubt about the constitutionality of the delegation of monetary policy under the Federal Reserve Act, or for-cause removal protection afforded the members of the Board. In contrast, at least since the 1935 legislation that established the current structure of the Federal Reserve, both the constitutionality and the policy merits of participation by Reserve Bank presidents on the FOMC have periodically become live topics for debate. Various plaintiffs have challenged their constitutional status, although no appellate court has yet reached the merits. (As discussed below, two district courts have). Although some commentators find the analysis and conclusion of unconstitutionality straightforward,92See, e.g., Peter Conti-Brown, The Institutions of Federal Reserve Independence, 32 Yale J. Reg. 257, 300–03 (2015). the unique configuration of the Federal Reserve makes application of structural constitutional precedents developed in other contexts somewhat inexact.

The basic issue, and the complexities attending it, arise from the fact that the Reserve Bank presidents are not employees of the U.S. government. They are hired as chief executives of the congressionally-created but nongovernmental Reserve Banks by the private boards of directors of those Banks.9312 U.S.C. § 341. Following a 2010 amendment to this statutory provision, the three bank directors are excluded from voting on appointing a president. Federal Reserve Act Amendments on Federal Reserve Bank Governance, Pub. L. No. 111-203, title XI, § 1107, 124 Stat. 2126 (2010) (uncodified). Yet five of them vote on the committee to which Congress has delegated monetary policy. For this arrangement to be constitutional, they must either be “officers” of the United States appointed in conformity with Article II requirements or nongovernmental actors whose participation in policymaking can pass muster under the private non-delegation doctrine enunciated in Carter v. Carter Coal.94Carter v. Carter Coal Co., 298 U.S. 238, 292 (1936). As was evident in Department of Transportation v. Association of American Railroads,95Dep’t of Transp. v. Ass’n of Am. R.Rs., 575 U.S. 43, 43 (2015). decided only a decade ago, there is not likely to be much receptivity in the current Court to the latter rationale.

If the Reserve Bank presidents are officers of the United States, they must be appointed by one of the two routes laid out in Article II. Because they are not nominated by the President and confirmed by the Senate, they must both qualify as “inferior” officers and be appointed by a “Head of Department.” Because, at least since Edmond v. United States,96Edmond v. United States, 520 U.S. 651, 651 (1997). the determination of whether officers are inferior is bound up with the question of how they can be removed, the constitutional issues pertaining to appointment and removal are closely related.

A good point of reference for considering these questions is a 2019 opinion of the Office of Legal Counsel (“OLC”).97Appointment and Removal of Fed. Rsrv. Bank Members of the Fed. Open Mkt. Comm., 43 Op. O.L.C. 1, 1 (2019) [hereinafter 43 Op. O.L.C.], https://www.justice.gov/olc/file/1349721/download [https://perma/cc/44K7-9QB4]. The opinion was occasioned by the introduction of a bill that would have made all Reserve Bank presidents voting members of the FOMC at every meeting. Id. at 1. A subsequent district court opinion addressed some of these issues, but much more briefly and outside the context of the FOMC and monetary policy. See Custodia Bank, Inc. v. Fed. Rsrv. Bd. of Governors, 640 F. Supp. 3d 1169, 1189–93 (D. Wyo. 2022). This opinion, which was occasioned by the introduction of a bill that would have made all Reserve Bank presidents voting members of the FOMC, concluded after careful analysis that the participation of Reserve Bank presidents on the FOMC was constitutional because they were inferior officers appointed, and removable, by the Board. As we will see, reaching this conclusion took some doing. Moreover, the Court’s subsequent decisions in Seila Law and Arthrex98United States v. Arthrex, Inc., 141 S. Ct. 1970, 1970 (2021). have arguably attenuated further the weaker links in OLC’s reasoning, though it is difficult to say by how much.

i.  Reserve Bank Presidents as “Officers of the United States”

As the Court itself observed in Lucia v. SEC,99Lucia v. SEC, 138 S. Ct. 2044, 2051 (2018). the standard that an officer of the United States is an official who “exercis[es] significant authority pursuant to the laws of the United States” has not been much developed since it was enunciated in Buckley v. Valeo100Buckley v. Valeo, 424 U.S. 1, 126 (1976) (per curiam), superseded by statute, Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81, as recognized in Ams. for Prosperity v. Grewal, 2019 WL 4855853 (D.N.J. Oct. 2, 2019). A much older case, United States v. Germaine, 99 U.S. 508 (1878), had established that someone must occupy a “continuing,” and not temporary, position in order to be an officer of the United States. Id. at 511–12. OLC quite reasonably concluded that, even though most Reserve Bank presidents serve as voting members of the FOMC for only one year at a time, they still meet the Germaine standard because the voting slots for Reserve Bank presidents are permanent, even though the individuals filling those slots may rotate. 43 Op. O.L.C., supra note 97, at 7. nearly fifty years ago. OLC reasoned that the FOMC meets the Buckley standard because it “sets the government’s monetary policy by ordering open-market transactions on the government’s behalf, which is ‘the most important monetary policy instrument’ of the United States.”101Id. (quoting Fed. Open Mkt. Comm. Fed. Rsrv. Sys. v. Merrill, 443 U.S. 340, 343 (1979)). OLC also cited the FOMC’s power to issue binding rules, a factor that appeared to have influenced the Court in Buckley.102Id. (citing Buckley, 424 U.S. at 141).

On the face of it, conducting monetary policy through the power delegated to the FOMC in the Federal Reserve Act seems an exercise of authority more significant than that possessed by most other officers in the U.S. government. If anything, OLC understated its significance in pointing to the FOMC’s authority to order the Federal Reserve Bank of New York to buy or sell government securities in order to implement monetary policy.103Id. When the Federal Reserve buys Treasuries from the market in order to increase demand and thus lower the interest rate on this risk-free asset, it does not fund the transaction as a private bond trader would—by using existing assets to purchase the bonds. Instead, the Federal Reserve creates the money it uses to buy the bonds through increasing the reserve balances of the correspondent banks of the dealers that sell those bonds. Understood in these terms, the FOMC’s power to order the purchase of bonds is a direct exercise of the sovereign authority to create money.

Are there any countervailing arguments? Perhaps the Court would look differently upon the FOMC because it does not bind private parties in ways comparable to the actions of the tax court judges, administrative law judges, Federal Election Commission members, and Public Company Accounting Oversight Board members who have been treated as officers in previous decisions. Indeed, the rulemaking function of the FOMC cited by OLC mostly binds parts of the Federal Reserve System itself.104See 43 Op. O.L.C., supra note 97, at 7. The FOMC does issue rules governing public access to its proceedings, 12 C.F.R. §§ 271.1–9, but these regulations do not “bind” third parties in the way that the Federal Election Commission’s requirements for reporting of campaign contributions binds those who have received the contributions. While this point does echo a distinction suggested in Justice Gorsuch’s Gundy dissent, there is little in any of the cases just noted to suggest that this distinction makes a difference. Nor do the alternative formulations for determining officer status suggested by the concurring and dissenting Justices in Lucia support such a distinction.105Justice Thomas, joined by Justice Gorsuch, reiterated his far-reaching position that any official “with responsibility for an ongoing statutory duty” is an officer subject the Appointments Clause. Lucia v. SEC, 138 S. Ct. 2044, 2056 (2018) (Thomas, J., concurring) (quoting NLRB v. SW General, Inc., 137 S. Ct. 929, 946 (2017) (Thomas, J., concurring)). That formulation would seem clearly to embrace all members of the FOMC. In dissent, Justice Sotomayor, joined by Justice Ginsburg, proposed refining the “significant authority” test so as to limit the universe of officers to officials with “the ability to make final, binding decisions on behalf of the Government.” Id. at 2065 (Sotomayor, J., dissenting). Narrower though her recommended standard may be, it would still seem to cover the FOMC, which makes the final decision on the open market purchases that influence interest rates. Her contrast of officers with “a person who merely advises and provides recommendations to an officer” surely does not describe Reserve Bank presidents who vote in the FOMC (though it might describe the presidents in the years in which they participate, but are not voting members). Id. It seems likely, then, that the Court would find Reserve Bank presidents to be officers of the United States.

ii.  Inferior or Principal Officers

As is already apparent, there is some uncertainty around how precedents derived in other contexts would be applied by the Court in considering the constitutionality of the Federal Reserve. The question of whether the Reserve Bank presidents are inferior officers is easily the most nettlesome of all, owing both to the idiosyncrasies of the Federal Reserve structure and to the fact that the line of relevant Supreme Court cases has generally involved officials acting in an adjudicatory capacity.106United States v. Arthrex, Inc., 141 S. Ct. 1970, 1982 (2021); Lucia, 138 S. Ct. at 2052; Edmond v. United States, 520 U.S. 651, 663 (1997). OLC references Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, 684 F.3d 1332 (D.C. Cir. 2012), in support of its analysis of the status of the Reserve Bank presidents—which also involved an adjudicatory function. 43 Op. O.L.C., supra note 97, at 10. OLC concluded they were, but in doing so appeared to elide some salient considerations. A recent district court case also concluded that a Reserve Bank president was an inferior officer, but outside the monetary policy context. As this section will show, there is a respectable argument that, extending the reasoning of recent opinions by members of the conservative majority, the Reserve Bank presidents are principal officers, at least for purposes of monetary policy.

OLC applied the test put forth by Justice Scalia in the first of those cases, Edmond: an inferior officer is one “whose work is directed and supervised at some level” by an officer who was nominated by the President and confirmed by the Senate.107Edmond, 520 U.S. at 662–63. OLC acknowledged that “the FOMC, as a body, has final authority over open-market operations.” But, specifically citing Justice Scalia’s “at some level” language in Edmond, as well as his observation that the “power to remove . . . is a powerful tool for control,”108Id. at 664. OLC relied heavily on the statutory authority of the Board to remove Reserve Bank presidents for its conclusion that they were inferior officers.10943 Op. O.L.C., supra note 97, at 11. OLC characterized the Board’s removal power as “at will.” Id. The relevant language of the Federal Reserve Act is at least slightly ambiguous: “The Board . . . shall be authorized and empowered . . . [t]o suspend or remove any officer or director of any Federal reserve bank, the cause of such removal to be forthwith communicated in writing by the Board of Governors of the Federal Reserve System to the removed officer or director and to said bank.” 12 U.S.C. § 248(f). It did not invoke the provisions of the Federal Reserve Act giving the Board broad authority over Federal Reserve Banks,110The Act gives the Board seemingly plenary power to “exercise general supervision over said Federal reserve banks,” 12 U.S.C. § 248(j), as well as specific powers, such as to examine “the accounts, books, and affairs of each Federal reserve bank,” id. § 248(a)(1), and suspend, liquidate or reorganize the banks, id. § 248(h). presumably because the presidents act in a different capacity on the FOMC than as chief executives of their Banks.

Before assessing whether the at-will removal power of the Board is enough to make the presidents inferior officers, we must address the threshold question of whether the Federal Reserve Act actually grants this power. As OLC noted, the same statutory provision that creates the removal authority goes on to require that “the cause of such removal [must] . . . be forthwith communicated in writing by the Board . . . to the removed officer or director and to said bank.”111Id.§ 248(f). The question is whether the requirement to communicate “the cause” should be read to restrict the Board’s discretion, just as it would be if the language paralleled that applicable to the Board— with a specified term of office “unless sooner removed for cause by the President.”112Id. § 242. OLC concluded that it did not, citing four reasons: the meaning of “cause” in the context of a reporting requirement; what OLC characterized as the “default rule that the appointing authority retains plenary removal authority”; the existence of “many statutes” that “parallel” the requirement of a communication of reasons; and the principle of constitutional avoidance.11343 Op. O.L.C., supra note 97, at 11–12.

At the time the opinion was issued, one might have wondered whether OLC’s assertion of the default rule proposition reflected Executive Branch bias toward presidential prerogative. The Court’s subsequent opinion in Seila Law, with its full-throated reaffirmation of much of the Myers reasoning, has certainly strengthened the OLC conclusion. Given that rule, OLC’s related argument of constitutional avoidance seems fairly well-grounded. So too, the Court’s endorsement of that rule strengthens an already plausible argument that a requirement to communicate “the cause” does not carry the term-of-art meaning of “for cause” elsewhere in the statute. So, the OLC’s conclusion that clear statutory language will be required by the current Court before it recognizes “for-cause” protection seems a reasonable prediction.114Less supportive of its conclusion are the other statutes cited by OLC, insofar as they do not use the term “cause” at all. Instead, they require that in removing the officer in question, the President communicate the “reasons for any such removal” to Congress. The statutes cited by OLC are Director of Operational Test and Evaluation in the Defense Department, 10 U.S.C. § 139(a)(1); Inspector General of the State Department, 22 U.S.C. § 3929; and Archivist of the United States, 44 U.S.C. § 2103(a). The three statutes use the same formulation: “The [Officer] may be removed from office by the President. The President shall communicate the reasons for any such removal to” either “both Houses” or “each House” of Congress. These cases do not contradict the OLC conclusion, but they do not support it either. Additionally, the only court to have considered the issue read the Federal Reserve Act as providing for-cause removal protection for the presidents. Melcher v. Fed. Open Mkt. Comm., 644 F. Supp. 510, 511 (D.D.C. 1986), aff’d on other grounds, Melcher v. Fed. Open Mkt. Comm., 836 F.2d 561, 561 (D.C. Cir. 1987). However, the persuasiveness of that opinion is questionable, both because its judgment was upheld by the Court of Appeals on other grounds and because the district court never addressed the fact that “cause” was used in a reporting context, rather than explicitly as a qualification on removal. The Court reasoned as follows:

The statutes governing the FOMC contain no suggestion that the Governors may supervise or otherwise influence the policy choices of the Reserve Bank members. Similarly, not even a hint of a suggestion exists that the power of the Board of Governors to remove officers of the Federal Reserve Banks was meant to be used by the Board to influence the votes of those officers who sit with them as members of the FOMC. To the contrary, the power of removal granted by 12 U.S.C. § 248(f) was to facilitate only the suspension or removal of Federal Reserve Bank officers for cause, a mechanism undoubtedly meant to encompass such infractions as misfeasance in office, but not a policy disagreement.

Melcher, 644 F.Supp. at 519–20.

Turning back to the inferior vs. principal officer issue, it is not obvious that a principal’s removal power is always sufficient to establish inferior status. While Justice Scalia’s majority opinion in Edmond clearly elevated the “directed and supervised” standard above other factors that had been considered in past cases, it did not specify that the removal power was dispositive. The Coast Guard judges at issue in that case were removable by the Judge Advocate General, though not in an effort to change the outcome in any specific case, and Justice Scalia noted the importance of that fact.115Edmond v. United States, 520 U.S. 651, 664 (1997) (citing 10 U.S.C. § 866(f)). He went on to cite two other ways in which the work of the judges was “directed and supervised.” One was that the Judge Advocate General set the rules of procedure and formulated policies for reviews of court-martial cases.116Id. at 664. The other was that the judges had “no power to render a final decision on behalf of the United States” because of an explicit, if somewhat complicated, system of review within the military justice system.117Id. at 665.

The inference one might draw from Edmond that removability alone may not be enough was modestly strengthened by the Court’s ruling in Free Enterprise Fund. There the Court ruled that the members of the Public Company Accounting Oversight Board were inferior officers both because it had invalidated their for-cause removal protection and because of “the Commission’s other oversight authority.”118Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 510 (2010).

The importance of one of Justice Scalia’s other factors for determining inferior status—the inability to “render a final decision on behalf of the United States”—has increased following the Court’s decision in Arthrex, which came nearly two years after the OLC opinion. It was precisely the “unreviewable authority wielded by [Administrative Patent Judges]” that the Court found “incompatible with their appointment by the Secretary to an inferior office.”119United States v. Arthrex, Inc., 141 S. Ct. 1970, 1985 (2021). The removal authority of the relevant principal officer was more circumscribed than in Edmond: while Administrative Patent Judges (“APJs”) could be removed from serving on future review panels, they had for-cause protection from being fired from federal service entirely.120Id. at 1982. It is not clear whether the Court would have found an unrestricted removal authority enough to offset the fact that the agency principal would still have had “no means of countermanding the final decision already on the books.”121Id. But Chief Justice Roberts’s choice of remedy suggests it would not have ruled differently. Rather than making the power to remove APJs explicitly plenary, the Court required that—contrary to the statutory scheme—the Director of the Patent and Trademark Office (the relevant principal officer) have discretion to review every decision made by the APJs.122Id. at 1986–88.

Perhaps because the Court was so closely divided, Chief Justice Roberts made clear that “we do not address supervision outside the context of adjudication.”123Id. at 1986. How much weight attaches to any part of Chief Justice Roberts’s opinion in Arthrex remains to be seen. The Court was split 5-4 on both the merits and the remedy, with the Chief Justice the sole affirmative vote for both parts of his opinion. This remark underscores the uncertainty as to how the Court might apply principles developed in an adjudicatory context to other kinds of officers. Still, it helps identify the part of the OLC opinion that was necessarily the most speculative. OLC was aware of the difference in functions between FOMC members and the officials in prior cases. It “recognize[d] that Reserve Bank FOMC members have voting power on a body that is empowered to make final decisions on behalf of the federal government.”12443 Op. O.L.C., supra note 97, at 13. In opining that they were nonetheless inferior officers, OLC doubled down on its removal argument: “The Board’s ability to supervise Reserve Bank FOMC members through the removal authority means that Reserve Bank members would have remained inferior officers, even if H.R. 6741 had made them a majority on the FOMC.”125Id.

In support of its conclusion, OLC cited a 2012 Court of Appeals case that, like Edmond and Arthrex, involved an adjudicatory function. In Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, the D.C. Circuit had ruled that “[w]ith unfettered removal power, the Librarian [of Congress] will have the direct ability to ‘direct,’ ‘supervise,’ and exert some ‘control’ over the Judges’ decisions,” even though “individual CRJ decisions will still not be directly reversible.”126Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 684 F.3d 1332, 1341 (D.C. Cir. 2012) (citing to Edmond v. United States, 520 U.S. at 651, 662–64 (1997)). Whether this precedent remains a good one after Arthrex is at least questionable (again, the apparently dissimilar removal powers in the two cases leaves us without a clear answer). Even before Arthrex was decided, however, Intercollegiate would have been less than a complete answer to the “directed and controlled” issue in the significantly different context of the FOMC—one in which supposed inferior officers vote for final government decisions on the same committee with principal officers.

For similar reasons, a district court’s recent holding in Custodia Bank, Inc. v. Federal Reserve Board of Governors127Custodia Bank, Inc. v. Fed. Rsrv. Bd. of Governors, 640 F. Supp. 3d 1169, 1176–77 (D. Wyo. 2022). that a Reserve Bank president is an inferior officer provides at best limited support for the OLC conclusion. This case involved not monetary policy, but a determination by the Federal Reserve Bank of Kansas City not to grant a “master account” at the Federal Reserve to a financial institution.128Id. at 1180–81. An account of this sort is necessary for a financial institution to access the payments system, and certain other services, operated by the Federal Reserve. See Marc Labonte, Cong. Rsch. Serv., IN12031, Federal Reserve: Master Accounts and the Payment System (2022), https://crsreports.congress.gov/product/pdf/IN/IN12031 [https://perma.cc/6YP8-KMAG]. Although the Court’s analysis was brief,129For example, the Court did not explicitly address the implications of Arthrex for its conclusion, despite the fact that both sides briefed the point. Defendant Board of Governors of the Federal Reserve System’s Memorandum of Points and Authorities in Support of its Motion to Dismiss at 43–45, Custodia Bank, Inc., v. Fed. Rsrv. Bd. of Governors, 640 F. Supp. 3d 1169 (D. Wyo, 2022) (No. 1:22-CV-00125-SWS) [hereinafter Board of Governors Motion to Dismiss]; Omnibus Memorandum in Opposition to Defendants’ Motions to Dismiss Plaintiff’s Complaint, Custodia Bank, Inc., v. Fed. Rsrv. Bd. of Governors, 640 F. Supp. 3d 1169 (D. Wyo. 2022) (No. 1:22-CV-00125-SWS). it referred both to the Board’s appointment and removal powers and to its statutory authority to “exercise general supervision over [the] Federal reserve banks.”130Custodia Bank, 640 F. Supp. 3d, at 1192 (citing 12 U.S.C. §§ 248 (a), (f), (j)). Moreover, elsewhere in its opinion, the Court had concluded that the Board was properly a defendant in the case because Custodia had plausibly alleged that the Board had “participated in or interfered with the consideration and decision of Custodia’s master account application.”131Id. at 1181. It appears, then, that the Court was under the impression that the Board’s actual influence over the Reserve Bank’s decision extended beyond its removal power.

Stepping back for a moment from the doctrine that has evolved in the cases just discussed, one is struck by the oddness of the relationship between members of the Board and Reserve Bank presidents on the FOMC that is implicit in the OLC opinion: If the Board does not like the positions taken on monetary policy by one or more presidents, it can replace those presidents. Through the exercise of this power, or the threat of its exercise, the Board thereby provides the direction and control necessary to satisfy the Edmond standard. To accept this view, one would have to believe that when Congress created the FOMC in 1933, its allocation of five votes to Reserve Bank presidents was more or less for show.132For a discussion of the impact of, and possible motivations for, the change, see Clifford, supra note 91, at 131–35 (explaining that the creation of FOMC meant to enhance status of Reserve Bank presidents as against their Boards of Directors, and the powers of the Board, but not to displace the Federal Reserve’s attribute of group authority). Yet there is nothing in the historical record suggesting such an intent. Nor, in contrast to the Board’s posture towards Reserve Banks with respect to non-monetary policy issues,133My experience while on the Board was that, on essentially any non-monetary policy issue, the Board believed it had the authority to provide both generally applicable guidelines for the Reserve Banks and direction on specific matters. An example of the former is the Board’s response to controversy over the securities trading activities of certain Reserve Bank presidents: the Board adopted a set of conflict of interest rules applicable to the presidents. Nick Timiraos & Michael S. Derby, Fed Imposes New Restrictions on Officials’ Investment Activities, Wall. St. J. (Oct. 21, 2021, 6:07 PM), https://www.wsj.com/articles/fed-imposes-new-restrictions-on-officials-investment-activities-11634839207 [https://perma.cc/XD84-RBQW]. An alleged, publicly known, example of the latter is found in another suit by a financial institution seeking a master account. The plaintiff explicitly alleged that its application had been denied at the specific direction of Chair Powell. See Complaint at 3, TNB USA, Inc. v. Fed. Rsrv. Bank of New York, 2020 WL 1445806 (S.D.N.Y. 20202) (No. 11:8-CV-07978). is there anything in Federal Reserve practice during the ensuing ninety years to support the view that Reserve Bank presidents are answerable to the Board for their votes on monetary policy. Of course, when the Court starts operating under the rubric of the constitutional avoidance doctrine, it may reshape statutes in ways surely not contemplated when they were passed.134See Neal Kumar Katyal & Thomas P. Schmidt, Active Avoidance: The Modern Supreme Court and Legal Change, 128 Harv. L. Rev., 2109, 2129–53 (2015). But OLC does not appear to be relying on the constitutional avoidance doctrine to conclude that the Board must have supervisory power over the monetary policies of Reserve Bank presidents.135Elsewhere in its opinion, OLC explicitly invokes the constitutional avoidance doctrine. See infra Section II.B.2.iv. Moreover, even if we accept this view of the statutory relationship between the Board and the presidents, there may still be constitutional problems.

The votes of Reserve Bank presidents have not come close to determining outcomes on the FOMC in the last thirty years. If the Board is at full strength and of one mind on monetary policy, even a solid bloc of Reserve Bank presidents would be outvoted 7-5. True, for several periods in recent years, the Board has had as few as four Members. Even in such circumstances, however, a prevailing coalition of Reserve Bank presidents has never seemed even a remote possibility. For one thing, there have been only two dissenting votes cast by Members of the Board in the twenty years since the FOMC began announcing its rollcall vote immediately following its meetings.136Information on FOMC dissents is maintained in tabular form by the Federal Reserve Bank of St. Louis. Daniel L. Thornton & David C. Wheelock, Making Sense of Dissents: A History of FOMC Dissents (2014), https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Ffiles.stlouisfed.org%2Ffiles%2Fhtdocs%2Fpublications%2Freview%2F2014%2Fq3%2FData_Appendix_Thornton_Wheelock_Dissents.xlsx&wdOrigin=BROWSELINK [https://perma.cc/EL5H-YM3R]. This change was one of many transparency measures instituted by Alan Greenspan during his lengthy tenure as Chair. My suspicion is that the greater transparency has modestly increased the threshold of disagreement that a Board Member would need to feel before dissenting from the Chair’s proposed policy decision. Especially after a prolonged period of Board unanimity—no Board Member has dissented since 2005—a dissent would itself become a big part of the story after an FOMC meeting. With the advent of another transparency measure—this one introduced by Chair Bernanke—of press conferences following FOMC meetings, a dissent by a Board member would surely become a major topic at the Chair’s press conference. Since communication is now itself regarded as an important tool of monetary policy, the resulting muddying of the waters around the Board’s views could be counterproductive, even from the perspective of a Board Member who would have preferred a different outcome. As recounted in Ben Bernanke’s reminiscence on his years as Chair, there are sometimes still quite significant differences of view among Board members. See Ben S. Bernanke, The Courage to Act 539–46 (2015). But Chair Powell and his two immediate predecessors have all taken pains to accommodate differences in forging an eventual consensus position. For another, the president of the Federal Reserve Bank of New York has traditionally been Vice-Chair of the FOMC and, in that capacity, has worked closely with the Chair in the so-called “troika,” which formulates the proposed monetary policy action prior to each FOMC meeting.137The third member of the troika is the Vice Chair of the Board. The troika is not an official entity. At times the Chair has invited a fourth FOMC member to participate in these preparatory meetings—most recently, Chair Jerome Powell invited then-Governor Lael Brainard to join those meetings. See Nick Timiraos, Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic—and Prevented Economic Disaster 54 (2022). Finally, as a group Reserve Bank presidents tend to have more divergent views than Board members, and thus the odds of all five voters taking the same dissonant position are low.

However, the opinions in Free Enterprise Fund, Seila Law, and Arthrex suggest that a majority of current Justices is largely uninterested in the ways in which agencies have actually functioned. Led by Chief Justice Roberts, they have focused more on theoretically possible outcomes within the structures Congress has created. In Seila Law, Roberts invoked the possibility that a single director might be less responsive to the President than a multi-member Board as part of the justification for striking down the for-cause removal protection that Congress had granted the Director of the Consumer Finance Protection Bureau. And in both Free Enterprise Fund and Arthrex he rejected arguments from dissenting Justices that the relevant principal officers had effective, though not direct, control over the decisions of officers who had not been nominated by the President and confirmed by the Senate. Here, there are certainly theoretical possibilities for Reserve Bank presidents to determine the outcome of an FOMC vote. Moreover, there were at least half a dozen votes in the period 1960–1988 in which the votes of Reserve Bank presidents were significant, including one in which those votes produced a different outcome from that which would have been reached had only Board members been voters.

The first possibility has already been mentioned: a Board at less than full strength may be outvoted by the bloc of five Reserve Bank presidents at an FOMC meeting. Under OLC’s account of the Board’s control over the “inferior” presidents, the Board could respond by removing some or all of the presidents, who would be replaced as voters by the previously designated alternates.138Under current practice, the alternatives in any given year would be four other Reserve Bank presidents and the first vice president of the Federal Reserve Bank of New York. Then the Chair could call a special FOMC meeting at which the Board’s original monetary policy preference could be adopted. If all the alternates proved recalcitrant, the Board could then remove them. Because the Federal Reserve Act specifies that only presidents and first vice presidents can represent the Reserve Banks on the FOMC,13912 U.S.C. § 263(a). at some point there would be no eligible alternates remaining and the Board would outnumber the Reserve Bank presidents.

The foregoing scenario is no way to run a central bank. The FOMC personnel drama would consume financial markets. The projection of a solid institutional footing, on which central banks rely for their credibility, would at least for a time be undermined, with potentially deleterious effects on the achievement of monetary policy aims. How would the Court assess the prospect of such a situation (fanciful as one hopes it will remain)? Perhaps the Court would find the confusion resulting from this sequence of events, coupled with the delay in implementing the Board’s preferred action, analogous to the impact of a decision by the APJs in Arthrex. That is, there would have been a final action taken on behalf of the United States that would have consequences that could not be completely undone by subsequent dismissal of the inferior officers involved. Alternatively, because the impact of the FOMC struggle would not fall on identifiable actors (such as patent holders), the Court might worry less about infringements on “liberty,” and accept the plenary removal power of the Board as adequate to establish the inferior officer status of Reserve Bank presidents. That is, the removal power might be found in this context to meet the Edmond standard of direction and supervision “at some level.”140Edmond v. United States, 520 U.S. 651, 663 (1997).

A second possible situation in which Reserve Bank votes could be determinative is where a monetary policy action favored by a majority, but not all, of the Board did not prevail because of the votes of Reserve Bank presidents. In a sense, the circumstances of this second situation present a variation on the first. As a matter of legal authority, the same majority favoring a different monetary policy action could remove one or more presidents who had taken the opposite position. If the Chair was in the minority of Board members (but the majority of the FOMC), the organizational complications in achieving this outcome could be substantial, with potential negative effects on financial markets. But, if the dissenting Board members held their ground, eventually they would probably prevail.

A third possible situation seems harder to resolve through use of the Board’s removal authority. Suppose the Board is one short of its full complement, and the Members are split 3-3 on whether to raise rates. If three or more of the Reserve Bank presidents vote to raise rates, a majority of the FOMC will have voted to raise the target federal funds rate. If only the votes of the Board Members (principal officers) counted, the target rate would remain the same. Unlike the prior hypothesized situations, the policy outcome that would have prevailed if only Board Members voted may not be achievable through use of the removal power, since the evenly divided Board could deadlock on removing the presidents who favored the rate increase.

As mentioned earlier, this last scenario is not entirely hypothetical. There are at least two instances in Federal Reserve history when the votes of Reserve Bank presidents resulted in a change of policy for which there was not majority support on the Board. At the June 1988 FOMC meeting, the Board had six Members, rather than its full complement of seven. They split evenly on whether to tighten monetary policy conditions, the position favored by Chairman Greenspan. Had only the presidentially appointed members of the FOMC been voting, the deadlock would have meant no change in policy. But because all five Reserve Bank voting members sided with the Chairman, the outcome was an 8-3 vote to tighten.141Press Release, Federal Rsrv. Bd. & Fed. Open Mkt. Comm., Record of Policy Actions of the Federal Open Market Committee (Aug. 19, 1988), https://www.federalreserve.gov/monetarypolicy/files/fomcropa19880630.pdf [https://perma.cc/KS3Y-8TV3]. At the December 1961 FOMC meeting, four of the Board’s seven Members dissented from the position favored by Chairman Martin, which nonetheless prevailed because of the Reserve Bank presidents’ votes. This situation was unlike that in my second hypothetical scenario, because the four dissenting Board members had three different views—one for greater tightening of policy than the FOMC majority had voted, two who opposed any tightening, and one who disagreed with the means chosen to implement the less accommodative policy.142Bd. of Governors of the Fed. Rsrv. Sys., Forty-Eighth Annual Report of the Board of Governors of the Federal Reserve System Covering Operations for the Year 1961, 89–91, https://www.federalreserve.gov/monetarypolicy/files/fomcropa19611219.pdf [https://perma.cc/TB4E-8FB7]. The last-mentioned dissenter had disagreed with the specific Treasury security whose interest rate the Committee instructed the Fed’s market operations to target.

Whatever the Court’s views of the other situations, this last possibility would presumably be more troubling. The closest thing we have to a relevant view from a member of the current Court supports that inference. Justice Alito, concurring in Department of Transportation v. Association of American Railroads,143Dep’t of Transp. v. Ass’n of Am. R.Rs., 575 U.S. 43, 57 (2015) (Alito, J., concurring). considered various constitutional issues that would need to be addressed following the Court’s unanimous decision that Amtrak was a governmental entity.144Writing for the Court, Justice Kennedy briefly noted the issues, which were to be considered by the Court of Appeals on remand. Id. at 55–56. As it happened, the D.C. Circuit did not reach the issue of interest here, having decided the case on other grounds. Ass’n of Am. R.Rs. v. U.S. Dep’t. of Transp., 821 F.3d 19, 23 (D.C. Cir. 2016), vacated, Ass’n of Am. RRs. v. U.S. Dep’t of Transp., WL 6209642 (D.D.C. Mar. 23, 2017). Among these was whether the manner of selecting Amtrak’s president ran afoul of the Appointments Clause. Eight members of Amtrak’s board were presidentially appointed and Senate confirmed. They chose the president, who became ex officio the ninth member of the Board. The president served at the pleasure of the Board.145Ass’n of Am. R.Rs., 575 U.S. at 65 (Alito, J., concurring).

Although he did not reach any definitive conclusions, Justice Alito clearly found the arrangement constitutionally suspect:

It would seem to follow that because agency heads must be principal officers, every member of a multimember body heading an agency must also be a principal officer. After all, every member of a multimember body could cast the deciding vote with respect to a particular decision. One would think that anyone who has the unilateral authority to tip a final decision one way or the other cannot be an inferior officer.146Id.

Dismissing the government’s argument that the president serves only at the pleasure of the other members of the Amtrak board, Justice Alito said “it makes no sense to think that the side with which the president agrees will demand his removal.”147Id. It is hard to know how Justice Alito would parse the FOMC. As already noted, interest rate increases are not regulatory, at least in a direct sense, and thus perhaps not the threat to “liberty” perceived by the conservative members of the Court to lurk in every administrative regulatory action.148Indeed, Justice Alito began his concurring opinion in the Amtrak case with the now customary invocation of liberty. Id. at 57. On the other hand, nothing in the logic of Justice Alito’s comment that every member of a multimember body heading an agency must be a principal officer suggests that this principle is limited to agencies that directly regulate nongovernmental individuals or entities.149There might even be a better argument for the Amtrak president’s manner of selection and presence on its board of directors than for the presence of Reserve Bank presidents on the FOMC. When Congress created that governance arrangement, which was designed for what was supposed to be a profitably run government corporation, it was apparently following practice at most public corporations, where non-executive directors select the chief executive officer, who is then placed on the board. In contrast, while the Reserve Bank presidents are also chief executive officers, their participation on the FOMC is not a managerial function; it is pure policymaking. Interestingly, OLC followed a logic similar to that of Justice Alito in concluding that the Reserve Bank presidents must be officers to serve on the FOMC: “[T]he officer status of some members does not turn on the presence of others who may outvote them.” 43 Op. O.L.C., supra note 97, at 8. As discussed in the text, however, OLC did not follow this logic in evaluating whether the presidents needed to be principal officers. Id.

iii.  Article II Requirements for Appointment of Inferior Officers

Assuming Reserve Bank presidents are inferior officers, there remains the question whether their appointments conform to Article II requirements. Free Enterprise confirmed that the “Head” of a Department may be a multi-member board or commission, so it is clearly acceptable for the Board to appoint the inferior members of the FOMC.150Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 512–13 (2010). There are two additional issues. First, the Board does not appoint the presidents directly; it approves selections made by the boards of directors of the Reserve Banks. Second, that approval is for the individuals appointed to be presidents of the Reserve Banks, not members of the FOMC. Under the Federal Reserve Act, the boards of directors of the Reserve Banks each year select the representatives of the Reserve Banks who will be voting members of the FOMC, with no requirement for approval by the Board of Governors.151See 12 U.S.C. § 263(a).

OLC disposed of both issues in concluding that the appointment of the presidents to the FOMC was consistent with Article II requirements. To deal with the fact that the Board approves—rather than directly makes—the selections of the Reserve Bank boards, OLC cited a 19th century case, United States v. Hartwell.15243 Op. O.L.C., supra note 97, at 14 (citing United States v. Hartwell, 73 U.S. 385, 393–94 (1867)). In Hartwell, which was favorably cited in a footnote in Free Enterprise Fund,153Free Enter. Fund, 561 U.S. at 512 n.13. OLC also cited to a line of Attorney General opinions predating Hartwell that had reached a similar conclusion. 43 Op. O.L.C., supra note 97, at 14–15. the Court ruled that a clerk in the office of the assistant Treasurer of the United States was a validly appointed officer, even though he had been selected by the assistant Treasurer with the “approbation” of the Secretary of the Treasury.154Hartwell, 73 U.S. at 392–93. OLC further noted that the Board appoints the Class C directors of the Reserve Banks (one of whom is designated as the chair), and has the power to dismiss the directors of all three classes.15543 Op. O.L.C., supra note 97, at 16 (citing 12 U.S.C. § 305 and 12 U.S.C. § 248(f)). OLC reasoned that “the Board could indefinitely reject proposed candidates until the directors propose Reserve Bank presidents to the Board’s liking.”156Id. Indeed, it appears as though the Board could even short circuit that potentially lengthy process by dismissing any Class B director who was unwilling to appoint a president satisfactory to the Board and, if necessary, appointing new Class C directors, who for at least a brief time could be the only members of the Board eligible to select the president.

As to the fact that the Board’s approval authority is for selection of individuals in their roles as presidents of Reserve Banks, rather than for participation on the FOMC as such, OLC again relied on a 19th century decision whose authority has been reaffirmed in a modern case. In Shoemaker v. United States,157Shoemaker v. United States, 147 U.S. 282, 300–01 (1893). the Court ruled that Congress could place the holders of two existing offices requiring Senate confirmation on a newly created commission without the incumbents having to go through another nomination and confirmation process. The test adopted by the Court was whether the “additional duties” were “germane to the offices already held by them.”158Id. at 301. Applying this test to the Chief of Engineers of the U.S. Army and the Engineer Commissioner of the District of Columbia, the Court found that the duties of their original offices were indeed germane to sitting on a commission charged with creating what is now Rock Creek Park in Washington, D.C.159Id.

Weiss v. United States, a 1994 case considering whether commissioned military officers could be appointed as military judges without a new Article II appointment, applied the Shoemaker germaneness test.160Weiss v. United States, 510 U.S. 163, 175 (1994). The majority opinion distinguished the case from Shoemaker on the ground that Congress had clearly not tried to “both create an office and also select a particular individual to fill the office.” Id. at 174. However, the Court went on to apply the germaneness test and found it satisfied. Id. at 177. In a concurring opinion, Justice Scalia explained the rationale for the test:

Violation of the Appointments Clause occurs not only when (as in Shoemaker) Congress may be aggrandizing itself (by effectively appropriating the appointment power over the officer exercising the new duties), but also when Congress, without aggrandizing itself, effectively lodges appointment power in any person other than those whom the Constitution specifies. Thus, “germaneness” is relevant whenever Congress gives power to confer new duties to anyone other than the few potential recipients of the appointment power specified in the Appointments Clause—i.e., the President, the Courts of Law, and Heads of Departments.161Id. at 196 (Scalia, J., concurring) (emphasis omitted).

Insofar as Justice Scalia’s concerns extended beyond the potential for congressional aggrandizement, they foreshadow the Court’s construction of the President’s removal power in Free Enterprise Fund, and thus better reflect the contemporary approach to these structural Constitutional issues.

Even with this more expansive view of the germaneness test, the selection by Reserve Bank boards of the presidents who will vote on the FOMC seems to pass muster. As OLC reasoned, “[I]n approving the selection of Reserve Bank presidents to their positions, the Board of Governors has implicitly concluded that the presidents would be competent to serve on the FOMC.”16243 Op. O.L.C., supra note 97, at 17. Indeed, the Federal Reserve Act explicitly ties the two roles together. The Board is fully aware that, in approving Reserve Bank presidents, they are effectively deciding who will be sitting around the table at FOMC meetings.

iv.  Removal of Presidents by Reserve Bank Boards

Unless one reads as a limitation the requirement that the Board notify a president of its reasons for exercising its power of removal, the Board has the plenary removal authority that is consistent with inferior officer status of the presidents. But OLC pointed out that the boards of directors of the Reserve Banks also have statutory authority to remove presidents whose appointments have been approved by the Board.163Id. at 11. The statutory provision is included among the enumerated powers of the Reserve Banks: “To appoint by its board of directors a president, vice presidents, and such officers and employees as are not otherwise provided for in this chapter, to define their duties . . . and to dismiss at pleasure such officers or employees.” 12 U.S.C. § 341. This is the one feature of the Federal Reserve structure that OLC assessed to be unconstitutional.16443 Op. O.L.C., supra note 97, at 21.

In reaching this conclusion, OLC cited Myers v. United States for the proposition that “the power to remove inferior officers is . . . ‘an incident of the power to appoint them.’ ”165Id. at 20 (citing Myers v. United States, 272 U.S. 52, 161 (1926)). But Myers involved a statute requiring congressional approval before the President could remove a postmaster. Even a broad reading of that case does not directly support the OLC conclusion, since there is no question the Board can remove a Reserve Bank president on its own. Doubtless for this reason, OLC relied more on its own prior opinions involving removals of officers by actors other than those with the Constitutional power to appoint them.166Id. However, in asserting that “a delegation [of the power to remove a Reserve Bank president] would improperly diffuse accountability for the supervision of inferior officers,”167Id. at 21. OLC did reflect a concern that has been featured in the Court’s recent decisions. It cited Chief Justice Roberts’s complaint in Free Enterprise Fund that “[t]he diffusion of power carries with it a diffusion of accountability.”168Id. at 20 (quoting Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 497 (2010)). Though preceding Arthrex, OLC foreshadowed the Chief Justice’s emphasis there on the “chain of command” from the president,169United States v. Arthrex, Inc., 141 S. Ct. 1970, 1979 (2021). in whom—according to a majority of the current Court—an indivisible and complete executive power of the United States was lodged by the Constitution.

OLC apparently resolved this issue by invoking the constitutional avoidance doctrine and then reading the statutory provision giving Reserve Bank boards the power of removal as requiring the approval of the Board before exercising that authority.17043 Op. O.L.C., supra note 97, at 21. I say “apparently” because, although OLC cited to a well-known case in which the Court applied that doctrine,171Id. (citing Edward J. DeBartolo Corp. v. Fla. Gulf Coast Trades Council, 485 U.S. 568, 575 (1988)). it also pointed out that “all classes of directors are subservient to the Board of Governors,”172Id. because of the Board’s power to remove those directors and its general supervision of Reserve Banks. OLC reasoned that the Board could, accordingly, require the Reserve Bank boards to seek approval before dismissing a president.173Id. at 21–22.

Given that these powers of the Board are explicitly set forth in the Federal Reserve Act, it is unclear why OLC felt it needed to give the directors’ removal authority provision a reading arguably inconsistent with its plain language. The alternative would have been for OLC to follow the course it did in considering the appointments process, where it emphasized that the Board could repeatedly reject individuals suggested by a Reserve Bank board until the latter sent the Board a name it liked.174See supra note 156 and accompanying text. Here, OLC could have noted that the Board’s authority to dismiss directors (and directly appoint the Class C directors) means that the Board could effectively reverse any decision by a Reserve Bank board to dismiss a president.

v.  Reserve Bank Presidents as Private Actors

Until the recent Custodia Bank case, the only court opinion addressing the merits of the constitutional status of the Reserve Bank presidents was the 1986 district court decision in Melcher v. Federal Open Market Committee.175Melcher v. Fed. Open Mkt. Comm., 644 F. Supp. 510, 510 (D.D.C. 1986), aff’d on other grounds, Melcher v. Fed. Open Mkt. Comm., 836 F.2d 561 (D.C. Cir. 1987). The D.C. Circuit Court affirmed on procedural grounds, leaving Judge Greene’s opinion on the merits neither validated nor rejected.176Melcher, 836 F.2d at 565. Judge Greene’s view that the authority granted Reserve Bank presidents on the FOMC was a permissible delegation to private actors seems unlikely to find favor in today’s Court.177OLC expressly disagreed with Judge Greene’s reasoning. 43 Op. O.L.C., supra note 97, at 7. His opinion is nonetheless instructive in thinking about both the constitutional arguments considered in the preceding subsections and the reasons why the Supreme Court might decline to find the structure of the FOMC unconstitutional even if the logic of its recent decisions tends toward that conclusion.

Judge Greene’s conclusion rested principally on two grounds. One was his textual observation that the Appointments Clause “governs the selection of public officers—it says nothing about the exercise of public power by private persons.”178Melcher, 644 F. Supp. at 521. The other, to which I will return in closing my discussion of the status of the presidents, was that “the lessons of history . . . militate strongly against a conclusion that would rigidly exclude the private members from the FOMC.”179Id.

The first point, while literally true, elided the question of whether someone acting in an effective government capacity should be treated as an “officer of the United States” for Appointments Clause purposes.180See id. A decade before Judge Greene’s opinion, Buckley had set forth the “significant authority pursuant to the laws of the United States” test. Buckley v. Valeo, 424 U.S. 1, 126 (1976) (per curiam), superseded by statute, Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81, as recognized in Ams. for Prosperity v. Grewal, 2019 WL 4855853 (D.N.J. Oct. 2, 2019). It also ignored the doctrine enunciated, if not especially well explained, in Carter Coal, which had found a delegation of federal governmental authority to private parties to be unconstitutional.181Carter v. Carter Coal Co., 298 U.S. 238, 278 (1936). Judge Greene may, in fact, have had Carter Coal in mind when he observed later in his opinion that the five Reserve Bank presidents did not have the “decisive voice” on the FOMC. Melcher, 644 F. Supp. at 523. That comment may have been an implicit allusion to a line of cases following Carter Coal that had countenanced private involvement in government decisions so long as the governmental actors had the final say. For a description of these cases, see Gillian E. Metzger, Privatization as Delegation, 103 Colum. L. Rev. 1367, 1437–45 (2003). There are unusual circumstances in which the Reserve Bank presidents could have the decisive vote(s) on an FOMC decision.

Subsequent judicial developments have further undermined the consistency of Judge Greene’s reasoning with the Court’s views. One is the persistent emphasis in structural constitutional cases over the last thirty years on the accountability of those exercising any form of executive power in the U.S. government. The other, consistent with that emphasis, is the Roberts Court’s conclusion in two cases that even entities and individuals specified as “private” by Congress can be considered parts of the government for Constitutional purposes.182See, e.g., Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 485–86, 495–96 (2010) (“Despite the provisions specifying that Board members are not Government officials for statutory purposes, the parties agree that the Board is ‘part of the Government’ for constitutional purposes . . . and that its members are ‘Officers of the United States’ who ‘exercis[e] significant authority pursuant to the laws of the United States.’ ”) (citations omitted); see also Dep’t of Transp. v. Ass’n of Am. R.Rs., 575 U.S. 43, 55 (2015) (“[Despite] Congress’ disclaimer of Amtrak’s governmental status . . . Amtrak is a governmental entity, not a private one, for purposes of determining the constitutional issues presented in this case.”). Although the features of the Reserve Banks and their presidents might be distinguished from those of the Public Company Accounting Oversight Board and Amtrak—the entities at issue in those cases—the basic logic applies: entities and individuals whose positions have been created by the government, that continue to have significant links to the government, and that exercise governmental powers will be treated as part of the government.183Ironically, Judge Greene cited Amtrak as an example of a “public-private partnership” created by Congress “in lieu of execution of these responsibilities exclusively by government officials.” Melcher, 644 F. Supp. at 523.

From our vantage point, the most interesting feature of Judge Greene’s opinion is that he turned to a rationale of a permissible delegation to private actors only after he had concluded that the Reserve Bank presidents had not been selected in a manner consistent with the Appointments Clause.184Obviously, they had not been nominated by the President and confirmed by the Senate. So, if they were officers, they had to be inferior officers to meet the Article II requirements. He cited three factors in reaching this conclusion: One was that they were appointed by the Reserve Bank boards of directors, rather than by the Board itself.185Melcher, 644 F. Supp. at 519. The other two factors were closely related. The first was that it “would be a distortion of language to label as ‘inferior officers’ members of a body vested with the vast powers possessed by the Federal Open Market Committee.”186Id. The other was that “Reserve Bank members sit on the FOMC with the Governors themselves, with the same opportunity to participate and vote as the Governors.”187Id. Elaborating a bit on the latter point, Judge Greene asserted that the Federal Reserve Act contained “no suggestion that the Governors may supervise or otherwise influence the policy choices of the Reserve Bank members.”188Id. He further maintained that the Board’s power to remove presidents was only for cause and, in any case, that the statutory removal provision contained “not even a hint of a suggestion” that it was “meant to be used by the Board to influence the votes of those officers who sit with them as members of the FOMC.”189Id. at 520.

As discussed earlier, some of these arguments would be dealt with by OLC thirty years later. Judge Greene did not even mention the statutory approval authority given to the Board for appointments of the presidents. And, unlike OLC, he did not parse the use of “cause” in the removal provision, but simply asserted that it was “a mechanism undoubtedly meant to encompass such infractions as misfeasance in office, but not a policy disagreement.”190Id. As we have seen, this is a contestable proposition as a textual and doctrinal matter.

Still, Judge Greene’s observations about how the FOMC actually operated were valid in 1986, and remain so today. In a sense, he was anticipating the functional analysis of inferior officer status that would be set forth a couple of years later in Morrison v. Olson.191Morrison v. Olson, 487 U.S. 654, 668–89 (1988). The fact that the Reserve Bank presidents act like, and are treated like, equals on the FOMC sits uneasily with the notion that they are subordinate to the Board. OLC followed the formalist approach to inferior status that began with Justice Scalia’s dissent in Morrison, became the Court’s position in Edmond, and was reinforced in Arthrex. While I constructed low probability hypotheticals to demonstrate the gap in OLC’s formalist analysis, Judge Greene captured the FOMC’s “tradition of operation,”192Melcher, 644 F. Supp. at 520. even as he glossed over doctrinal points that have become only more important as formalism has gotten the upper hand over functionalism in the Court’s structural Constitutional doctrines.

Judge Greene’s doctrinal argument that Congress may constitutionally delegate voting positions on the FOMC to private individuals has an awkward feel to it. As already noted, it is almost summary in its brevity and does not deal with two obvious issues. Additionally, one of the points he makes in that argument is somewhat at odds with his analysis of the inferior officer question. While he had earlier referred to “the vast powers possessed by the Federal Open Market Committee” in rejecting the notion that the presidents could be inferior officers, he suggests later that because private parties regularly buy and sell Treasury securities, Congress can establish a public-private partnership in the Federal Reserve to do just that.

An indication of what might have been motivating a smart district court judge to offer such a strained argument may be found in Judge Greene’s invocation of what he called the “deliberate, time-honored balance” of public and private representation in the regulation of the monetary system,193Id. at 522. as contemporaneously reflected in the composition of the FOMC: “Ever since the birth of this nation, the regulation of the nation’s monetary systems has been governed by a subtle and conscious balance of public and private elements.”194Id. at 521. He recounted how this balance had been variously struck in the structures of both the First and Second Banks of the United States, the original Federal Reserve Act, and finally the Banking Act of 1935 that established the FOMC as we know it today. He concluded that

[f]ew issues in the history of this nation have been as thoroughly considered and debated as central banking and the regulation of the money supply, and private participation, or even control, have been hallmarks of what was from time to time prescribed by the Congress. The current system is also the product of an unusual degree of debate and reflection within the Legislative Branch, with the participation from time to time of the Executive, and it represents an exquisitely balanced approach to an extremely difficult problem. To be sure, this background would not save the legislation if it clearly contravened the Constitution. But the Court concludes on the basis of its consideration of all the factors discussed above, that, while the composition of the Federal Open Market Committee may be unusual, it is not unconstitutional.195Id. at 524 (footnote omitted).

One can read this part of Judge Greene’s opinion as both acknowledging the force of long-established practice in determining the constitutionality of certain government arrangements and as giving at least some Constitutional role to the political branches in determining the acceptable form of those arrangements. As we will see in Part III, a variation on this theme might also affect the view of today’s Court on the constitutionality of not just the Reserve Bank presidents’ status, but of the Federal Reserve more generally.

III.  CONSTITUTIONAL AVOIDANCE

Application of the doctrines embraced by the Court’s conservative majority in recent cases raises significant questions about the constitutionality of the FOMC. Even without further steps in the Court’s revamp of the separation of powers doctrine, the presence of Reserve Bank presidents on the FOMC is not easy to reconcile with the reasoning in existing opinions. If, as seems quite possible, the conservatives extend the logic of some of their opinions in future cases, other features of the FOMC could be more directly implicated. Were the Court to resurrect a meaningful non-delegation doctrine, the broad monetary policy discretion of the FOMC would obviously invite scrutiny. Similarly, were the Court to invalidate a traditional multi-member independent agency, the Board would obviously be among the many agencies whose constitutionality would be under a cloud.196Additionally, were the Court to find the non-appropriated funding mechanism for the Consumer Finance Protection Bureau unconstitutional on grounds that implicated the Federal Reserve’s independent funding, the independence of monetary policy would be threatened.

But suppose the Court wants to avoid holding that some part of the Federal Reserve’s structure or mandate runs afoul of its separation of powers doctrines. In this Part, I begin with some conjecture as to why the conservative majority may prefer such an outcome and then consider the doctrinal positions that could be available to the Court to achieve this end.197It is also possible that one or more Justices will not have a strong ex ante view on the issue and could be swayed by one or more of these arguments. Since my aim here is to support my intuition that this Court will not issue a ruling that finds the central role or structure of the FOMC unconstitutional, I focus only on potential arguments that have a fighting chance of being accepted by the current Court majority. Most obviously, I do not include in this part of my discussion a functional analysis of the sort presented in Justice Breyer’s dissents in Free Enterprise Fund and Arthrex, Justice Kagan’s dissent in Seila Law, and to a limited extent Justice Thomas’s dissent in Arthrex. Chief Justice Roberts and the other four of his colleagues have displayed little receptivity to such analyses. With respect to the participation of Reserve Bank presidents in monetary policy and the breadth of the FOMC’s delegated powers, standing requirements could foreclose a case from ever reaching the merits.198Of course, if the Court did not want to rule against the FOMC, it could use its discretion not to grant certiorari to unsuccessful challenges in the lower courts. However, were a circuit court of appeals to engage in its own extrapolation of the Court’s prior rulings and find against the FOMC, the Court could be forced to deal with such a case. Alternatively, even if standing were established and the substantive constitutional issues were taken up, the Court might find the FOMC, and perhaps the entire Federal Reserve System, to be exceptional and thus protected from the reach of generally applicable separation of powers doctrines.199It is also possible that, despite the apparent logic of some opinions of the conservative majority, the Court might ultimately not revive the non-delegation doctrine directly or extend its removal power dogma to traditional independent agencies. As evidenced by its decision in West Virginia v. EPA, 142 S. Ct. 2587, 2607 (2022), the Court might create other routes to de-fang the administrative state that could be less of a threat to the FOMC. But, as with other areas in which the Court’s failure to elaborate a standard for its doctrinal innovations, it is virtually impossible to determine how much impact the majority’s major questions doctrine will have.

A.  Reasons to Forbear

There are many reasons why at least some conservative Justices might be reluctant to invalidate either the mandate or the structure of the FOMC. As a matter of ideology, they may simply be more accepting of a powerful, operationally independent central bank than of regulatory agencies such as the EPA, Occupational Safety and Health Administration, and SEC, which typify the administrative state that they hold in such low esteem. As became apparent when President Trump mused publicly about replacing Federal Reserve Chair Jerome Powell, there is support for an independent Fed among some Republican legislators.200Nick Timiraos & Kate Davidson, Fed Chairman Jerome Powell Draws Congressional Support, Even as Trump Bashes Him, Wall St. J. (Dec. 6, 2018, 5:30 AM), https://www.wsj.com/articles/fed-chairman-jerome-powell-draws-congressional-support-even-as-trump-bashes-him-1544092201 [https://perma.cc/VX5Z-L8N5]; see also Michael C. Bender, Rebecca Ballhaus, Peter Nicholas & Alex Leary, Trump Steps Up Attacks on Fed Chairman Jerome Powell, Wall St. J. (Oct. 23, 2018, 8:39 PM), https://www.wsj.com/articles/trump-steps-up-attacks-on-fed-chairman-jerome-powell-1540338090 [https://perma.cc/5FMY-PGQF]; Jeanna Smialek, Trump’s Feud With the Fed Is Escalating, and Has a Precedent, N.Y. Times (June 24, 2019), https://www.nytimes.com/2019/06/24/business/economy/federal-reserve-trump.html [https://perma.cc/5E7K-83XG]. And, while many—perhaps most—companies subject to the jurisdiction of those latter agencies would like to see their authority curtailed, there is almost certainly more support for an independent central bank. Indeed, while financial firms may differ with specific decisions of the FOMC and regulatory actions of the Board, they rely on the central bank to moderate inflation, promote growth, and support the financial system in periods of stress.201Additionally, as a group, Reserve Bank presidents have traditionally been inclined toward the more “hawkish” monetary policy associated with some economic conservatives than have the Board members appointed by presidents of both political parties. Of course, there are dovish Reserve Bank presidents. And perhaps no U.S. central banker is more identified with a hawkish monetary policy than Paul Volcker, chair of the Board and the FOMC from 1979 to 1987.

Another explanation, not inconsistent with the first, is that some members of the Court may share the sense that the Federal Reserve is a higher-status and more consequential agency than others.202Needless to say, there is no official ranking of the status of agencies. If, however, one is looking for some objective indicator of the status point, it is worth noting that the Chair of the Board is, by statute, an Executive Level 1 position, and the Members are Executive Level 2 positions. Those positions correlate with the Secretaries and Deputy Secretaries, respectively, of Cabinet departments. By contrast, the Chairs of most other independent agencies are Executive Level 3 positions, and the non-Chair members are Executive Level 4, the status (and salary) of, respectively, Under and Assistant Secretaries in the Cabinet departments. The Reserve Bank presidents, as nongovernment employees, have salaries roughly double those of the Board members. However, with the exception of the president of the Federal Reserve Bank of New York, their status is decidedly lower, if for no other reason than that the other eleven do not have votes on the FOMC every year. Moreover, none of the Reserve Bank presidents share in the regulatory authority of the Board. Some of the Justices may recognize that they have very little understanding of monetary policy, other than that it is important. For both reasons, they may be reluctant to disrupt the agency to which that policy has been committed.

It is obviously hard to know whether, or how much, policy considerations of this sort would affect the Court’s predisposition toward a constitutional challenge lodged against the FOMC. The potential impact of an adverse ruling on the economy, however, would almost surely weigh on at least some of the conservative majority. This concern would be evident in the difficulty the Court would face in the more narrowly legal exercise of crafting a workable remedy.

Although the Court’s recent separation of powers decisions have been doctrinally aggressive, their immediate impact on the functioning of government has been limited. Indeed, it may be a mark of the conservative majority’s eagerness to make new law that its decisions provided little practical relief to the plaintiffs in those cases.203In Free Enterprise Fund, the Court denied the broad injunctive relief sought by petitioners, which would effectively have brought the operations of the PCAOB to a halt. All that changed was the invalidation of the for-cause removal protection that Congress had created for PCAOB members. Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 513 (2010). Similarly, in Seila Law the CFPB’s civil investigative demand that had triggered the case was eventually upheld, an outcome essentially unaffected by the Court’s ruling that the Director could be removed at will by the President. Consumer Fin. Prot. Bureau v. Seila Law LLC, 997 F.3d 837, 848 (9th Cir. 2021). As of this writing it remains unclear if the plaintiffs in Collins v. Yellen will obtain any relief. The Fifth Circuit has remanded the case to the district court to determine if any retrospective relief was appropriate, though five of the judges thought the absence of injury was sufficiently clear that no remand was necessary. Collins v. Yellen, 27 F.4th 1068, 1069 (5th Cir. 2022) (mem.) (en banc). Finally, in Arthrex the only remedy was to give the Director of the Patent and Trademark Office the opportunity to review the decision of the patent law judge. United States v. Arthrex, Inc., 141 S. Ct. 1970, 1987 (2021). Since there was never any indication that the Director was opposed to that decision, this case also made new law while giving no actual relief to the plaintiff. None produced any immediate tangible consequences of note to the general public—or, indeed, to anyone beyond the relatively small circles of parties and agency officials involved in the cases.

In contrast, a holding that either the mandate or structure of the FOMC was unconstitutional could have a major destabilizing effect on financial markets and, at least for a time, could be front page news. As in Free Enterprise Fund, Seila Law, and Collins, a holding that the Members of the Board were removable at will by the President would not in itself affect the actions of the formerly protected officials. However, the presumed independence of the Federal Reserve would have been called into question. Especially if the decision was handed down at a time when the Administration was thought to be unhappy with FOMC policy, there could be a period of volatility as market actors speculated on whether the President might use the implicit threat of removal to force a change in policy.204It is possible, perhaps likely, that the President and Secretary of Treasury would respond to the Court’s decision by affirming their intention not to interfere with monetary policy. Such a statement would likely reduce, though probably not eliminate, short-term market uncertainty. There might nonetheless be an impact on longer-term interest rates, as market actors priced in the possibility of a future president threatening, if not actually exercising, the use of the removal power. In discussing the uncertain status of the Federal Reserve chair qua chair, Adrian Vermeule has suggested that in most instances convention will deter the President from removing that individual. Adrian Vermeule, Conventions of Agency Independence, 113 Colum. L. Rev. 1163, 1196–99 (2013). The convention, in turn, is backed by the prospect of political backlash, including difficulties in naming a successor, and the alternative of waiting what has recently been only about a year after a president is inaugurated before the term of the chair lapses. Id. In a sense, Vermeule’s hypothesis was strengthened by President Trump’s ultimate decision not to attempt to remove Chair Jerome Powell, despite the President’s deep unhappiness with his own appointee. However, a President empowered by the Supreme Court to remove non-chair members may face less of a political backlash. Moreover, if the Senate is controlled by the same party that holds the presidency, the backlash may not be so significant. Market actors might also speculate on the likelihood that a new President would remove several members of the Board whose monetary policies did not align with those of the incoming Administration.

A holding that the Reserve Bank presidents were principal officers, and thus not constitutionally eligible to sit on the FOMC, would present an especially tricky remedial challenge. The cleanest option might be to sever the portion of Section 12A of the Federal Reserve Act that provides for Reserve Bank representation on the FOMC,20512 U.S.C. § 263(a). leaving just the Members of the Board. This would be a major amputation, not the neat surgical snip performed in recent separation of powers cases. Moreover, it would clearly be at odds with the congressional policy reflected in the Federal Reserve Act for more than a century, and thus hard to justify as capturing what congressional preferences would be in light of the holding that the Reserve Bank presidents were principal officers.

An alternative approach would be to give the President authority to remove the Reserve Bank presidents, thereby dodging the problem of a divided Board discussed in Part II.206An even more far-reaching remedy would be for the Court to require that Reserve Bank presidents be nominated by the President, confirmed by the Senate, and then removable by the President. Since this resolution would probably not be thought necessary by the Court in order to make the Reserve Bank presidents inferior officers, and since this remedy would almost surely reinforce a narrative that the Court is ignoring the will of the political branches in remaking the U.S. government more to its own liking, this option seems unlikely. But this remedy would require the Court not just to excise from a statute the provisions that it has found unconstitutional. It would have to write in a new provision never drafted by Congress.207In Free Enterprise Fund and Seila, the Court was able to remove the brief clauses in the challenged statutes providing for-cause removal protection. As noted earlier, in Arthrex the Court did effectively add its own provision to the statute in framing the remedy to require review by the Director of the Patent and Trademark Office. However, the Court (albeit with a fragile majority that included the Justices who had dissented on the merits) apparently believed that making the Patent Law Judges removable at will would be more at odds with the structure of the statute passed by Congress than making their decision reviewable. Arthrex, 141 S. Ct. at 1987 (“[R]eview by the Director better reflects the structure of supervision within the PTO and the nature of APJs’ duties . . . .”). In addition, this remedy would create some of the same uncertainty discussed earlier in connection with an invalidation of for-cause protection for Board Members, though probably of a lesser order, because the Reserve Bank presidents occupy fewer seats and generally have more heterogeneous views.

Finally, of course, the Court could simply invalidate the entire Federal Reserve Act, rather than changing a core structural feature of the FOMC by severing or rewriting certain offending provisions. Quite possibly—almost inevitably, to my mind—the result would be chaos in financial markets as banks, businesses, and households all scrambled to preserve the value of their money after the creator and caretaker of that money had just been put out of business. In theory, Congress could step in quickly by—for example, reenacting the Federal Reserve Act for a limited period, while leaving the Reserve Bank presidents off the FOMC. Congress would thereby calm financial markets to some degree, while giving itself time to decide on a permanent solution. Presumably, however, the Court is not oblivious to the difficulties in getting anything done across First Street in the Capitol. Even apparent no-brainers such as raising the statutory debt limit in order to pay obligations already incurred by the federal government have entailed political brinkmanship, which in 2011 led to the credit rating of U.S. government debt being downgraded for a time,208Binyamin Appelbaum & Eric Dash, S.&P. Downgrades Debt Rating of U.S. for the First Time, N.Y. Times (Aug. 5, 2011), https://www.nytimes.com/2011/08/06/business/us-debt-downgraded-by-sp.html [https://perma.cc/UF3J-KKVP]; Damian Paletta, S&P Official: U.S. Downgrade Was Due in Part to Debt-Ceiling Brawl, Wall St. J. (Aug. 5, 2011, 10:25 PM), https://www.wsj.com/articles/SB10001424053111903454504576491043656840536 [https://perma.cc/BM7N-WFQD]. and in 2023 caused anxiety in financial markets until an eleventh-hour agreement avoided the U.S. government defaulting on its obligations. The Court could not have confidence that Congress would expeditiously pass a temporary measure that preserved at least a recognizable status quo at the Federal Reserve.

Were the Court to strike down as an excessive delegation of legislative authority the dual mandate that gives the FOMC substantial discretion in the conduct of monetary policy, it would either have to divine a permissible congressional rule for the FOMC to implement or, as in the invalidation of the entire Federal Reserve Act scenario of the preceding paragraph, leave the country without any monetary policy until Congress (somehow) acted.

The former path seems difficult but not inconceivable. Where could the Court find an appropriate congressional rule if not in the Federal Reserve Act itself? Perhaps, as suggested in Part II.A., the Court could follow the preference of some (mostly conservative) economists and effectively read the “maximum employment” aim of monetary policy out of the Federal Reserve Act. Doing so would leave price stability as the “rule” set by Congress, which will then be assumed to have made the basic policy decision for price stability over employment. As with some other recent controversial steps it has taken, the Court might justify such an outcome by invoking the expanded canon of constitutional avoidance.209See generally Katyal & Schmidt, supra note 134 (explaining how the Court has used constitutional avoidance canon to aggressively rewrite statutes). That is, it would argue that Section 2A of the Federal Reserve Act would be an unconstitutional delegation of authority to the FOMC unless the statutory “maximum employment” goal is read to be a byproduct of achieving price stability, rather than as a goal in itself. To reach this decision, though, the Court would have to ignore not just the plain meaning of Section 2A (including the fact that “maximum employment” precedes “stable prices” in the text), but the entire purpose and history of the Federal Reserve Reform Act that added this provision in 1977.210Among other factors underscoring the significance of the maximum employment goal in the Federal Reserve Reform Act are the intense contemporary debate around the wisdom of including such a goal, see Michelle A. L. Goldberg, The Fed’s Dual Mandate: One Too Many?, 33 Rev. Banking & Fin. L. 343, 363–67 (2013), and the passage by the same Congress of the Humphrey Hawkins Act establishing full employment as a national goal, see Full Employment and Balanced Growth Act of 1978, Pub. L. No. 95-523, 92 Stat. 1887 (codified as amended in scattered sections of 15 U.S.C.). It is also worth noting that, over time, bills have been introduced (and not passed) to remove the maximum employment mandate. See, e.g., H.R. 215, 113th Cong. (2013) (proposing to strike maximum employment).

B.  Standing

One way for the Court to avoid the unattractive outcomes described in the preceding section would be simply to decline to reach the merits of a challenge to the FOMC.  There is a quartet of D.C. Circuit cases from the late 1970s to the late 1980s in which the court found that plaintiffs alleging economic harm from monetary policy actions lacked standing to challenge the constitutionality of the FOMC on grounds of excessive delegation of authority, due process, and the Appointments Clause.211The due process claim was based on the participation in selection of Reserve Bank presidents by the bankers on Reserve Bank boards. The Federal Reserve Act has subsequently been amended to prohibit the three bank representatives on each board from involvement in the selection of the president. 12 U.S.C. § 341, amended by Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1412. Those cases largely explain the paucity of judicial discussions of the constitutional status of Reserve Bank presidents.212There had been occasional constitutional challenges to the FOMC prior to the D.C. Circuit cases discussed in the text. These, too, had been dismissed on standing grounds. See, e.g., Horne v. Fed. Rsrv. Bank, 344 F.2d 725, 725 (8th Cir. 1965); Bryan v. Fed. Open Mkt. Comm., 235 F. Supp. 877, 877 (D. Mont. 1964). The two questions to be addressed in this section are, first, whether enough has changed in the last thirty-five years to alter those outcomes today and, second, whether there are claims other than injury from monetary policy actions that might provide an alternative route for a structural challenge to the FOMC.

As to the first question, the best chance for a plaintiff probably lies in appealing to the Court’s recent preoccupation with accountability in the context of Appointments Clause and removal issues to argue that the special rules of separation of powers standing should apply here. As to the second question, there are several possibilities: The D.C. Circuit cases included unsuccessful claims by Members of Congress asserting harm to their position as legislators. Another possibility is an indirect route, by which a plaintiff suing a Reserve Bank or its president for a non-monetary policy harm includes a constitutional claim. Finally, there is the theoretical possibility that the President would attempt to remove a Reserve Bank president.

When both legal and practical considerations are taken into account, the chances of any plaintiff having standing to pursue a structural challenge to the FOMC are, at best, modest. However, it is important to note that the standing hurdle in past cases applied only in cases directly challenging the FOMC—the presence of the Reserve Bank presidents, the breadth of its mandate, or both. Were the Court to extend its reasoning in Seila Law and find traditional multi-member independent commissions unconstitutional, any banking organization regulated by the Federal Reserve could easily meet the standing requirements in challenging a regulation or order. If its outcome were to subject the members of the Board to at-will removal by the President, it would immediately affect the independence of the FOMC.

1.  Private Party Standing to Challenge Monetary Policy Actions
i.  The D.C. Circuit Decisions

Of the four D.C. Circuit cases, two addressed standing claims by plaintiffs suing in their private capacities. Committee for Monetary Reform v. Board of Governor of the Federal Reserve System213Comm. for Monetary Reform v. Bd. of Governors of the Fed. Rsrv. Sys., 766 F.2d 538, 538 (D.C. Cir. 1985). involved only private standing claims, while in Reuss v. Balles214Reuss v. Balles, 584 F.2d 461, 464 (D.C. Cir. 1978). Representative Reuss claimed standing both in his capacity as a Member of Congress and as a private citizen owning government securities.

In Committee for Monetary Reform, the court applied a three-part test for determining standing very similar to that used today:

Art. III requires the party who invokes the court’s authority to show [1] that he personally has suffered some actual threatened injury as a result of the putatively illegal conduct of the defendant, and that the injury [2] fairly can be traced to the challenged action and [3] is likely to be redressed by a favorable decision.215Comm. for Monetary Reform, 766 F.2d at 541. The court quoted this version of the test from Valley Forge Christian College v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 472 (1982). Today the formulation most often used is taken from Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992), which states the first prong of the test as “injury in fact,” a phrase Judge Edwards used later in his opinion in Committee for Monetary Reform. Comm. for Monetary Reform, 766 F.2d at 542.

Although the 800 entities and individuals joining the Committee in the suit were a varied lot,216The plaintiffs included “businesses, building associations, farmers, a labor union, and private individuals.” Comm. for Monetary Reform, 766 F.2d at 542. the court did not dwell on the first prong of the test. It simply assumed that the economic injuries alleged—“serious financial damage as a result of monetary instability and high interest rates in recent years”217Id.—were sufficient to establish injury in fact. The court may have felt it unnecessary to detail economic injuries such as wealth erosion because of high inflation in the late 1970s and early 1980s, and job loss, because of the contractionary monetary policy and serious recession that followed. Alternatively, the court may simply have economized its analysis because of its conclusion that the second prong of traceability was clearly not satisfied.

On this point, the court stated that it was “entirely speculative” whether the influence of the Reserve Bank presidents was responsible for the FOMC’s pursuit of restrictive monetary policies.218Id. In addition, it was “highly uncertain whether and to what extent such policies were responsible for the adverse economic conditions that allegedly resulted in harm to the appellants.”219Id. For good measure, the court also said that the injuries could not be redressed by the court, because it was again “too speculative” whether having only members on the FOMC subject to “democratic control” would have resulted in a different monetary policy.220Id. at 543.

The plaintiffs had also argued that they had standing on “separation-of-powers grounds,” an argument based on the Supreme Court’s decision a decade earlier in Buckley v. Valeo.221Buckley v. Valeo, 424 U.S. 1, 1 (1976) (per curiam). In Buckley, the Court had allowed a challenge to the constitutionality of the composition of the Federal Election Commission without requiring the plaintiff to show that an appropriately appointed Commission would have decided the matter at hand any differently. The D.C. Circuit rejected this argument derived from Buckley, quoting its holding that “litigants with sufficient concrete interests at stake may have standing to raise constitutional questions of separation of powers with respect to an agency designated to adjudicate their rights.”222Comm. for Monetary Reform, 766 F.2d at 543 (quoting Buckley, 424 U.S. at 117) (per curiam)). Here, the court said, the plaintiffs had not alleged they were “directly subject to the governmental authority they seek to challenge, but merely assert[ed] that they [were] substantially affected by the exercise of that authority.”223Id. Judicial intervention was thus not necessary to protect individual rights. To allow standing under these circumstances would be to open up the courts to the “generalized grievances” shared by a large class of citizens and, thereby, to decide “abstract” questions better decided by other governmental institutions.224Id. (quoting Warth v. Seldin, 422 U.S. 490, 499, 500 (1975)).

The D.C. Circuit’s earlier decision in Reuss had rested on generally similar reasoning, with a few notable differences. One was the reluctance of the panel majority in that case even to conclude that the injury prong of the standing test had been met, though Congressman Reuss’ own pleadings may have led to this conclusion.225Reuss v. Balles, 584 F.2d 461, 469 (D.C. Cir. 1978). Reuss had alleged that action by the FOMC may affect the value of his bond, an injury the court found too speculative. Note that this case was litigated in the mid-1970s, before the appointment of Paul Volcker as Fed Chair and the dramatic rise in interest rates (and thus decline in value of existing fixed-rate bonds) that followed his steering the FOMC to a much more restrictive monetary policy. A second was that the panel majority distinguished Buckley not on the Committee for Monetary Reform ground that the plaintiffs must be “directly subject to the authority of the agency, whether such authority is regulatory, administrative, or adjudicative in nature,”226Comm. for Monetary Reform, 766 F.2d at 543. but because Reuss had not shown a sufficiently “personal stake”227Reuss, 584 F.2d at 465. that would “benefit” from a favorable decision.228Reuss, 584 F.2d 461, 470 (D.C. Cir. 1978). This reasoning seemed to invoke, without specifically citing, the “generalized grievance” concern. But, as Judge Wright noted in dissent, the counterargument was that Reuss’ bonds could well benefit if the FOMC did not tighten monetary policy.229Id. at 472.

ii.  Current Standing Doctrine

How, if at all, would the views of a majority of the current Court differ from those expressed in the D.C. Circuit cases decided several decades ago? The recent cases invalidating for-cause removal protection for federal officials provide a starting point for analysis. In the most recent of the three, Collins v. Yellen,230Collins v. Yellen, 141 S. Ct. 1761, 1761 (2021). Justice Alito addressed standing to bring a separation of powers challenge, in a part of his opinion joined by all his colleagues but Justice Sotomayor.231Justices Kagan, Breyer, and Gorsuch did not join in other parts of Justice Alito’s opinion. Id. at 1769. Because he concluded rather easily that the plaintiffs had standing, his discussion is not lengthy.

Justice Alito began by invoking the now-familiar three-part test of Lujan.232Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (alteration in original) (citations omitted):

First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical’ . . . . Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be “fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.” . . . . Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.”
The plaintiffs, shareholders of the government-sponsored enterprises Fannie Mae and Freddie Mac, claimed that actions taken by the Federal Housing Finance Agency (“FHFA”) had diminished the value of their shareholdings. FHFA, the regulator of Fannie and Freddie, had taken these actions in its other statutory role as conservator of those two enterprises following their massive losses during the onset of the Global Financial Crisis in 2008. Justice Alito found the first injury-in-fact prong of the Lujan standard easily satisfied because plaintiffs’ claim of unnecessarily withheld dividends was the “sort of pocketbook injury [that] is a prototypical form of injury in fact.”233Collins, 141 S. Ct. at 1779.

The second prong of traceability was satisfied because FHFA had adopted a dividend formula that swept all the net worth of Fannie and Freddie to the Treasury Department, in exchange for its financial support of the two enterprises. Justice Alito found the third prong of redressability satisfied, at least in part because the case involved a claim that the President’s removal power had been unconstitutionally infringed. He quoted from Seila Law, in which Chief Justice Roberts’s majority opinion had stated that, in the context of the removal power, it was “sufficient that the challenger sustains injury from an executive act that allegedly exceeds the official’s authority.”234Id. (quoting Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2196 (2020)). Seila Law, in turn, referred back to the first of the trio of removal cases, Free Enterprise Fund. Thus there was no need for plaintiffs to allege, much less prove, that FHFA would have acted differently had the relevant enabling legislation not restricted the President’s removal power.

A claim of standing to challenge the constitutionality of the FOMC by plaintiffs such as Congressman Reuss or the Committee for Monetary Policy Reform would differ in two salient respects from that advanced by the aggrieved Fannie and Freddie shareholders in Collins. First, the existence of an injury-in-fact would not be so clear cut for today’s Court. Second, as discussed by the D.C. Circuit in those two older cases, the many economic factors affecting bond prices and interest rates more generally make tracing the putative bondholder injury back to the FOMC less straightforward. The traceability prong may also be complicated by the absence of the regulatory relationship between agency and plaintiffs that was present in Seila Law, Collins, and Buckley itself.

At first glance, an allegation that the actions of the FOMC reduced the value of a plaintiff’s bonds or resulted in a recession in which a plaintiff was laid off would seem a clear injury in fact, and thus adequate under the first prong of the Lujan test. In Collins, Justice Alito had characterized “pocketbook injury” as a “prototypical” form of injury in fact.235Id. As it further restricted standing in an even more recent case, the Court reaffirmed that “certain harms readily qualify as concrete injuries . . . . The most obvious are traditional tangible harms, such as physical harms and monetary harms.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021). However, Lujan’s statement of standing requirements included not only that an injury in fact be “concrete,” but that it be “particularized.”236Lujan, 504 U.S. at 560 (citations omitted). The Lujan formulation also requires that the injury be “actual or imminent,” and not “conjectural or hypothetical.” Id. (citations omitted). This requirement is often explained as disallowing standing where plaintiffs have only “generalized grievances” shared with most or all other citizens.237See, e.g., id. at 573–74. (“We have consistently held that a plaintiff raising only a generally available grievance about government—claiming only harm to his and every citizen’s interest in proper application of the Constitution and laws, and seeking relief that no more directly and tangibly benefits him than it does the public at large—does not state an Article III case or controversy.”); see also the discussion of cases featuring the generalized grievance issue in Lance v. Coffman, 549 U.S. 437, 439–41 (2007) (per curiam). In a recent case, Justice Breyer’s majority opinion might be read as suggesting that the generalized grievance standard is distinct from a determination of an injury in fact. Carney v. Adams, 141 S. Ct. 493, 498 (2020) (noting that requirement that injury must be “concrete and particularized” is a first aspect of standing law relevant to the case and requirement that grievance must be “more than an abstract and generalized harm to a citizen’s interest in the proper application of the law,” as a second aspect of standing doctrine). Logically, though, it seems more an elaboration, or example, of the particularization (and perhaps concrete) standard. See Spokeo, Inc. v. Robins, 578 U.S. 330, 339 n.7 (2016) (discussing a generalized grievance in the context of considering the particularization requirement).

Again at first glance, the particularization—or non-generalized grievance—requirement does not seem to pose a significant problem for bondholder standing. After all, the injury any bondholder claims to have suffered will vary, obviously with the face value of the bonds they hold, but also with their maturity, since changes in the federal funds rate will normally have different effects on shorter-term bonds than on long bonds.238The difference depends, among other factors, on the degree to which market actors believe that high rates will be sustained. So, for example, if the FOMC raises rates, but most market actors believe that the economy is too fragile to absorb rate increases without falling into recession, then prices of longer-dated bonds will not change as much (and, if markets believe that the FOMC will have to reverse course, the price of longer-dated bonds may actually increase, in anticipation of lower future rates). The cases in which the Court has found a plaintiff’s grievance to be a generalized one involved quite different circumstances, usually involving “every citizen’s interest in proper application of the Constitution and laws, and seeking relief that no more directly and tangibly benefits him than it does the public at large.”239Lujan, 504 U.S. at 573–74. Thus the Court has denied standing to plaintiffs claiming that funds had not been properly appropriated or spent,240See, e.g., United States v. Richardson, 418 U.S. 166, 196 (1974); see also, e.g., Massachusetts v. Mellon, 262 U.S. 447, 488 (1923). that a member of Congress who was also an officer in the military reserves violated the Incompatibility Clause,241See Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 222–23 (1974). and that a successful voter referendum had not been properly implemented.242See Hollingsworth v. Perry, 570 U.S. 693, 693 (2013); see also Lance v. Coffman, 549 U.S. 437, 439–41 (2008) (per curiam) (discussing similar cases).

The particularized injury argument of a bondholder is arguably strengthened by Justice Scalia’s explanation, offered a few years before he authored the Lujan opinion, that a “widely shared” grievance was not the same as a “generalized” grievance.243FEC v. Atkins, 524 U.S. 11, 34–35 (1998) (Scalia, J., dissenting). The explanation was contained in his dissent in Federal Election Commission v. Akins,244Id. a case that granted standing to a group of voters seeking review of a Federal Election Commission (“FEC”) decision that an organization was not a “political committee.”245Id. at 27 (majority opinion). Justice Scalia made clear that his objection was based not on the fact that many people may have been harmed by the FEC action, but that every voter had been harmed in the same way.246Id. at 35 (Scalia, J., dissenting). He explained that victims of a mass tort had standing because each suffered a different injury, and that each plaintiff in a voting rights suit had been denied his or her own statutorily protected right to vote.247Id. The differing losses to individual bondholders would seem consistent with these forms of particularized injury.

While Justice Scalia’s reasoning in Akins might be applied in a case challenging the constitutionality of the FOMC, two considerations inject at least a bit of doubt. First, in the twenty-five years since Akins, the Court has neither embraced nor rejected his approach. There is no congruent analysis to be found in any more recent majority opinion. Second, Chief Justice Roberts has subsequently suggested that the generalized grievance bar to standing might be higher than one might infer from Justice Scalia’s Akins opinion.

In a dissent in Massachusetts v. EPA joined by Justice Scalia himself, the Chief Justice included among his arguments against standing the fact that the “very concept of global warming seems inconsistent with this particularization requirement” because it is a “phenomenon ‘harmful to humanity at large.’ ”248Massachusetts v. EPA, 549 U.S. 497, 541 (2007) (Roberts, C.J., dissenting). He did not elaborate. One should perhaps not place too much emphasis on this comment, insofar as most of his dissent focused on the problems of traceability and redressability, and his objections to what he believed to be the majority’s relaxation of standing requirements based on a state’s parens patriae interests. Still, his observation about global warming is at least arguably inconsistent with Scalia’s Akins reasoning: Not everyone is harmed in the same way by global warming, or perhaps at all. Indeed, while the economic losses are likely to be very large for the country as a whole, there will be discrete winners. And the damage suffered by those owning coastal property in New England surely will be particular to each owner.

So, too, with interest rate increases—households and institutions holding mostly cash or very-short-term assets (as opposed to equities or longer-term bonds) can benefit from higher rates. The Roberts dissent thus raises the possibility that the current Court would expand the meaning of generalized grievance to include actions by the FOMC that reverberate broadly through the economy, whether or not some plaintiffs could point to injuries specific to them. How real that possibility would be is among the many imponderables encountered in the muddled world of standing doctrine. One wonders, for example, whether the Chief Justice’s view may be limited to instances where plaintiffs seek to force an agency to regulate, rather than to escape regulation.

Turning to traceability, there are two hurdles for plaintiffs attempting to satisfy this second prong of the Lujan test. First, as both D.C. Circuit panels concluded in those older cases, the action of the FOMC in raising the federal-funds target does not directly cause the harm that plaintiffs allege they suffer because of a higher-interest-rate financial environment. The second hurdle also implicates the redressability prong of the Lujan test: How can plaintiffs trace back their injury to the fact of a putatively unconstitutional FOMC, when they have no way of showing that a properly appointed (or removable) FOMC would have taken a different policy action in light of prevailing economic circumstances?

The first hurdle to establishing traceability does appear significant for many of the plaintiffs represented in the Committee for Monetary Reform case. While the historically high interest rates of the 1980s FOMC, and the recession they brought on, led to considerable economic pain, tracing any specific job loss or corporate bankruptcy to the FOMC’s actions is not straightforward. After all, not every company went bankrupt, and the vast majority of employees did not lose their jobs. Other factors, such as pre-existing vulnerabilities of certain firms and employees or changes in consumer preference, presumably played a role. At least as to holders of Treasury securities, though, the argument for traceability is much stronger, since Treasuries of the same denomination and maturity are fungible. Indeed, there is solid economic evidence linking changes in the federal-funds rate to changes in the prices of Treasuries. As one review of the economic literature concluded, “FOMC decisions affect bonds of all maturity.”249Andrea Buraschi & Paul Whelan, Bond Markets and Monetary Policy, in Handbook of Fixed-Income Securities 77, 91 (Pietro Veronesi ed., 1st ed. 2016). One important analytic challenge in isolating the impact of FOMC policy decisions on Treasuries has been to determine changes in bond prices that have occurred in anticipation of FOMC policy moves, which may limit the effect of FOMC statements on those prices. Studies demonstrate that the information content of FOMC statements as to future monetary policy also affects the prices of Treasuries. See, e.g., Samuel G. Hanson & Jeremy C. Stein, Monetary Policy and Long-Term Real Rates, 115 J. Fin. Econ. 429, 429 (2015). Recent research has confirmed that non-traditional monetary policy tools, such as large-scale asset purchases, also predictably affect the price of Treasuries. See, e.g., Eric T. Swanson, Measuring the Effects of Federal Reserve Forward Guidance and Asset Purchases on Financial Markets, 118 J. Monetary Econ. 32, 32 (2021). While intervening variables such as liquidity considerations and term premia also play a role, it is quite clear that FOMC actions have a major impact on prices.250There may be unusual circumstances in which the prices of certain maturities of bonds do not appreciably change after an FOMC change in its interest-rate target. For example, if the FOMC raises short-term rates, but markets believe that an economic slowdown will ensue, followed by a reversal of the rate increase, then the price of longer-dated bonds may not move much in response to the initial increase. The result would be a flattening of the yield curve, meaning that the slope of the line connecting short-term rates to longer-term rates had been reduced. Because plaintiffs would not be seeking damages, and thus would not need to quantify the impact of an FOMC policy change on the market value of their bonds, the argument for a traceable injury-in-fact seems a strong one.

Still, the preceding paragraph is based on financial economics analysis, not legal doctrine. There is no regulatory, contractual, or any other relationship between the FOMC and a bondholder. The loss occurs as financial markets adjust their assessment of the value of a bond in light of the effects on funding costs for financial institutions that participate in the federal funds market, hold reserves with the Federal Reserve, or transact in the repo and reverse repo facilities now maintained by the Federal Reserve.251The implementation notes issued by the FOMC to accompany its statements at the end of each meeting make clear that there is no regulatory action directed at any particular party, but instead a series of market operations and setting of interest rates to be paid by the Federal Reserve on reserves and in its ONRRP facility. Press Release, Federal Rsrv. Bd. & Fed. Open Mkt. Comm., Implementation Note: Decisions Regarding Monetary Policy Implementation (Dec. 14, 2022), https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a1.htm [https://perma.cc/8JLK-U4Z3]. Those institutions will face higher borrowing costs and, accordingly, will need to increase the rates they charge to households and businesses borrowing from them.252The set of direct effects of FOMC actions is now broader than it was for many years, when the principal monetary policy instrument of the FOMC was open market operations—that is, buying and selling Treasuries, which affected the level of reserves held by banks, and thus the amount they could lend. As reserves became scarcer, the price of credit extended between financial institutions in the federal funds market rose. Several developments during and after the Global Financial Crisis of 2007–2009 have complicated things. First, a 2008 change in the Federal Reserve Act authorized the FOMC to pay interest on reserves. That authority proved useful to the FOMC when it decided in late 2015 to begin raising rates following seven years near zero, because reserves were so abundant after the extraordinary FOMC purchases of bonds during and after the crisis that open market operations alone likely would have been ineffective in raising rates. The “administered rate” of interest on reserves affects bank lending because there is no reason for a bank to make a loan at a rate lower than the risk-free rate it receives from the Federal Reserve on its reserves. Similarly, the reverse repo and repo facilities created in recent years allow the FOMC to affect the rates that financial institutions eligible to directly participate in those facilities can earn or must pay. Anticipating these effects, a potential purchaser of the plaintiff’s Treasury bond will now be willing to buy it only at a price that effectively equalizes the return the purchaser could get on a newly issued Treasury with a similar term until maturity.

In a sense, the question the Court would face is whether economic traceability will suffice, or whether standing doctrine will demand legal traceability—a kind of privity between the plaintiff and the agency. This same question is raised by the second hurdle, that of demonstrating that a validly constituted FOMC would have acted differently than the current FOMC with Reserve Bank presidents as voters. This hurdle is also relevant to the redressability prong of standing requirements.

Without some doctrinal relaxation, that second hurdle would be effectively insuperable. But, as explicitly stated by the Court in its recent decisions finding that statutory constraints on the President’s prerogative to remove officials were unconstitutional, “a litigant challenging governmental action as void on the basis of the separation of powers is not required to prove that the Government’s course of conduct would have been different in a ‘counterfactual world’ in which the Government had acted with constitutional authority.”253Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2196 (2020) (citing Free Enter. Fund v. Pub. Co. Acct. Oversight Bd. 561 U.S. 477, 512 (2010)). In its recent decisions the Court has not discussed this point. The excerpt from the opinion quoted in the text simply cited to Free Enterprise Fund, which in turn had cited to several much older cases in which the Court had decided such cases without requiring plaintiffs to establish the counterfactual. In Collins, Justice Alito simply cited back to Seila Law. Collins v. Yellen, 141 S. Ct. 1761, 1779 (2021).

As noted earlier, the two D.C. Circuit panels had rejected plaintiffs’ claims of “separation of powers standing,” based on their readings of Buckley. Recall that in Buckley the Court said that plaintiffs with “sufficient concrete interests at stake may have standing to raise constitutional questions of separation of powers with respect to an agency designated to adjudicate their rights.”254Buckley v. Valeo, 424 U.S. 1, 117 (1976) (per curiam). The Committee on Monetary Reform panel read the last clause of that sentence as restricting separation of powers standing to plaintiffs “directly subject to the governmental authority they seek to challenge,” and not simply “substantially affected by the exercise of that authority.”255Comm. for Monetary Reform v. Bd. of Governors of the Fed. Rsrv. Sys., 766 F.2d 538, 543 (D.C. Cir. 1985). The court seems to have concluded a lot from a single sentence in a massive per curiam opinion. The plaintiffs in Buckley were clearly subject to regulation by the FEC. Thus, the Court had no occasion to consider whether the relaxation of traceability might be permitted in other circumstances. The fact that the Court has never since cited the Buckley sentence in disposing of standing objections in its separation of powers cases reinforces the inference that the D.C. Circuit may have invested it with too much significance.

Again, the atypical characteristics of the FOMC and monetary policy, relative to those of most other federal agencies, make extrapolation of standing doctrine tricky. In most cases, potential plaintiffs fall into two groups—those who are, or might be, regulated by the agency whose action is being challenged, and those who are not. As explained by Justice Scalia in Lujan, contemporary standing doctrine erects a high barrier to those in the second group:

When . . . plaintiff’s asserted injury arises from the government’s allegedly unlawful regulation (or lack of regulation) of someone else, much more is needed. In that circumstance, causation and redressability ordinarily hinge on the response of the regulated (or regulable) third party to the government action or inaction—and perhaps on the response of others as well . . . . [A]nd it becomes the burden of the plaintiff to adduce facts showing that those choices have been or will be made in such manner as to produce causation and permit redressability of injury.256Lujan v. Defs. of Wildlife, 504 U.S. 555, 562 (1992) (citations omitted).

Many of the more controversial standing cases have involved the question of whether the Court regards the interests of beneficiaries of the regulation to be concrete and particularized enough to satisfy the Court’s view of legal harm. But the FOMC does not regulate anyone.257There is one possible, modest qualification to this statement considered. See infra note 282. The claim of bondholders would turn neither on a regulatory relationship nor on the actions of a regulated party, but instead on the well-documented reaction of financial markets to FOMC action, the motivation of which is usually to bring about that very reaction.

This distinctive circumstance appears to pit two predilections of the Roberts Court conservative majority against one another—on the one hand, a restrictive view of standing to challenge agency action (or inaction) for anyone not directly regulated or otherwise suffering injury comparable to one cognizable at common law258See Cass R. Sunstein, Injury in Fact, Transformed, 2021 Sup. Ct. Rev. 349, 350 (2022). and, on the other, an expansive view of Appointments Clause requirements and presidential removal prerogatives. While it is obviously impossible to say for sure, I suspect that the conservative majority would incline toward the former position, since the plaintiffs for which it has shown most solicitude are the subjects of regulation.259There is a slightly different note struck in Justice Alito’s opinion in Collins, as discussed in greater detail later in this Article. See infra Section IV.A.1. In rebutting the argument that the FHFA should be distinguished from the CFPB, he acknowledged that the FHFA did not wield regulatory and enforcement authority over purely private individuals. However, he noted that FHFA did regulate the two government-sponsored enterprises that dominate the secondary mortgage market and, as such, “could have an immediate impact on millions of private individuals and the economy at large.” Collins v. Yellen, 141 S. Ct. 1761, 1785 (2021). Obviously that description applies to the FOMC as well. One should probably not place too much weight on this comment for purposes of a standing determination, though, insofar as the impact of FHFA decisions on the plaintiffs in its role of conservator created the kind of direct economic injury that Justice Alito had already classified as a “prototypical” form of injury-in-fact. Apart from the Court’s abstract preferences, though, one thing is certain. If, for whatever reason, the Court does not want to take on the merits of such a case, it has a ready means for avoiding the issue by taking a narrower view of standing.

2.  Claims Other than Economic Harm from Monetary Policy Actions
i.  Congressional Standing

Three of the four D.C. Circuit cases included a claim of congressional standing.260Melcher v. Fed. Open Mkt. Comm., 836 F.2d 561, 562 (D.C. Cir. 1987); Riegle v. Fed. Open Mkt. Comm., 656 F.2d 873, 874 (D.C. Cir. 1981); Reuss v. Balles, 584 F.2d 461, 464–65 (D.C. Cir. 1978). Reuss also included a claim to standing as a private citizen. Id. In the first, Reuss v. Balles, the court rejected the argument of the Member of Congress that he had standing because he was deprived of his constitutional right to initiate impeachment proceedings against a Reserve Bank president.261Reuss, 584 F.2d at 464–65. Because Representative Reuss was a member of the House, he could not rely more directly on the advice and consent role of the Senate. Reuss also claimed that his powers as a member of the Legislative Branch were usurped by an unconstitutional delegation of the Article I power to “coin money.” Id. at 465. As the court noted, that circumstance would not have been changed even had all members of the FOMC been subject to Senate confirmation. Id. In the second case, Riegle v. FOMC, the Court assumed that Senator Riegle had standing, because a violation of the Appointments Clause deprived him of his Constitutional right to advise on, and consent to, officer appointments.262Riegle, 656 F.2d at 877. I say “assumed” because, in acting on a motion to dismiss, the Court expressly construed the complaint in the manner most favorable to the plaintiff. Id. The court provided no analysis of the basis for Senator Riegle’s claim of standing. Id. However, the Court ruled that “[w]here a congressional plaintiff could obtain substantial relief from his fellow legislators through the enactment, repeal, or amendment of a statute, this court should exercise its equitable discretion to dismiss the legislator’s action.”263Id. at 881. In the third case, Melcher v. FOMC, the court simply invoked the Riegle equitable discretion ground for dismissal, without conducting its own standing analysis.264Melcher, 836 F.2d at 562. The court spent a good bit of its opinion trying to clarify that, contrary to what had been suggested in Riegle, the availability of congressional standing did not depend in any way on whether private standing to assert a similar constitutional claim was available to any plaintiff.

The Supreme Court’s decision in Raines v. Byrd265Raines v. Byrd, 521 U.S. 811, 829 (1997). very likely resolves the standing issue raised in Reuss, Riegle, and Melcher against the legislators in those cases. Raines involved a challenge by six legislators to the constitutionality of the Line Item Veto Act, which allowed the President to “cancel” specific spending authorizations or tax benefits in subsequently enacted legislation. The legislators argued that a line item veto violated the Article I bicameralism and presentment requirements and, thereby, “divest[ed]” them of their constitutionally protected role in repealing legislation.266Id. at 816. The majority opinion by Chief Justice Rehnquist rejected their claim of injury, holding that “individual members of Congress do not have a sufficient ‘personal stake’ in this dispute and have not alleged a sufficiently concrete injury to have established Article III standing.”267Id. at 830. The Court believed the injury was “institutional,” rather than personal.268The court easily distinguished the one precedent cited by the legislators, where the plaintiffs had been a group of “legislators whose votes would have been sufficient to defeat (or enact) a specific legislative Act . . . on the ground that their votes have been completely nullified.” Id. at 823. The precedent in question was Coleman v. Miller, 307 U.S. 433, 456 (1939).

The injuries alleged in the three suits against the FOMC are fairly clearly “institutional” as the Court used the term in Raines. The Court characterized any claim that is not “personal,” such as entitlement to the congressional seat itself or receipt of salary, as institutional, because it “ran” with the status of being in Congress and would not be retained when the Member left that body.269Raines, 521 U.S. at 821. The prerogatives of adopting Articles of Impeachment, or advising and consenting in connection with appointment of an officer of the United States, belong to the full House and Senate, respectively. And, for all the twists and turns in standing doctrine in the intervening years, the Court recently reiterated that after Raines, “individual members lack standing to assert the institutional interests of a legislature.”270Va. House of Delegates v. Bethune-Hill, 139 S. Ct. 1945, 1953 (2019).

Might a majority of the House or the Senate have standing under the Raines doctrine, as elaborated in subsequent cases, to complain that the presence of Reserve Bank presidents on the FOMC deprives that house of its unique constitutional powers?271In an aside of uncertain significance, the Court noted that it “attach[ed] some importance to the fact that appellees have not been authorized to represent their respective Houses of Congress in this action, and indeed both Houses actively oppose their suit.” Raines, 521 U.S. at 829. Maybe, but not very likely.272The organizational hurdle to such a case has been substantially diminished, at least with respect to the House of Representatives, by the creation and progressively increased authority of the Bipartisan Legal Advisory Group, a five-member committee that is authorized to bring suit on behalf of the House based on a majority vote. See Ben Miller-Gootnick, How the House Sues, 2021 U. Ill. L. Rev. 607, 607 (2021).

In the first place, the one circumstance in which the Raines Court envisaged legislative body standing was when an action in another part of government had “completely nullified” its vote.273Raines, 521 U.S. at 823. While the Court did not explain the scope of “complete nullification,” the two cases in which it found institutional legislative standing (one before and one after Raines) involved situations in which an executive branch official determined the outcome of a tied legislative vote274Coleman v. Miller, 307 U.S. 433, 438 (1939). or a voter initiative removed the authority of a legislature to determine legislative districts.275Ariz. State Legislature v. Ariz. Indep. Redistricting Comm’n, 576 U.S. 787, 787 (2015). While one might argue that the denial of the opportunity to vote on articles of impeachment of a presidential nomination also “completely nullified” the relevant house’s vote, the absence of an intervening action by a non-legislative actor distinguishes an FOMC challenge from those prior cases.

Relatedly, Raines did not stipulate that institutional legislative standing would be found even if both houses of Congress had authorized challenges to a line item veto. The Court pointedly noted that its denial of standing did not “deprive[] Members of Congress of an adequate remedy (since they may repeal the Act or exempt appropriations bills from its reach).”276Raines, 521 U.S. at 829. In one recent D.C. Circuit case, which was later vacated as moot, the Court found institutional standing where there was the theoretical possibility of a veto-proof majority of Congress passing legislation to forbid an allegedly unconstitutional Executive Branch expenditure.277U.S. House of Reps. v. Mnuchin, 976 F.3d 1, 4 (D.C. Cir. 2020), vacated sub nom. Yellen v. U.S. House of Reps., 142 S. Ct. 332 (2021). This case involved a challenge to the Trump Administration’s transfer of funds appropriated for other purposes to supplement a congressional appropriation for building a wall on the border between the United States and Mexico. The three-judge panel did not use the language of “nullification” in applying what it deduced as the test emerging from the Supreme Court’s cases. Instead, it asked whether “the defendant’s action curtail[ed] the power and authority of the [House].” Mnuchin, 976 F.3d at 12 (emphasis added). But even this somewhat expanded view of legislative standing, assuming its acceptance by the Supreme Court, still involved an action in another part of government that “nullified” the effect of a congressional vote.278The D.C. Circuit has also granted standing to six House members on the Committee on Oversight and Reform, who sought to enforce their statutorily granted right to obtain information related to property owned by the U.S. government. The court ruled that a rebuffed request for information is a sufficiently particularized injury for a legislator that there was no requirement that the House, or even the Committee as a whole, bring the suit. Maloney v. Murphy, 984 F.3d 50, 54 (D.C. Cir. 2020), vacated sub nom. Carnahan v. Maloney, 143 S. Ct. 2653 (2023). Again, whatever the receptivity of the Supreme Court to this “informational” exception for individual legislators, it would not be helpful to a legislative challenge to the constitutionality of the Federal Reserve Act. In the FOMC context, the Court might well return to the point that Congress itself has created the situation of which one House complains, with no intervening action by anyone to undermine the original congressional vote (or a future one).279An additional point is that both of the cases in which the Court found legislative standing involved state legislative bodies. In Raines the Court cautioned that separation of powers considerations at the federal level might well make the hurdle for congressional standing higher. 521 U.S. at 824 n.8. Indeed, the point is further made by the identity of the likely defendant in such a case—the FOMC itself. The FOMC has surely done nothing to interfere with, much less nullify, congressional prerogatives.

As with so many strands of standing doctrine, Raines and its progeny have been vigorously criticized from different perspectives.280See, e.g., Matthew I. Hall, Making Sense of Legislative Standing, 90 S. Cal. L. Rev. 1, 22–23 (2016); Jonathan Remy Nash, A Functional Theory of Congressional Standing, 114 Mich. L. Rev. 339, 354–58 (2015); David J. Weiner, The New Law of Legislative Standing, 54 Stan. L. Rev. 205, 233–34 (2001); Note, Standing in the Way of Separation of Powers: The Consequences of Raines v. Byrd, 112 Harv. L. Rev. 1741, 1752–58 (1999). And there have been indications that legislative standing may be available in certain other circumstances, such as to defend the Constitutionality of a statute where the Executive declines to do so.281For a review of these other areas, see generally Wilson C. Freeman & Kevin M. Lewis, Cong. Rsch. Serv., R45636, Congressional Participation in Litigation: Article III and Legislative Standing (2019). In Maloney, the Court of Appeals found standing for a group of members of congressional oversight committees under 5 U.S.C. § 2954, which authorizes a minimum number of members of one of those committees to obtain information pertaining to its jurisdiction from any executive agency. In a split decision, the court concluded that this “informational interest” was more personal than institutional, and thus standing was not foreclosed by Raines. 984 F.3d at 54. Whatever the merits of that decision, it is not relevant to the issue of standing for individual members of Congress to contest the constitutionality of properly enacted legislation. But there has been no indication that the Court would be receptive to a claim of standing when members of Congress challenge the constitutionality of a statute validly enacted into law. A search for a nonlegislative government actor that has “nullified” a congressional voting prerogative will come up empty in a prospective challenge to any of the potential Constitutional infirmities associated with the FOMC. As a result, even if one or both houses of Congress voted to initiate such a challenge, the Court would likely find standing lacking.

ii.  Private Actions Against Reserve Banks

Recall that in Custodia Bank the plaintiff financial firm argued that the Reserve Bank president was a principal officer. Because the Reserve Bank’s denial of a master account to Custodia was a particularized harm that gave it standing, it could include this structural constitutional argument along with its administrative law claims.282While disputes over access to Federal Reserve services have occurred in the past, the emergence of financial firms involved with crypto assets and other innovative technologies has elevated the importance of this issue and, with it, the number of possible plaintiffs with standing to challenge the status of Reserve Bank presidents. David Zaring has suggested another possible plaintiff with standing to raise structural constitutional issues pertaining to the FOMC—the primary dealers with which the Federal Reserve conducts its transactions in government securities. David Zaring, Law and Custom on the Federal Open Market Committee, 78 Law & Contemp. Probs. 157, 182–83 (2015). As Zaring himself notes, it is hard to see the incentive of an existing primary dealer to challenge the hand that feeds it. In any case, there is no regulatory relationship between the FOMC and the primary dealers. The Federal Reserve Bank of New York actually maintains the relationships, since it implements FOMC directives. The Bank characterizes them as “business, not regulatory.” Federal Reserve Bank of New York Policy on Counterparties for Market Operations, Fed. Rsrv. Bank of N.Y. (Apr. 25, 2023), https://www.newyorkfed.org/markets/counterparties/policy-on-counterparties-for-market-operations [https://perma.cc/KZM3-ZR3E]:

The Federal Reserve Bank of New York’s relationships with private sector counterparties described in this policy are business, not regulatory, relationships entered into by the New York Fed for the purposes described herein. That a firm is a New York Fed counterparty is not an endorsement of the firm by the New York Fed and should not be used as a substitute for independent analysis and due diligence by other parties considering a business relationship with the firm.

Id. If a firm chooses not to continue as a primary dealer, with the benefits it brings, the Federal Reserve Bank of New York would no longer have any authority to enforce the contractual expectations it has established for its relationships with the dealers. Perhaps, though, a financial firm that unsuccessfully sought primary dealer status could, like Custodia in the master account context, claim that the president of the Federal Reserve Bank of New York is a principal officer.
In dismissing that claim, the court found that the Reserve Bank president was an inferior officer properly appointed by the Board. But its conclusion was built on the facts of that case—the undoubted power of the Board to remove her and at least the suggestion that the Board had successfully influenced her decision. Might a similarly situated future plaintiff import the arguments for Reserve Bank presidents being principal officers in the monetary policy context, as discussed in Part II.B.2? Possibly, but there are some hurdles.

First, there is the question of whether the Reserve Bank president’s action is an exercise of “executive power” to which Article II requirements attach. In Custodia, the district court noted that the standard for deciding the case was whether granting a master account “constitutes the execution and enforcement of the Federal Reserve Act.”283Custodia Bank, Inc. v. Fed. Rsrv. Bd. of Governors, 640 F. Supp. 3d 1169, 1190 (D. Wyo. 2022). But the court made clear it was not definitely deciding that actions on master account applications are executive functions as a matter of law.284Id. Instead, it observed that Custodia had “plausibly alleged” this to be the case.285Id. at 1186. Presumably because of its view that the Reserve Bank president was an inferior officer, the Court did not believe it needed to resolve the executive power issue.

In its motion to dismiss, the Board had argued that granting a master account was incident to the taking of deposits from banks and other financial institutions, a function that Reserve Banks are authorized (but not required) by the Federal Reserve Act to perform.286Board of Governors Motion to Dismiss, supra note 129, at 4–5; 12 U.S.C. § 342 (“Any Federal reserve bank may receive from any of its member banks, or other depository institutions . . . deposits of current funds in lawful money . . . .”). The Board seemed to be arguing that the granting of master accounts—and, by extension, the provision of other services by Reserve Banks—falls on the private, operational side of the public-private hybrid created by the Federal Reserve Act. Indeed, the Board explicitly invoked the precedent of the First Bank of the United States for the proposition that a “decision on whether to open an account at a government-affiliated bank is not the type of sovereign power implicating the [Appointments] Clause.”287Board of Governors Motion to Dismiss, supra note 129, at 40. Thus, we are directed to the question of how history may be relevant for assessing the constitutionality of Federal Reserve practice. As will be discussed shortly, the answer to that question cannot readily be derived from existing Court precedents. See infra Section III.C.1. This characterization is belied somewhat by the Board’s own explanation that it was developing guidelines to promote consistency in master account decisions across the Federal Reserve System, because “access decisions made by individual Reserve Banks can have implications for a wide array of Federal Reserve System . . . policies and objectives.”288Proposed Guidelines for Evaluating Account and Services Requests, 86 Fed. Reg. 25865, 25866 (proposed May 11, 2021). This aim itself suggests that, in making decisions on master accounts, Reserve Bank presidents do “exercis[e] significant authority pursuant to the laws of the United States.”289Buckley v. Valeo, 424 U.S. 1, 126 (1976) (per curiam).

Regardless of a plaintiff like Custodia Bank’s success on the executive power issue, the second hurdle would likely prove more formidable. The very fact that its claimed injury has nothing to do with monetary policy decisions, or the FOMC as such, might well foreclose the plaintiff from arguing that Reserve Bank presidents are principal officers because of their role on the FOMC. In Seila Law, the Court stated that, “[i]n the specific context of the President’s removal power, we have found it sufficient that the challenger ‘sustain[s] injury’ from an executive act that allegedly exceeds the official’s authority.”290Seila Law LLC. v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2196 (2020) (quoting Bowsher v. Synar, 478 U.S. 714, 721 (1986)). As explained earlier, this standard removes the need for a plaintiff to show that the official or agency would have made a different decision in the absence of for-cause protection. But it retains a required link between the injury and the official’s authority. A disappointed applicant’s injury is related to the Reserve Bank president’s statutory authority to accept deposits, under the general supervision of the Board, not from an FOMC monetary policy decision on which the president has voted.

The circumstance here raises a peculiar question: Can a Reserve Bank president be an inferior officer for some purposes (those in which she is acting as head of the Reserve Bank), while being a principal officer for purposes of FOMC monetary policy decisions? The possibility may seem a bit jarring. But perhaps that is a sensible way to parse the anomalous characteristics of the Federal Reserve System generally, and the Reserve Bank presidents in particular. In any case, if standing to challenge the FOMC role of Reserve Bank presidents is denied plaintiffs like Custodia Bank, chances are that courts will never need to decide the question one way or another.

iii.  Presidential Removal of a Reserve Bank President

A third possibility is that the President could attempt to remove a Reserve Bank president, much as President Roosevelt attempted to remove Commissioner Humphrey in the confrontation that gave rise to Humphrey’s Executor. While the procedure by which the President would execute this effort is not entirely clear, given that the Reserve Bank president is not an employee of the U.S. government, presumably an actual case or controversy would eventually be joined. Undoubtedly, the putatively deposed Reserve Bank president would have standing to challenge her removal, thereby bringing the Article II issues front and center. While the legal issue is clear, the circumstances under which the President might be tempted to initiate a confrontation of this sort, with its potential for economic uncertainty, are probably quite limited.

C.  The Federal Reserve as Exceptional

While a relatively low probability outcome, there is at least some chance that a bondholder could successfully argue for standing to challenge the role of Reserve Bank presidents on the FOMC or the breadth of monetary policy discretion granted the FOMC in its statutory mandate. Alternatively, if the Court applies the logic of Seila Law in future cases involving traditional independent agencies, a plaintiff appealing a regulatory action by the Board would have no difficulty establishing standing to challenge the for-cause removal protection of its members. This section explores two, arguably mutually reinforcing, avenues by which the Court might nonetheless find that the FOMC’s pedigree provides it some insulation from contemporary constitutional challenge. One is quite literally the Fed’s pedigree—that is, its arguable ancestry in the First and Second Banks of the United States, which date to the earliest years of the Republic. The other is a simple denomination of the Federal Reserve as “exceptional” or an “anomaly” because of the role of a central bank. There are hints of both these arguments—though no more than that—in opinions by Justices in the current conservative majority.

1.  History

Much of the doctrine on the relevance of historical practice to separation of powers issues—if it can even be called that—predates the consolidation of the conservative majority on today’s Court.291For a review and assessment of the uses of history, see Curtis A. Bradley & Trevor W. Morrison, Historical Gloss and the Separation of Powers, 126 Harv. L. Rev. 411, 411 (2012). See also Curtis A. Bradley & Neil S. Siegel, Historical Gloss, Madisonian Liquidation, and the Originalism Debate, 106 Va. L. Rev. 1, 1 (2020); Richard H. Fallon, Jr., The Many and Varied Roles of History in Constitutional Adjudication, 90 Notre Dame L. Rev. 1753, 1753 (2015). Still, the Chief Justice’s emphasis on what he regarded as the novelty of the for-cause removal protections invalidated in Free Enterprise Fund and Seila Law raises the question whether a long-established agency structure might be tolerated even if the Court’s increasingly muscular Article II doctrines suggest constitutional difficulties. If, that is, a structure is unconstitutional in part because it is novel, then perhaps it may be constitutional if it is longstanding. It should be noted at the outset, though, that there are no examples of the current conservative majority using this reasoning to validate a practice in a separation of powers case—only examples where the purported novelty of practice is said to reinforce questions about its constitutionality.

A threshold question is whether the asserted novelty of the two-level for-cause protection in Free Enterprise Fund and the single-headed independent agency in Seila Law was, in fact, integral to the Court’s conclusions that they were unconstitutional. If the decisions ultimately rested on the Court’s textual extrapolations and its theory of the separation of powers, then the absence of novelty might not save the FOMC (or any other agency). The Chief Justice does not give a clear answer to this question.292Cf. Leah M. Litman, Debunking Antinovelty, 66 Duke L.J. 1407, 1423 (2017) (“[I]t is unclear whether the Court uses novelty as a ‘factor’ in its analysis or as an on-off switch that adjusts whether a statute is presumed constitutional or presumed unconstitutional.”). In Free Enterprise Fund, the direct discussion of novelty was relatively brief and came only after both a lengthy consideration of judicial precedent and some speculation as to the effects of the two-level protection on the President’s ability to take care that the laws be faithfully executed. His reference late in the opinion to then-Judge Kavanaugh’s assertion that the “lack of historical precedent” was “the most telling indication of [a] severe constitutional problem” appeared to “hover[] somewhere between rhetorical dressing and doctrine,” as Neal Katyal and Thomas Schmidt characterized it.293Katyal & Schmidt, supra note 134, at 2145 (quoting Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 537 F.3d 667, 699 (D.C. Cir. 2008) (Kavanaugh, J., dissenting). It may be that the Chief Justice included the novelty point in part to compensate for the shakiness of his reasoning in rejecting the view that, notwithstanding the PCAOB’s for-cause removal protection, the SEC had essentially unlimited control over the PCAOB’s actions, as was argued by Justice Breyer in dissent. Free Enter. Fund. v. Pub. Co. Acct. Oversight Bd., 561 U.S. at 477, 547–49 (Breyer, J., dissenting).

By contrast, the Chief Justice’s discussion of history and novelty is a prominent part of his opinion in Seila Law. It actually precedes his structural analysis. He again quotes the “telling indication” comment and, further echoing then-Judge Kavanaugh’s opinions in the D.C. Circuit, proceeds to distinguish or dismiss the handful of historical precedents of agencies headed by a single director with for-cause removal protection that were cited by the parties and in Justice Kagan’s dissent. But, as in his earlier invocations of an anti-novelty doctrine in Free Enterprise Fund and National Federation of Independent Business v. Sebelius,294Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 549–50 (2012). In the quite different context of the constitutional support for the Affordable Care Act provided by the Commerce Clause, the Chief Justice’s discussion of novelty was remarkably brief. In perhaps his most telling comment, he acknowledged that “[l]egislative novelty is not necessarily fatal.” Id. at 549 (emphasis added). He then quoted the “telling indication” language that had also been quoted in Free Enterprise Fund, Katyal and Schmidt note that the Chief Justice used the rhetoric of novelty throughout his opinion. Katyal & Schmidt, supra note 134, at 2158–59. Whether or not one agrees with their argument that the avoidance doctrine made the anti-novelty doctrine possible, they are manifestly correct that the Court did not “define it carefully . . . defend it with any kind of rigor, or . . . face its full consequences.” Id. at 2149. he does not explain why the absence of historical precedent is problematic. Nor does he specify how, exactly, the purported novelty of the CFPB’s single-director structure fits into his conclusion that it is unconstitutional. He begins his structural discussion by saying that “[i]n addition to being a historical anomaly, the CFPB’s single-Director configuration is incompatible with our constitutional structure.”295Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2202 (2020) (emphasis added). And he certainly gives no indication that a well-established practice might help save an agency structure.

In truth, there is little in the Seila Law opinion to suggest that congressional and executive practice matters to the Chief Justice, except insofar as it confirms his view of far-reaching presidential prerogatives. On the contrary, the trouble he took to narrow the conventional understanding of Humphrey’s Executor might be read to suggest that he attaches little constitutional significance to historical practice by the politically accountable branches of government.296For Chief Justice Roberts, unlike some of his conservative colleagues, past Supreme Court practice does matter, at least to some degree. As the Chief Justice made clear in dismissing Justice Kagan’s argument that the FTC’s authority in 1935 had been quite broad, its actual authority did not matter to him.297Seila Law, 140 S. Ct. at 2200 n.4. All that mattered was the characterization of the agency provided by the Humphrey’s Executor Court.298Id.

One might conclude from Seila Law that novelty matters because it identifies a practice falling outside the narrow bounds of the reinterpreted Humphrey’s Executor (or Morrison, the other “exception” to Myers), but that non-novelty in itself has no validating force.299This is the conclusion Gillian Metzger had reached even before Seila Law. See Gillian E. Metzger, Forword: 1930s Redux: The Administrative State Under Siege, 131 Harv. L. Rev. 1, 19 (2017) (“[N]ovelty can condemn an administrative arrangement, but lack of novelty can’t save it . . . .”). The issues for Chief Justice Roberts may be limited to whether a practice runs afoul of his conception of the Myers “general rule” and, if so, whether the Court deigns to extend the two narrow exceptions created by those two cases. Indeed, the discussion of novelty may be little more than a rhetorical device to help mask what might otherwise seem a rather aggressive judicial restructuring of the government to the Court’s liking.

Still, as already noted, Chief Justice Roberts does not address the issue of historical practice head-on. And there is a single, tantalizing hint in Seila Law—albeit only in a footnote—that history might carry some significance after all. In rejecting the argument that any prior agencies are relevant precedents for the CFPB, Chief Justice Roberts references Justice Kagan’s point that “financial regulators” have historically enjoyed some insulation from the president.300Seila Law, 140 S. Ct. at 2202 n.8. He responds that “even assuming financial institutions like the Second Bank and the Federal Reserve can claim a special historical status, the CFPB is in an entirely different league.”301Id. He does not endorse the point, but he apparently admits of the possibility.

To supplement the limited inferences on the relevance of historical precedent that can be drawn from recent separation of powers cases, we can turn to another fairly recent case—one that offers a more extensive look at the constitutional relevance of historical practice. National Labor Relations Board v. Noel Canning302NLRB v. Noel Canning, 573 U.S. 513, 519 (2014). relied substantially on past practice in concluding that the Recess Appointments Clause covered vacancies that had arisen prior to a congressional recess.303The appointments at issue were nonetheless voided because the Court found that the Senate was truly “in session” during its pro forma sessions and that a three-day recess was to be too short a time to bring them within the scope of the Recess Appointments Clause. Id. at 549–53. However, with the change in composition of the Court since 2014, Justice Breyer’s majority opinion is likely of limited value in predicting how history might influence the disposition of the constitutional issues raised by the FOMC’s structure and mandate.304It is perhaps noteworthy that when Chief Justice Roberts in Seila Law and then-Judge Kavanaugh in PHH Corp. cited the Noel Canning majority opinion, it was not to the lengthy part of the opinion in which Justice Breyer found that historical practice had validated the use of the recess appointment power for vacancies occurring before the recess commenced, but for the holding that practice also established that three days was too short a period for the power to be operative. Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2201 (2020) (noting that a “few scattered examples” shed little light on the question); PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 182 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting). Justice Scalia’s stinging concurrence in the judgment, joined by the Chief Justice and Justices Thomas and Alito, is almost surely more relevant in projecting when and how the current Court may credit history and practice.305One would expect that Justices Kavanagh, Gorsuch, and Barrett will align much more closely with the Scalia view than with Breyer’s.

A good portion of Justice Scalia’s opinion addressed disagreements with the majority that are not especially salient for present purposes—whether the Recess Appointments Clause is ambiguous and whether there was any textual basis for the majority’s conclusion that a three day intrasession congressional break was not a “recess.”306Noel Canning, 573 U.S. at 575–83 (Scalia, J., concurring). Addressing the cases cited by Justice Breyer to support the weight he gave to historical practice, Justice Scalia countered that “[n]early all involved venerable and unchallenged practices, and constitutional provisions that were either deeply ambiguous or plainly supportive of the practice.” Id. at 574 n.1. He did, however, also spend considerable time contrasting the majority’s approach with his own high threshold for historical practice to affect constitutional interpretation:

Of course, where a governmental practice has been open, widespread, and unchallenged since the early days of the Republic, the practice should guide our interpretation of an ambiguous constitutional provision . . . . ‘But [p]ast practice does not, by itself, create power. . . . That is a necessary corollary of the principle that the political branches cannot by agreement alter the constitutional structure. Plainly, then, a self-aggrandizing practice adopted by one branch well after the founding, often challenged, and never before blessed by this Court—in other words, the sort of practice on which the majority relies in this case—does not relieve us of our duty to interpret the Constitution in light of its text, structure, and original understanding.307Id. at 572–73 (citations omitted).

He went on to note, among other things, that no “[p]residential legal adviser” had opined until 1921 that intrasession recess appointments were constitutional,308Id. at 589. and that it was only after this opinion was delivered to President Harding by his Attorney General “did the flow of intra-session recess appointments start.”309Id. at 590. His observation that “[i]t is necessary to skip over the first 13 decades of our [n]ation’s history”310Id. at 589. underscored his “early days of the Republic” standard. Indeed, to support his narrowly drawn characterization of when historical practice might argue in favor of its constitutionality, he invoked INS v. Chadha,311INS v. Chadha, 462 U.S. 919 (1983). in which “[w]e did not hesitate to hold the legislative veto unconstitutional even though Congress had enacted, and the President had signed, nearly 300 similar provisions over the course of 50 years.”312Noel Canning, 573 U.S. at 572 (Scalia, J., concurring). The Court does not defer to accommodations between the President and Congress, because the structural features of the Constitution were “designed first and foremost not to look after the interests of the respective branches, but to ‘protec[t] individual liberty.’ ”313Id. at 571.

Justice Scalia did not explain why historical practice meeting his fairly demanding standard should receive deference from the judiciary. This omission is unfortunate, because an understanding of the rationale might help in assessing the FOMC’s historical case. Justice Breyer’s majority opinion invoked Madison’s “liquidation” theory in explaining why practice could be relevant to constitutional interpretation—that is, that the “difficulties . . . in expounding terms & phrases necessarily used in such a charter . . . might require a regular course of practice to liquidate & settle the meaning of some of them.”314Id. at 525 (majority opinion) (quoting James Madison’s letter to Spencer Roane of Sept. 2, 1819). Then-Judge Kavanaugh apparently agreed with the liquidation explanation, since he quoted this part of the Breyer opinion in his D.C. Circuit opinions on the CFPB single-director structure.315PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 179 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting); PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d at 1, 24 (D.C. Cir. 2016).

In his Seila Law opinion, Chief Justice Roberts does not use the term “liquidation,” but does nod in its direction by citing the famous debate on removability in the First Congress.316Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2197 (2020). He appears, though, to be nodding toward a narrow view of liquidation, which values the non-judicial explication of ambiguous Constitutional text only when it was “contemporaneous” with the drafting of the Constitution and is thus presumed to reflect its original meaning.317Id. For an explanation of narrow and broader understandings of liquidation, see Bradley & Siegel, supra note 291, at 39–59. Again, though, insofar as the Chief Justice reads that decision of the First Congress to accord with his view that the Constitution gives the President far-reaching removal power,318For criticism of the Chief Justice’s historical reading, see Daniel D. Birk, Interrogating the Historical Basis for a Unitary Executive, 73 Stan. L. Rev. 175, 187–89, 194–97 (2021); Jane Manners & Lev Menand, The Three Permissions: Presidential Removal and the Statutory Limits of Agency Independence, 121 Colum. L. Rev. 1, 21–27 (2021); Jed Handelsman Shugerman, Presidential Removal: The Marbury Problem and the Madison Solutions, 89 Fordham L. Rev. 2085, 2097–98, 2105–08 (2021). it remains unclear whether this history has independent significance or is simply a helpful gloss on his structural analysis.

Assuming that Chief Justice Roberts might grant some relevance to history that cuts against his doctrinal instincts on separation of powers issues, his comments in Seila Law on the prior practice cited by Justice Kagan and the parties appear consistent with the Scalia standard: “[T]hese isolated examples [of agencies with single heads who have for-cause removal protection] are modern and contested.”319Seila Law, 140 S. Ct. at 2202 (emphasis added). While Roberts did not say that a practice had to date back to “the early days of the Republic” to be relevant, he did observe that the Office of Special Counsel, the “first enduring single-leader office,” had been created in 1978, “nearly 200 years after the Constitution was ratified.”320Id. at 2201. He tracked the “unchallenged” component of Justice Scalia’s standard in asserting that President Carter had raised a Constitutional objection, that President Reagan had vetoed a renewal of the office on constitutional grounds, and that President Clinton had “questioned the constitutionality” of the Social Security Administration’s new single-director structure when signing the relevant legislation in 1994.321Id. at 2202. It is not clear that all those constitutional objections by three Presidents actually related to the feature of a single Director removable only for cause. See Sasha W. Boutilier, Simplistic Structure and History in Seila Law, 96 N.Y.U. L. Rev. 1582, 1610–15 (2021). It is certainly true, however, that the Office of Legal Counsel had, without ultimately resolving the issue, noted that the removal restriction for the Commissioner of the Social Security Administration presented a serious constitutional question. See Constitutionality of the Commissioner of Social Security’s Tenure Protection, 45 Op. O.L.C. 1, 1 (2021), https://www.justice.gov/olc/opinion/constitutionality-commissioner-social-security-s-tenure-protection [https://perma.cc/4XMQ-2YYS] (referencing Letter to Lloyd N. Cutler, Counsel to the President, from Walter Dellinger, Assistant Attorney General, Office of Legal Counsel from July 29, 1994). In any case, for purposes of projecting Chief Justice Roberts’s assessment of the FOMC, the accuracy of his history is less important than the point he is making by invoking it.

Although Chief Justice Roberts did not explicitly embrace the “early years of the Republic” norm, his recasting of Humphrey’s Executor suggests that actual congressional practice in creating the Federal Trade Commission Act in 1914 is not dispositive of anything. As noted earlier, all that matters is the characterization of an agency whose principals enjoy for-cause protection that he understands the Humphrey’s Executor Court to have validated. Since the Federal Reserve was created less than a year before the FTC, it seems increasingly unlikely that the early twentieth century lineage of an agency would in itself buy anything with the current Court.322Readers wondering if the nineteenth century Interstate Commerce Commission (“ICC”) provides a hoarier, and thus potentially more convincing, precedent for independent agencies should remember that the ICC as created in 1887 was essentially subordinate to the Secretary of the Interior. Only after the amendments passed by Congress in 1905 was it recognizable as a workably independent agency.

Indeed, one could argue that, for constitutional purposes, the salient characteristic of today’s Federal Reserve—its more or less exclusive, independent authority and discretion to make monetary policy—is even more recent. It did not take shape for two or more decades after passage of the Federal Reserve Act. Both directly and indirectly, Presidents and their Secretaries of the Treasury played a role under the original Federal Reserve Act. It was only in the Banking Act of 1935 that the Secretary of the Treasury and Comptroller of the Currency were removed from the Board.323Banking Act of 1935, ch. 614, Title II, § 203(b), 49 Stat. 684, 704 (1935) (current version at 12 U.S.C. § 241). The story is complicated by the fact that the 1935 legislation also made the Federal Reserve more governmental and less private by clarifying the authority of the Board over the Reserve Banks, see id. §§ 203(a), 204, 49 Stat. 684 at 704, 705 (1935) (current version at 12 U.S.C. §§ 241, 347b(a)), and formally creating an FOMC dominated by the Board. Id. § 205, 49 Stat. 684, 705 (1935) (current version at 12 U.S.C. § 263(a)). This shift might be argued to somewhat mitigate the Article II issues discussed earlier, but it is almost surely not enough to change the basic analysis. President Roosevelt’s roughly contemporaneous decision to take the United States off the gold standard removed what had initially been a notable, if variable, constraint on the Fed’s policy discretion.324For the text of the April 19, 1933, press conference at which President Roosevelt announced that the nation was off the gold standard, see 2 Franklin D. Roosevelt & Samuel I. Rosenman (Compiler), The Public Papers and Addresses of Franklin D. Roosevelt 137–40 (1938). For a more detailed discussion of the various steps taken by President Roosevelt to effectuate the elimination of the gold standard, see Craig K. Elwell, Cong. Rsch. Serv., R41887, Brief History of the Gold Standard in the United States 8–10 (2011); Kenneth W. Dam, From the Gold Clause Cases to the Gold Commission: A Half Century of American Monetary Law, 50 U. Chi. L. Rev. 504, 509–14 (1983). The practical impact of the gold standard on monetary policy varied with macroeconomic conditions. For a thorough treatment of the effect of the gold standard on U.S. economic performance, including monetary policy, see Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919–19­39 (1996), especially at 118–19, 295–97, 324, 326, 346–47, 392–93. Moreover, as a political and institutional matter, as in the early years of the Fed coinciding with the First World War, the Federal Reserve felt compelled through the end of the Second World War to support the Administration’s demand for keeping interest rates low in order to facilitate financing of the war effort. This de facto subservience ended only with the so-called Treasury-Fed Accord of 1951. See Robert L. Hetzel & Ralph F. Leach, The Treasury-Fed Accord: A New Narrative Account, 87 Fed. Rsrv. Bank Richmond Econ. Q. 33, 33 (2001); Clifford, supra note 91, at 229–70. But even then, the Federal Reserve did not have full legal, much less practical, autonomy in setting monetary policy. Two provisions included in 1933 legislation—the Thomas Amendment to the Agricultural Adjustment Act325Agricultural Adjustment Act of May 12, 1933, ch. 25, § 43, 48 Stat. 51 (1934) (codified as amended in 31 U.S.C. § 821). and the Emergency Banking Act326Emergency Banking Act of March 9, 1933, ch. 1, § 4, 48 Stat. 2 (codified as amended in 12 U.S.C. § 95).—gave the President and the Treasury Department authority to make open market purchases of Treasury securities and to regulate all member banks of the Federal Reserve System. Although the Administration did not exercise either of these authorities, they “remained at hand to make the wishes of the Treasury forceful in the councils of the Federal Reserve System.”327Clifford, supra note 91, at 144. For a description of both statutory provisions and their use, see id. at 142–46. On June 12, 1945, Congress terminated the authority of the President and the Secretary of the Treasury, under section 43(b)(1) of the Agricultural Adjustment Act in 1941, to issue United States notes and use such notes to purchase and retire Unites States bonds and other obligations, absent an agreement with the Federal Reserve Board. Act of June 12, 1945, ch. 186, § 4, 59 Stat. 238 (1945).

Assuming that congressional practice from the first half of the twentieth century is not old enough to affect the current Court’s constitutional analysis, do the Banks of the United States nonetheless ground the Fed in practice from the “earliest days of the Republic”? After all, the First Bank was incorporated on February 25, 1791,328An Act to Incorporate the Subscribers in the Bank of the United States, ch. X, 1 Stat. 191, (1791) [hereinafter First Bank Charter]. in the waning days of the very same First Congress whose debates over the removal of presidential appointees loomed so large in the reasoning of Chief Justice Taft in Myers v. United States329Myers v. United States, 272 U.S. 52, 117–19 (1926). and, by extension, Chief Justice Roberts in Seila Law. The answer to that question may depend on how broadly or narrowly the antecedent “practice” is characterized for purposes of deciding if it created a relevant precedent.

If the history is framed narrowly, then the precedents of the Banks of the United States are likely immaterial. So, for example, if the Court asks whether there is an unchallenged practice for two centuries or more of having a mixed committee composed of both government and nongovernment employees with unlimited capacity and discretion to inject fiat money into the economy, and to withdraw it in order to restore price stability, then the answer is clearly no. Both Banks of the United States were chartered directly by Congress as private entities in a way similar to the chartering of corporations by state legislatures at the time—through special acts of incorporation that sought to achieve a public purpose while setting forth many specific powers, constraints, and governance provisions.330For a discussion of the use of such charters by Massachusetts, see Oscar Handlin & Mary Flug Handlin, Commonwealth: A Study of the Role of Government in the American Economy: Massachusetts, 1774–1861 (rev. ed. 1969). Those acts contained neither the mandate nor the authority to conduct monetary policy as we know it today.331There is disagreement among Fed historians as to whether some proponents contemplated the First Bank of the United States conducting quasi-monetary policy. See infra p. 180. The disagreement is described in Richard H. Timberlake, Monetary Policy in the United States: An Intellectual and Institutional History 28–29 (1993). Whatever the intentions of proponents however, it is clear that neither Bank’s charter contained any such mandate. Unlike the Federal Reserve, both Banks competed with state-chartered banks for lending business.332See David Jack Cowen, The Origins and Economic Impact of the First Bank of the United States, 1791–1797, in Financial Sector of the American Economy 50–54 (Stuart Bruchey ed., 2000); see also Bray Hammond, Banks and Politics in America: From the Revolution to the Civil War 199, 283–­85 (1957). Unlike shares in Federal Reserve Banks, shares of the banks of the United States could be (and were) held by non-bank individuals and entities, and could be alienated more or less freely. Both banks had statutory limitations on the size of their balance sheets, in contrast to today’s Federal Reserve, which as a legal matter has no constraints on the amount of its borrowing, lending, or purchases.333Moreover, the directors of the Banks could be held personally liable for violations of this and certain other charter provision. First Bank Charter § 7; An Act to Incorporate the Subscribers in the Bank of the United States, ch. XLIV, § 11, 3 Stat. 271 (1816) [hereinafter Second Bank Charter]. The Second Bank was also subject to an explicit requirement that it not refuse payment in specie (i.e., gold or silver) to any noteholder or depositor, thereby restraining its ability to create money.334Second Bank Charter § 17. For the importance of this provision, see Timberlake, supra note 331, at 32–33.

In short, while the congressional acts of incorporation of the banks did provide for a board that combined shareholder-selected and presidentially-appointed directors, in a manner that roughly foreshadowed the structure of the Federal Reserve, the authority of that board was, to borrow Chief Justice Roberts’s phrase, “in an entirely different league.”335Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2202 n.8. (2020). Interestingly enough, in light of recent Supreme Court decisions, among President Andrew Jackson’s ideas for an alternative to a straightforward rechartering of the Second Bank of the United States was the feature that all directors of the Bank would have to be renominated by the President and confirmed by the Senate each year. See Edward S. Kaplan, The Bank of the United States and the American Economy 111 (1999). Obviously, this would have substantially increased Administration influence over the Bank’s policies and practices. Finally, while the Supreme Court famously held in McCulloch v. Maryland336McCulloch v. Maryland, 17 U.S. 316, 316 (1819). that Congress could constitutionally charter a banking corporation, the Court gave no indication that it was endorsing the delegation of monetary policy to any actors, governmental or nongovernmental. Indeed, the Court assumed that the purpose of the Second Bank of the United States was to facilitate the “fiscal operations” of the government.337Id. at 422.

On the other hand, a broader—but, as a factual matter, equally accurate—characterization of the history could readily lend relevance to the legacy of the Banks of the United States in applying separation of powers doctrines as they are remade by the current Court. Starting less than two years after the country began operating under the Constitution, the objective of ensuring a stable, national currency has periodically led the political branches to create institutions to pursue that objective with a significant measure of operational autonomy from those same political branches. In part to reinforce this autonomy, these institutions have always been public/private hybrids, combining certain government features with contributions of private capital and with a governance structure that includes individuals who are not employees of the government.

When the Banks of the United States were incorporated in 1791 and 1816, respectively, there was no conception of monetary policy as we think of it today to be found anywhere in the world.338See Hammond, supra note 332, at 128. But, as has been regularly noted by economic historians, both Banks engaged in activities to expand or contract the amount of credit being extended in the economy. With the government’s deposits and the Banks’ own capital, they were the dominant financial actor in the country. Like any bank, they could, and did, increase the amount of credit in the economy through their own lending. They also could, and sometimes did, exercise restraint in the interests of a more stable economy by declining to extend more credit, even where profitable opportunities may have been available.339See, e.g., Cowen, supra note 332, at 104–05, 199–­209. At times, though, the Bank might take action designed to protect its own position, rather than serving the needs of the economy more generally. See Timberlake, supra note 331, at 38. The existence of examples of the Banks acting in both their private and the public interests underscores the availability of facts supporting multiple narratives of the Banks’ relationship to modern day central banking. In a rudimentary way they also “regulated” credit creation by the growing number of private, state-chartered banks. This they accomplished not by means of legally binding rules, but by either presenting the notes of those banks with a demand for payment in specie (a credit constraining activity) or by forbearing from doing so, and thereby allowing higher levels of credit in the economy.340See Hammond, supra note 332, at 198­–99, 301, 304–­06; Jane Ellen Knodell, The Second Bank of the United States: Central Banker in an Era of Nation-Building, 1816–1836, 158–60 (2017). By statute, both Banks of the United States were granted the critical privilege of having their bills and notes declared legal tender for “all payments to the United States.”341First Bank Charter § 10; Second Bank Charter § 14. This provision enhanced the money status of the Banks’ notes across the country by sparing them the discounting to which the notes of state banks were frequently subject, especially in locales far removed from the banks.342See Knodell, supra note 340, at 89–92. Finally, it is worth noting the contemporary references to the Banks as “public” banks and the fact that the basis for Chief Justice Marshall’s opinion in McCulloch was that Congress had created the Second Bank as a “necessary and proper” adjunct to the exercise of its governmental powers.343In Osborn v. Bank of the United States, 22 U.S. 738, 861 (1824), a later case involving the jurisdiction of the federal judiciary to hear cases involving the Bank, Chief Justice Marshall elaborated on his reasoning in McCulloch and stated explicitly that the Bank was a “public,” not a “private” corporation, “created for public and national purposes.” Id. at 860. Of course, neither McCulloch nor Osborn described the Bank in terms we would recognize as describing a modern central bank.

The governance of both Banks was even more weighted to the private side than the original Federal Reserve, and certainly than today’s Federal Reserve. In the First Bank, the twenty-five directors were elected annually by a plurality of shareholders, with no more than three-quarters eligible for re-election the following year. The U.S. government had the right to,344First Bank Charter § 11. and did, acquire twenty percent of the ten million dollars in stock that was set by statute as the capital ceiling for the Bank. With the reduced weighting of votes for owners of larger numbers of shares required by the Act of Incorporation,345Id. § 7. The Act specified that the stockholders obtained progressively fewer votes for the number of shares they held (e.g., one vote for every two shares up to ten shares, but then only one additional vote for every four shares between ten and thirty shares). There was an absolute limit of thirty votes per stockholder (including any government stockholders). the government would not have been able to dominate formal governance of the Bank in any case. However, the government waived its voting rights,346See Edwin J. Perkins, American Public Finance and Financial Services 1700–1815, in Historical Perspectives on Business Enterprise 236 (Mansel G. Blackford & K. Austin Kerr eds., 1994). thereby ceding any formal governance role altogether (though economic historians have argued that the influence of the Secretary of the Treasury on the Bank’s operations was nonetheless significant).347This argument is especially put forward with respect to the early years of the First Bank of the United States. See Cowen, supra note 332, at 143–53. The Act of Incorporation of the Second Bank required, rather than simply authorized, the government to acquire twenty percent of the shares.348Second Bank Charter § 6. It also provided for the President to appoint five of the twenty-five directors annually, with the advice and consent of the Senate.349Second Bank Charter § 8.

In short, the legacy of the Banks of the United States can be characterized as establishing an American practice of using a public-private hybrid financial institution to manage the monetary affairs of the country, in accordance with the needs of the day. If the Court were to choose this relatively broad framing of the history of the Banks, it would probably have already decided against finding the FOMC unconstitutional. Still, it is worth asking how historical “practice” as so understood measures up against the Scalia formulation in Noel Canning.

Scalia’s limitation of history’s value to cases involving an “ambiguous constitutional provision”350NLRB v. Noel Canning, 573 U.S. 513, 572 (2014) (Scalia, J., concurring). does not seem especially problematic here. There is no constitutional text defining inferior officers or addressing delegations of congressional authority or granting the President the power to remove officials. All are judge—or, more accurately, Justice—made doctrines whose specifics can be refined as the Justices choose, perhaps in part because of the significance of history. The Appointments Clause, of course, is a part of the Constitution. But that text presents no difficulties for the FOMC so long as the Reserve Bank presidents are considered inferior officers.

The requirement that the practice have been “open” seems less applicable to statutory enactments, which are by definition publicly known. Nor does a requirement that a practice be “widespread” apply to legislation in the same way that actions by the Executive such as recess appointments do.351In Noel Canning, Justice Scalia was concerned with the potential for presidential aggrandizement through practices that were constitutionally questionable but perhaps difficult for Congress collectively to resist. Id. at 593. Obviously, that is not the concern where the issue is the extent of the President’s removal power. Once legislation is passed, it is law. But might the Court translate “widespread” from the context of Executive practice into a requirement that a legislated practice have been in effect more or less continuously since its implementation in the early years of the Republic? The charters of both Banks were allowed to lapse, one by congressional inaction and the other by presidential veto. There was an interval of three quarters of a century between the demise of the Second Bank in 1836 and the passage of the Federal Reserve Act in 1913.

Moreover, neither the Banks nor the FOMC have been “unchallenged.” The controversy over the constitutionality of the First Bank gave rise to the famous debate among the Founders, pitting Madison and Jefferson against Hamilton as all three vied to influence President Washington’s decision whether to veto the Bank bill. Controversy over the Second Bank produced one of the landmarks of constitutional history. Later, in his message vetoing the Second Bank, President Jackson argued it was unconstitutional not only by indirectly relitigating the Court’s decision in McCulloch,352As Jerry Mashaw has pointed out, Jackson did not directly question the validity of the Court’s holding in McCulloch. Rather, he argued that the Court had held the Bank was constitutional because Congress had concluded it was a necessary and proper adjunct to exercise of a power explicitly granted in Article I. Jackson went on to enumerate the reasons he (in wielding his veto as part of the Article I legislative process) did not regard a renewal of the Second Bank’s charter as necessary and proper. See Jerry L. Mashaw, Administration and “The Democracy”: Administrative Law from Jackson to Lincoln, 1829–1861, 117 Yale. L.J. 1568, 1592–93 (2008). but also by asserting that the Congress had unconstitutionally delegated its own authority to the Bank by granting it an effective monopoly.353This is not to say that President Jackson is necessarily persuasive. He essentially argued that the Constitution provides in only a few cases—such as patents and trademarks—for Congress to grant a monopoly over restrictions on “trade or exchange.” Since Congress, in Section 21 of the Act of Incorporation of the Second Bank, had forbidden itself from establishing any other bank during the term of the Second Bank’s charter, Jackson urged that Congress had thereby exceeded its constitutional powers by restricting its own action. This is obviously a different kind of non-delegation argument from those advanced in the last hundred years—one that arises from the act of granting an exclusive privilege through an act of incorporation. However, as President Jackson himself demonstrated in withdrawing U.S. government deposits from the Second Bank, it is not at all clear just how much Congress had restricted the prerogative of the political branches. As discussed earlier, the FOMC itself has been challenged in litigation by legislators.

Even as some of Justice Scalia’s requirements are not germane to legislation, so there may be qualifications on the significance of historical practice that apply only to legislation. Most relevant here is that the “monetary policy” function of the Banks of the United States, as described earlier, was not authorized in either Bank’s Act of incorporation. It was the heft and reach of the Banks that enabled them to permit or restrain credit growth by state banks. While Congress had enabled this rudimentary credit regulation practice through providing for a large capitalization and by allowing branching, it had neither asked nor authorized the Banks to fulfill that function. Accordingly, one might argue, whatever monetary policy power the Banks might have possessed de facto was of no consequence for deciding constitutional practice, which is determined by the formal pronouncements and actions of the three branches of government established by the Constitution.

There are, in turn, rejoinders to these qualifications on the strong legacy account: As to a reformulation of “widespread” as “continuous,” James Madison himself eventually came to believe that the creation and existence of the First Bank had liquidated the question of its constitutionality. Extending this acknowledgement, one might argue that once the constitutionality of a governance device or delegation is established through practice, subsequent congressional choices for other means of achieving policy aims do not remove the precedential value of that practice. Congress is free to return to it as circumstances change. Similarly, with respect to the “unchallenged” point, it would be odd if constitutional objections by political actors themselves fatally undermine a piece of legislation, especially one that the Court itself has found constitutional. Under the logic by which standing was denied to some of the congressional challengers in the cases discussed earlier, their objections do not carry any constitutional weight beyond that which would apply in a private party’s challenge. Finally, while neither Act of incorporation of the Banks called upon them to regulate the credit practices of state banks, the issue of ensuring sound money—in part through exercising control over state bank note issuance—was central to the debate over (and support for) the Second Bank.354See Hammond, supra note 332, at 233–43.

2.  The Federal Reserve as Anomalous

A second route by which the Court might find the FOMC exceptional is to declare it so. Peculiar as that might seem as the stated basis for a judicial conclusion, consider then-Judge Kavanaugh’s possibly revealing aside in his dissent from the en banc decision of the D.C. Circuit in PHH Corporation v. Consumer Financial Protection Bureau.355PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 75 (D.C. Cir. 2018) (en banc). Responding to the CFPB’s argument that the Chair of the Federal Reserve is not removable except for cause, Judge Kavanaugh first correctly noted that the matter is not at all clear from the language of the Federal Reserve Act.356While the Act specifies the term of Members of the Board as fourteen years “unless sooner removed for cause,” the following sentence specifies the four-year terms as Chair or Vice Chair for officials who are also members of the Board. 12 U.S.C. § 242. That second sentence neither contains a similar for-cause provision nor indicates explicitly that the President has plenary removal power. Id. He then went on to say that, even if the CFPB were correct, that attribute of the Federal Reserve Board Chair was not pertinent to a decision on the CFPB:

But even assuming the CFPB’s assertion is correct, such an exception would simply reflect the unique function of the Federal Reserve Board with respect to monetary policy. The Chair of the Federal Reserve Board would be akin to what Justice Breyer in Noel Canning referred to as an historical anomaly—here, an anomaly due to the Federal Reserve’s special functions in setting monetary policy and stabilizing the financial markets.357PHH Corp., 881 F.3d at 192 n.17 (Kavanaugh, J., dissenting).

So, the Federal Reserve may be an “anomaly.”358Id. Given that this comment was in a footnote, it is perhaps not surprising that Judge Kavanaugh did not explain it any further. It seems unlikely that, in upholding the constitutionality of the FOMC, the Court would simply declare it anomalous without further explanation. But his remark is a good starting point for projecting what this escape route might look like.

To begin with, of course, the fact that an agency feature is an anomaly does not in itself validate that feature. A law authorizing the Senate Finance Committee to choose the Secretary of the Treasury without the involvement of the President or the rest of the Senate would certainly be anomalous. It would equally certainly be held unconstitutional. So what is it about the Federal Reserve that might make its anomalous status acceptable?

Judge Kavanagh did refer to the Federal Reserve, or at least the possible status of its chair, as a “historical anomaly.”359Id. It is not altogether clear if Judge Kavanaugh meant that the Federal Reserve is, historically, an anomaly or that it is an anomaly because of its history—in the sense of longevity or pedigree. If the answer is that banking and credit played an unusually prominent role in constitutional and policy debates in the early days of the Constitution, then we revert to the analysis in the preceding section. But because he says that the Federal Reserve is an anomaly due to its “special functions in setting monetary policy and stabilizing the financial markets,”360Id. he may be implying that something about those functions could justify agency features that would be struck down elsewhere.

One possibility is that Judge Kavanaugh, and perhaps other conservative colleagues, simply regard the Federal Reserve as too important to mess with, as suggested earlier. Whatever its utility as a realist explanation of why the Court may forbear from finding the FOMC unconstitutional, however, the perceived importance of the Federal Reserve is not an argument carrying much doctrinal weight. A rationale more easily grounded in the Court’s conservative doctrines has already cropped up several times in my discussion of recent separation of powers cases: the FOMC does not regulate any private actors. Judge Kavanaugh began his dissent with the same appeal to liberty that we saw in Justice Gorsuch’s Gundy dissent.361“This is a case about executive power and individual liberty.” Id. at 164. Again, “liberty” to these Justices means not just what most people think of as liberty, but also corporate property and profits. That same invocation of liberty appears in Justice Scalia’s Noel Canning concurrence (arguing that separation of powers doctrine is not principally a matter of protecting the prerogatives of the three branches of government, but of guarding liberty).362NLRB v. Noel Canning, 573 U.S. 513, 571 (2014) (Scalia, J., concurring). It is also echoed, albeit with less rhetorical flourish, in some elements of standing doctrine.

If the Court opts to maintain a fairly restrictive standing doctrine for anyone not directly regulated by an agency, perhaps it would extend the rationale for that position to its treatment of a removal, Appointments Clause, or delegation issue that unexpectedly reached the merits. That is, the Chief Justice’s emphasis on accountability and liberty interests in finding removal restrictions unconstitutional in Free Enterprise Fund and Seila Law, and in his somewhat ambiguous Appointments Clause opinion in Arthrex, might lead the Court to give Congress more constitutional latitude in structuring agencies where those interests are not at stake—at least as the Court seems to understand them. Similarly, as noted in Part II, Justice Gorsuch’s suggested non-delegation doctrine appears more permissive where Congress does not empower an agency to “regulate” or “govern” private conduct.363Va. House of Delegates v. Bethune-Hill, 139 S. Ct. 1945, 2139 (2019) (Gorsuch, J., dissenting).

However convincing this approach might be to the Court in considering the FOMC as a monetary policy body, it does not apply to the Board in its non-monetary policy roles. The Board has far-reaching regulatory powers over banking organizations and certain financial market utilities,364For a description of the Board’s regulatory powers, see Fed. Rsrv. Pub. Educ. & Outreach, supra note 15, at 62–82. which as an economic matter are much more significant than those of the CFPB. The Board alone exercises these powers, without the participation of the Reserve Bank presidents. Were Seila Law to prove a forerunner to a broader invalidation of traditional multi-member independent commissions, the non-regulator logic would hardly save the Board and, by extension, its independence as the more important of the two groups that constitute the FOMC. Indeed, insofar as the Chief Justice’s cryptic reference in Seila Law to the Second Bank of the United States and the Federal Reserve contrasted those institutions with the CFPB,365Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2202 (2020). he may have been referring only to their monetary policy and credit extension roles.366It is also possible that the Chief Justice was not aware of the complexities of the Fed’s structure. In academic legal literature, one sometimes sees references to the “Federal Reserve Board” as the entity conducting monetary policy. His description of the CFPB—“a mini legislature, prosecutor, and court, responsible for creating substantive rules for a wide swath of industries, prosecuting violations, and levying knee-buckling penalties against private citizens,” mostly describes non-monetary policy roles of the Board as well.367Seila Law, 140 S. Ct. at 2202 n.8. One might not characterize the Federal Reserve as regulating a “wide swath of industries,” but its scope of powers to set prudential and other requirements for all banking organizations reaches to the heart of those firms’ financial and business models, not just to their relationships with retail customers.

There is a basis for distinguishing the Board from the CFPB and most other agencies. The Board’s regulatory authority over banking organizations is in some sense an extension of its monetary policy authority. If the Court accepts a rationale for the exercise of monetary policy independent of the President, then there may be a derivative rationale for the independence of the Board’s regulatory functions. Moreover, the authority to pay interest on bank reserves held at the Federal Reserve, which has become a principal tool of monetary policy, is lodged solely in the Board.36812 U.S.C. § 461(b)(12). A greatly simplified explanation of how banks “create” money may be useful for understanding this argument.

When, as is usually the case, private banks extend loans to households and businesses by crediting the transaction accounts of those borrowers, they are creating money—“inside money” as it is described in economics.369See N. Gregory Mankiw, Principles of Economics 611–16 (8th ed. 2016); Ricardo Lagos, Inside and Outside Money, Fed. Rsrv. Bank of Minneapolis (May 1, 2006), https://www.minneapolisfed.org/research/staff-reports/inside-and-outside-money [https://perma.cc/CTU4-V6UY]. The borrowers receive in their checking accounts the amount of the loans, which are now available to spend. Meanwhile, no other party (for example, the bank or any of its depositors) has seen a reduction in the amount available for immediate expenditure. Hence the aggregate supply of money in the economy has increased. However, the banks know that the borrowers will spend some or all of their loans, and that other depositors will in the normal course of business be drawing funds as well. So the banks’ money creation function is at least somewhat constrained by its need to maintain sufficient reserves to meet the demands for payment as they are presented in the form of checks and electronic transfer instructions by account holders.370Vault cash is of course a reserve asset as well, but the non-cash transfers that dominate the contemporary financial system are ultimately grounded in the “outside” money (i.e., outside of banks) created electronically by the Federal Reserve.

Traditionally, banks have been regarded as the “transmission belt” for monetary policy. The Federal Reserve used open market operations to increase or decrease the amount of reserves in the banking system by, respectively, buying or selling government securities. The variation in available reserves, in turn, affected the amount and pricing of credit that banks could make available. Up until very recently, the Federal Reserve also imposed minimum reserve requirements on banks to help constrain the growth of the money supply.371With the shift to an ample reserves monetary policy, see infra note 372. The Federal Reserve eliminated minimum reserve ratios in March 2020. Press Release, Bd. of Governors of the Fed. Rsrv. Sys., Federal Reserve Actions to Support the Flow of Credit to Households and Businesses (Mar. 15, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315b.htm [https://perma.cc/E7CQ-BW8G]. For years beforehand, the Federal Reserve’s required reserve ratios had remained unchanged and were not regarded as an important tool for monetary policy. The Federal Reserve’s response to the Global Financial Crisis of 2007–2009 included a massive increase in the amount of reserves, and thus significantly reduced the efficacy of open market operations in influencing the amount and pricing of bank lending.372Once the acute phase of the Global Financial Crisis (“GFC”) began in the fall of 2008, the FOMC quickly reduced interest rates very close to zero in an effort to make liquidity available and borrowing as cheap as possible under severely adverse conditions. However, the FOMC found that monetary stimulus at the “zero lower bound” was still inadequate in the face of the financial and economic disruptions that followed the collapses of Lehman Brothers, AIG, Fannie Mae, and Freddie Mac. The FOMC therefore undertook to purchase very large amounts of government securities in an effort to ease financial conditions further. As a result, the reserves in the banking system (which the Federal Reserve created in order to purchase the outstanding securities) increased enormously. This “quantitative easing” and its aftermath have moved monetary policy from the traditional “scarce reserves” condition to one of “ample reserves.” When, in late 2015, the FOMC increased its target rate for the first time since the onset of the GFC, it would not have been able to achieve that target with the traditional “modest size” of securities sales. Fed. Rsrv. Pub. Educ. & Outreach, supra note 15, at 38. Instead, it used its relatively new authority to pay interest on reserves to influence banks’ lending behavior. Since reserves are by definition risk-free, a bank has no incentive to use its reserves to back lending at less than the Federal Reserve pays on those reserves. Still, the now preferred monetary policy tool of paying interest on reserve balances held by banks at the Federal Reserve has not changed the basic situation: the Federal Reserve uses its reserve policies to affect lending—and thus the creation of money—by banks.373The Federal Reserve has also established an Overnight Reverse Repurchase facility (“ONRRP”), which allows some non-bank financial institutions—principally money market funds—to engage in what is essentially a short-term, interest-bearing deposit with the Fed. Adjustment of the ONRRP rate and changes in the rate paid on bank reserve balances together constitute the “administered” rate approach to monetary policy that has emerged following the GFC.

Through its discount window lending programs, the Federal Reserve makes liquidity available to solvent banks unable to obtain funding from depositors or other private sources.374The Federal Reserve’s description of the discount window explicitly ties the discount window to the purposes of monetary policy:

Federal Reserve lending to depository institutions (the “discount window”) plays an important role in supporting the liquidity and stability of the banking system and the effective implementation of monetary policy. By providing ready access to funding, the discount window helps depository institutions manage their liquidity risks efficiently and avoid actions that have negative consequences for their customers, such as withdrawing credit during times of market stress. Thus, the discount window supports the smooth flow of credit to households and businesses.

The Discount Window, The Fed. Rsrv. Disc. Window (Aug. 28, 2023), https://www.frbdiscountwindow.org/pages/general-information/the%20discount%20window [https://perma.cc/RDW4-3WND].
The provision of liquidity to banks under stress was a principal motivation for the creation of the Federal Reserve—this is what was meant by the phrase “to furnish an elastic currency” in the purpose clause of the original Federal Reserve Act.375Federal Reserve Act, Pub. L. No. 63-43, Ch. 6, 38 Stat. 251 (1913). The classic formulation of lender-of-last-resort policy is that the central bank should make credit freely available to solvent firms upon presentation of good collateral, but at a penalty rate. The penalty referred to, however, is customarily understood to be relative to terms available under normal circumstances—that is, the rate should be such as to disincentivize banks from accessing the discount window when private funding is available. Theoretically, a central bank could make a solvency determination even if it (or other government agencies) did not regulate the specific financial intermediary. In practice, however, a de novo solvency determination in the midst of a financial squeeze would be exceedingly difficult. But this access to liquidity is tied to the far-reaching prudential regulatory authority of the Board. That is, only financial institutions that have been subject to regulations designed to keep them responsibly supplying credit to businesses and households are entitled to the favorable terms of the discount window.376In “unusual and exigent circumstances,” the Board does have authority to provide liquidity to institutions and markets it does not regulate. 12 U.S.C. § 343(3)(A). Exercise of this authority now requires agreement by the Secretary of the Treasury. Id. § 343(3)(B)(iv).

More generally, this prudential authority is important to ensure the stability of the banking system, because problems such as bank runs will disrupt the flow of sustainable credit and thus the aims of monetary policy. The purpose clause of the original Federal Reserve Act included the aim of “establish[ing] a more effective supervision of banking in the United States.”377Federal Reserve Act, Pub. L. No. 63-43, Ch. 6, 38 Stat. 251 (1913). The Act imposed detailed reserve requirements for member banks,378Id. § 19, 38 Stat. 270. which the Board was authorized to temporarily suspend.379Id. § 11(c), 38 Stat. 262. The Board was empowered to examine “the accounts, books and affairs” of each member bank.380Id. § 11(a), 38 Stat. 261. Any state bank that became a member was to be subject to the various statutory requirements already imposed on national banks “and to such rules and regulations as the Federal Reserve Board may, in pursuance thereof, prescribe.”381Id. § 9, 38 Stat. 259.

The prudential authority of the Federal Reserve granted in the original Act was, in effect, a price of membership for banks wishing to benefit from the Federal Reserve’s exercise of its “elastic currency” authority (though any bank wishing to acquire or maintain a national banking charter was required to be a member of the System). In the succeeding decades, both prudential regulation and access to lender-of-last-resort facilities ceased to be a choice for depository institutions. All state-chartered banks became subject to the reserve requirements promulgated by the Board and also gained access to the discount window.382Monetary Control Act of 1980, Pub. L. No. 96-221, § 103, 94 Stat. 133 (1980) (amending § 19(b) of the Federal Reserve Act, codified at 12 U.S.C. § 461(b)). Since passage of the Bank Holding Company Act in 1956,383Bank Holding Company Act of 1956, Pub. L. No. 511, 70 Stat. 133 (1956). the Board regulates and supervises at a consolidated level all holding companies that own insured depository institutions. In the wake of the GFC, Congress gave the Board additional authority, and instructions, to regulate large banking organizations in order to promote financial stability.384Dodd-Frank Wall Street Reform and Consumer Protection Act § 165, Pub. L. No. 111-203, § 165, 124 Stat. 1376, 1423 (2010) (codified at 12 U.S.C. § 5365) (requiring the Board to develop and apply enhanced prudential standards on large bank holding companies).

In short, one could plausibly argue that the function of the Board in regulating private banking organizations is inextricably related to the monetary policy function of the entire FOMC. The banks create money. The Board’s prudential regulation of the banks is thus an indirect regulation of the supply of money and credit. The fact that the Board also provides advantages to regulated banks (for example, interest on reserves and discount window access) further demonstrates that monetary policy, liquidity assistance, and bank regulation are all components of the same enterprise. To subject the Board to discretionary presidential removal would, accordingly, compromise monetary policy independence.

Whatever its policy and economic merits, this argument might well vex the conservative Justices, who may be inclined toward the presumed view of many bankers that prudential regulation is just as much an intrusion on their “liberty” as EPA regulation is on the liberty of chemical plants. There are also some complications internal to the argument itself. For one thing, prudential regulatory authority is shared among several federal agencies. While the Board’s authority over bank holding companies gives it, as a practical matter, regulatory power over the vast majority of U.S. banking assets, a small national or state non-member bank would be regulated only by the Office of the Comptroller of the Currency or Federal Deposit Insurance Corporation, respectively. So the Court might ask whether recognition of a special status for the Board under evolving separation of powers doctrines would need to extend to those other banking agencies. Second, the sustained and substantial growth of non-bank lending has led to a situation in which many institutions outside the prudential regulatory perimeter extend credit, and in some cases effectively create “money” through their lending activities.385For example, retail money market funds are a significant enough source of money creation to be included in the Federal Reserve’s calculation of M2, which is the broader of its two standard measures of the money supply. Money Stock Measures—H.6 Release, Bd. of Governors of the Fed. Rsrv. Sys., https://www.federalreserve.gov/releases/h6/about.htm [https://perma.cc/WVT9-QN8N]. Yet money market funds are regulated by the Securities and Exchange Commission, not the Federal Reserve or the other federal banking agencies. The Board’s regulatory authority is not coincident with the range of private activities that implicate the aims of monetary policy by affecting credit growth and financial stability.

IV.  CONSTITUTIONAL CHOICES

To recap what we have seen thus far: The logic of opinions of conservative Justices in recent separation of powers cases suggests there may be one or more constitutional infirmities in the structure and mandate of the Federal Reserve. At the same time, there are various ways by which the Court could nonetheless avoid a decision that such an infirmity does indeed exist. The working assumption in this paper is that the Court would likely opt for an avoidance route. This last Part details the implications for the conservatives’ separation of powers jurisprudence of each avoidance route, as well as the less likely alternative of deciding that the structure or monetary policy mandate of the Federal Reserve is in action unconstitutional.

A.  Doctrinal Restraint

As should be clear by now, it would take further evolution in one or more existing separation of powers doctrines to place the structure or mandate of the Federal Reserve at significant risk. If none but a very unlikely plaintiff has standing to challenge the FOMC, then the relatively strong argument on the status of Reserve Bank presidents and a potential argument on non-delegation grounds will not reach the merits. And if the Court forbears from holding traditional multimember independent agencies unconstitutional, then the standing readily available to any regulated banking organization cannot undo the removal protection of the Board. The independence of the Federal Reserve would be preserved.

1.  Standing

Long before any of the current Justices were on the Court, the D.C. Circuit applied standing doctrine to preclude challenges to the FOMC from reaching the merits, as recounted in Part III. Thus, even as the current Justices have further restricted standing in other contexts,386See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2198 (2021) (holding that a right created by Congress may create standing only if it is one for which there is “a close historical or common-law analogue”) (emphasis omitted). For assessments of the cumulative effect of the Court’s restrictions on standing, see Erwin Chemerinsky, What’s Standing After TransUnion LLC v. Ramirez, 96 N.Y.U. L. Rev. Online 269, 282–86 (2021); Sunstein, supra note 258, at 362–73. they need not break new doctrinal ground to avoid deciding constitutional issues related to the FOMC. However, in most other contexts, regulated entities will have standing to challenge an agency’s constitutionality when regulatory beneficiaries and interested members of the public do not. Here it is very possible that no one has standing to launch such a challenge, absent the unlikely scenario of the President attempting to remove a Reserve Bank president.387Of course, were the Court to permit a plaintiff such as Custodia Bank to challenge the status of a Reserve Bank president on the FOMC as part of its suit against a Reserve Bank that had denied it access to certain Federal Reserve services, then a much more likely route to an adjudication on the merits would exist. With the concept of a unitary executive, and the associated norm of presidential accountability that is integral to the Chief Justice’s justification of recent separation of powers decisions, it might seem odd for the most powerful independent agency in the U.S. government to be insulated from presidential control solely because no likely plaintiff has standing.

The Court might try to reconcile these two doctrinal strands by embracing the position the D.C. Circuit inferred from that single sentence in Buckley—that is, by holding special separation of powers standing is limited to stating “a regulated entity with sufficiently concrete interests.”388See supra pp. 53–54, 60. The justification for choosing traditional, restrictive standing doctrine over more recent concerns with political accountability of independent agencies is suggested by the argument we have already seen in the removal cases—that separation of powers principles are important only, or at least principally, to protect the “liberty” interests of regulated companies. Here, though, there is some latent tension between statements in the Seila Law and Collins majority opinions.

In Seila Law, Chief Justice Roberts had dismissed the argument that the single-headed Social Security Administration was a precedent for the CFPB by, among other things, noting that “unlike the CFPB, the SSA lacks the authority to bring enforcement actions against private parties. Its role is largely limited to adjudicating claims for Social Security benefits.”389Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2202 (2020). As with so much in in that opinion, this point echoed then-Judge Kavanaugh’s opinions in the earlier CFPB case, in which he had distinguished the Commissioner of Social Security’s for-cause removal protection because that official lacked the unilateral authority to bring enforcement actions against private citizens, “the core of the executive power and the primary threat to individual liberty.”390PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 174 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting).

But in Collins, Justice Alito—who himself is certainly not ill-disposed to the “liberty” argument—observed that the FHFA “could have an immediate impact on millions of private individuals and the economy at large,” even though it does not directly regulate any private individuals and businesses, as the CFPB does.391Collins v. Yellen, 141 S. Ct. 1761, 1785 (2021). Because of the unusual circumstances of that case, the criterion of sheer economic impact was not essential to his conclusion on removability of the FHFA director. Nonetheless, it may fit more comfortably with the formalist notion reflected in the Chief Justice’s opinions that the Constitution requires all exercises of executive power to be subject to some form of direct presidential oversight. Indeed, it was relied on in the Office of Legal Counsel opinion that, despite his statutory for-cause protection, the Commissioner of Social Security could be removed by the President.392See supra note 11 and accompanying text.

There is, of course, no necessary congruence between standing doctrine and the Article II doctrines at issue in these recent cases. Still, a standing decision today would be made against the backdrop of a very different separation of powers jurisprudence from that which prevailed four decades ago when the D.C. Circuit ruled on the challenges to the FOMC. A denial of standing to the hypothetical bondholder in Part II would have the substantive effect of limiting the Court’s Appointments Clause and removal doctrines.

Such a decision would align with the special solicitousness of the current Court for regulated entities, as opposed to beneficiaries of regulation. In that sense it would reflect the Court’s ideological leanings. As a practical matter, it would be of much greater importance for the Federal Reserve, precisely because most other statutorily independent agencies do regulate private actors. But it would not require a break with precedent. Furthermore, in the specific context of the FOMC, the de facto substantive character of restrictive standing would not obviously favor either end of the political spectrum. One can readily imagine a more permissive standing doctrine producing challenges from the left seeking more presidential control over inflation-fighting central bankers, and from the right seeking to remove the discretion of the FOMC to balance employment growth and price stability in making monetary policy decisions.

2.  Independent Agencies

Unlike a continuation of restrictive standing doctrine, the Court’s reaffirmation of the traditional understanding of Humphrey’s Executor would be received as very significant. Against the experience of the last decade and the changes in the Court’s composition, such a development may seem unlikely. A declaration that today’s multimember independent agencies violate Article II would permit the Court’s conservatives to pursue their goal of a unitary executive, but to do so through decisions that generally will have limited immediate impact, and thus elicit less popular blowback. The day after the Court’s decision, the agencies would function as they did before, except that they would labor under the tacit—and at times perhaps not so tacit—threat of removal if they do not follow the President’s wishes in their rule-making, programmatic, enforcement, and adjudicatory activities.

For the Court’s conservatives to pass up this opportunity, the Chief Justice and at least one other Justice would need to see good reasons not to apply the logic in parts of Seila Law in deciding a head-on challenge to a traditional independent agency. What reason or combination of reasons might they find convincing? A premonition that condemning those agencies to Executive subservience might indeed produce a significant public reaction, despite the absence of immediate policy change? Second thoughts about undoing nearly a century and a half of settled practice, and substituting their own views for those of so many Congresses and Presidents? A bit of uneasiness at the prospect of the jurisprudential gymnastics that might be needed to save the Board, and perhaps a few other favored agencies, for which a finding of unconstitutionality would produce significant economic or political repercussions?

Whatever its possible motivation, a decision reaffirming Humphrey’s Executor would signal, if not quite a cease fire, then at least a pause on one front of the Court’s campaign against the administrative state. It might be accompanied by an escalation on the other front, resulting in more “major questions” limitations on agency authority and perhaps a straightforward application of the non-delegation doctrine to strike down part of an agency’s statutory authority. But, at least with respect to the structure of government, it would be an accommodation to the transformation that took place in the first third of the twentieth century. In that sense, it would at least somewhat echo the accommodation by the Court’s conservatives in the 1930s.

This stance might well be interpreted in the way Professors Randy E. Barnett and Larry Solum interpreted the first stirrings of the Court’s anti-novelty sentiments—as an embrace of a “this far and no further” approach to evaluating congressional experimentation with agency independence.393Randy E. Barnett, No Small Feat: Who Won the Health Care Case (and Why Did So Many Law Professors Miss the Boat)?, 65 Fla. L. Rev. 1331, 1348 (2013); Lawrence B. Solum, How NFIB v. Sebelius Affects the Constitutional Gestalt, 91 Wash. U. L. Rev. 1, 52 (2013). Their suggestion, grounded in a version of originalism, was that novelty in and of itself was not a constitutional argument, but that decisions of the Court such as National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012), instead were premised on the inconsistency of a congressional enactment with the original meaning of the Constitution. They further suggested that the Roberts Court had more or less accepted the expansions of congressional power during the New Deal (and later, as sanctioned by the Warren Court), but that it would not countenance any further expansion inconsistent with the original meaning—an “originalist second best,” as Solum termed it. Id. at 54. This was a very plausible reading of the Roberts Court in 2013 and may turn out to be plausible still. However, the reasoning in Seila Law and the change in composition of the Court inject some doubt as to the continuing viability of their interpretation. It may limit the range of options to those exercised by Congress through the 1930s but would pull up short of a complete imposition of the Court’s favored organization of government.

B.  Federal Reserve as Exceptional

Were the Court unexpectedly to liberalize standing or open the door to challenging traditional multi-member agencies, it would need to address the merits. In that event, as discussed in Part III, it might distinguish the Federal Reserve from other agencies in applying its evolving separation of powers doctrines. This section considers the implications of a decision upholding the mandate and structure of the Federal Reserve.

1.  History

The discussion of the history-based avoidance strategy in Part III explained how the Court can effectively determine the outcome of its analysis by the way it defines the practice for which historical validation is sought. By defining the practice in general terms—such as seeking a stable national currency through creating institutions with significant operational autonomy—the Court could vindicate the structure and mandate of the Federal Reserve. By defining it more narrowly—a mixed committee composed of both government and nongovernment employees with unlimited capacity and discretion to inject fiat money into the economy, and to withdraw it in order to restore price stability—the eighteenth and nineteenth century experience with the Banks of the United States becomes irrelevant. In fact, that narrow characterization of the Federal Reserve’s structure and mandate is not even a description of the original Federal Reserve in 1914 and arguably does not become so for decades following passage of the Federal Reserve Act.394See supra pp. 10–12.

Faced with a decision on the constitutional merits, the Court might well opt for the broader characterization of the “practice” that was arguably liquidated by the creation of the Banks of the United States. But doing so, while producing the sensible outcome in that case, would raise a different question: Might the congressional practice not be fairly characterized even more broadly—as insulating additional recipients of extensive delegated statutory authority from full control by the President? If the two Banks provide precedent for today’s Federal Reserve because, despite all their differences, they were congressional creations with substantial autonomy, why do they not also serve as precedent for other such institutions, including today’s agencies such as the FTC and FCC? In creating those agencies, Congress endorsed the proposition that they too needed some degree of insulation from presidential politics and favoritism.

Of course, the early Congresses did not create independent regulatory commissions; they successively chartered two independent Banks that served public functions, including an early form of what today is called monetary policy. So perhaps the relevant precedent is limited to that substantive area—“monetary policy and stabilizing the financial markets” as then-Judge Kavanaugh expressed it.395PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 192 n.17 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting). Again, though, why? It would be one thing if, during that same era, Congress had legislated on other economic issues and uniformly delegated regulatory functions to entities wholly subservient to the President. But that is not what happened. The forms of economic regulation pioneered by Congress beginning in the late nineteenth century just did not exist in 1789 or 1816.396While there were no other entities we would recognize as independent regulatory agencies, Congress had in fact endowed various agencies performing other functions with considerable independence. See Jerry L. Mashaw, The American Model of Federal Administrative Law: Remembering the First One Hundred Years, 78 Geo. Wash. L. Rev. 975, 984–85 (2010). There was no railroad system to be regulated, no awareness of a radio spectrum to be allocated, no internal combustion engine to pollute the air and overheat the planet. There were not even monopolies, except perhaps those created by the states.397The only other contemporaneous governmental economic regulation that even approaches the importance of money was the tariff, a key subject of another of Alexander Hamilton’s seminal commentaries on the economic circumstances of the new nation. See Alexander Hamilton, Alexander Hamilton’s Final Version of the Report on the Subject of Manufactures, Founders Online (Dec. 5, 1791), https://founders.archives.gov/documents/Hamilton/01-10-02-0001-0007 [https://perma.cc/RK4Z-E6VF]. Administration of the tariff was lodged in the Treasury Department and thus fully subject to political control. See Carl E. Prince & Mollie Keller, The U.S. Customs Service: A Bicentennial History 35–67 (1989). But the history of the tariff is no more compelling as a supposed precedent for what came later than the Banks. In the first place, although the tariff was from the start bound up with debates over the protecting U.S. industry from foreign competition, its most important function was as the dominant source of revenue for the federal government. Second, presumably because of its importance as a revenue measure, Congress itself made all policy decisions in periodic tariff legislation that set specific tariffs in great detail. Third, the early decades of customs administration were characterized by extreme patronage politics and corruption, which eventually produced a measure of insulation for customs employees (though they remained within Treasury). Id. Fourth, there is certainly nothing in the history of the early tariff acts and the creation of tariff districts to suggest that Congress considered, and rejected on constitutional grounds, an independent customs service.

The history of the regulation of money, and the various institutional arrangements created by Congress to perform this task, is indeed a complicated one. One can discern broad trends, especially since the founding of the Federal Reserve, whose authority has become decidedly more governmental and mostly more independent over time. The very complexity of that history—from Alexander Hamilton’s proposals, to the Banks, to the experiment with congressionally created currency during the Civil War, to the formation of the Federal Reserve, to the removal of the gold standard, to the New Deal overhaul of the Fed’s structure, to the addition of the dual mandate—suggests how reactionary it would be for the Supreme Court to override the decisions Congress and the President have made. Those decisions, as included in the Federal Reserve Act and updated most recently in 2010, have been made as prevailing economic and political concerns changed. For the Court to impose its view on the basis of a separation of powers theory nowhere stated in the text of the Constitution would seem the height of judicial imperialism.

As compelling a reason as this complex story of money regulation is for deferring to the political branches, the position of the Federal Reserve relative to other agencies is an accident of history. Even in a predominantly agricultural economy, the development of a reliable and uniform currency was an important issue for the fledgling national government. The only reason Congress could grant a measure of autonomy to money-related institutions and not to the other agencies we know today was that those other problems associated with the economy were either unknown or of such trivial importance in 1800 as not to be worth Congress’s time. So, yes, the pedigree of the Federal Reserve is unusual, if not unique. But that distinction from other agencies is not necessarily a good reason to parse the scope of congressional authority under the Necessary and Proper Clause in a qualitatively different way.

Noel Canning involved the interpretation of a discrete constitutional text—the Recess Appointments Clause. Both Justice Breyer’s opinion for the majority and Justice Scalia’s concurrence in the result were focused on the history of a well-defined practice that was recognized as such from the outset by the Presidents who made the appointments and by the Congresses that acquiesced in them (or did not, depending on your perspective). The Congresses that chartered the Banks of the United States had no idea that their actions could be relevant to the constitutionality of an independent commission to allocate the radio spectrum. The demarcation of the precedent—or liquidation, for those who prefer the Madisonian term—that was created by those Congresses is thus necessarily a task for those participating in today’s debates. As such, whether the Court defines the practice in need of historical precedent narrowly, somewhat more broadly, or very broadly is itself a policy choice.

2.  Nature of Central Banking

In discussing removability doctrine, Justice Kavanaugh characterized the Federal Reserve as anomalous because the Fed has “special functions in setting monetary policy and stabilizing the financial markets.”398PHH Corp., 881 F.3d at 192 n.17. Well, yes, and the FCC has special functions in regulating access to the airwaves. The FTC has special functions in protecting consumers. The Securities and Exchange Commission has special functions in protecting investors and assuring the smooth operation of capital markets. And, in fact, the CFPB itself has the “special functions” of ensuring that consumers understand financial commitments and protecting them from unscrupulous lenders.

So why might the Federal Reserve’s “special functions” be more special than those of these other agencies, so as to justify agency features that would be struck down elsewhere? Here, the fact that the FOMC does not regulate any private actors, which we have seen multiple times as a possible distinction, does not really fit with the concept of “special functions.” Additionally, of course, the Board does regulate private actors. Some academics who favor more independence for the Federal Reserve than for other agencies offer what has become the standard argument for central bank independence—that a central bank subject to political control will be pushed toward accommodative monetary policy when helpful to the incumbent Administration’s electoral or other political needs, regardless of possible medium term effects in the form of high inflation.399Sunstein & Vermeule, supra note 9, at 98; Lawrence Lessig & Cass R. Sunstein, The President and the Administration, 94 Colum. L. Rev. 1, 107 (1994); Geoffrey P. Miller, The Unitary Executive in a Unified Theory of Constitutional Law: The Problem of Interpretation, 15 Cardozo L. Rev. 201, 216 (1993). Sunstein and Vermeule extend their point about the dangers of over-concentrating power in the President beyond the Federal Reserve, suggesting—as I have—that the allocation of broadcast licenses by the FCC raises similar concerns. Sunstein & Vermeule, supra note 9, at 98. That is a good argument, to be sure, though it leaves open the question of just how to strike the balance between operational independence and accountability in a democracy.

Whatever the policy merits of this argument, however, it is not grounded in the Constitution. There is nothing there stating, or even implying, a different separation of powers principle for central banking. On the contrary, the constitutional controversy over the two Banks of the United States, those early avatars of a central bank, was resolved in a Supreme Court decision that rested on the Necessary and Proper Clause, a part of the Constitution that today’s conservative majority often glosses over. There was no reason to think the congressional discretion derived from that Clause applied any less to its implementation of any other explicit Article I power. Nor does anything in Article II suggest otherwise. There is no textual basis to conclude, for example, that Congress may grant independence to the Federal Reserve because of the importance of keeping near-term politics out of monetary policy, but that it may not grant independence to the FCC if it believes that near-term politics should be kept out of allocating broadcast licenses.

In her Seila Law dissent, Justice Kagan noted that, up until recently, the Court has nearly always left issues of agency structure and relative independence to the Congress.400Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2224 (2020) (Kagan, J., dissenting). She made that point in the context of arguing that the Court should similarly have refrained from finding a separation of powers problem in the single-headed structure of the CFPB. As Sunstein and Vermeule argue, in doing otherwise and striking down the for-cause protection of the Director, the Seila Law majority opinion reflected a set of ideas and preferences about government that cannot be derived from the originalist approach to which the conservative justices say they subscribe. Were the Court later to exempt the structure or mandate of the Federal Reserve from the doctrines it has been crafting, its policy preferences would be more obviously on display. While that would be true of any decision giving the Fed special treatment, one that carved out the Board—despite its extensive regulatory powers—from an otherwise applicable prohibition on traditional multimember independent agencies would highlight the Court’s policy preferences in especially sharp relief. In finding historical precedent for allowing, for example, the Federal Reserve but not the FCC to be insulated from presidential control, the Court will be picking favorites from among the creations of Congress.

C.  Finding of Unconstitutionality

Although my expectation is that at least two of the Court’s conservatives would refrain from finding the structure or mandate of the Federal Reserve to be unconstitutional, one cannot have full confidence in that assumption. Given the scope of some of its recent decisions and the limited regard of at least some Justices for stare decisis, one cannot rule out entirely such a finding. To the degree that the non-disruptive approach described above was attributable to Chief Justice Roberts’s status as the swing vote on the Court prior to Justice Ginsburg’s death, rather than to congruent views of the other conservative Justices, it is obviously less secure. The divergence between the approaches of incrementalism and sweeping change was on full view in the Court’s decision in Dobbs v. Jackson401Dobbs v. Jackson Women’s Health Org., 142 S. Ct. 2228 (2022). In Dobbs, five of the conservative Justices voted to overturn Roe v. Wade. Chief Justice Roberts concurred only in the judgment; he would have found the Mississippi statute at issue in the case to be constitutional, but he would not have gone so far as to overturn Roe completely. Id. at 2310–11 (Roberts, C.J., concurring). overruling Roe v. Wade.402Roe v. Wade, 410 U.S. 113 (1973), overruled by Dobbs, 142 S. Ct. 2228 (2022). Still, one or more other conservative members of the Court may be more concerned with the immediate impact on the economy associated with a ruling against the Federal Reserve than they were to the upending of abortion rights in many states. Justice Kavanaugh, in particular, comes to mind, both because of the pains he went to in Dobbs, 142 S. Ct. at 2309­–10 (Kavanaugh, J., concurring) to confine the implications of his vote and because of his specific reference to the “anomalous” character of the Federal Reserve in his D.C. Circuit opinions in PHH. PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 174 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting). So too, the possibility of an escalation of the offensive against the administrative state has likely increased. Accordingly, it is worth noting the implications of a negative outcome for the Federal Reserve.

The implications for the Court’s separation of powers doctrine would vary depending on the specific basis for a ruling of unconstitutionality. They would be least significant if the ruling was based on the Appointments Clause issue with Reserve Bank presidents. Even if the ruling disrupted the economy,403Even the economic impact of a finding against the Reserve Bank presidents might be manageable. As noted in Section III.A., a decision invalidating the participation of Reserve Bank presidents on the FOMC would surely create some uncertainty in financial markets. But if it left the Board intact and independent, market actors might conclude after some reflection that there would be substantial continuity in the Federal Reserve’s monetary policy. This outcome is particularly likely if, as has been true for some time, a solid majority of the Board supports the Chair’s policy direction. the Court could craft an opinion with few implications for the rest of the government. The circumstance of nongovernmental employees sitting on a powerful policymaking committee is unique to the Federal Reserve. While the decision might have an impact on policy roles for government corporations, as in the Amtrak case, it would have little relevance for traditional multi-member independent regulatory agencies. Indeed, the most consequential part of this hypothesized decision might be the expansion of the special standing rules for separation of powers cases that might be necessary in order to reach the merits.

On the other hand, a decision that the mandate of the FOMC or the for-cause removal protection of the Board was an unconstitutional delegation would have broad legal, as well as economic, repercussions. It would effectively signal that there were no limits to the Court’s redesigning of the federal government in accordance with its own views of the best relationship among the branches.

A finding that the Fed’s dual mandate for monetary policy was an unconstitutional delegation would either follow or presage the invalidation of a host of statutory authorities—not just of independent agencies, but probably of agencies within the Administration as well. Any delegation that requires an agency to balance different policy aims could be at risk. In addition, the Court would be faced with the remedial dilemma of either effectively terminating the FOMC or rewriting the Federal Reserve Act. The former option would produce economic chaos. The latter is certainly possible. As discussed in Part II, the Court might elevate price stability to a single mandate, requiring no balancing of inflation against growth. In that event, the Court would have overtly adopted the policy preference of some economic conservatives, thereby reinforcing suspicions that the Court has become an essentially political institution.404Were the Court disposed to invalidate the dual mandate, an alternative path would be to interpret the statutory language in a way that effectively read out the distinct goal of maximum employment. That is, the Court would invoke the substantive canon of constitutional avoidance in declaring that only by reading the statute this way could it be upheld as constitutional. The FOMC would be left with the single goal of price stability. In either case—a finding of unconstitutional delegation or a distorted reading of the Federal Reserve Act—in practice the outcome might nonetheless leave the FOMC with de facto discretion to take employment and growth considerations into account. In such circumstances, assuming liberalized standing, private actors might challenge FOMC decisions as inconsistent with the Court’s ruling. At that point, the Court would have to decide if it would get into the business of reviewing monetary policy decisions, something that Judge Augustus Hand, on behalf of the eminent panel including his cousin Judge Learned Hand and Judge Thomas Swan, shunned nearly a century ago. Raichle v. Fed. Rsrv. Bank of N.Y., 34 F.2d 910 (2d Cir. 1929). Additionally, of course, the Court would need to liberalize non-separation of powers standing doctrine in order to permit challenges to monetary policy decisions.

A decision holding that the Board cannot constitutionally be given for-cause removal protection would, again, either follow or presage similar decisions pertaining to other agencies. The Court would have negated well over a century of practice and realized its vision of a unitary executive, eliminating at least the rulemaking functions of independent agencies and perhaps their adjudicatory and programmatic functions as well. As already seen in the cases of the CFPB and FHFA, the impact on most agencies might not be immediately noticeable in policy terms. One would expect, though, that agency principals whose policies were disagreeable to the current President would eventually be removed. Their replacements would presumably be of one mind (the Administration’s) and significant policy changes could ensue. This impact would be even greater if the Court simultaneously struck down partisan balance requirements as a further infringement on unitary executive authority. The result, as Professors Cass R. Sunstein and Adrian Vermeule put it well, would be a “Madisonian nightmare”—a “discretion-wielding, immensely powerful set of administrative authorities concentrated in a single person.”405Sunstein & Vermeule, supra note 9, at 98.

CONCLUSION

Some of the most important opinions authored by Chief Justice Roberts disclaim any intention to set forth rules that could be applied in future cases. Of course, it is nothing new for important Supreme Court cases to raise more questions than they answer. But this result is often the product of opinions whose reasoning is tied closely to the facts of the case, as to which competing principles or values are explicitly balanced. The uncertainty about the implications of those decisions for future cases arises because it is hard to predict how the Court will balance these principles and values in different factual circumstances.

Chief Justice Roberts’s opinions are different. They often articulate broad principles that do not appear actually or potentially offset by other principles of equal importance to the Court. Thus, the peculiar feel of cases like Seila Law and Arthrex, whose sweeping logic can readily be understood to threaten many other agency arrangements established by statute, but whose conclusions rather unpersuasively state that the reasoning is confined to specifics of the case.406Similarly, in West Virginia v. EPA, 142, S. Ct. 2587 (2022), Chief Justice Roberts invoked the potentially far-reaching “major questions doctrine” while declining to give any meaningful guidance as to when that doctrine might be invoked in the future. For early criticisms on this and other grounds, see Natasha Brunstein & Richard L. Revesz, Mangling the Major Questions Doctrine, 74 Admin. L. Rev. 217, 217 (2022); Daniel T. Deacon & Leah M. Litman, The New Major Questions Doctrine, 109 Va. L. Rev. 1009, 1015 (2023). Justice Gorsuch’s dissenting opinion in Gundy also expressed a sweeping principle and left considerable uncertainty as to how it might be applied. Of course, precisely because he was writing a dissent, he did not have the same obligation to address the implications of his reasoning that might be felt by the author of a majority opinion. Moreover, Justice Gorsuch did try to provide at least some guidance as to how his principle would work. The substantial uncertainty that nonetheless results from his opinion is perhaps mostly a function of the inherent difficulty of drawing even a fuzzy non-delegation line, as Justice Scalia had noted two decades earlier. See supra Section II.A. We can only guess as to the reasons for this approach. Perhaps the Chief Justice is trying to move the Court’s doctrine forward in a politically less provocative fashion, while still getting his more uncompromising colleagues to sign on to his opinions. Perhaps he hopes to recapture some legitimacy for the Court by pulling up short of full realization of those controversial principles in future cases. Perhaps he himself does not know how far he is willing to extend the doctrines.

Precisely because the Chief Justice’s principles can capture so much more than the facts of the cases that expressed them, their potential reach can be at least generally extrapolated. In this Article I have used the Federal Reserve to explore the limits of those principles, taking into account other relevant doctrines in opinions written or joined by Justices in the Court’s conservative majority. As a practical matter, a challenge to the constitutionality of the mandate or structure of the FOMC may never be decided on the merits. Yet, even if that remains the situation, working through the implications of the conservative majority’s evolving doctrines is valuable heuristically.

This exercise has revealed the choices from which the Court may need to select in applying its new separation of powers doctrines over time: One is to confine the principles already embraced through introduction of additional, moderating principles. A second is to apply doggedly the logic of those principles by invalidating congressional grants of authority and independence for many agencies. A third is to fashion ad hoc arguments that limit the reach of the new doctrines in particular cases. The first would, in essence, be a welcome retreat from the Court’s campaign against the administrative state. The second would lay bare a judicial appropriation of power from the other two branches of government that might (or might not) produce a destabilizing political reaction. The third would rest not on recognizable judicial standards but on the Court’s own preferences for certain agencies and functions of the U.S. government over others.

97 S. Cal. L. Rev. 1

Download

* Nomura Professor of International Financial Regulatory Practice, Harvard Law School.

Regulation by Enforcement

An increasingly common response by regulators to what they view as undesirable market trends or challenges has been a sharp turn toward litigation to introduce novel legal theories and frameworks that could have been the product or subject of legislative or administrative rulemaking. The decision to do so has been met by calls claiming such administrative action to be unfair, and in some instances, illegal.

This Article revisits the New Deal origins of regulation by enforcement, and its more recent incarnations, and explains that as a legal matter, regulators generally enjoy discretion as to whether to make policy through rulemaking, adjudication, or by filing a lawsuit in federal court. However, there are some exceptions to this principle, as well as some reasons to believe that recent doctrinal developments hostile to agency adjudications could reduce the discretion of agencies to choose their policymaking tool, especially when their actions are understood to be naked attempts to grab turf or circumvent democratic norms embedded in the Administrative Procedure Act. In this Article, we analyze the incentives facing agencies when choosing to regulate by enforcement, consider some of the new risks, and lay out a framework for thinking about when agencies should regulate by rule, and when they should regulate by enforcement.

INTRODUCTION

One visible response by regulators to what they view as persistent—or particularly fast-moving—market challenges has been a sharp turn toward litigation to introduce or test out novel legal theories and frameworks that could have been the product or subject of legislative or administrative rulemaking.1We recognize that regulators often deploy adaptive, innovative regulatory strategies when addressing new technologies and market trends. Our argument here relates to analyzing the tradeoffs between regulation and enforcement, two critical regulatory strategies within the larger regulatory toolkit. On administrative innovation see generally, Hilary Allen, Regulatory Sandboxes, 87 Geo. Wash. L. Rev. 579 (2019) (detailing the deployment of regulatory sandboxes as an administrative technique); Philip J. Weiser, Entrepreneurial Administration, 97 B.U. L. Rev. 2011 (2017) (noting the significance of administrative innovation within the regulatory toolkit). This approach, popularly termed “regulation by enforcement,” prompted fierce critiques from commentators and the marketplace, often from the standpoint of fairness—and based on an implicit assumption that such regulatory conduct might be illegal, or at the very least, politically motivated.2See e.g., Andrew James Lom & Rachael Browndorf, Regulation by Enforcement Takes Center Stage Again for the US SEC, Norton Rose Fulbright (July 2022), https://www.
nortonrosefulbright.com/en/knowledge/publications/df8f5eab/regulation-by-enforcement-takes-center-stage-again-for-the-us-sec [https://perma.cc/F54B-FA8X]; Andrew B. Kay & P. Randy Seybold, Combating Regulation by Enforcement: A Strategic Framework for Responding to State Agency Overreach, Venable LLP (June 2019), https://www.venable.com/insights/publications/
2019/06/combating-regulation-by-enforcement-a-strategic [https://perma.cc/7HSH-XMHW] (noting regulation by enforcement at state-based levels). For an early discussion of aspects of regulation by enforcement within the context of international securities regulation, see generally Paul Mahoney, Securities Regulation by Enforcement: an International Perspective, 7 Yale J. Reg. 305 (1990); Fran Velasquez, CFTC’s Regulation by Enforcement Needs to Change, Commissioner Says, CoinDesk (Oct. 6, 2022), https://www.coindesk.com/policy/2022/10/06/cftcs-regulation-by-enforcement-needs-to-change-commissioner-says/ [https://perma.cc/2QXZ-MKAH].
In response, defenders of agency action have called the criticisms “bogus,” “misguided,” and lambasted politicians, market participants and even academics, for uttering the phrase.3Stephen Katte, Former SEC Chief Blasts ‘Bogus’ Catchphrase: ‘Regulation by Enforcement,’ CoinTelegraph (Jan. 23, 2023), https://cointelegraph.com/news/former-sec-chief-blasts-bogus-catchphrase-regulation-by-enforcement [https://perma.cc/49S9-75DB].

In this Article, we work to give substance to what is all too often a nebulous term of art. In Part I, we provide an overview of how this particular species of regulatory intervention—visible across multiple issue areas such as the oversight of cryptocurrencies, environmental and social governance (“ESG”), insider trading and antitrust—tests certain assumptions about the nature of the administrative state. Specifically, we show that the work of regulatory agencies is traditionally understood as consisting of creative and destructive functions, mapped along axes of rulemaking and enforcement, respectively. Rulemaking by enforcement, however, blurs the lines between the two, both disrupting and supplementing the rulemaking toolkit.4Generally, the term “regulation” derives from the verb to “regulate,” meaning to “govern or direct according to rule.” Regulate, Merriam Webster, https://www.merriam-webster.com/dictionary/regulate [https://perma.cc/B94T-CSBA] (last updated July 30, 2023). In financial regulation, for example, the term regulation typically refers to the establishment of rules and guidelines for overseeing the marketplace. Regulation contrasts with the supervisory function that involves evaluating compliance with applicable rules and ultimately, promoting enforcement. See e.g., What is the Fed: Supervision and Regulation, Fed. Rsrv. Bank S.F., https://www.frbsf.org/education/teacher-resources/what-is-the-fed/supervision-regulation; Supervising and Regulating Financial Institutions and Activities, 5 Fed. Rsrv. Sys. Purposes & Functions 73, 74 https://www.federalreserve.gov/aboutthefed/files/pf_5.pdf [https://perma.cc/BUN6-7WA7] (“Regulation entails establishing the rules within which financial institutions must operate—in other words, issuing specific regulations and guidelines governing the formation, operations, activities, and acquisitions of financial institutions. Once the rules and regulations are established, supervision—which involves monitoring, inspecting, and examining financial institutions—seeks to ensure that an institution complies with those rules and regulations . . . ”); Peter Conti-Brown & Sean Vanatta, Focus on Bank Supervision, Not Just Bank Regulation, Brookings (Nov. 2, 2021), https://www.brookings.edu/articles/we-must-focus-on-bank-supervision/ [https://perma.cc/SW3Q-PG3Y] (“If regulation sets the rules of the road, supervision is the process that ensures obedience to these rules (and sometimes to norms that exist outside these rules entirely). Regulation is the highly choreographed process of generating public engagement in the creation of rules . . . supervision functions as a distinct mechanism of legal obedience—a means by which government or private actors seek to alter bank behavior . . . These mechanisms can be displayed on two axes, between public and private mechanisms, which require the exercise of coercive and non-coercive power.”). Moreover, as discussed in this Article, the regulatory toolkit comprises an array of formal and more informal levers that extend along a continuum of intensity between fulsome rulemaking and enforcement actions. In addition to the hard power visible in rulemaking and enforcement, agencies can deploy “softer,” situational and tailored mechanisms like interpretative guidance, press releases, no-action and exemptive letters, or public statements and speeches that can indicate the direction of agency thinking and regulatory priorities. James Cox, Robert Hillman, Don Langevoort, & Ann Lipton, Securities Regulation: Cases & Materials, Ch. 1(B)(f) (Aspen, 10th Ed., 2021). See generally Tim Wu, Agency Threats, 60 Duke L.J. 1841 (2011) (detailing the increasing use of “threats” or make or enforce a rule as a useful regulatory device to address fast-moving industry trends); David Zaring, Best Practices, 81 N.Y.U. L. Rev. 294 (1996) (highlighting using empirical analysis and increasing use of best practices as an administrative tool). Thus, while creating important opportunities for advancing regulatory priorities, it invariably raises normative questions about its appropriateness as a matter of legal and historical precedence.

In Part II, we take a closer look into rationales explaining why a regulator might choose to create policy by means of enforcement rather than through more traditional rulemaking.5Or by using intermediary measures, such as no-action letters, interpretative guidance, or public statements. To begin, we first identify what “regulation by enforcement” has meant historically, starting with key precedent and decisions introduced at the twilight of the New Deal era, and moving toward more recent iterations in the last quarter century. Next, we identify what can be understood as a spectrum of possible incentives and motivations behind regulation by enforcement. These range from the necessary—where agencies act because they have no other option, such as when notice-and-comment rulemaking is not possible owing to the absence of clear legislative authority—to the optional, where regulation by enforcement (rather than detailed rulemaking) offers a faster or more expedient pathway to exercise or expand oversight. Underlying these motives driving regulation by enforcement, we highlight opportunities for regulators to achieve a variety of laudable goals, such as promoting the realization of their institutional missions, delivering desirable marketplace outcomes in relatively expeditious ways, and offering a statement of intent on the part of authorities about preferred policy positions in a manner designed to arrest misconduct before it can wreak actual damage.6Scholars have increasingly pointed to the challenges regulators confront in determining optimal policy priorities and trade-offs. See e.g., Dan Awrey & Kathryn Judge, Why Financial Regulation Keeps Falling Short (Colum. L. & Econ., Working Paper No. 617, 2020) (noting the high information asymmetries impacting financial regulators in an innovating financial market); Chris Brummer & Yesha Yadav, Fintech and the Innovation Trilemma, 107 Geo. L.J. 232 (2019) (positing a trilemma where regulators are only able to achieve two objectives when balancing market integrity, rules clarity, and financial innovation). However, we also point out other less savory possible incentives to pursuing rulemaking through enforcement, as opposed to through administrative processes, including an interest in reducing or circumventing the transparency and accountability intended by traditional administrative processes, and extending an agency’s authority in ways that might otherwise be impermissible, politically costly or even illegal.7See, e.g., Jennifer Huddleston, Supreme Court Considers Case Against Agencies Run Amok, The Reg. Rev. (Nov. 22, 2022) https://www.theregreview.org/2022/11/22/huddleston-supreme-court-considers-case-against-agencies-run-amok/ [https://perma.cc/A56Z-F2UB]; John Joy, The Race to Regulate Crypto: CFTC vs. SEC, Jurist (Nov. 24, 2021) https://www.jurist.org/
commentary/2021/11/john-joy-crypto-sec/ [https://perma.cc/7UJR-SYTA].

In Part III, we investigate the legality of regulation by enforcement and explore these trade-offs in greater depth. In analyzing applicable case-law, we suggest that its legality is more complicated than scholars and commentators might appreciate. On the surface, the strategy of regulation by enforcement is perfectly legal and stands on solid legal ground—well within the authorization afforded to agencies by governing case law. Looking deeper, however, courts have been silent on a more fundamental question: whether regulation by enforcement is legal when it involves more than filling gaps in administrative and legislative dictates, and it is used as a substitute for detailed rulemaking or, even more extreme, in a way designed to undermine the procedural safeguards put in place to ensure informed rulemaking. With this in mind, Part III then moves to examine the appropriateness (rather than just the legality) of regulation by enforcement. Here, the Article inspects under what circumstances this regulatory strategy is (and is not) in line with normative rule-of-law values that underpin the administrative state, as well as expectations that rulemaking be informed and loyal to the values of legitimacy and procedural fairness.

We observe that regulation by enforcement can enable regulators to achieve a range of positive outcomes. It gives agencies teeth to promote their institutional mandates and to generate confidence among the public that the agency is, in fact, doing the job it is charged to do. Regulation by enforcement can thus create efficiencies in agency administration when it produces sought-after policy results (for example, improved investor protections, more competitive markets) at relatively lower bureaucratic cost (for example, with greater speed and encompassing fewer procedural steps). On the other hand, the strategy can also come with notable shortcomings. When enforcement attempts to circumvent longstanding norms of procedural fairness, informed rulemaking, deliberative analysis, and the quality of the policymaking can be diminished, with lower informational content, shallower expertise, and limited public engagement underlying decision-making.8Letter from John Boozman, Senator, to Helen Albert, acting SEC Inspector General (Mar. 16, 2023), https://www.boozman.senate.gov/public/_cache/files/0/d/0d9ca45c-01d6-4bc1-b284-888f7
79e9d61/9FE27A1BD55965A2C221EB9F8C301CCE.senator-boozman-sec-oig-audit-letter-31623.pdf [https://perma.cc/33KQ-WGW4] (expressing concerns about the significance of preserving procedural safeguards in the notice-and-comment process, and noting that short notice-and-comment periods can be detrimental for the quality of rulemaking. See generally, Yuliya Guseva, When the Means Undermine the End: the Leviathan of Securities Law and Enforcement in Digital-Asset Markets, 5 Stan. J. Blockchain L. & Pol’y 1 (2022) (detailing sub-optimal outcomes from enforcement actions in cryptocurrency markets resulting in a market environment with less information).
Regulatory effects may be scattershot, where high-profile actions target certain actors but leave others alone. These procedural and outcomes-driven effects can mean that regulation by enforcement can end up suffering from a perception of limited legitimacy, increasing the reputational risks to agencies, as well as raising the critique that agency action may be excessively political and not grounded in the rule of law. Regulatory agencies thus risk being viewed as less technocratic and expert and driven more by selfish, rather than public interests. In such cases, concerns can filter into the judicial review mechanism, and ambitious attempts to engage in regulation by enforcement can run around in which courts rule against the government’s position—or even more dramatically, roll back the general authority being asserted by the litigating agency.9Evan Weinberger, CFPB Appellate Ruling Portends ‘Chaos’ in Financial System, Bloomberg Law (Oct. 21, 2022), https://news.bloomberglaw.com/banking-law/cfpb-appellate-ruling-portends-chaos-in-financial-system?context=article-related [https://perma.cc/LBC4-ULJ4] (on the capacity of judicial rulings to entirely defang agency authority and competence); Lauren Feiner, Meta Acquisition of Within Reportedly Approved by Court in Loss for FTC, CNBC (Feb. 1, 2023), https://www.cnbc.com/2023/02/01/ftc-loses-attempt-to-block-meta-acquisition-of-within.html [https://
perma.cc/5VNR-EET6].

Against this backdrop, this Article provides a framework for understanding regulation by enforcement, and examines the historical precedent, legal basis, and tradeoffs that undergird the practice. Throughout, we recognize the complexity of agency decision-making, tasked with maintaining stability, integrity, as well as entrepreneurialism within the market. Our Article situates regulation by enforcement as part of a spectrum of tools deployed by regulators looking to fulfill the demands of their institutional mandates, within tight budgets and under the eye of political critics and an engaged public. As such, the strategy comes with a number of significant advantages and benefits. But it also presents notable risks and costs for advocates of governmental authority, especially given recent Supreme Court decisions on separation of powers jurisprudence that have privileged settled expectations as a check on regulatory innovation.10See e.g., West Virginia v. Env’t Protection Agency, 142 S. Ct. 2587 (2022). See also the Supreme Court’s decision to review the principle of Chevron deference that has traditionally afforded administrative agencies extensive latitude in how they exercise authority. Josh Gerstein & Alex Guillen, Supreme Court Move Could Spell Doom for Power of Federal Regulators, Politico (May. 1, 2023), https://www.politico.com/news/2023/05/01/supreme-court-chevron-doctrine-climate-change-00094670. Rather than taking a particular side—and seeking to overcome the ideological tensions that have polarized discussion on this topic—we offer an account that highlights the legal and normative trade-offs involved, in a bid to contribute to a more thoroughgoing understanding of regulation by enforcement as an administrative phenomenon of the 21st century regulatory state.

I.  THE RULEMAKING/ADJUDICATION DICHOTOMY

The modern regulatory agency has two principal ways to make policy with the force of law.11For discussion of less formal and softer administrative measures, see infra, Section II.B. It can promulgate rules of prospective application and general applicability that interpret the statutory authority given to it by Congress. This is defined in the Administrative Procedure Act as “rulemaking,” and almost always takes the form of “notice and comment” or “informal” rulemaking.125 U.S.C. § 553. “Formal rulemaking,” is an effort to create a rule—policy with prospective application and general applicability—in a courtroom proceeding presided over by an administrative law judge. See 5 U.S.C. §§ 554, 556–57. It is essentially never used in the modern administrative state. See Edward Rubin, It’s Time to Make the Administrative Procedure Act Administrative, 89 Cornell L. Rev. 95, 106 (2003) (arguing that “formal rulemaking has turned out to be a null set”). Alternatively, it can enforce those rules, and its other statutory authorities, through adjudications pursued either through administrative adjudicatory proceedings or by filing suit in federal court—or through informal settlement negotiations with entities charged with illegal conduct.135 U.S.C. §§ 554–57. In this section, we describe the basic implications and processes required to engage in rulemaking and adjudication. We then illustrate them with some examples from the SEC’s halting efforts to regulate cryptocurrencies, which have been undertaken largely through enforcement actions that are adjudicated either by agency officials or in the federal courts, rather than through rulemaking.14For a detailed empirical analysis of the history of enforcement against crypto, see generally Yuliya Guseva, The SEC, Digital Assets & Game Theory, 46 J. Corp. L. 629 (2021) (noting that early enforcement trends showcased an attempt to create greater clarity and certainty, but that this approach has evolved to become more scattershot and predictable, fostering greater distrust between industry and regulators). It should be noted that some discrete proposed rulemaking has been put forward in the area of overseeing custody of investor assets that can extend to include cryptocurrency assets. See SEC Proposes Enhanced Safeguarding Rule for Registered Investment Advisers, Sec. & Exch. Comm’n (Feb. 15, 2023), https://www.sec.gov/news/press-release/2023-30 [https://perma.cc/W8JL-LJK7]. In addition, the SEC and the Commodity Futures Trading Commission (CFTC) have jointly proposed amendments to disclosures made by private funds in Form PF with respect to these funds’ holdings of digital assets. See SEC/CFTC Proposed Amendments to Form PF, Sec. & Exch. Comm’n (Sept. 28, 2022), https://www.sec.gov/files/ia-6083-fact-sheet-0.pdf [https://perma.cc/KD6Z-PWBL]. Finally, the SEC has put out a bulletin (rather than proposed notice-and-comment rulemaking) setting out regulatory stipulations for those providing custody of crypto assets. See SEC Staff Accounting Bulletin No. 121 on Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Platform Users, 17 C.F.R. 211 (Apr. 11, 2022).  In the following section we consider some of the incentives the agency must consider when it decides how, exactly, it should make policy—and what the tradeoffs are of making policy through adjudication—that is, by suing the entities that it regulates, rather than via the rulemaking process.15The SEC looks to have increased its enforcement intensity in the context of crypto-related cases between 2020-2023. In 2021, the agency brought 30 crypto-related enforcement actions, a rise of 50% from 2020 figures. By May 2023, the SEC had brought 13 crypto-related actions, putting it on track to beat 2022 numbers by 25%. The SEC has brought around 30% of its 140 crypto-related enforcement actions between late 2021-mid-2023. For a detailed description and discussion, SEC Crypto Enforcement Actions on Track to Outpace 2022, PYMTS (May. 5, 2023) https://www.pymnts.com/cryptocurrency/2023/sec-crypto-enforcement-actions-could-outpace-2022/ [https://perma.cc/84T5-Y6HS].

Conceptually, rulemaking and adjudication are distinct exercises. Rulemaking can be understood as a “creative act.” It might be analogized to legislation—or at least “legislation” in an agency-specific area subject to a particular set of procedural requirements.16Those requirements are set forth in the Administrative Procedure Act, 5 U.S.C. § 551 et seq. When Congress passes statutes, it is making laws of prospective application and general applicability, as opposed to a backwards-looking individualized determination.17Admittedly, the APA defines rules confusingly, but general applicability and future effect seem to be important: “agency statement of general or particular applicability and future effect.” 5 U.S.C. § 551(4). When making rules, agencies are doing the same thing. Regulatory agencies embark on a process that is intended to be both open to public observation and comment, and that is conducted on the basis of the expertise that the agency can mobilize in developing the rule, both from resources developed within the agency, and from whatever knowledge that can be harnessed outside of it.18Administrative Procedure Act, 5 U.S.C. § 551 et seq.; The Administrative Procedure Act generally tries to strike a balance between transparency and the legal basis to act. When an agency promulgates rules with the force of law, the traditional test is found in Chevron v. NRDC, 467 U.S. 842 (1984); For further discussion, see sources and comments, infra notes 116–126. The agency drafts the rule, publicizes the proposal, seeks and responds to public comment from interested parties, revises the rule, obtains approval for promulgation from the political leaders of the agency, and then publishes the final rule, making it subject to judicial review.19For a much more detailed investigation into this process, see Jeffrey S. Lubbers, A Guide to Federal Agency Rulemaking (6th ed., American Bar Association 2018).

Policymaking through enforcement, by contrast, can be interpreted as more of a “destructive” act. Successful agency litigation stops conduct by a regulated industry, through a cease-and-desist order, for example, a censure, license suspension, or fine.20Office of Administrative Law Judges, U.S. Sec & Exch. Comm’n, https://www.sec.gov/alj [https://perma.cc/992R-TUPS] (discussing sanctions that Administrative Law Judges (“ALJs”) may impose, including “cease-and-desist orders; investment company and officer-and-director bars; censures, suspensions, limitations on activities, or bars from the securities industry. . . [and] civil penalties,” among other sanctions). For a discussion, see David Zaring, Enforcement Discretion at the SEC, 94 Tex. L. Rev. 1155, 1219 (2016). It imposes sanctions in most cases in which the agency wins in court. Agency adjudication is the administrative law version of a judicial proceeding—it looks backwards at conduct that has already occurred and, if it concludes that the conduct violated the law, it imposes penalties.21See Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 744 (2002) (noting the “numerous common features shared by administrative adjudications and judicial proceedings”). As with a judicial proceeding, adjudication begins with an investigation by the agency’s personnel, and then the filing of a lawsuit or an administrative proceeding. The government and the defendants then participate in a process of discovery (usually very limited in the administrative law context), briefings, arguments, and a decision rendered old by an adjudicator as to whether a violation has in fact occurred.22The process, notably, can involve courts and judges both internal and external to the regulatory agency. In the former case, individuals litigate issues in federal court; in the latter, cases can be litigated internally in administrative proceedings, which are increasingly subject to scrutiny and constitutional challenge. See Petition for Review of an Order of Sec. Exch. Comm’n, Jarskey v. SEC, No. 20-61007 (5th Cir. 2022) (No. 20-61007) (holding that held that Congress unconstitutionally delegated legislative power to the SEC when it gave the SEC full discretion to choose whether to bring actions in an Article III court or before an ALJ). https://www.ca5.uscourts.gov/opinions/pub/20/20-61007-CV0.pdf [https://perma.cc/B8N5-M9FH]; Rebecca Fike, Fifth Circuit Issues a New Blow to SEC Administrative Law Judges, Vinson & Elkins (May 19, 2022), https://www.velaw.com/insights/fifth-circuit-issues-a-new-blow-to-sec-administrative-law-judges/ [https://perma.cc/XJF3-LNB3].

As a general heuristic, “rulemaking” refers to an action when an agency behaves like a legislature, and “adjudication” occurs when it acts like a court. However, there are complications. Enforcement through adjudication can take place in courts of law, or in in-house administrative proceedings run by agency officials, the administrative law judges who preside over formal adjudications, or the myriad other kinds of agency judges who decide various kinds of agency adjudications.23As Christopher Walker and Melissa Wasserman have explained, “Some new-world adjudicatory systems handle hundreds of thousands of cases a year, while others handle just a few cases annually. Many are essentially just as formal as APA-governed formal adjudication; others are quite informal.” Christopher J. Walker & Melissa F. Wasserman, The New World of Agency Adjudication, 107 Cal. L. Rev. 141, 143 (2019). See also sources and discussion, supra note 4. And, of course, it can take place through settled enforcement actions. In such cases, the agency is not acting like a court at all, but rather like a prosecutor extracting a plea deal, at times before even bringing a charge.24Lars Noah, Administrative Arm-Twisting in the Shadow of Congressional Delegations of Authority, 1997 Wis. L. Rev. 873, 923 (1997) (“although arm-twisting by agencies is not akin to plea bargaining by prosecutors, there are similar grounds for fearing abuse”).

Crucially, policymaking for the future—which is ultimately, the point of rulemaking—can also take on guises that escape simple dichotomies. In other words, agencies can exercise authority through a sophisticated, “softer” range of levers that, while carrying persuasive and expressive power, wield lesser formal intensity and legal obligation than notice-and-comment rulemaking or adjudication.25Tim Wu, for example, has described agency threats—the threat to make or enforce a rule—as a desirable policy levers, especially within industries that are in a state of change and where there is a high degree of uncertainty within market conditions. Wu, supra note 4, at 1842. Agencies can spotlight their positions using mechanisms like no-action and exemptive letters, interpretative guidance, and even press releases and public statements.26For discussion, Donna Nagy, Judicial Reliance on Regulatory Interpretations in SEC No-Action Letters: Current Problems and Proposed Framework, 83 Cornell L. Rev. 921, 924–27(1998) (highlighting the profound significance of no-action letters for market participants and noting that they are often viewed as formal and legal, but highlighting that they express unofficial informal interpretations). See also, Cox, Hillman, Langevoort, & Lipton, supra note 4; Wu, supra note 4 (highlighting the use of threats as a regulatory device). Noting debates surrounding the ambiguity attaching to the definition of “force of law” in the context of agency interpretations, see discussion and analysis in Lisa Bressman, How Mead Has Muddled Judicial Review of Agency Action, 58 Vand. L. Rev. 1443 (2005). Interpretations of law, and in the case of no action letters, the application of law to specific facts—while avoiding the process of rulemaking—can set expectations and impact market behavior. At the same time, such intermediate measures do not possess the hard finality offered by rulemaking or enforcement. Agency staff can always reconsider positions taken in the letters and adjust course (and even abandon it) when necessary. Indeed, verbiage accompanying such letters makes clear that staff disseminating them speak only for themselves, and not the agency as a whole.27Cox et al., supra note 4; 17 C.F.R § 202.1(d).

Moreover, adjudication can involve the application of law to facts in a way that can result in new interpretations with binding effect on how the law is pertains to like circumstances, effectively creating prescriptive direction for regulators and industry alike.28In this way, adjudication maps along a popular and larger debate in legal philosophy, and the question as to whether judges “find” or “make” law. See, e.g., H.L.A. Hart, The Concept of Law 37 (3d ed. 2012) (noting that “these judgments will become a ‘source’ of law” resembling “the exercise of delegated rule-making power by an administrative body”). Adjudication can, in the process, draw on the soft law tools noted above, like staff guidance or answers to frequently asked questions, all the way to previous formal rulemaking, to create new support structures for the law that themselves carry legal effect.29See United States v. Mead Corp., 533 U.S. 218 (2001) (holding that courts should defer to reasonable agency interpretations of their government statutes only if those interpretations have been promulgated pursuant to a rulemaking or formal adjudication, as then the agency has acted with force of law). Similarly, even findings of fact—like whether certain behavior meets a condition precedent for establishing an illegal act or violation of the law—may involve interpreting and expanding black-letter legal requirements, even as fact-finding ordinarily ranks as the least law-oriented task of an adjudicator.30See Hart, supra note 28, at 97 (observing that if courts can “make authoritative determinations of the fact that a rule has been broken, these cannot avoid being taken as authoritative determinations of what the rules are”).

Securities law offers no shortage of examples illustrating just how consequentially law making can be performed by adjudicators. In what is widely considered to be the most important case for establishing the perimeter of securities law, SEC v. W. J. Howey Co., the Supreme Court (not Congress) defined the bedrock concept of an “investment contract”—a “catch-all” type of “security” falling outside of more traditional categories (for example a stock or a bond).31Congress defined the term, “security,” in the Securities Act of 1933 and gave the SEC the power to regulate investment contracts in the Exchange Act of 1934; the agency and the courts then had to define what counted as an investment contract and what did not. See 15 U.S.C. § 77b(a)(1); 15 U.S.C. § 78c(a)(10). Drawing on prior judicial interpretations of states’ Blue Sky Laws, Howey laid out a broad set of standards with which the SEC would, quite literally, prosecute the shifting parameters of its authority for the next eight decades.32See generally SEC v. W.J. Howey Co., 328 U.S. 293 (1946). For discussion of the historic impact of the Howey test on the marketplace and securities jurisprudence see for example, Miriam Albert, The Howey Test Turns 64: Are the Courts Grading this Test on a Curve?, 2 Wm. & Mary Bus. L. Rev. 1 (2011). It is important to note that SEC staff has issued no-action letters that provide guidance on the application of the Howey test to situations in which promoters are operating within grey areas and in which guidance from the SEC can carry special legal and commercial importance. See, e.g., Re: Pocketful of Quarters, Inc., Response of the Division of Corporation Finance, U.S. Sec. & Exch. Comm’n (July 25, 2019), https://www.sec.gov/corpfin/pocketful-quarters-inc-072519-2a1 [https://perma.cc/KT5T-V44K]; Re IMVU, Inc., Response of the Division of Corporation Finance, U.S. Sec. and Exch. Comm’n, (Nov. 17, 2020), https://www.sec.gov/corpfin/imvu-111920-2a1%5Bhttps://perma.cc/Y8EV-QTUE%5D. The 1946 case, which concerned real estate transactions involving orange groves in Florida, declared that an investment contract arises where there is (i) an investment of money; (ii) in a common enterprise; (iii) for profit; and (iv) derived from the efforts of others.33See supra note 32. This court-created framework was intended to anchor a facts-and-circumstances based analysis, and was flexible enough to apply to situations in which investor-risks arose from novel or new financing arrangements. But in detailing these four prongs in 1946, even the Supreme Court could not have possibly imagined the sheer range of schemes and assets to which the Howey test would eventually be applied, from animal breeding arrangements to contracts for death benefits.34See e.g., Miller v. Central Chinchilla Group Inc, 494 F.2d 414 (1974) (on animal breeding arrangements for chinchillas); SEC v. Mut. Benefits Corp., 323 F. Supp. 2d 1337, 1339 (S.D. Fla. 2004), aff’d, 408 F.3d 737 (11th Cir. 2005) (on life insurance benefits); Albert, supra note 32. Invariably, these individual requirements have each been subject to a multitude of interpretations over time as Howey prongs have been thoroughly litigated by parties contesting the ambit of the market’s regulatory perimeter—and whether a particular kind of issuer should be included, or not.35See also, requests to the SEC for guidance and no-action letters to determine the scope and interpretation of Howey. See supra notes 25–26. See also U.S. Sec. & Exch. Comm’n, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Release No. 81207 (July 25, 2017) (setting out analysis and guidance on the potential application of securities laws to tokens issued by a decentralized autonomous organization (“DAO”)); U.S. Sec. & Exch. Comm’n, Investor Bulletin: Initial Coin Offerings, Investor.gov (July 25, 2017), https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-16 [https://perma.cc/T8LJ-MU8C] (guidance on the application of the Howey test to initial coin offerings (“ICOs”)).

To take one example, the Howey Court itself left unresolved how the common enterprise prong should be interpreted. In other words, it did not lay out specific and exclusive criteria to define what a common enterprise should be, and the elements needed to constitute one. To fill this gap, the lower courts have created different tests for the type and intensity of “common enterprise” required to be found to establish that a contract is an investment contract subject to SEC oversight. In Howey, the common enterprise could be found through the service contract, which gave the servicer “full and complete” possession of the land specified in the contract, and permitted the servicer to pool the investors’ money and to then distribute returns from selling oranges to them on a pro rata basis in accordance with their contribution.36See supra note 35. In this scenario, the Howey contract purchasers enjoyed so-called “horizontal commonality” with one another, as the returns to the investors were pooled and correlated with one another pro rata. When seeking out such commonality, the analysis looks at the relationship between the investors themselves to determine whether they were all facing similarly shared risks, collective action burdens and information asymmetries that could be mitigated by the presence of SEC regulation. 

But courts have also found other kinds of commonality sufficient to satisfy Howey’s common enterprise prong. Specifically, “vertical commonality” examines the relationship between investors and a promoter or issuer.37SEC v. Glenn W. Turner Enterprises, Inc. 474 F.2d 476, 482 n.7 (9th Cir. 1973) (“a common enterprise is one in which the fortunes of the investor are interwoven with and dependent on the efforts and success of those seeking the investment or of third parties”). Vertical commonality can exist even if investors receive diverging returns as among each other (in contrast to horizontal commonality). Some courts have divided vertical commonality into a “broad” and a “strict” variance. In the case of “broad vertical commonality,” investors need not show any kind of intertwined risk between themselves and a promoter as long as they are dependent on the promoter’s efforts with respect to money management (in other words the promoter gets paid regardless of whether investors make money).38SEC v. Koscot Interplanetary, Inc., 497 F.2d 473, 478-479 (5th Cir. 1974); Albert, supra note 32, at 17–19. “Narrow vertical commonality,” on the other hand, requires showing shared risk between the investors and the promoter (that is, the promoter only gets paid if the investors make money).39For a discussion, see Randolph A. Robinson II, The New Digital Wild West: Regulating the Explosion of Initial Coin Offerings, 85 Tenn. L. Rev. 897, 935 (2018); Glenn W. Turner Enterprises, Inc. 474 F.2d at 482 n.7.; Albert, supra note 32, at 17–19.

The common enterprise components of the Howey test affect different securities-adjacent businesses in different ways. Consider cryptocurrencies in their various forms. For example, a crypto-token that is digitally developed by a promoter to raise money for a venture and sold to buyers with the promise of future returns from the business might look like a pretty conventional type of common enterprise.40This kind of transaction broadly describes an ICO. There are, of course, multiple other kinds of crypto-asset transaction types, such as stablecoin issuance. On ICOs, see for example, James Park, When Are Tokens Securities? Some Questions from the Perplexed (UCLA Sch. L., Lowell Milken Inst., Rsch. Research Paper No. 18-13 2018). For a discussion of variety of crypto-asset types and dynamic pathways resulting in token characteristics evolving over time, see Yuliya Guseva, A Conceptual Framework for Digital Asset Securities: Tokens and Coins as Debt and Equity, 80 Maryland L. Rev. 166 (2020). Money is pooled. And the fortunes of the purchasers are linked to each other and to the success of the promoter’s efforts.41SEC v. Int’l Loan Networks, Inc., 968 F.2d 1304, 1307 (DC Cir. 1992). But relatively more “decentralized” cryptocurrencies like Bitcoin look quite different. There is no typical promoter as such.42Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Release No. 81207, U.S. Sec. & Exch. Comm’n (July 25, 2017). That said, purchasers of the crypto-token will see their fortunes rise and fall depending on whether the currency is adopted widely and appreciates in value. Because of this shared state, it may be argued that holders are part of a kind of common enterprise, but one that happens to be a uniquely decentralized one. Does that satisfy the definition of an investment contract? Or does the absence of pooling by a central issuer as well as its apparent absence for the purposes of vertical commonality mean that the definition of common enterprise is unable to reach relatively more decentralized cryptocurrencies? 

The definitions of an investment contract—and interpretations of the Howey test—provide one important example of how SEC enforcement through adjudication can make policy—and why incremental litigation against one sort of coin can still leave important questions unanswered with regard to other kinds of coins.43As noted above, see also, the work of the SEC in guiding policy interpretations on Howey through softer tools like no-action letters. On more informal sources of SEC rulemaking, see Nagy, supra note 26. But additional examples abound of critical policy derived by or generated through litigation.44Interestingly, commentators note that that enforcement actions, alongside settlements, undertaken by the Federal Trade Commission (“FTC”) are resulting in the creation of a novel body of law on privacy and cybersecurity. For example, Daniel Solove and Woodrow Hartzog argue that FTC’s enforcement actions against corporate privacy policies—generally resulting in settlements—have produced what the authors call “a common law of privacy.” Using its authority to policy unfair and deceptive trading practices, the FTC’s enforcement efforts have produced a corpus of agreements that companies look to when crafting their information privacy policies. For a detailed analysis, see Daniel Solove & Woodrow Hartzog, The FTC and the New Common Law of Privacy, 114 Colum. L. Rev. 583 (2014). For a detailed analysis of varying sources of privacy regulation in the United States, see Anupam Chander, Margot Kaminksi & William McGeveran, Catalyzing Privacy Law, 105 Minn. L. Rev. 1733 (2021). For example, it has been courts that have not only defined what counts as “material” information but have also defined its application for industry standards and practice. What a reasonable investor would find important given the “total mix” of information is both a fact based inquiry and court policymaking that, while based on the specific circumstances of litigants in a dispute, ultimately define the outer reaches of securities law and the agency’s jurisdiction.45TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976). The meaning of materiality has thus been worked out through a number of enforcement actions, as well as through other adjudications. For example, the SEC has worried that ordinary investors will not understand the material risks posed by cryptocurrency investments.46See Tyler C. Lee, Decrypting Crypto: Issues Plaguing Today’s Hottest Regulatory Nightmare, 16 N.Y.U. J.L. & Bus. 551, 561–62 (2020) (“SEC Chairman Clayton continues to raise concerns that the material facts and risks involved in cryptocurrencies are beyond the understanding of the Main Street investors.”).

In these instances, the line between “finding the law” and “creating the law” can become blurry as the law intersects with unanticipated, real-world operations of new technologies. Cryptocurrencies offer plenty of obvious examples: do staking services constitute an “investment of money,” where the customer maintains control and ownership of staked digital assets? Does it matter when those wishing to stake their crypto assets do so to protect the integrity and continuity of a blockchain rather than for the reward of additional tokens? Does the presence of a permissioned blockchain, in which participation in its infrastructure is restricted rather than open to all—necessarily mean that its native cryptocurrency is “dependent on the efforts of others”? Can an instrument that begins life as a security become so decentralized in its underlying governance that, eventually, it no longer qualifies as one? And if so, what constitutes the legal inflection point at which this transition occurs? Just as these questions involve the application of long-standing principles to new fact patterns, they can also involve exercising judgment about how entire domains of technology, and their supporting operational systems and transactions should be categorized, and under what circumstances. Thus, they represent issues that could well be clarified as a matter of administrative rulemaking or more informal guidance (for instance, through no-action letters). But at the same time, they could also constitute questions that are sufficiently substantive and related to precedent or statute that they end up being adjudicated in court.47For example, in some foreign legal systems, like that of the European Union, questions such as these have been subject to detailed rulemaking. See, e.g., Justin Williams, Davina Garrod, Peter I. Altman, Ezra Zahabi, Jenny Arlington & Alexander Armytage, EU Close to Introducing Groundbreaking Law to Regulate Crypto, Akin Gump (Oct. 27, 2022), https://www.akingump.com/en/news-insights/eu-close-to-introducing-groundbreaking-law-to-regulate-crypto.html [https://perma.cc/6HXQ-KVCT].

II.  WHY WOULD AN AGENCY SEEK TO CREATE LAW THROUGH ENFORCEMENT?

Regulation by enforcement, while effective in times of crisis, is usually a choice, something regulators have themselves explicitly acknowledged.48See infra note 65. In this section, we review the discretion traditionally afforded to regulators, and the logic behind it. We then explore the criticisms and incentives faced by regulators who choose to engage in regulation by enforcement.

A.  Policymaking by Enforcement: The Historical Endorsement

So, why should agency leadership choose to make policy through adjudication rather relying on a more formal rulemaking process?

Regulators do not spend much time justifying their choice of policymaking tools.49For a detailed discussion on the continuum of regulatory priorities and factors governing the decision-making of the SEC in choosing between adjudication and rulemaking, see generally, Don Langevoort, The SEC as a Lawmaker: Choices About Investor Protection in the Face of Uncertainty, 84 Wash. U. L. Rev. 1591, 1619–622 (2006) (highlighting the impact of a highly motivated, litigation-minded enforcement division as impacting the choice between enforcement vs. rulemaking). But courts have identified reasons why making policy on a case-by-case basis is useful. The traditional view, as we have observed, is that adjudication creates a common law regime where precedents produced by a series of enforcement actions can give regulated industry direction about the concerns of regulators, while giving regulators the flexibility to take a different approach in the next enforcement action.

The case most famously associated with this proposition is Chenery v. SEC.50332 U.S. § 194 (1947). Chenery involved a breakup of a utility company holding company scheme that allowed insiders to control the utility despite having a tiny amount of equity in the enterprise by a pyramid corporate structure. The Supreme Court considered the case twice, and on the first occasion in 1943, invited the SEC to promulgate a rule setting forth limits on minority control through the holding company structure, something to which the dissent objected.51SEC v. Chenery Corp., 318 U.S. 80, 92 (1943) (“Had the Commission, acting on its experience and peculiar competence, promulgated a general rule of which its order here was a particular application, the problem for our consideration would be very different.”). The dissent believed that Congress had given the SEC “wide powers to evolve policy standards, and this may well be done case by case.” Id. at 100.

When the agency declined to do so, the Court, reviewing the case a second time in 1947, took the refusal in stride.52Robert Thompson and Adam Pritchard argue that the embrace in Chenery II of the Chenery I dissent’s indifference between policymaking through rulemaking or adjudication is due to a change in personnel on the Court, resulting in declining influence of Justice Frankfurter, who had been a leading thinker on administrative law at the time. See A.C. Pritchard & Robert B. Thompson, Securities Law and the New Deal Justices, 95 Va. L. Rev. 841, 900 (2009). It held that “the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.”53Chenery Corp., 332 U.S. at 194 (1947). As the Court observed,

Not every principle essential to the effective administration of a statute can or should be cast immediately into the mold of a general rule. Some principles must await their own development, while others must be adjusted to meet particular, unforeseeable situations. In performing its important functions in these respects, therefore, an administrative agency must be equipped to act either by general rule or by individual order. To insist upon one form of action to the exclusion of the other is to exalt form over necessity.54Id.

The idea is that administrative agencies should be able to engage in discrete, incremental lawmaking via litigation if this happens to be their preferred choice. Like common law, where judges are tasked with making rules on a case-by-case basis, adjudication allows courts and agencies to engage in problem-by-problem or issue-by-issue analysis, building on precedent to create a well-established body of law.55See, e.g., Charles H. Koch, Jr., The Advantages of the Civil Law Judicial Design As the Model for Emerging Legal Systems, 11 Ind. J. Global Legal Stud. 139, 160 (2004) (identifying “instances in which the U.S. common law model has captured some of those advantages in its administrative adjudications”). See also Colin S. Diver, Policymaking Paradigms in Administrative Law, 95 Harv. L. Rev. 393, 403–09 (1981) (characterizing common law adjudication as incremental regulation). For the Court, this sort of phased analysis may be appropriate when a rule may not obviously be the best approach or if the risks in implementation are unknown. This scenario may arise if there is a novel administrative scheme, or if the costs and benefits of a particular formal rule may not be clear. In such cases, regulators may decide to establish rules via courts as they recognize shortcomings, as opposed to putting forward an entire regulatory framework from the outset, or so the administrative law traditionalists have put it.56See Diver, supra note 55. On regulatory uncertainties and information asymmetries facing financial regulators, see Awrey & Judge, supra note 6.

The limits to agency discretion, at least by this classical account, are few.57For limitations on deference to administrative agencies, see for example, Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012). In analyzing the scope for deference to rules made by the Department of Labor under the Fair Labor Standards Act, the Supreme Court highlighted the significance of factors like fair notice, procedural fairness, and substantive consistency of promulgated rules with governing statutes. In this case, the Court overturned rules made by the Department of Labor, noting that, in the Court’s opinion, the rulemaking did not comport with standards of procedural fairness and substantive coherence. Most important has been something akin to a regulatory “eye test”: as the First Circuit has put it, “an agency cannot merely flit serendipitously from case to case, like a bee buzzing from flower to flower, making up the rules as it goes along.”58Henry v. Immigr. & Naturalization Serv., 74 F.3d 1, 6 (1st Cir. 1996). Especially when adjudications are made in-house, a showing of very different outcomes for similarly situated cases could form the basis for a conclusion by a court that the agency has been acting arbitrarily, and thus violating basic procedural norms and rules that authorize its work.59Id. (quoting Davila-Bardales v. I.N.S., 27 F.3d 1, 5 (1st Cir. 1994)) (“[A]gencies do not have carte blanche. While a certain amount of asymmetry is lawful an agency may not ‘adopt[ ] significantly inconsistent policies that result in the creation of conflicting lines governing the identical situation.’ ”) (citation omitted). Still, inaction by agencies—indeed a decision to pursue an enforcement action in one case, and not to do so in a similar case—is largely protected. As discussed below, the Supreme Court has held that an agency’s decision not to pursue an enforcement action is presumptively unreviewable, as such actions are “committed to agency discretion by law,” under § 701(a)(2) of the Administrative Procedure Act (“APA”), with very narrow exceptions, such as when an agency is totally abandoning its statutory responsibilities.60Heckler v. Chaney, 470 U.S. 821 (1985).

B.  The Contemporary World of Regulation by Enforcement—and its Critics

Fast forward eighty years, and the deployment of regulation by enforcement has grown in ways unanticipated by the Court in Chenery. Some government officials have explicitly, and proudly, identified their willingness to use litigation as a means of progressing novel legal theories to change the law, rather than merely addressing unexpected or unanticipated facts with which agencies have limited experience.61See e.g., Sheelah Kolhatkar, Lina Khan’s Big Battle to Rein in Big Tech, New Yorker (Nov. 29, 2021) (reporting statements made by FTC Chair, Lina Khan: “Even in cases where you’re not going to have a slam-dunk theory or a slam-dunk case, or there’s risk involved, what do you do?” she said. “Do you turn away? Or do you think that these are moments when we need to stand strong and move forward? I think for those types of questions we’re certainly at a moment where we take the latter path.”). Others have leveraged enforcement proceedings to make policy after abandoning a failed notice and comment processes.62One recent example comes from the CFTC. In 2018, Chairman Giancarlo proposed a revised rule for SEFs—exchanges created after Dodd Frank Act that are intended to provide the regulated venues for swaps trading. The rule suggested that trade reporting protocols should be a part of SEF functionality—and the process for releasing it was subject to the APA, and there were numerous comments received. After considerable pushback from industry, however, Chairman Tarbert officially withdrew the proposed rule in 2020. However, just a year later, the same day as a settlement with a platform for running an unregistered swap exchange facility, CFTC published a Staff interpretation that essentially restated what had been proposed in the 2018 rule and that was officially withdrawn by the Chair, in effect using the enforcement action to state its interpretation of what was now the law. Yet others highlight an interest in sending strong signals to the market, seemingly prioritizing innocuous but “high profile” cases with media personalities to drive home their policy points and underscore their authority in contested fields.63Gary Gensler, Chair, Sec. & Exch. Comm’n, Prepared Remarks at the Securities Enforcement Forum (Nov. 4, 2021) (transcript on file with the SEC) (“[H]igh-impact cases are important. They change behavior. They send a message to the rest of the market, to participants of various sizes, that certain misconduct will not be permitted. Some market participants may call this ‘regulation by enforcement.’ I just call it ‘enforcement.’ ”). In doing so, commentators have argued that they depart from at least the tone and tactics taken on some other issues in similar circumstances in the past.64In the case of Regulation FD, for example, the SEC publicly admitted contemplating between enforcement and rulemaking for advancing disclosure policy, and opting ultimately for rulemaking:

“Prior to Regulation FD, the legal question presented by selective disclosure was whether this practice violated insider trading law and was thus subject to civil and criminal penalties as a type of securities fraud. Under judicial interpretations regarding insider trading law, the answer has not always been clear.



Against this backdrop of legal uncertainty, the Commission began to see increasing numbers of public reports that issuers were disclosing important nonpublic information, such as advance warnings of earnings results, to selected securities analysts or institutional investors before public disclosure. Even after Commissioners began to focus public attention on this practice through speeches, reports of additional selective disclosures continued. The issue for the Commission then became what, if any, regulatory response was appropriate. One option would have been to pursue a series of “test cases” charging fraudulent insider trading in some of these matters, with the goal of clarifying existing judicial interpretations in this area. Ultimately, however, rather than engage in what some might call “regulation by enforcement,” the Commission determined that the better approach was to engage in rulemaking proceedings, with full opportunity for public notice and comment, in order to craft a more targeted regulatory response to selective disclosure.”

Sec. & Exch. Comm’n, Written Statement Concerning Regulation Fair Disclosure (May 17, 2001), https://www.sec.gov/news/testimony/051701wssec.htm [https://perma.cc/27BP-P4KR].

Not surprisingly, the flexibility to choose between making rules or making policy through a case-by-case adjudicatory process, has had its share of critics dating back to Chenery. In the last forty years, they have slowly earned greater prominence in both academic and regulatory circles. As early as 1982, Former SEC Commissioner Roberta Karmel argued that the SEC was using its enforcement powers to enlarge its regulatory turf, and suggested that rulemaking was better for predictability.65See generally Roberta Karmel, Regulation by Prosecution (1982). A decade later, former SEC Chair Harvey Pitt and Karen Shapiro similarly concluded that regulation by enforcement was deployed to “utilize enforcement proceedings to develop new legal theories and remedies.”66Harvey Pitt & Karen Shapiro, Securities Regulation by Enforcement: A Look Ahead at the Next Decade, 7 Yale J. on Reg. 149, 155 (1990) (“Unlike many of its sister agencies, the SEC consistently has maintained a vigorous, highly visible, and largely successful enforcement profile.”). Pitt and Shapiro echoed argued “that notions of due process require ample, advance notification of precisely what types of conduct will be prohibited, before any person may be civilly or criminally prosecuted for a violation of those standards.” Id. For a discussion, see Nagy, supra note 26, at 1013. For Pitt and Shapiro, the enforcement paradigm, which emerged once the Supreme Court created a private right of action through doctrine rather than an explicit legislative rule, incentivized the agency to try to expand its regulatory powers through enforcement actions that sought to push at the existing edges of the doctrine.67Id. Herman & McLean v. Huddleston, 459 U.S. 375, 380 (1983). This created fertile ground for a consequential but otherwise fairly “amorphous” body of law, epitomized by the prohibition against insider trading, which has evolved in its application largely through litigation, rather than rulemaking.68See Donald C. Langevoort, Rereading Cady, Roberts: The Ideology and Practice of Insider Trading Regulation, 99 Colum. L. Rev. 1319 (1999) (noting that it was an enforcement action “that for the first time treated exchange-based insider trading as federal securities fraud”); Langevoort, SEC as Lawmaker, supra note 49, at 1619–620. But see some rulemaking in the area, notably, Rule 10b-5(1) and Rule 10b-5(2), 17 CFR § 240.10b5-1; 17 CFR § 240.10b5-2. For a detailed discussion of the history, Adam Pritchard & Robert Thompson, A History of Securities Law in the Supreme Court, Ch. 5., (Oxford Un. Press, 2023) As detailed by Pritchard and Thompson, the prohibition against insider trading has evolved as a “quasi common-law prohibition” under Rule 10b-5, alongside a much narrower type of statute-based violation under Section 16(b) of the Securities and Exchange Act 1934. The statutory track, they note, is narrow but relatively clear. According to Pritchard and Thompson, the case-based, Rule 10b-5-derived body of law is much less clear and more “amorphous” in its construction.

The criticism has intensified recently, especially in the context of cryptocurrency, as well as climate-related and environmental-social-governance-related (“ESG”) rulemaking.69On the history of the term ESG and an analysis of the controversies that have arisen in light of the term’s popularity, including the empirical challenges in demonstrating the connection between ESG and financial performance, see generally, Elizabeth Pollman, The Meaning and Making of ESG, U. Penn., Inst Law & Econ, Research Paper No. 22–23 (Oct. 2022). Critics argue that the agency has made notable attempts to police what it has perceived as “green-washing” and illegal issuances of securities by cryptocurrency sponsors without first offering actionable or coherent rules on the implementation of standards for ESG principles or concrete guidelines to outline when a crypto-asset is a security.70For example, in Spring 2021, the SEC announced the creation of its Climate and ESG Task Force within the Division of Enforcement. This Task Force was created to, “identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force will also analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.” Press Release, Sec. & Exch. Comm’n, SEC Announces Enforcement Task Force Focused on Climate and ESG Issues (Mar. 21, 2023), https://www.sec.gov/news/press-release/2021-42 [https://perma.cc/ZAG5-LY5A]. See also Kevin B. Muhlendorf and Martha E. Marrapese, SEC’s First ESG Enforcement Action Is Latest Move In Agency’s ESG Efforts, Wiley (May 17, 2022), https://www.wiley.law/alert-SECs-First-ESG-Enforcement-Action-Is-Latest-Move-In-Agencys-ESG-Efforts [https://perma.cc/AF9W-RCRF]; Andrew Ramonas, Recent SEC Enforcement Hints at Looming Crackdown on ESG Claims, Bloomberg (Aug. 10, 2022) https://news.bloomberglaw.com/securities-law/recent-sec-enforcement-hints-at-looming-crackdown-on-esg-claims [https://perma.cc/N44C-2VX3]. Similarly, in the context of cryptocurrency and cyber-enforcement, the SEC has significantly increased its enforcement staff in recent years with the creation of the Crypto and Cyber Unit (formerly, the Cyber Unit), boasting fifty specific positions. See Press Release, Sec. & Exch. Comm’n, SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit, (May 3, 2022), https://www.sec.gov/news/press-release/2022-78 [https://perma.cc/2Q6L-G9EC]. What rulemaking the agency has done in the space is limited to a proposed reinvigoration of the Names Rule, which constrains the ability of investment funds from inaccurately describing their investment strategy. Sec. & Exch. Comm’n, Investment Company Names, 17 CFR Parts 232, 270 and 274, https://www.sec.gov/rules/proposed/2022/ic-34593.pdf [https://perma.cc/2Q6L-G9EC]. The criticisms, recently encapsulated by the Wall Street Journal, lament that the SEC’s “regulation by enforcement isn’t working and merely fuels market uncertainty.”71Editorial Board, The FTX Crypto Fiasco, Wall Street J. (Nov. 10, 2022) https://
http://www.wsj.com/articles/the-ftx-crypto-fiasco-cryptocurrency-sam-bankman-fried-alameda-coindesk-binance-11668122004; see also, James Park, The Competing Paradigms of Securities Regulation, 57 Duke L.J. 625, 663 (2007) (“for the most part, the regulated prefer that regulators utilize rulemaking over principles-based enforcement actions”); Comm. Capital Mkts. Regul., Interim Report of the Committee on Capital Markets Regulation 66, 66 (2006), http://www.
capmktsreg.org/pdfs/11.30Committee_Interim_ReportREV2.pdf [https://perma.cc/9PFT-PLG3] (“When new standards are introduced through specific enforcement actions and only later codified as explicit rules, confusion and distrust are likely to be the consequences.”).
For cryptocurrencies, SEC Commissioner Mark Uyeda has criticized his own agency for pursuing enforcement actions instead of making rules. “This is an example of a situation where regulation through enforcement does not yield the outcomes achievable through a process that involves public comment, because without the benefit of comments from crypto investors and other market participants, the commission is unable to consider their perspectives in developing an appropriate regulatory framework.”72Kenneth Corbin, ‘Regulation by Enforcement’ Won’t Work for Crypto, Argues SEC Commissioner, Barron’s (Sept. 9, 2022), https://www.barrons.com/advisor/articles/sec-regulation-enforcement-crypto-commissioner-51662747452 [https://perma.cc/32QV-BG9E]. Another Republican SEC Commissioner, Hester Pierce, also complained that the agency has “tried to cobble together a regulatory framework through enforcement actions.”73Hester M. Peirce, Commissioner, Sec. Exch. Comm’n, Remarks at Regulatory Transparency Project Conference on Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation? (June 14, 2022). Not surprisingly, cryptocurrency entrepreneurs have also loudly criticized an approach driven by regulation by enforcement as regulatory technique.74Brian Armstrong, Op-ed: Crypto Markets Need Regulation to Avoid More Washouts like FTX, CNBC (Nov. 11 2022), https://www.cnbc.com/2022/11/11/op-ed-crypto-markets-need-regulation-to-avoid-ftx-type-situations.html [https://perma.cc/9RWX-K2AW] (“Instead of putting in place clear guidelines for crypto, U.S. regulators have focused on regulation by enforcement.”).

The criticisms have bothered the SEC under the Biden administration. For example, the agency’s enforcement director has characterized the agency’s approach to emerging technologies and novel investment contracts as something that involves enforcement, but that is not using enforcement as a particular policymaking tool. As Director Gurbir Grewal noted in a keynote address, “this is not ‘regulation by enforcement.’ This is not ‘regulation by enforcement.’ This is not ‘regulation by enforcement.’ There. I have said it thrice and what I tell you three times is true.”75Gurbir Grewal, Director, Sec. Exch. Comm’n, Div. Enf’t, Remarks at the 2021 SEC Regulation Outside the United States—Scott Friestad Memorial Keynote Address (Nov. 8, 2021) (on file with Sec. Exch. Comm’n).

Notwithstanding such statements, accumulating critiques have set the stage over the years for considerable push-back striking at regulation by enforcement..76Still, courts have tried to preserve the integrity of enforcement, and even in some instances incented adversarial process. For example, when the SEC proposed to settle cases against banks in the wake of the 2008 Financial Crisis without obligating them to admit any wrongdoing, judges questioned the policy and tried to throw out some of the settlements as being nonbinding–taking on regulation by enforcement by incenting more adversarial proceedings. See SEC v. Citigroup Glob. Mkts., Inc., 827 F. Supp. 2d 328, 333 (S.D.N.Y. 2011), vacated and remanded, 752 F.3d 285 (2d Cir. 2014) (“[A] n allegation that is neither admitted nor denied is simply that, an allegation. It has no evidentiary value and no collateral estoppel effect.”). See, e.g., Mike Koehler, A Foreign Corrupt Practices Act Narrative, 22 Mich. St. Int’l .L. Rev. 961, 988 (2014) (declining to approve proposed settlement). The SEC’s neither admit nor deny settlement policy has been questioned by several judges, most notably Judge Jed Rakoff. As, for example, the SEC diverted more cases to administrative adjudicatory proceedings, the securities bar responded with a successful effort to characterize these proceedings as technically unconstitutional based on the relative independence of agency adjudicators from political oversight.77Lucia v. SEC, 138 S. Ct. 2044 (2018). As a result, the courts have started to demand that administrative proceedings be politically controlled, an idea usually inconsistent with the fact that an individual should be entitled to a hearing before an unbiased judge. And even more recently, defendants have pushed to vacate civil monetary judgments based on the structure of regulatory agencies and “unprecedented agency action that ignores fundamental constitutional principles.”78Seila Law LLC v. Consumer Fin. Pro. Bureau, 140 S. Ct. 2183, No. 19-7, slip op. (2020). These tactics, grounded in separation of powers arguments, have found a receptive audience at the D.C. Circuit Court of Appeals, and ushered in a reduction in agency independence.79PHH Corp.. v. Consumer Fin. Prot. Bureau, 881 F.3d 75 (D.C. Cir. Ct of App., 2018). For a discussion, see David Zaring, Toward Separation of Powers Realism, 37 Yale J.  Reg. 708, 754 (2020).

C.  A Continuum of Agency Incentives Driving Regulation by Enforcement

Many attempts to undermine regulation by enforcement are indirect and at times lead to outcomes eroding governmental supervision that are, in our view, inconsistent with the best interests of regulators and industry alike. Still, the rising tide of criticism is important insofar as it highlights an underappreciated theoretical and practical reality—namely, that there are a range of possible incentives that can drive the adoption of regulation by enforcement, or at least make it more attractive.80See also, Langevoort, SEC as Lawmaker, supra note 49, at 1619–21. Sometimes these incentives push agencies to enforce for the right reasons—regulators are unsure how to proceed, and so make policy on a case-by-case basis. By taking this careful approach, the damage of a bad choice is limited. In other cases, however, viewed more skeptically, regulators can use enforcement to avoid the burdens of other kinds of rulemaking—processes designed to make policymaking decisions better informed and more accountable.

We think that when regulators turn to adjudication, their incentives to do so can thus plausibly be characterized as lying along a continuum ranging from an interest in cautious case-by-case refinement and regulatory modulation to attempts to bypass administrative controls intended to enhance public participation and review. We have identified the bull case for regulation by enforcement as an essential gap filler and crisis response mechanism. For example, such an approach can reap gains where rulemaking still lags in its early stages or if its application and impact may be unclear. Regulation by enforcement can step in to tamp down on public harms in the absence of a clear rule or one that is under development. We have also explained that, as a matter of administrative law, courts have generally deferred to agency choices to prosecute, instead of legislating. But it is worth highlighting that there is a bare case, with tradeoffs that extend beyond the more usual concerns about whether regulation by enforcement makes for an unpredictable, unclear, and more ad hoc regulatory system.81See e.g., Press Release, U.S. Senate Comm. Banking, Housing & Urban Affs., Toomey: SEC’s Regulation-by-Enforcement Approach Harmed Consumers (July 28, 2022), https://www.banking.senate.gov/newsroom/minority/toomey-secs-regulation-by-enforcement-approach-harmed-consumers [https://perma.cc/WAY5-96L5].

First, agencies could pursue adjudications, or at a minimum find adjudication attractive, insofar as it enables rulemaking in ways that avoid the kind of public scrutiny and involvement entailed in administrative procedure. Normally, the rule writing process is just that—a process that, by definition, is intended to attract attention and inspection. The most visible and significant element of such review is the notice-and-comment process, designed to encourage commentary on rulemaking in ways that expose it to critique, criticism, and refinement. During notice-and-comment, new proposals are exposed to review by industry and civil society, and agencies are often required to, at a minimum, respond to the concerns raised in the review.82A Guide to the Rulemaking Process, Fed. Reg., https://www.federalregister.
gov/uploads/2011/01/the_rulemaking_process.pdf [https://perma.cc/758S-NU8U].

While this is how rulemaking is meant to work, the standard process can create political obstacles that draw negative media attention, private sector pushback, and can end up diluting or strengthening proposals in ways that might be out-of-sync with the views of agency leadership. The potential for such frictions provides one reason why adjudication can be such an attractive administrative tool. Adjudications limit the required responsiveness of agencies to the sort of wide-ranging assessments and suggestions that notice-and-comment rulemaking entails. Furthermore, they channel primary responsibility of dissent to the particular defendant selected by an agency to be the subject of an enforcement action. In this way, agencies can choose to set the terms of a debate, and even rope in other actors without necessarily giving them their day in court or a direct opportunity to participate.83For example, the SEC’s 2022 complaint against three cryptocurrency traders is illustrative of an approach whose fullest regulatory implications can extend well beyond the actors and issues laid out in the case itself. In this instance, the SEC brought charges for insider trading in violation of securities rules against three crypto-traders, one of whom worked for the crypto-exchange, Coinbase Inc. In its complaint, the SEC offered the argument that the defendants were involved in insider trading with respect to nine “crypto-asset securities,” thus triggering the application of insider trading rules. This case comes with a number of intriguing and expansive implications. First, while alleging that nine coins were crypto-asset securities, the SEC did not sue the issuers of these assets as part of the complaint. In addition, by suggesting that these coins were securities, the SEC also raised the prospect that any crypto-exchanges hosting trading in these assets could face potential sanction for doing so. However, in the complaint itself, the SEC did not sue any exchange transacting in these assets, nor did it explicitly threaten them. As commentators note, this enforcement strategy appears especially tricky by causing a number of coins to become viewed as “securities,” owing to the fact that the onus of showing that they are not ends up falling on three defendants, rather than issuers or exchanges that may be better placed to absorb the costs of making that case. They can also potentially extract negotiated settlements from weaker or vulnerable actors without even ever having to go to court, and by publicizing the terms of the settlement and the infraction shape the public perception as to what the law “is.”

Practically, adjudication can also enable agencies to bypass some internal restraints accompanying administrative rulemaking.84Chris Brummer, Soft Law and the Global Financial System: Rulemaking in the 21st Century (Cambridge Univ. Press, 2015); Langevoort, SEC as Lawmaker, supra note 49, at 1619 (“As administrative law has long worried, enforcement actions bypass controls, such as notice, comment, and judicial review, designed to introduce deliberation and accountability.”). Following the decision of the DC Circuit in Business Roundtable vs. SEC, agency rulemaking must be supported, in most instances, by a detailed cost-benefit analysis in order for it to pass muster.85Business Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011). The demand to produce such analyses in the promulgation of a rule means that agencies must demonstrate that their rule has been developed in a way that considers costs, if not numerically, then at least seriously.86See id. In Business Roundtable, the court faulted the SEC for failing to consider the entirety of the costs that would be imposed on public companies if long term minority shareholders could place dissident candidates on the same ballot as management nominees to the board in the annual vote by shareholders. In NAM v. SEC, however, the same court allowed the SEC to not try to calculate the benefits of a rule designed to help to end a civil war in central Africa because those benefits would be difficult to calculate, and whatever the outcome of a cost benefit analysis, Congress had ordered the SEC to try to help in ending the war. NAM v. SEC, 800 F.3d 518 (D.C. Cir. 2015). As the D.C. Circuit put it, “the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified,” it risks reversal for failing to follow its legal requirement that it consider efficiency, competition, and capital formation in its rulemakings.87See Business Roundtable, 647 F.3d 1144. That court also faulted the SEC’s evaluation of costs and benefits in an earlier case. See Chamber of Commerce v. SEC, 412 F.3d 133 (D.C. Cir. 2005). Often, this means employing experts (for example, economists) that can develop an unimpeachable economic case to support the rule. Otherwise, the rule might be challenged and struck down in court as one that is arbitrary and capricious. 88Motor Veh. Mfrs. Ass’n v. State Farm Ins., 463 U.S. 29 (1983) (requiring reviewing courts to take a “hard look” at agency policymaking make with the force of law). All the while, most of the records involved in the analysis are “FOIAable,” enabling any member of the public the right to access scrutinize them—and use them as the basis for potential criticism of agency leaders or even litigation.89David Zaring, Toward Separation of Powers Realism, 37 Yale J. Reg. 708, 751 (2020). This process has generated intermittent risks to agency rulemaking. For example, in reviewing a rule designed to reduce human rights abuses from armed groups financed by conflict minerals, academics and industry pointed to extensive shortcomings in the SEC’s analysis, noting deficiencies in modeling, the assumptions being made in these models, and resulting cost estimates. More recently, SEC’s 2022 proposal to regulate climate disclosure has attracted critique for its cost-benefit analysis by industry and lobbying groups. Notably, such critiques may derive from self-interest or ideological disagreement with the goals of the regulation. Nevertheless, precisely because agencies are constantly under the spotlight for their expertise, research and economic analysis, rulemaking entails procedural steps and strategy designed to ensure that it is informed and methodologically robust. In particularly contentious, ideological or high-stakes areas of oversight, playing offense by litigating—as opposed to engaging in rulemaking and waiting to be sued—can present a lower risk route to making policy.

Additionally, adjudication need not be as rigorous as typical administrative processes. As Jim Cox has observed, “when the SEC brings enforcement actions, it does not have to do cost-benefit analysis.”90James D. Cox, Headwinds Confronting the SEC, 18 N.C. Banking Inst. 105, 107 (2013). Additionally, while litigation itself consists of a (potentially long and winding) process, it does immediately signal the policy posture of the agency without opening the agency up to the same kinds of risks entailed in rulemaking. The administrative checks of rulemaking, for better or worse, can be mostly avoided by pursuing an enforcement action.

Adjudication also enables agencies to shift responsibility for rulemaking to the courts, a shirking strategy.91The typical armchair economic incentives invoked in these contexts are rather at odds with one another. See, e.g., Xingxing Li, The Cross-Border Transplantation of Variable Universal Life Insurance: The Evolution and the Regulatory Challenges, 20 Wash. U. Global Stud. L. Rev. 279, 326 (2021) (noting cases in which “an agency’s typical behavior is shirking responsibility in spite of their tendency to relentlessly expand their turf”). In short, regulatory agencies, especially when faced with politically difficult choices, may wish to punt the ultimate responsibility for crafting particular rules to other actors. To the extent that legislation is not forthcoming, agencies may view courts as more optimal forums for hashing out difficult questions in ways that relieve agencies of the pressure, or responsibility, associated with “making law” through the administrative process. As a part of this balancing process, agency administration may also be tempted to view an enforcement decision as a way to relieve relevant leaders of the need to confront the criticism involved in taking on contentious rulemaking. Generously, adjudication may arguably be seen as an expression of administrative modesty. More critically, it may be viewed as a kind of shirking or avoidance in cases in which regulators should really be coming forward to engage in detailed and ambitious rulemaking.

In other situations, agencies could alternatively turn to adjudication as an expressly political act. Litigation is, by definition, a confrontational exercise, whether in order to enforce existing rules or to make new policy. As a result, regulation by enforcement presents an opportunity for agencies to signify their interest in taking action in ways that conform with certain policy or ideological moorings. Litigation can be designed to bolster or echo the Executive’s priorities or the priorities of key members of Congress to demonstrate high performance and in the process, enhance the career prospects of agency leaders. Alternatively, agencies could perceive certain forms of conduct as especially odious or dubious, and as a result, wish to engage in litigation as a more effective route of bringing media attention to the issue than the rulemaking process.

Finally, regulation by enforcement, even in the case of unsuccessful or discredited lawsuits, offers a means to extend the regulatory perimeter in ways unavailable under more conventional administrative rulemaking. To fully understand this particular strategy, it is important to understand that enforcement actions, particularly when exercised in novel ways, can freeze activity in the sector targeted by an agency. For example, by asserting that a particular digital asset is a security, a lawsuit can cool or temper the production or trading of that and similar digital assets. One question raised by the SEC vs. Wahi litigation, for example, was whether the mere claim by the SEC that a token was a security might prompt platforms that offer trading to preemptively delist it and any others deemed similar to avoid any potential punishment for themselves.92See e.g., Andrew Hinkes, Richard Kerr & Keri Riemer, SEC v. Wahi: An Enforcement Action Impacting the Broader Crypto/Digital Assets and Investment Management Industries, K&L Gates (Aug. 23, 2022), https://www.klgates.com/SEC-v-Wahi-An-Enforcement-Action-Impacting-the-Broader-Crypto/Digital-Assets-and-Investment-Management-Industries-8-23-2022 [https://perma.cc/N9XD-CNX5]. This kind of preemptive deterrence effect takes place the moment the litigation is filed and can remain in effect for as long as the litigation is arising. As a consequence, the act of litigation can have an injunctive impact on actors, regardless of its merits, but with potentially high upside for a regulator. If successful, the suit helps to establish precedent that cannot be undone by future agencies; if unsuccessful, the suit chills politically undesirable but legal activities in ways that can extend far beyond its regulatory perimeter.

III.  THE LEGALITY AND TRADEOFFS OF REGULATION BY ENFORCEMENT

The turn to arguably more ambitious and consequential forays into regulation by enforcement raises two key questions. First, does this trend violate the strict letter of the law? And second, even if regulatory action is legally justified, does it offer a more effective means of governance – in other words, do the trade-offs justify the move? These inquiries are not mutually exclusive. For example, to the extent that the first question may not yield a straight-forward answer, the greater or lesser benefits of pursuing regulation by enforcement might impact judicial (in)tolerance for its continued use within the administrative canon. To state things differently, even if the practice might be acceptable legally or is at least ambiguous in this regard, it might yet fall foul of norms that underlie a deeper administrative commitment to the rule of law, such that the continued reliance on regulation by enforcement warrants further scrutiny.93Kevin Stack, An Administrative Jurisprudence: The Rule of Law in the Administrative State, 115 Colum. L. Rev. 1985, 1986–87 (2015); Richard Fallon, Jr., “The Rule of Law” as a Concept in Constitutional Discourse, 97 Colum. L. Rev. 1, 43–44 (1997) (highlighting the framing significance of the concept of rule of law).

A.  The Legal Question: Does It Violate the Law?

As described earlier, it is now well-established that courts afford expansive latitude to agencies in determining how best to forward rulemaking.94On certain limitation to agency deference, see for example, Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012). But while Chenery supports the proposition that agencies should be given discretion to pursue lawmaking through the judicial system, it is not without its complications. Perhaps the most important of these is the  APA. Outlined earlier, the APA governs the process by which federal agencies develop and issue regulations. A bedrock of administrative practice and good governance, the APA includes requirements for agencies to publish notices of proposed and final rulemaking as well as to offer the public opportunities to provide comment on notices of proposed rulemaking.95A Guide to the Rulemaking Process, supra note 82. In this way, the APA provides a systematic form of an “external” check on the processes and procedures that govern administrative agencies charged with carrying out the grunt work of implementing congressional statutes and that exercise extensive latitude to do so under Chenery.96Gillian Metzger & Kevin Stack, Internal Administrative Law, 115 Mich. L. Rev. 1239 (2017) (detailing the tension between the “external law” and the “internal law” of agencies and highlighting the application of the APA as being consistent with the imposition of both external and internal constraints).

Enacted in 1946, just months before the release of the Chenery decision, the APA explicitly directs agencies to engage in a particularized and defined process when developing and writing rules. The process is intended to (1) ensure that agencies keep the public informed of their organization, procedures, and rules, (2) provide for public participation in the rule-making process, (3) prescribe uniform internal, organizational standards for the conduct of formal rule making and adjudicatory proceedings, and (4) restate the law of judicial review.97Cynthia Scheopner, Administrative Procedure Act of 1946, Britannica, https://www.britannica.com/topic/Administrative-Procedures-Act [https://perma.cc/6WHZ-5BTE] As Ed Rubin writes, the APA is far from perfect.98Edward Rubin, It’s Time to Make the Administrative Procedure Act Administrative, 89 Cornell L. Rev. 95, 97–98 (2003). Some scholars suggest that it goes too far in its strictures, while others advocate that it does not go far enough.99See id. What is clear, however, is that it imposes a range of internal organizational norms alongside external checks that were devised as a way to respond to the rapid expansion of the administrative state following the New Deal reforms of the 1930s.100Metzger & Stack, supra note 96, at 1266–76 (detailing the historical dynamics giving rise to the passage of the APA in 1946).  

But what does the APA mean for regulation by enforcement? In particular, does it curtail the ability of agencies to govern through litigation? Chenery, as noted above, does allow agencies considerable discretion to engage in both rulemaking and adjudication. But what about in more murkier instances? Specifically, could an agency willfully circumvent the APA, and its public policy goals, by engaging in regulation by litigation rather than through detailed rulemaking?

At least at first glance, the APA should make little difference to an agency’s ability to engage in regulation by enforcement, even if this reflects a deliberate strategy to circumvent the act. That is, because the APA lacks an anti-evasion clause, it should allow agencies to pursue a workaround its provisions. Moreover, courts have tended to interpret their ability to intervene in enforcement-related issues as being highly constrained. In Heckler v. Chaney, perhaps the most cited example of this principle, inmates sought redress after had been sentenced to death by lethal injection. They petitioned the FDA to take enforcement action to prevent the use of a specific drug protocol in capital punishment cases, alleging that use of these drugs constituted a violation of the Federal Food, Drug, and Cosmetic Act (FDCA).10121 U.S.C.S. § 301 et seq. The FDA refused to intervene. Seeking review under the APA, the inmates filed suit in District Court asking that the FDA be required to stop the use of the drugs. The Court of Appeals held that the FDA’s refusal to take enforcement action was both reviewable and an abuse of discretion and remanded the case with the directions that the FDA be required “to fulfill its statutory function.”102Id. When the case was finally appealed to the Supreme Court, Chief Justice Rehnquist held that an agency’s decision to refrain from taking enforcement action should be assumed to be insulated from judicial review under the APA. That is, the FDA’s determination to avoid intervening was perfectly legitimate.103Id.

Looking deeper, however, it is worth asking whether Heckler is the last and complete word on the question. Crucially, it is silent on the issue of whether an agency’s decision to proactively enforce—rather than to refrain from enforcing – constitutes a potential violation of the APA. Heckler speaks to an agency refusing to deploy its resources in a case—the implication being, that by dint of its inaction, it chooses to leave the existing parameters of the law unchanged. By contrast, the Court in Heckler does not address what happens when an agency decides to bring a case—that is, to use its power, authority, and resources to sanction a regulated entity in a bid to further a specific interpretation of the law. Stated differently, Heckler leaves open the question of what legal consequences follow under the APA when an agency takes steps to either “make law” or “find law” through an active deployment of its enforcement power. As detailed in this Article, agencies might decide to pursue enforcement for any number of reasons. Chenery provides considerable latitude allowing such a strategy. But, as noted above, agencies may opt for launching litigation over rulemaking for reasons that might reflect a more cynical motive to affirmatively avoid the requirements of the APA. What happens then? Heckler, arguably, does not provide an answer.104To be sure, this enforcement discretion can be exploited by agencies. Selective enforcement of rules can undo some of the consistency advantages of rulemaking.

To be sure, there are serious difficulties involved in identifying that line between an agency’s decision to pursue sanctions as part of its expected exercise of enforcement authority, and one in which its choices lie in deliberately (or recklessly) skirting the APA’s administrative process. Perhaps the most obvious is the challenge of finding evidence that might point to this administrative intention.105In the question of deference to agency decision-making, the Supreme Court highlighted that deference may not be given when the Court suspects that the agency’s interpretation “does not reflect the agency’s fair and considered judgment on the matter in question,” such as when it might promote a “convenient litigating position.” Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 155 (2012). As any lawyer knows, the task of uncovering “proof” that points to a state-of-mind is notoriously difficult. First, agencies are complicated creatures, staffed by many people, and it is difficult to attribute a single intent to so many individuals. Second, it requires looking for incriminating materials like internal memos, emails, or evidence of conversations had between decision-makers that could suggest a nefarious motive, and obtaining discovery against an agency in an APA case is very difficult.106As the Supreme Court has observed, “the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.” Camp v. Pitts, 411 U.S. 138, 142 (1973). Obtaining this kind of material is challenging in the best of times. But it is especially difficult when agencies decide to pursue adjudication. Notably, the APA affirmatively shields agencies from having to publish their own internal organizational processes and rulemaking for public consumption. That is, there is no need for an agency to subject its own in-house enforcement deliberations to notice-and-comment.107Administrative Procedure Act, 5 U.S.C. § 554(a). This leaves agencies relatively unconstrained in their abilities to develop their own procedures and processes without having to first subject them to outside scrutiny.108Metzger & Stack, supra note 96, at 1277–78. Without such affirmative disclosure about internal policies, those looking to understand why agencies might be acting as they do have to rely on costlier measures. Discovery within litigation offers one expensive pathway, if a court is willing to allow it.109As one commentator has noted, “After all, the presumption of regularity is a rebuttable presumption.” Conley Hurst, Comment, The Scope of Evidentiary Review in Constitutional Challenges to Agency Action, 88 U. Chi. L. Rev. 1511, 1519 (2021). Or, when possible, observers could also try to gain informational access through Freedom of Information Act requests that might yield clues as to agency process—but which itself has notable constraints as to what information must be provided by government.110Freedom of Information Act, Pub. L. No. 89-487, 80 Stat. 250 (1966). As a result, understanding whether an agency’s enforcement decisions are being driven by a wish to deliberately avoid the APA is, ironically enough, a task made more difficult by the very application of the APA itself.111Henry v. I.N.S., 74 F.3d 1, 6 (1st Cir. 1996).

In short, the question as to whether regulation by enforcement is legal under the APA is not entirely settled, even as most of the foundational principles are. On the one hand, agencies clearly have wide latitude under Chenery. And according to Heckler, the decision to avoid enforcing is essentially unreviewable. However, Heckler is incomplete: it does not address the scenario in which agencies affirmatively choose to bring a case. Moreover, there is little in either Chenery or Heckler that addresses a much more foundational inquiry, namely whether the pursuit of enforcement to circumvent the APA deliberately or recklessly is permissible, especially when it is intended to establish novel legal arrangements or dictates normally reserved for the rulemaking function.

B.  Legal Scrutiny Beyond the APA

The APA is but one vector of risk for agencies dependent on regulation by enforcement for rulemaking. Even where the APA offers few restrictions on agency action, perceptions of agency abuse or mischievousness can create considerable perils for the administrative state. Some commentators and scholars have noted that regulation by enforcement may lead to Congressional oversight hearings and the politicization of agency action—whether in the form of traditional rulemaking or litigation.112See, e.g., Pitt & Shapiro, supra note 66; Karmel, supra note 65. But we think the consequences may be far greater, and perceptions of overzealous regulation could, over time, catalyze court reactions that ultimately undermine the very authority of the agencies to pursue their missions.113See, e.g., William Buzbee, Recognizing the Regulatory Commons: A Theory of Regulatory Gaps, 89 Iowa L. Rev. 1, 4 (2003) (addressing, for what it is worth critically, “contemporary political critiques often including battle cries that there is just too much regulation, and poor regulation at that”). At a minimum, litigation efforts can backfire, creating unfavorable precedent for the particular regulatory action or claim in question. But far more ominously, agency overreach can become grounds for courts to rein in the larger administrative authority. To be sure, normatively, imposing checks and balances on agencies constitutes the preserve of the judiciary. However, an ambitious agency pushing novel rules and doctrine in ways found to be unfair, unvetted, or unaccountable can increase the risk to itself of attracting judicial ire, and ultimately undermining the scope of its authority and sphere of influence.

Risks are particularly acute given the recent arc of Supreme Court decisions and posture. One possible target lies in the Chevron doctrine, a Constitutional principle many scholars argue was designed to get the courts out of the policing of agency policymaking. The Supreme Court has formally agreed to review its constitutionality, with a decision likely to be delivered in summer 2024, placing in jeopardy a critical lever by which agencies have exercised their authority with relative legal confidence over the decades.114See, e.g., Gerstein & Guillen, supra note 10. The doctrine, named after “the most cited case in administrative law,”115David Zaring, Reasonable Agencies, 96 Va. L. Rev. 135, 144 (2010). The Financial Stability Oversight Council, for example, saw its designation powers challenged and curtailed through litigation, where the court found that the FSOC violated administrative law when designating Metlife as a systemically risky firm and that its process was “fatally flawed.” See Lee Myerson, Metlife: FSOC “Too-Big-to-Fail” Designation, Metlife: FSOC “Too-Big-to-Fail” Designation, Harvard L. Sch. Forum Corp. Gov. (May 2, 2026), https://corpgov.law.harvard.edu/2016/05/02/metlife-fsoc-too-big-to-fail-designation/ [https://perma.cc/U2TH-FPTF]. outlines the standard of review courts must exercise when reviewing agency actions. For the first step, the reviewing court must ask whether, after “employing traditional tools of statutory construction,” it is evident that “Congress has directly spoken to the precise question at issue.”116Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842, 843 n.9 (1984). If so, the statute is “unambiguous[],” and the agency must not differ from Congress’ clearly expressed command.117Id. If, however, the court decides that the statute empowering the agency action is ambiguous, it then moves to step two of the inquiry. That step requires the court to uphold the agency’s interpretation so long as it is “based on a permissible construction of the statute.”118Id. For one of the leading critiques, see Thomas W. Merrill, Judicial Deference to Executive Precedent, 101 Yale L.J. 969, 970 (1992) (“the failure of Chevron to perform as expected can be attributed to the Court’s reluctance to embrace the draconian implications of the doctrine for the balance of power among the branches, and to practical problems generated by its all-or-nothing approach to the deference question”).

The standard was popular in the courts for decades, but increasingly seems to have fallen out of favor at the Supreme Court.119See e.g., Nathan Richardson, Deference is Dead (Long Live Chevron), 73 Rutgers U. L. Rev. 441 (2021) (arguing that the Chevron doctrine has been in steady decline). Although the Court has not expressly overruled the case, it has unanimously restricted certain aspects of agency deference for in-house adjudication, and has not deferred to an agency interpretation of its government statute in six years.120Editorial Board, Supreme Court 9, Administrative State 0, Wall St. J. (Apr. 14,
2023), https://www.wsj.com/articles/supreme-court-axon-v-ftc-sec-v-cochran-administrative-state-federal-court-elena-kagan-43f6b20 (discussing the ruling in Axon Enterprise v. FTC and SEC v. Cochran, in which the Court stated that litigants did not need to first exhaust agencies’ administrative processes before being able to proceed to federal court).
The Court did not cite Chevron in a majority opinion during the 2021 term, and cited it only three times in 2020, raising the likelihood that the Justices may have soured on the idea that courts should defer to agencies in most matters of legal interpretation.121But see Isaiah McKinney, The Chevron Ball Ended at Midnight, but the Circuits are Still Two-Stepping by Themselves, Yale J. Reg. Notice & Comment (2022), https://www.yalejreg.com/nc/chevron-ended/ [https://perma.cc/VXP9-7KYC] (noting that circuit courts do often adhere to Chevron). No agency would wish for the end of deference. But the seeming diminishing of Chevron at the Supreme Court opens up questions about what kinds of agency conduct may have irritated the Court sufficiently into taking a much closer and critical look at agency behavior.122McKinney, supra note 121. Here, the pursuit of enforcement, if designed or interpreted to bypass administrative norms, could provide an easy target for fully unwinding judicial deference.123In slightly different context, the Bankruptcy Court strongly admonished the SEC in the context of judicial hearings designed to scrutinize and approve Binance.US’s plan to buy the bankrupt entity, Voyager Digital. In responding to the SEC’s contention that Binance.US and the proposed sale were in violation of applicable securities law, Judge Wiles demanded specific evidence and criticized the agency for failing to offer clarity about the application of securities regulation. See, e.g., Dietrich Knauth, SEC Objections to Voyager-Binance Deal Criticized by U.S. Judge, Reuters (Mar. 2, 2023), https://www.reuters.com/legal/sec-objections-voyager-binance-deal-criticized-by-us-judge-2023-03-02.

And Chevron is not the only source of legal scrutiny. Notably, the Court has recently emphasized that an agency, when it breaks new policymaking ground, must “be cognizant that longstanding policies may have engendered serious reliance interests that must be taken into account.”124Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1913 (2020). See also Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 222 (2016) (also invoking the reliance interest). An agency that has used enforcement actions to expand its regulatory turf, or to try out novel legal theories, might be particularly vulnerable to a charge that it arbitrarily failed to consider the settled expectations of a regulated (or previously unregulated) industry. Reliance interests are not dispositive, but they must be part of an agency’s reasoned decision-making. As the Supreme Court has explained, an agency “may determine, in the particular context before it, that other interests and policy concerns outweigh any reliance interests,” but “that difficult decision [is] the agency’s job.”125Dep’t of Homeland Sec., 140 S. Ct. at 1914. See also, Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (on the importance of fair notice and procedural fairness in granting deference to agencies). An agency that proceeds through litigation is going to find it difficult to establish that its enforcement action included some sort of attention to the reliance interests of the defendant in the action.126For example, in April 2023, Coinbase filed an appellate petition in the Third Circuit to compel the SEC to clarify the scope of its rulemaking vis-à-vis Coinbase and to respond to questions that Coinbase had requested the SEC to address. This petition took the form of “a writ of mandamus,” designed to compel the SEC to respond to Coinbase questions. Coinbase’s petition followed service by the SEC in March 2023 of a “Wells Notice”—a common precursor to a potential enforcement action. Crystal Kim, The SEC Has 10 Days to Respond to Coinbase, Axios (May 4, 2023), https://www.axios.com/2023/05/04/coinbase-sec-crypto-regulation; Dave Michaels, Coinbase Tries Novel Defense in SEC Fight, Wall St. J. (May 5, 2023), https://www.wsj.com/articles/coinbase-tries-novel-defense-in-sec-fight-43298183. In June 2023, the SEC formally launched an enforcement action against Coinbase, alleging, inter alia, that Coinbase was operating an unregistered securities exchange. For discussion of the complaint, see Press Release, Sec. & Exch. Comm’n, SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency (June 6, 2023).

Another possible vector of risk involves the “major questions doctrine,” which holds that courts should not defer to agency statutory interpretations that concern questions of “vast economic or political significance.” In 2022, the Court indicated that it intended to take the major question doctrine seriously with a last-day-of-term effort to gather the few cases applying the doctrine into a coherent whole. In West Virginia v. EPA, a case concerning the EPA’s power to encourage power plants to shift away from coal, and toward gas, wind, and solar, the Court explained that “in certain extraordinary cases . . . something more than a merely plausible textual basis for the agency action is necessary” to permit a new agency to go forward.127West Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587, 2609 (2022). To do so, the “agency instead must point to clear congressional authorization for the power it claims.”128Id. (quotation marks omitted). So far, the major questions doctrine has only been deployed by the Supreme Court to reverse rules—which incentivizes agencies like the SEC to avoid rulemaking and make policy through enforcement.129In one case, the Court reversed a rule like “order” promulgated by the Centers of Disease Control setting and extending a nationwide eviction moratorium. See 85 Fed. Reg. 55292 (2020) (charactering the moratorium as an “Order”). The order was rule-like in that it was a government action of general applicability and future effect, per the definition of a rule in 5 U.S.C. § 551. See Alabama Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485 (2021). Nonetheless, to the extent that regulation by enforcement is turf expansive, there is some risk that the courts could get frustrated and sanction regulators who move beyond their usual remits, however they do so, including by enforcement. Indeed, in the Wahi litigation outlined above, when the SEC sought to sanction defendants engaged in insider trading, arguing that the tokens traded are securities—led to a tussle on the major questions doctrine in court. In the Wahi case, defendants argued that the determination of tokens as securities constituted a major question, one that the SEC should seek Congressional permission to answer.130Matthew Bultman, Ex-Coinbase Manager Tests If SEC Crypto Reach Is ‘Major’ Question, Bloomberg (Feb. 16, 2023), https://news.bloomberglaw.com/securities-law/ex-coinbase-manager-tests-if-sec-crypto-reach-is-major-question [https://perma.cc/5BJW-4ZKY] (“If the court agrees with the defendants here and grants the motion to dismiss, this will be one of the first cases of this magnitude,” Rutgers Law School professor Yuliya Guseva said. “It will have broad implications in future cases.”); Dave Michaels, Coinbase Ex-Manager Convicted of Insider Trading Is Crypto’s Latest Legal Hope, Wall St. J. (Mar. 26, 2023), https://www.wsj.com/articles/coinbase-insider-trading-case-spearheads-cryptos-latest-bid-to-avoid-sec-oversight-a43bd268. 

This set of concerns, then, leads to what is perhaps the most fundamental question: whether agencies even have constitutional basis on which to bring their claims. In other words, agencies face the risk that the legal basis for their very authority to legislate and enforce comes under challenge. This risk is not theoretical. Already the courts of appeals have invoked two rarely invoked constitutional provisions, the nondelegation doctrine and the appropriations power, to stop relatively novel exercises of agency power, in a sort of thermostatic constitutional response to policymaking perceived as overzealous.

The nondelegation doctrine prohibits Congress from delegating its legislative powers to other entities—including the President, administrative agencies or, perhaps most disapprovingly, private organizations. In J.W. Hampton v. United States, the Court ruled that Congress must give its delegates an “intelligible principle” on which to base their legislative-like regulatory actions; and that, if it did so, it could appropriately transfer some of its legislative responsibilities to someone else.131“If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power.” J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). The doctrine has not been used to strike down legislation since 1935, so it is a doctrine that has, as Cass Sunstein has put it, had “one good year, and 211 bad ones (and counting).”132Cass R. Sunstein, Nondelegation Canons, 67 U. Chi. L. Rev. 315, 322 (2000). The Fifth Circuit turned to the doctrine nonetheless to reject an enforcement action brought administratively by the SEC. The appellate court objected to the absolute discretion, per Chenery and Heckler, the agency thought it enjoyed when it came to choosing its forum for enforcement actions. When Congress did not create a standard about when to bring an enforcement action, if “the intelligible principle standard means anything, it must mean that a total absence of guidance is impermissible under the Constitution,” the court concluded, meaning that the decision to bring the case administratively had been made without any congressional guidance.133Jarkesy v. SEC, 34 F.4th 446, 462 (5th Cir. 2022). That in turn meant that the enforcement proceeding had to be dismissed.

In Community Financial Services Association of America Ltd. v. CFPB, trade associations sought to challenge how the Consumer Financial Protection Bureau is funded, arguing the agency’s financing model—where it receives its working budget from the Federal Reserve rather than via the Congressional appropriations process—was unconstitutional.134Cmty Fin. Serv. Ass’n of Am. Ltd. v. CFPB, No. 21-50826 (5th Cir. Oct. 19, 2022). It should be noted that the CFPB has appealed and filed an application for certiorari with the US Supreme Court. Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited, Scotus Blog, https://www.scotusblog.com/case-files/cases/consumer-financial-protection-bureau-v-community-financial-services-association-of-america-limited/ [https://perma.cc/E4BA-Z9ME]. See also Cecilia Kang, F.T.C.’s Court Loss Raises Fresh Questions About Its Chair’s Strategy, N.Y. Times (July 11, 2023), https://www.nytimes.com/2023/07/11/technology/lina-khan-ftc-strategy.html [https://perma.cc/6SA5-JE9M] (highlighting risks of the FTC’s litigation’s strategy after the FTC’s lawsuit challenging Microsoft’s proposed acquisition of Activision Blizzard, a video game maker); An Interventionist SEC Risks a Courtroom Backlash, Financial Times (Sept. 10, 2023), https://www.ft.com/content/630a9923-6d63-4cf4-af0d-9668d2404bcb [https://perma.cc/5EV5-5EQ9]. The plaintiff trade associations made the argument that the CFPB’s Payday Lending Rule was invalid owing, amongst other things, to its unusual funding process. The Fifth Circuit agreed, opening the door for plaintiffs to now contest any number of rules and enforcement actions delivered by the CFPB. While this case relates specifically to the workings of the CFPB, its implications can arguably extend much farther.

When agencies pursue litigation in ways that depart cavalierly from Chenery, and in ostensible circumvention of more traditional notice-and-comment rulemaking, their actions, however well intentioned, risk judicial pushback and may prove to be fertile grounds for rollbacks of administrative power more broadly. Stated differently, regulation by enforcement, while largely permissible under Chenery, does not mean that it is always allowed, and miscalculations carry risks for not only discrete cases, but also for the very powers of the regulatory state.

C.  The Normative Question: (When) Are the Trade-Offs Worth It?

Recapping, we earlier described the bull case for regulation by enforcement. Regulation by enforcement, rather than rulemaking, enables important gap filling and incremental rule-giving. Regulators can reduce errors and respond to unforeseen situations and even emergencies when necessary. In pushing high-profile litigation, agencies can additionally send a powerful signal of their intent to police the marketplace.135Sometimes, of course, they can do so without filing an enforcement action. See Wu, supra note 4 (“The use of threats instead of law can be a useful choice—not simply a procedural end run”). This can foil activities by reckless risk-takers that become fearful of punishment and being publicly shamed in the media. A litigation-focused strategy—being public and liable to deter widely—can also instill confidence in the agency’s competence and its commitment to the cause it has been created to forward.

But there are deeper normative risks—both to the quality of the rulemaking, as well as to the underlying legitimacy of the regulatory framework. As we discuss below, regardless of the ultimate legality of rulemaking via litigation, its deployment can have costs to the quality of resulting rules, as well as to its acceptance as legitimate and fair. Furthermore, by shifting rulemaking to courts rather than agencies, the approach invites judicial interpretations and interventions that can ultimately undermine, rather than expand, regulatory authority. In other words, the courts can reject an agency’s adjudicatory efforts, and leave regulators red-faced, equipped with a much lighter reserve of institutional power that the agency might have wanted.

1.  Informational Costs and Rulemaking Quality

Favoring ex post adversarial litigation over formal ex ante rulemaking creates the possibility of a much lower-quality, lesser-informed policy intervention. The content of the new law can end up being less sophisticated substantively and more thinly informed.136On information asymmetry facing regulators in financial regulation, see Awrey & Judge, supra note 6.

There are internal-to-the-agency advantages of rulemaking. The act of developing a new rule requires an agency to engage in extensive research, crafting, analysis, and careful drafting even before it is presented to the public for scrutiny. This rulemaking process is designed to generate a deep reserve of information, opinion and analysis that exposes new proposals to various forms of expertise and the exigencies of real-world application. It requires agencies to engage substantively with the industry they are seeking to regulate, understand the risks, model the various directions that implementation might take, calibrate the costs that firms will have to pay when seeking to comply with the rule, as well as calculate the overall aggregate effect of the rule on the market (for instance through cost-benefit analyses). Well before the rule takes shape, then, it must be developed through an internal process designed to collect information, make a case for its benefits, to substantiate this argument for a potential challenge in the courts, and then to draft a rule that can coherently reflect the most optimal statement of the agency’s concerns versus the costs involved in execution.137See e.g., John C. Coates IV, Cost–Benefit Analysis of Financial Regulation: Case Studies and Implications, 124 Yale L.J. 882 (2015); Jonathan Guynn, The Political Economy of Financial Rulemaking after Business Roundtable, 99 VA. L. Rev. 641(2013) (highlighting court scrutiny of agency rulemaking on cost-benefit grounds).

There are also outside-of-the-agency benefits to rulemaking. Rulemaking can prompt extensive dialogue between the public and agencies even before proposals reach the notice-and-comment stage, opening up pathways for information to flow between agencies and others well before any drafting begins. Envisioning future rulemaking (because it is mandated by a Congressional statute), members of the public often try to engage with agencies early in a bid to see their interests reflected in upcoming proposal drafts—ahead of when the proposal is ready for publication in the notice-and-comment period. Lobbying by certain interest groups offers the most visible example of such a practice, where industry or citizen representatives seek out opportunities to make their views heard at early stages of drafting. In her study of the Volcker Rule—a post-2008 Financial Crisis measure designed to restrict how freely banks could engage in risk-taking for their own account—Kimberly Krawiec examined 8000 comment letters received by the Financial Stability Oversight Council in the pre-proposal stage.138Kimberly Krawiec, Don’t Screw Joe the Plumber: The Sausage Making of Financial Reform, 55 Arizona L. Rev. 53 (2013). In addition to industry input, her study observed a surprising degree of private-public interest, bolstered by organizations like Americans for Financial Reform or Public Citizen.139Id. at 58. To be sure, scholars diverge on whether such public commentary is, in fact, expert and informative for agencies.140Stuart Minor Benjamin, Evaluating E-Rulemaking: Public Participation and Political Institutions, 55 Duke L.J. 893 (2006) (highlighting a lack of informational value in public comment by members of the everyday public); Susan Webb Yackee, Sweet-Talking the Fourth Branch: The Influence of Interest Group Comments on Federal Agency Rulemaking, 16 J. Public Admin. Res. & Theory 103 (2005) (showing that public comment letters can make a difference to the content of rulemaking); Krawiec, supra note 138, at 58. However, as Krawiec notes, the fact of receiving such input can often be informative in its own way, notwithstanding concerns about substantive content.141Krawiec, supra note 138, at 58.

Litigation, by contrast, involves fewer informational inputs. In lieu of notice-and-comment, it offers informational opportunities through three critical tools: the discovery process, testimony, and amicus briefs. Discovery, for its part, creates the parameters for dispute and comprises the occasion where parties to the process supply information to one another. But discovery is an imperfect proxy for detailed policy-based research. It is centered on the case itself and, therefore, on the alleged conduct of the defendant. Its data gathering and analysis may not reach the interests of the industry as a whole, or offer a rigorous public analysis conducted by the agency about the merits of the case. And even where it is collected, not all data will be presentable during a dispute and could be disregarded for any number of legal or procedural reasons.142Sometimes, one supposes too much data can be a trap for the aggressive regulator—an increased number of bases to find problems with a rule, a harsh spotlight on the decision-making process. But it is ever the case, and generally we think that more informed policymaking is better than its less-informed alternative.

Amicus briefs or “friends of the court” briefs, by contrast, enable expert and interested third parties to offer instruction and insight to the court. However, like litigation, amicus briefs do not involve the opportunity for policy engagement, much less counterproposals. Instead, they represent occasions for authors to provide legal theory or partial legal analyses courts may or may not deem to be relevant to assigning liability or guilt. As a result, full scrutiny need not be brought to bear on specific rulemaking agenda items. And there is also no requirement or even expectation for agencies to respond to amicus briefs, unlike in the case of rulemaking, where regulators are expected to consider and address input gathered through the notice-and-comment process. For these reasons, even as the number of briefs issued has grown,143Leah Ward Styles, Why and When to File an Amicus Brief, Smith Gambrell Russell https://www.sgrlaw.com/ttl-articles/why-and-when-to-file-an-amicus-brief/ [https://perma.cc/X99L-AB4J]; Brendan Koerner, Do Judges Read Amicus Curiae Briefs?, Slate (Apr. 1, 2003), https://slate.com/news-and-politics/2003/04/do-judges-read-amicus-curiae-briefs.html. scholars have long debated whether they really impact the decision-making of judges in practice. On the one hand, their contribution has been noted in cases where they offer judges specific expertise (for example, statistics) that is not included as part of the record. Briefs can be cited in decisions, showcasing their significance. On the other, judges are, as mentioned above, under no duty to heed such briefs. Unlike agencies that must be cognizant of the comments they receive and cannot just ignore them, judges can exercise far greater discretion.144Koerner, supra note 143. Indeed, one study points to a divergence in attitude to amicus briefs between judges. While some welcome the interventions, others like Judge Richard Posner have been openly hostile.145Joseph Kierney & Thomas Merrill, The Influence of Amicus Court Briefs on the Supreme Court, 148 U. Penn. L. Rev. 743 (2000). Ultimately, the receptivity toward amicus briefs, even in their limited utility, can depend on a number of factors, such as the particular court in which they are filed, the judge in the case, the kind of brief offered (for example, offering specific expertise), as well as whether the person submitting is respected and trusted by the court.146Koerner, supra note 143.

Testimony, as a final source of information, comprises statements gathered by critical parties to the dispute. It can take place in the form of pre-trial depositions or in-court testimony. Like both discovery and amicus briefs, testimony is generally tied to specific facts. And in order to be admitted into deliberations, it, like discovery, must meet procedural and substantive requirements, like avoiding hearsay and other requirements—standards inapplicable to notice-and-comment. Moreover, larger questions deemed irrelevant to the dispute, even if critical or central to policy considerations, will have no sanctioned weight in the adjudication—even where agencies engage courts in order to regulate by enforcement.

2.  Fairness and Legitimacy

Regulation by enforcement, as opposed to regulation by administrative process, also raises important fairness and legitimacy concerns. The APA aims to create a system of procedural fairness around the rulemaking process to ensure that authorities govern through proper, transparent, well-evidenced, and objective processes.147Stack, supra note 93, at 1993. Through publicity, notice-and-comment, and mandatory agency engagement, those that may be bound by new legislation —as well as anyone else—is invited to provide input and contribution. Judicial review of rulemaking offers the ultimate check on the implementation of the process. Though agencies enjoy considerable deference, they do confront the possibility of being challenged, for example, where regulations are found to be arbitrary and capricious. Moreover, the process is intended to give regulated entities and the public a preview of the expectations and rules that will apply to them.

By pursuing an enforcement action as a first means of creating new law, policymakers raise the risk of doing so in a way that, justified or not, could appear to give those affected scant prior notice of illegality or expected punishment.148Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012). Or even where parties ought to understand or expect enforcement, the absence of a rule can create unequal compliance opportunities for firms. Some firms will have greater resources to track potential regulatory actions. Moreover, certain defendants are better positioned to bear these costs than others. Smaller companies may have few resources to defend themselves, while larger actors might be better placed to withstand and contest the action. The Wahi case again offers an example. Rather than target large entities like crypto trading platforms or issuers, the SEC chose to bring a case against three individuals, whose capacity to direct vast resources to the litigation was arguably extremely limited.149Hinkes et al., supra note 92. This asymmetry leads to the potential for procedural unfairness (or perceived unfairness) in situations where smaller defendants or individuals may be specifically selected as test cases, owing to the likelihood that they fail to contest the claim (because they are small firms) or, conversely, if they are sufficiently high profile that agencies can generate the needed buzz, publicity, and wider deterrent effects on smaller players in order to make the case for a new jurisprudence.150On selective enforcement by the SEC in the context of initial coin offerings, where the SEC has brought actions against “small and significant” defendants, and possible explanations for this trend, see James Park & Howard Park, Regulation by Selective Enforcement: The SEC and Initial Coin Offerings, 61 Wash. J.L. Policy 99 (2020). Because rulemaking in such cases arises by dint of an adversarial process, it arguably necessitates an even greater need to show procedural fairness. As enforcement implies the need for defendants to fight back, it makes sense to consider whether those subject to new rules have the capacity, notice, and opportunity to take on the contest.

Finally, fairness norms may also call into relief the motives of agencies to make new rules and ultimately their authority and technocratic credibility. As Kevin Stack observes, achieving coherence within the law represents an essential value within the regulatory system. Agencies, he notes, have a key role in implementing coherence to facilitate the creation of a legal “system” that aims to be internally and philosophically consistent.151Peter L. Strauss, When the Judge Is Not the Primary Official with Responsibility to Read: Agency Interpretation and the Problem of Legislative History, 66 Chi.-Kent L. Rev. 321, 329–30 (1990). They are expected to deliberate and execute policy in a way that can connect into and reflect the wider administrative/legal system of which it is a part, to offer continuity with past practice as well as contemporary policy priorities.152Stack, supra note 93, at 2011–13.

When policy is generated through litigation that does not derive from clearly articulated rulemaking, or that is designed to shape industries or punish particular actors without prior notice and guidelines, there may be doubts about the agency’s adherence to these rule of law norms. For example, in August 2023, the Court of Appeals for the D.C. Circuit ruled against the SEC in the agency’s decision to deny asset manager Grayscale’s application for a bitcoin exchange-traded fund. Strikingly, in reviewing the legality of the SEC’s decision, the D.C. Circuit unanimously determined that the agency had acted in an “arbitrary and capricious manner” when it refused Grayscale’s petition.153Paul Kiernan, Grayscale’s Court Win Over SEC Lifts Hopes for Bitcoin ETF Approval, Wall St. J. (Aug. 29, 2023) https://www.wsj.com/finance/regulation/grayscale-wins-lawsuit-against-sec-over-bitcoin-etf-1b305cfa. In other words, there emerges, in short, a difference between “filling a gap” and “filling a legislative void.” The former involves targeted elaboration of existing legislative or administrative processes and thinking. The latter attempts to create a legal artifice in the absence of such groundwork. Eliding the rigors of information gathering and public input can, in short, have costs. Rather than being perceived as fair, impartial, and guided by their public interest mission, deficiencies within the rulemaking process can fuel negative views of agencies as being excessively political, insufficiently motivated by internal expertise and lacking technocratic professionalism.154In a startling decision, the court in SEC vs. Digital Licensing (Debt Box) ruled that the SEC’s behavior in bringing a restraining order against the defendant crypto company constituted a “gross abuse of power.” The court ordered the SEC to pay the defendant’s legal and other costs relating to the complaint, noting that the SEC had repeatedly misled the court by presenting falsehoods and mischaracterizations of the facts to support its submissions in the case. Sec. & Exch. Comm’n v. Digital Licensing, Inc., No. 2:23-cv-00482 (D. Utah Nov. 21, 2023); see also Nikhilesh De, SEC Committed ‘Gross Abuse of Power’ in Suit Against Crypto Company, Federal Judge Rules, CoinDesk (Mar. 18, 2024), https://www.coindesk.com/policy/2024/03/18/sec-committed-gross-abuse-of-power-in-suit-against-crypto-company-federal-judge-rules/ [https://perma.cc/SQ74-GHFG]. Ultimately an erosion of trust in the fundamental norms governing agency rulemaking can curtail confidence in the mission of the agency and its ability to execute it successfully and legitimately.

III.  WHEN SHOULD AGENCIES REGULATE BY ENFORCEMENT?

Enforcement is a critical function of the regulatory state, and for the most part noncontroversial. Government agencies are charged with mission-critical responsibilities aimed at serving the public and undertaking actions that preserve the integrity of rules designed to protect investors, consumers, and even the overall economy. For what purpose enforcement is used can, however, vary. At times, agencies may seek to utilize their enforcement powers in ways that preserve the integrity of existing law; at others, they may seek to establish new legal theories, or even regulatory regimes, powers, or jurisdiction. In all cases, discrete and expansive, regulatory action may be considered essential, or even vital and a necessary action to send powerful signals to the market in a timely manner. Or it could deliberately enable what are ultimately abusive practices by agencies.

The sheer variety of ways and motives driving regulation by enforcement raises a number of pressing doctrinal questions. Overall, regulation by enforcement is a firmly established and jurisprudentially sanctioned practice. Still, precedent has not to our knowledge distinguished among the different scenarios in which it is practiced. This void offers the courts, and especially a Supreme Court skeptical of broad remits of administrative authority, considerable leeway to respond in ways that regulators may find surprising. Agencies also risk the possibility that their actions could have serious reputational consequences, and provide fodder for legislative actions clipping their budgets, and legal decisions eroding their very authority.

Enforcement by regulation should thus be undertaken with a clear understanding by regulators as to its risks and exercised in ways that optimize the long-term interests of agencies, their stakeholders, and regulated entities. From this standpoint, we foresee a number of helpful rules of thumb. Ultimately, some of the same kinds of cost-benefit and data analysis compelled in rulemaking should be institutionally embedded in agencies for enforcement actions. Here, coordination among enforcement and rulemaking staff might be helpful. We understand that the distinction between preserving and creating law can be murky, but cases in which serious questions arise, the cost benefit analysis should, in turn, likewise increase in its rigor. A practical understanding of the divergent incentives of staff in each office is warranted, as well as the incentives of agency stakeholders in approving and guiding enforcement actions.

Additionally, enforcement actions in novel policy areas should be ideally initiated as early as possible in the lifecycle of the disputed market practice as to mitigate subsequent market disruption. If an entity is selling what an agency believes is an unregistered security, or if an entity is violating rules as an unregistered securities exchange or unlicensed bank, enforcement activity should be brought to bear early—or a rulemaking initiated. Waiting years to bring an enforcement action can be misinterpreted, as well as heightens perceptions of agencies acting only when convenient, politically palatable, or for other than merits-based reasons.155See e.g., Bittner v. United States, 598 U.S. 85 (2023) (discussing the Due Process Clause and requirements for fair notice in the context of the Bank Secrecy Act).

At the same time, regulation by enforcement is likely to be most accepted as legitimate when it is understood to be a last, rather than first resort. The APA is designed to enable not only democratic participation and accountability, but also predictability. Taking the pains to articulate the agency’s expectations, even if only through soft law tools like staff guidance and no action letters, are more likely to set the stage for more broadly accepted enforcement actions with high policy throughput. Yet even here, in order to be effective, the guidance should be coherent, thought through, and offer a clear set of expectations for market and industry participants built on top of established legal principles, precedent, and rulemaking.

Finally, enforcement actions designed to promote policy should embrace some of the public facing norms of administrative process. Adjudications are, as mentioned, by their very nature confrontational, and usually represent a zero-sum game for participants. Nevertheless, regulatory agencies should, when possible, respond to amicus briefs and other interventions by industry and civil society, even in the context of legal proceedings. By conferring voice to a broader set of stakeholders, agencies can relieve the pressure generated by opting out of administrative process.

Ultimately the increasing attention directed toward regulation by enforcement creates a rich research area for academics, policymakers, and the press. Commentators would do well to keep an eye out for developments that suggest such strategies risk decisions that not only create bad precedent, but also risk decaying the very authority of the agency.

At the same time, the drivers behind regulation by enforcement deserve greater scholarly and popular attention. To some extent, the turn to enforcement can be attributed to partisan politics. Litigation can further the political objectives of democratically elected representatives who have appointed personnel to the administrative state. And it can be used to bolster the bona fides of officials and regulators seeking greater visibility, and perhaps, professional promotion. And in such cases, the incentives of a regulator may not necessarily conform with their agency, with the regulator having moved on when the agency faces potentially adverse litigation or judicial weakening. Still, regulation by enforcement may also reflect how changes in the reception of administration of policy may drive the exploration of a greater toolbox for regulators. In this sense, litigation may beget litigation, and proliferating lawsuits by private actors to agency rulemaking incents regulators to sue preemptively instead, creating a doom loop of legal challenges that not only stifle courts, but also ultimately add to regulatory uncertainty.

In the end, identifying and disentangling motives will not always be easy. Though attempts to do so will continue to abound—if not by courts, then from legislators and the public. In this process, the credibility of all actors will be tested. The ability of government to solve problems resides in trust, just as does the ability of the private actors to sell their goods and services. The outcry from “regulation by enforcement,” however well or ill-informed, at a minimum indicates that the trust is no longer always there. The key for regulators, lawmakers, and courts will be to see just what is responsible for its decay, and how to restore it in ways that advance the public interest.

96 S. Cal. L. Rev. 1297

Download

* Chris Brummer is the Agnes Williams Sesquicentennial Professor of Financial Technology at Georgetown University Law Center.

† Yesha Yadav is the Milton R. Underwood Chair, Associate Dean and Professor of Law at Vanderbilt Law School.

‡ David Zaring is Elizabeth F. Putzel Professor of Legal Studies at the Wharton School, University of Pennsylvania. For their invaluable insights, perspectives and comments, we are most grateful to Anita Bandy, Anupam Chander, Patrick Corrigan, Elizabeth de Fontenay, Keir Gumbs, Kathryn Judge, Don Langevoort, Jai Massari, Donna Nagy, Peter Molk, Alex Platt, Todd Phillips, Adam Pritchard, Elizabeth Pollman, Bob Rasmussen, Adriana Robertson, Kevin Stack, Bob Thompson, Anne Tucker, Yuliya Guseva, and to participants at the BYU Winter Deals Conference, the Digital Transformation in Business and Law Symposium sponsored by the Southern California Law Review at USC and the University of Pennsylvania Institute for Law and Economics (ILE) Roundtable (Spring 2023). We thank Alex Ang Gao for excellent research assistance. Errors are our own.

Divided Agencies

Clashes between presidential appointees and civil servants are front-page news. Whether styled as a “deep state” hostile to its democratically selected political principals or as bold “resisters” countering those principals’ ultra vires proposals, accounts of civil servant opposition are legion. Move beyond headlines, however, and little is known about the impact of political divisions within agencies on their workaday functioning.

This Article presents the first comprehensive, empirical examination of the effects of intra-agency political dynamics on policymaking. Leveraging data on political preferences based on campaign donations, we identify “ideological scores” for both appointees and civil servants in dozens of agencies over thirty-four years—the first measure of the political gap between these two groups across agencies and time. We use these scores to examine how ideological divergence between appointees and civil servants affects regulatory activity.

We find that agencies with greater distance between these two groups—which we term “divided agencies”—may adopt a more cautious posture. They tend to extend the rulemaking process and allow consideration of late-filed comments. These features provide appointees with extra time to gather and digest comments from politically aligned outside experts. Divided agencies’ caution may extend to the completion of final rules, which—in some but not all models—tend to be less numerous. Remarkably, we find no evidence that divided agencies are any less successful in shepherding proposed rules to final status. That finding casts doubt on the claim that the longer rulemaking timeframes in these agencies are attributable to civil servants’ attempts to derail oppositional appointees’ initiatives. Instead, one possible interpretation is that divided agencies’ caution pays off.

These findings imply that, with agency heads oscillating between left and right based on the party in power, the generally more moderate civil service can serve as a ballast. Specifically, faced with appointees that may be responsive only to a bare electoral majority, the presence of oppositional civil servants may encourage regulatory caution and push decision-making away from the extremes—thus, paradoxically, moving policy toward the median voter.

Our findings also spotlight the critical role that the notice-and-comment process—which is often maligned as pretextual—can play in divided agencies. Generalist appointees face a principal-agent problem when crafting rules: their key source of necessary in-house expertise, civil servants, may be misaligned. In this circumstance, comments from outside allies can provide a check on civil servants’ work. That civil servants can play a promajoritarian, moderating role in divided agencies highlights the importance of preserving civil service protections—especially in today’s polarized political climate.

Introduction

Secretary of the Interior Ryan Zinke, who served during the Trump Administration, and John Morton, who helmed Immigration and Customs Enforcement (“ICE”) under President Obama, may not have much in common politically, but they do share one experience: they managed agencies in which approximately one-third of their workforce was estranged. A proponent of increasing industry access to public lands, Secretary Zinke believed he had “thirty [percent] of the crew that’s not loyal to the flag” concerning that goal.[1] He compared his situation to capturing “a prized ship at sea and only the captain”—that would be Secretary Zinke, incidentally, a former Navy SEAL—“and the first mate row over” to manage the captured crew.[2] In response, some Interior Department civil servants styled themselves “the disloyals,” printing T-shirts with that epithet.[3]

Director Morton faced a similar mutiny. After issuing a directive prioritizing deportations of people convicted of crimes and urging prosecutorial discretion in other cases,[4] the union representing nearly thirty-nine percent of ICE employees passed a no-confidence vote against Morton’s leadership.[5] That move was unprecedented.[6]

That other apostates can be found across the executive branch is unsurprising;[7] the conditions are ripe for such conflicts. Civil servants often hold differing views from appointees.[8] With only four thousand appointees atop a federal workforce of over two million[9]—many of whom hold job protections—the former group’s ability to supervise the latter will, by practical necessity, be incomplete. As political polarization grows and hardball tactics typically associated with electoral politics enter administrative agencies,[10] we expect that conflicts between appointees and civil servants will only increase.

In recent years, legal scholars have turned their attention to examining these inner workings of administrative agencies. For instance, some scholars posit that competing centers of power within agencies—civil servants and appointees, along with public participants—serve a checking function on each other’s power and thus mimic the more familiar constitutional separation of powers.[11] Others theorize about the policies produced by agencies that contain competing powers, some of which pull in majoritarian and others in countermajoritarian directions.[12]

Yet while the legislative consequences of political divisions among the branches of government are well studied,[13] relatively little empirical work analyzes the impact on policy of political divisions within agencies.[14] Empirically, political dynamics inside administrative agencies remain terra incognita in some important respects. How do agencies in which key subgroups are at loggerheads differ from agencies that are more politically cohesive? Do deeply divided agencies take longer to regulate, perhaps because of distrust or civil servant foot-dragging? Is White House review more exacting for these agencies, on the theory that White House officials are less likely to trust proposed rules emanating from ideologically divided entities? And do these agencies ultimately produce fewer rules?

This Article seeks answers to these questions. It examines how ideological differences between political appointees and civil servants affect the rulemaking process. These two groups share power within agencies, with generalist appointees relying on expert civil servants to implement the former group’s preferred policies. That division gives rise to a well-studied principal-agent problem: appointees must rely on civil servants who may have very different policy preferences and over whom appointees have limited ability to monitor or control.[15]

Faced with agents they may distrust, appointees may seek out and spend more time considering informed “second opinions” from other sources. These alternative sources of information include comments received during the notice-and-comment process, informal feedback from allies in Congress, and recommendations from advisory committees of outside experts occupying a privileged position within agencies. Indeed, public choice theorists posit that administrative structures and processes can serve just this purpose.[16]

We put this theory to the test, examining how appointees respond when their agents in the civil service hold differing views. To do so, we first develop a measure of ideological distance over time and within agencies so that we can identify divided agencies.

Existing measures are inadequate for that purpose,[17] so we create our own. We leverage a dataset on ideological preferences based on campaign donations to do so. We use these data to generate dynamic “ideal point” estimates for agency heads and civil servants in forty-seven agencies over thirty-four years—and thus, a new measure of the ideological gap between these two groups across agencies and time.[18] We then connect this measure to data concerning the rulemaking process.

Our results show that divided agencies—that is, those with ideologically opposed agency heads and civil servants—adopt a slower rulemaking posture than agencies that are more unified. Several of our findings suggest that greater caution may be at play. Once civil servants generate a proposed rule, appointees take their time. While we cannot rule out all alternative explanations, we observe that one feature of the delay is consideration of late-filed comments. Considering late-filed comments allows appointees to hear from a greater number of ideologically aligned outside groups as a check on civil servants’ work. Delay may also result from appointees spending additional time assessing those comments. In either case, slower rulemaking at divided agencies suggests that appointees may be utilizing rulemaking procedures to blunt civil servants’ informational advantages. Additionally, divided agencies may tend to issue fewer rules. That their rules are no less likely to become final, however, is perhaps evidence that their caution pays off.

This claimed cautious approach means that, whatever policy changes one desires in a first-best world, the reality of policymaking in divided agencies likely will leave one disappointed. Indeed, divided agencies are likely status quo-preserving. Whether this feature is normatively desirable turns, in part, on one’s risk aversion and the extent to which one values policy certainty.

Given that partisan polarization—and thus divided agencies—likely will persist into the foreseeable future, our findings provide a set of best practices for agencies to function as well as possible under these conditions. The policy implication that most closely follows from our findings is that officials must preserve the independence of the civil service. At a time when that independence is challenged, our findings about rulemaking suggest that civil servants comprise a moderating counterweight against more ideologically extreme appointees; thus, they serve as a bulwark against wild changes in regulatory policy. With agency leadership swinging between liberal and conservative poles, as we find, civil servants—who tend to be more moderate, albeit left of center—can pull agency policies toward the median voter. This moderation serves to improve democratic representation in agency policymaking: appointees are aligned with the Presidents who appoint them, and Presidents tend to be more ideologically extreme than the median voter. Allowing policy to swing all the way to their appointees’ preferences would therefore not reflect the public’s preferences. In contrast to common laments of employment-protected civil servants serving as a countermajoritarian force in policymaking, we show that they can serve a democratizing function in divided agencies.[19]

Further, to prevent divided agencies from descending into the gridlock and paralysis that plague other polarized institutions, appointees must have access to high-quality information from ideological allies, which we infer from divided agencies’ greater willingness to consider late-filed comments. We argue that the notice-and-comment process is well suited to transferring high-quality information to distrustful appointees. Notice-and-comment also may discourage civil servants, aware that their work will be “checked” by outsiders, from straying too far from their principals’ goals. Additional measures to inject diverse outside sources of information into agency decision-making could further enhance agencies’ ability to function, even in a challenging partisan climate within their walls—though they would increase resource costs associated with rulemaking.

This Article proceeds in four parts. Part I situates our study in twin literatures: empirical scholarship examining extra-agency influences on regulatory dynamics and descriptive and positive work concerning intra-agency dynamics. Part II presents our theory and expectations concerning the effects of appointee-civil servant preference divergence on regulatory processes and outputs. In Part III, we describe our research design, including our creation of an original dataset identifying appointees’ and civil servants’ political ideologies across agencies and time, and we present our analysis. Part IV discusses normative implications and offers policy prescriptions.

          [1].      Evan Osnos, Trump vs. the “Deep State, New Yorker (May 14, 2018), https://
http://www.newyorker.com/magazine/2018/05/21/trump-vs-the-deep-state [https://perma.cc/9862-ZBGM].

          [2].      Matthew Daly, Interior Chief’s Loyalty Comments Draw Widespread Criticism, Associated Press (Sept. 26, 2017), https://apnews.com/article/8c3ae77664f44159823903b3add31e65 [https://
perma.cc/AN4H-W8N6].

          [3].      Osnos, supra note 1.

          [4].      Memorandum from John Morton, Dir., U.S. Immigr. & Customs Enf’t, to All Field Off. Dirs., All Special Agents in Charge, & All Chief Couns., U.S. Immigr. & Customs Enf’t (June 17, 2011), https://
http://www.ice.gov/doclib/foia/prosecutorial-discretion/certain-victims-witnesses-plaintiffs.pdf [https://perma.
cc/JM2G-ZSVX].

          [5].      Ted Hesson, 7 Numbers that Tell the Story of an Immigration Boss’s Tenure, ABC News (June 17, 2013, 12:34 PM), https://abcnews.go.com/ABC_Univision/Politics/ice-director-john-mortons-
tenure-numbers/story?id=19422159 [https://perma.cc/W37D-R4QM]; see also Julia Preston, Single-Minded Mission to Block an Immigration Bill, N.Y. Times (June 1, 2013), https://www.nytimes
.com/2013/06/02/us/for-chris-crane-a-quest-to-block-an-immigration-bill.html [https://perma.cc/2ZLK-
TXUC] (providing figures used to calculate the union’s share of ICE’s workforce).

          [6].      Preston, supra note 5.

          [7].      See Osnos, supra note 1 (providing other examples).

          [8].      See infra Part III.

          [9].      Fiona Hill, Public Service and the Federal Government, Brookings (May 27, 2020), https://
http://www.brookings.edu/policy2020/votervital/public-service-and-the-federal-government [https://perma.cc/
JRK2-QYRM] (reporting the size of the federal nonmilitary, nonpostal workforce and the approximate number of political appointees).

        [10].      See Brian D. Feinstein & M. Todd Henderson, Congress’s Commissioners: Former Hill Staffers at the S.E.C. and Other Independent Regulatory Commissions, 38 Yale J. on Regul. 175, 223, 226 (2021) (documenting these developments).

        [11].      See Jon D. Michaels, Of Constitutional Custodians and Regulatory Rivals: An Account of the Old and New Separation of Powers, 91 N.Y.U. L. Rev. 227, 238–39 (2016); Gillian E. Metzger, The Interdependent Relationship Between Internal and External Separation of Powers, 59 Emory L.J. 423, 425 (2009); Neal Kumar Katyal, Internal Separation of Powers: Checking Today’s Most Dangerous Branch from Within, 115 Yale L.J. 2314, 2346 (2006).

        [12].      See Matthew C. Stephenson, Optimal Political Control of the Bureaucracy, 107 Mich. L. Rev. 53, 72 (2008).

        [13].      See generally Daryl J. Levinson & Richard H. Pildes, Separation of Parties, Not Powers, 119 Harv. L. Rev. 2311 (2006); Gary W. Cox & Mathew D. McCubbins, Setting the Agenda: Responsible Party Government in the U.S. House of Representatives (2005); John J. Coleman, Unified Government, Divided Government, and Party Responsiveness, 93 Am. Pol. Sci. Rev. 821 (1999); David R. Mayhew, Divided We Govern: Party Control, Lawmaking, and Investigations, 1946–2002 (2d ed. 2005).

        [14].      But see generally Rachel Augustine Potter, Bending the Rules: Procedural Politicking in the Bureaucracy (2019); Rachel Augustine Potter, Slow-Rolling, Fast-Tracking, and the Pace of Bureaucratic Decisions in Rulemaking, 79 J. Pol. 841 (2017) [hereinafter Potter, Slow-Rolling, Fast-Tracking]; Anne Joseph O’Connell, Political Cycles of Rulemaking: An Empirical Portrait of the Modern Administrative State, 94 Va. L. Rev. 889 (2008); George A. Krause, A Two-Way Street: The Institutional Dynamics of the Modern Administrative State (1999).

        [15].      See Mathew D. McCubbins, Roger G. Noll & Barry R. Weingast, Administrative Procedures as Instruments of Political Control, 3 J.L. Econ. & Org. 243, 243–44 (1987) (outlining this principal-agent problem).

        [16].      See, e.g., id. at 255 (“[P]olitical principals in both branches of government suffer an informational disadvantage with respect to the bureaucracy. . . . [M]any of the provisions of the Administrative Procedures [sic] Act solve this asymmetric information problem.”).

        [17].      For instance, measures based solely on the ideology of the appointing President fail to capture ideological differences in consecutive agency heads appointed by the same President. In other words, they do not capture enough variation over time. Other measures only occur sporadically in time.

        [18].      The included executive agencies are the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Justice, Labor, State, Transportation, Treasury, and Veterans Affairs (operating as the Veterans Administration until 1989); Environmental Protection Agency; and Small Business Administration. The included independent agencies are the Agency for International Development, Civil Aeronautics Board (until its dissolution in 1985), Commodity Futures Trading Commission, Equal Employment Opportunity Commission, Farm Credit Administration, Federal Communications Commission, Federal Deposit Insurance Corporation, Federal Emergency Management Agency (until its subordination to the Department of Homeland Security in 2003), Federal Energy Regulatory Commission, Federal Housing Finance Agency, Federal Housing Finance Board (until its dissolution in 2009), Federal Labor Relations Authority, Federal Maritime Commission, Federal Reserve Board, Federal Trade Commission, General Services Administration, Interstate Commerce Commission (until its dissolution in 1996), National Aeronautics and Space Administration, National Archives and Records Administration, National Credit Union Administration, National Transportation Safety Board, Nuclear Regulatory Commission, Office of Federal Housing Enterprise Oversight (until its dissolution in 2009), Office of Personnel Management, Pension Benefit Guaranty Corporation, Securities and Exchange Commission, Social Security Administration, Surface Transportation Board, and U.S. Postal Service. Also, the Internal Revenue Service, although part of the Treasury Department, is included as a separate agency.

        [19].      See Stephenson, supra note 12, at 72 (presenting a positive theory of this dynamic).

           *      Assistant Professor of Legal Studies and Business Ethics, the Wharton School of the University of Pennsylvania.

           †      Professor of Law, Political Science and Public Policy, University of Southern California Gould School of Law. We thank Adam Bonica, Devin Judge-Lord, and Rachel Potter for data, and Ming Hsu Chen, John Harrison, Erin Hartman, Kathryn Kovacs, Jeff Lubbers, Neysun Mahboubi, Jennifer Mascott, John McGinnis, Jon Michaels, David Noll, Anne Joseph O’Connell, Richard Pierce, Zach Price, Michael Rappaport, Noah Rosenblum, Amy Semet, Bijal Shah, Kevin Stack, Matthew Stephenson, Chris Walker, Dan Walters, Adam White, and participants at the Presidential Administration in a Polarized Era conference at the C. Boyden Gray Center for the Study of the Administrative State for helpful comments. The authors also gratefully acknowledge the Gray Center’s financial support of this research. 

  Download

Divided Agencies

Clashes between presidential appointees and civil servants are front-page news. Whether styled as a “deep state” hostile to its democratically

Read More »

A Closer Look at the PTAB Operation

Prior to the passage of the America Invents Act (“AIA”) in 2011,[1] allegedly low-quality patents were allowed to proliferate. Many of these low-quality patents contributed little to innovation because holders of these patents did not practice the technologies they had exclusive rights over. Rather, these patent holders used the patents to challenge actually productive patents owned by operating companies. Unfortunately, there are only two ways to challenge such low-quality patents: through federal court litigation or administrative patent opposition mechanisms.

In light of these problems, Congress passed the AIA and empowered the United States Patent Trademark Office (“USPTO”) to reevaluate and revoke previously issued patents through the creation of the Patent Trial and Appeal Board (“PTAB”).[2] The goal of these post-grant administrative proceedings is to serve as an efficient alternative to district court litigation and to lower the cost of invalidating low-value patents.[3] Despite Congress’s best intentions, there is still much uncertainty regarding these cancellation procedures. Contrary to congressional expectations, the U.S. patent system ranking dropped consecutively from first to tenth to thirteenth in its patent protection ranking between 2017 and 2018, receiving the lowest score in patent opposition out of all developed countries’ post-grant opposition mechanisms.[4] Such downward trend raises the question: Are these subpar ratings merely a result of the new tribunal’s growing pains which will soon subside, or do they indicate a systemic flaw of the U.S. patent opposition system?

Out of the new PTAB’s proceedings, inter partes review (“IPR”), a process by which the PTAB reconsiders or cancels previously issued patents, has been exceedingly popular for patent challengers. This Note analyzes over 11,000 PTAB proceedings across different industries and technologies, and attempts to evaluate the PTAB’s run over its eight-year life in order to provide an empirical perspective on whether the PTAB has gone too far invalidating patents.

This Note will inform the debate over how well the PTAB is working by looking at: (1) its treatment of Non-practicing Entities (“NPEs”) and Patent Assertion Entities (“PAEs”); (2) serial IPR petitions; and (3) concurrent litigation. All three areas will be analyzed across different industries using original empirical data. The data will show that while Congress has mostly achieved its intended goals of making patent opposition litigation faster and cheaper at the PTAB, there are unintended consequences of the PTAB mechanisms.

As I will describe in greater detail below, the specific findings are the following:

       First, the PTAB has largely succeeded in providing an additional avenue to raise invalidity challenges against NPEs and PAEs, especially in the information technology (“IT”) sector. However, there has also been an alarming rise in invalidity petitions aimed at actual operational companies, a trend across industries but especially in the biosciences. Among PTAB invalidity proceedings against NPEs/PAEs, 52% of them are against patents related to the IT industry whereas only 6% are against patents in life science;

Second, among 11,909 PTAB petitions filed, there are 7,074 unique patents addressed. In other words, 41% of the time the PTAB looks at a petition, the Board had already seen the same patent challenged some other way in another petition. On a per-patent basis, 32% of the patents have been challenged more than once. Such serial petition problems also exist across industries. The problem is the most prevalent within the IT industry. In fact, 36% of the patents addressing software technologies are challenged more than once, whereas 30% of the patents addressing biosciences are challenged more than once;

Third, the PTAB mechanisms are used in unintended ways by certain entities.[5] For example, almost one in five patents in front of the PTAB, 19% to be precise, faces multiple invalidation petitions brought by the same challengers.

Fourth, while the institution rate is decreasing across industries, petitions against software patents are instituted at the highest rate of 75%, whereas petitions against bioscience patents are instituted at the rate of 68%;

Fifth, the heightened concerns on the invalidity rate of PTAB petitions (most commentators report a rate of around 80%) could be misleading because the overall rate of petitions being held partially or entirely invalid out of all petitions filed is only 22%. The 80% invalidity rate is calculated by dividing petitions that are held partially or entirely invalid by petitions that received final written decision; however, the majority of petitions filed do not ever receive a final written decision;

Last, patent challengers who resort to invalidating patents at the PTAB are highly likely to have parallel lawsuits against the same patents, as 83% of the PTAB petitions have a co-pending district court case.

In Part I, I will introduce the U.S. patent system, the history and purpose of the AIA, and the PTAB. I will discuss the popularity of one specific PTAB proceeding IPR and present both sides of the debate around IPRs, the USPTO director’s discretion, and the Supreme Court’s scrutiny over the PTAB in recent years. In Part II, I will describe the study design, which includes its data source and data structure. In Part III, I will expand upon the findings and review how the PTAB operations have changed under different directors. At the end, I will conclude my analysis.

 

 

          [1].      35 U.S.C. §§ 311–319. In September 2012, petitions for inter partes review first became available. Id.

          [2].      See id. § 6(b).

          [3].      H.R. Rep. No. 112-98, pt. 1, at 39–40, 48 (2011), as reprinted in 2011 U.S.C.C.A.N. 67, 69, 78 (discussing that post grant reviews were intended to be “quick and cost effective alternatives to litigation”).

          [4].      See U.S. Chamber of Com., Glob. Innovation Pol’y Ctr., U.S. Chamber International IP Index 7–9 (6th ed. 2018), http://globalipcenter.wpengine.com/wp-content/uploads/
2018/02/GIPC_IP_Index_2018.pdf [https://perma.cc/NH7B-MW29] (commenting that the change is primarily driven by relative weakness in patentability requirements and patent opposition and noting that all other EU countries patent opposition system scored higher than that of the United States). In 2020, the U.S. IP system ranking went back up according to the 2020 International IP Index. See U.S. Chamber of Com., Glob. Innovation Pol’y Ctr., U.S. Chamber International IP Index 38 (8th ed. 2020), https://www.uschamber.com/assets/documents/023881_gipc_ip_index_2020_fullreport_final.pdf [https:
//perma.cc/Y2KQ-9NH2].

          [5].      Subcomm. on Intell. Prop., Innovation in America: How Congress Can Make Our Patent System STRONGER, Comm. on Judiciary (Sept. 11, 2019, 2:30 PM), https://www.judiciary.senate.gov/
meetings/innovation-in-america-how-congress-can-make-our-patent-system-stronger [https://perma.cc/
KW4C-2M2J] (broadcasted at 1:53; Senator Tillis urging Director Iancu to make administrative changes to the PTAB). 

*      Executive Editor, Southern California Law Review, Volume 95; J.D. Candidate 2022, University of Southern California Gould School of Law; B.S. Mechanical Engineering, B.S. Earth Science, Rice University. I would like to thank Yoko Hongyu Li for her invaluable guidance on data gathering and software programming. To my parents Xiao and Wei, thank you for encouraging me in all my pursuits and inspiring me to follow my dreams. Finally, many thanks to editors at Southern California Law Review who made this process a breeze.