Administrative law’s central anxiety is the exercise of delegated power. This angst, more often than not, is directed at delegations from Congress to an administrative agency—spawning countless legal conundrums: which institutions should have interpretive primacy,
whether the statutory delegate’s identity matters,
and whether the nondelegation doctrine should be revived.
These normative debates, in turn, also have positive counterparts. Decades of interdisciplinary scholarship ask why and under what conditions legislatures delegate in the first place. Prominent theories, for example, posit that Congress delegates to agencies to exploit their superior expertise,
reduce policymaking transaction costs,
or otherwise shift political blame.
From these perspectives, politically-appointed agency heads—say, the Administrator of the Environmental Protection Agency (EPA) or the Secretary of Health and Human Services (HHS)—are the main arbiters of delegated authority. In reality, however, much of that power is subdelegated within the agency.
Agency heads, that is, take authority granted from Congress or the President and further redelegate it to their subordinates. As a result, tenure-protected career staff and lower-level political officials often make decisions initially granted to their superiors.
In this manner, characters less familiar to the administrative law literature now come to the foreground: the EPA’s Chief Financial Officer,
for instance, or HHS’s Director of the Office for Civil Rights.
Delegation in some form, of course, is a necessity in large organizations like bureaucracies. Agency heads have limited time. They have finite resources. They must thus rely on their staff for discrete tasks. These assignments, however, are usually accompanied by structures and processes to coordinate institutional decisionmaking.
In other words, even if staff members or other subordinates make initial recommendations, their decisions usually undergo intra-agency review before becoming the “agency’s” decision. As a result, agency heads often remain the final decisionmaker. By contrast, when the EPA Administrator formally subdelegates her authority, she allocates the decision right to someone else within the agency. Such decision rights are usually accompanied by signature authority—literally, the authority to affix one’s signature and sign off on an agency action without higher-level oversight.
The resulting stakes can be high. Consider a particularly dramatic controversy over population measures in the 2000 U.S. Census. The 1990 census had relied primarily on mail-in forms and thereby “missed record numbers of people that had been traditionally hard to count, mainly members of ethnic and racial minorities.”
In response, President Bill Clinton’s Secretary of Commerce proposed using statistical sampling to adjust the 2000 census count.
However, House Republicans sued to block the use of this method, which was expected to benefit Democrats in the congressional-reapportionment process.
The Supreme Court sided with the House Republicans, holding that the Census Act prohibited the practice.
Nonetheless, the Clinton Administration maintained that population counts derived from sampling could still be used for redistricting and determining the allocation of federal funds.
On June 20, 2000, the Secretary of Commerce proposed a rule subdelegating the authority to the presidentially-appointed and Senate-confirmed Director of the Census Bureau to decide whether to use statistical sampling.
The Director’s authority would be “final.”
Otherwise, “[r]eview of the Director’s decision by the Secretary of Commerce would at a minimum create the appearance that considerations other than those relating to statistical science were being taken into account.”
Representative Dan Miller, the Republican Chairman of the Subcommittee on the Census, questioned the validity of the proposed rule in a series of letters to various members of the Department of Commerce and the Census Bureau, arguing that “there is a serious difference between delegating . . . to a subordinate, and divesting oneself of final review and reversal power”—the latter being impermissible under the Census Act.
Agency subdelegation of this nature is a more pervasive phenomenon than commonly recognized, sometimes even by agency heads themselves. As one former Securities and Exchange Commission (SEC) member marveled, “[f]rom time to time, you might read in a newspaper about a ‘Commission action,’ and you will have no idea what it is about.”
Often it will turn out, however, that “the staff ha[s] taken action pursuant to the more than 376 separate rules where the Commission previously granted delegated authority to the SEC staff.”
These SEC subdelegations range in recipient and scope. For example, the Commission’s internal Director of the Division of Trading and Markets is authorized to act on thousands of rule filings from self-regulatory organizations, including various exchanges and clearing agencies.
The SEC has also subdelegated authority to the Director of the Division of Trading and Markets to grant exemptions from important Exchange Act Rules,
as well as from rules regarding short sales.
The Director of the Division of Corporation Finance is authorized to grant or deny issuer waivers.
The Commission has further delegated authority to the Chief Accountant to temporarily suspend rules issued by the Public Company Accounting Oversight Board.
And the SEC is hardly alone. At one point in time, the EPA recorded over 500 subdelegations by its own count, roughly half within its headquarters and the rest distributed among its regional offices.
The Federal Communications Commission (FCC) devotes significant parts of the Code of Federal Regulations (CFR)to hundreds of delegated authorities.
Other agencies like the Consumer Product Safety Commission similarly delegate authority but memorialize it only in internal agency documents.
Subdelegations are also the subject of recent high-profile litigation. Faced with quorum-killing vacancies, the Election Assistance Commission (EAC) delegated some responsibilities to its Executive Director.
In the ensuing litigation, the Tenth Circuit upheld the actions.
Subdelegations are likely to become even more common should legislative gridlock result in further vacancies.
In the real world, subdelegation matters. Yet little is known about this important bureaucratic practice: Under what circumstances do agency heads delegate to their subordinates and why? Which powers are subdelegated, and to whom? What explains variations in these dynamics, if any, across different agencies? At first glance, one might think the positive story just mirrors that of delegation one level up. Perhaps bureaucrats delegate for the same reasons that legislators do. There are good reasons to think, however, that this instinct is misplaced given their diverging goals, cultures, and norms.
Thus, while social scientists and legal scholars have long focused on delegation to agencies, the focus here is on delegation within agencies.
Subdelegation, in turn, complicates many longstanding debates in administrative law. Perhaps most obviously, it adds another dimension to separation-of-powers disputes, which emphasize the ways in which the legislature and executive battle to impose their respective preferences.
The fact that presidential appointees can subdelegate their authority to sympathetic subordinates is a less-recognized means of partisan entrenchment. Relatedly, defenders of the “unitary executive” have celebrated the myriad ways in which Presidents have centralized and consolidated control over the bureaucracy, especially through their appointments.
Subdelegations to career civil servants, however, weaken this mechanism of executive power. When administrations turn over, subdelegations remain in place until and unless they are repealed.
Administrative law scholarship has also increasingly turned from the external separation of powers (between the President, Congress, and courts) to the internal separation of powers—that is, the counterbalances offered by various agency actors.
This literature often presents career staff as nonpartisan keepers of professional norms.
Considering such staff members as recipients of delegated authority with their own preferences and biases, however, calls into question the extent to which they facilitate, rather than buffer, fights between their political principals. In this view, civil servants can amplify, as opposed to mitigate, potential abuses of power.
Finally, legal scholars have also disputed the extent to which the administrative state is “ossified”—that is, rendered impervious to change by increasing legal requirements.
Subdelegations to experienced subordinates, however, can expedite agency action through the internal reallocation of resources.
To help shed light on these practices, this Essay advances a positive theory for how and why agency heads subdelegate their power and analyzes the resulting normative implications.
It is based on a close study of existing and historical subdelegations within a wide range of administrative agencies; in this sense, it is a work of qualitative, grounded theory-building.
The burden is to develop a compelling, parsimonious, and falsifiable explanation for a significant amount of the observed variation in subdelegation practices.
Drawing on a rich social science literature, this Essay argues that delegations within agencies are best understood as credible commitment devices through which commissioners motivate better-informed but potentially biased subordinates.
The central positive claim is that variations in subdelegation practices reflect differences in agency heads’ willingness to delegate credibly.
More specifically, the theory predicts that an agency head will commit more credibly to a subdelegation in order to induce more information production, but only within a bounded range of expected preference divergence and internal transaction costs. As the potential bias of the delegate increases, the agency head is more likely to opt for veto authority. Conversely, as preferences align, the agency head is more willing to subdelegate credibly since she can obtain additional information without the same risk of bias. At the same time, the transaction costs of reviewing and reversing a subordinate’s recommendation also matter. When the transaction costs of internal review increase, the agency head is more likely to delegate credibly since doing so eliminates those transaction costs.
Previous legal scholarship on agency subdelegation, by contrast, has largely focused on matters of statutory interpretation: whether Congress explicitly permitted the delegation and, if not, how to understand legislative silence or ambiguity.
A related issue is the extent to which the President has an inherent constitutional authority to subdelegate or whether the nondelegation doctrine demands congressional authorization.
Still other scholars have proposed that judicial deference to agency interpretations should extend only to those signed off on by agency heads, rather than their subordinates.
And perhaps most relevantly here, Professor Elizabeth Magill has examined how agencies “self-regulate” in order to maintain control over subdelegations.
While a broader literature considers how agencies delegate to external actors like other agencies
or private parties,
the main focus here is on internal delegations.
More specifically, Part I frames the problem in terms of the agency head’s choice to delegate final authority to a subordinate or to retain a veto after reviewing the subordinate’s recommendation. The decision involves trade-offs between the relative potential for superior information, bias, and internal review costs. Part II considers the ways in which agency heads can make their delegations more credible in order to motivate information production. These design choices include greater reputational backing, transparency, longevity, dissolution, and, finally, entrenchment. As such, one of this Essay’s main contributions is to examine how credibility is institutionalized within administrative agencies.
Part III’s normative prescriptions, in turn, follow from the previous positive premises: Generally stated, courts should maximize the use of high-quality information in the administrative state by encouraging credible delegation. Doing so will increase the likelihood that expertise within agencies is used efficiently. Specifically, subdelegation raises constitutional concerns given that tenure-protected employees could exercise significant delegated authority. In this context, courts should apply a more functional understanding of political control attuned to the credibility and nature of the subdelegation. Moreover, judges should only extend Chevron deference to a subdelegation when the agency head has delegated authority in a way that is transparent and otherwise evinces a commitment to elicit expertise.
Furthermore, courts should also help to encourage credibility when enforcing internal delegations under the Accardi doctrine—the basic principle that an agency must abide by its own rules.
Because the doctrine still creates uncertainties for subordinates deciding whether to invest resources, judges should set clearer bright-line rules to facilitate information-forcing grants of authority. Finally, this Part also grapples with the potential for agency subdelegation to be used as a tool of partisan entrenchment—a means for agency heads to project their preferences beyond their tenures. As such, it argues that political actors, rather than courts, are best situated to prevent the entrenchment of delegations that can undermine democratic accountability.
I. Subdelegation’s Trade-offs
This Part develops a positive theory for when and why agency heads internally delegate power to their subordinates.
In doing so, it builds on the work of scholars like Sean Gailmard, John Patty, and Matthew Stephenson to highlight the various trade-offs that administrators face in the decision: between more information and bias, and between internal transaction costs and a loss of control. The first section frames the delegation problem as a choice between final and reviewable subdelegations—in essence, the choice between treating staff as authorities or advisors. The second section then amplifies these dynamics and the organizational costs of advice giving within the bureaucracy. In doing so, it explores the relationship between information production and flow within agencies and, more specifically, how the transaction costs of conveying information can influence the agency head’s initial decision to subdelegate.
A. Advisors Versus Authorities
Managing a bureaucracy, like managing a business, requires entrusting tasks to others. Agency heads have finite resources and skills. They cannot personally approve—let alone research, analyze, and evaluate—the myriad decisions required to be made on a daily basis. Agency heads must thus rely on their subordinates to perform many functions.
These subordinates include an ever-“thickening” array of political appointees
as well as thousands of civil servants.
Political appointees are generally selected by the President or an agency head.
Their tenures are not protected, lasting an average of two years.
They possess a dizzying array of titles such as deputy secretary, deputy undersecretary, principal deputy administrator, or assistant deputy administrator, among others.
Civil servants, by contrast, possess tenure and salary protections.
By law, they are hired on the basis of merit, not political ties.
As a result, they often enter government with professional norms informed by technical or legal training.
Agency heads thus face a choice in how to manage interactions with their subordinates: They can either assign a decision to them while retaining veto authority or else delegate the decision entirely.
Put differently, agency heads can review their underlings’ recommendations or else let them make the final choices. Call the former reviewable subdelegations and the latter final subdelegations.
To illustrate this (for now) simplified distinction, take the grant of authority at issue in a recent constitutional challenge to how administrative law judges (ALJs) are appointed within the SEC.
The SEC is authorized by Congress to enforce securities laws either by filing civil suit in federal district court or else through administrative adjudication.
The Commission granted its ALJs the authority to conduct administrative hearings.
The relevant statute, however, allowed the Commission a choice in how to treat the ALJ’s initial adjudicatory decision.
On the one hand, the SEC could “adopt regulations whereby an ALJ’s initial decision would be deemed a final decision of the Commission.”
This delegation would be a final subdelegation: The ALJ’s decision would be the agency’s decision. On the other hand, the SEC could instead choose to extend a reviewable subdelegation—the path it eventually took.
More specifically, the SEC established an internal review process in which it gave itself time to review the initial order; should the Commission decline such review, it would then issue an order to that effect.
Because the subdelegation was nonfinal in this respect, a panel of the D.C. Circuit upheld the constitutionality of the ALJ’s appointment scheme, though the ruling will now be considered en banc.
At first glance, one might wonder why agency heads would ever choose a final over a reviewable subdelegation—why treat subordinates as authorities rather than mere advisors? Why not instead, as with the SEC’s ALJs, keep the option to reject a decision even while rubberstamping it? After all, delegating is dangerous: There is a persistent risk that the delegate will be defiant or otherwise make a bad decision.
To minimize that risk, one might think it always better to retain the ability to restrain wayward subordinates. Final subdelegations, by contrast, entail a pledge not to reverse the subordinate’s decision.
When authority is delegated in this manner, it is committed to the delegate’s discretion. By subdelegating a power with finality, the agency head effectively gives up control.
Nevertheless, final subdelegations are pervasive in the real world. The SEC’s Director of Enforcement, as will be discussed, currently exercises the Commission’s subpoena authority.
The Office of Legal Counsel (OLC) is generally not reviewed by the Attorney General who delegated to the OLC the authority to issue executive branch legal opinions.
The Food and Drug Administration (FDA) used to exercise delegated rulemaking authority independently from the Department of HHS.
The puzzle here is to explain why. Of course, agency heads, no less than other political actors, do not seek to maximize their power but rather to optimize it.
Sometimes, in other words, it is beneficial for those in control to cede that control.
On the one hand, doing so can free up resources to pursue higher-priority tasks. By declining decisionmaking authority, agency heads can focus their attention on more important matters. At the same time, subdelegating that authority to others can also be valuable in its own right. When the recipient of the delegation is more expert on a relevant matter, subdelegation can result in better-informed decisions. Indeed, in many ways, high-quality information is the bureaucracy’s raison d’être.
Assigning decision rights within the agency can take advantage of knowledge dispersed within the organization.
It can also encourage appointees and civil servants alike to develop more specialized expertise.
Indeed, social scientists have long recognized that an important function of delegation is to motivate effort and information acquisition.
This intuition has driven theories, for example, of why Congress restricts its own ability to amend internal committee proposals
and why firm managers delegate to employees.
Administrative law scholars, of course, are also familiar with the concept that Congress grants agencies discretion to capitalize on their expertise.
The unifying insight is that principals are willing to trade off control for information.
Congress resists the ability to revise committee bills in order to encourage data gathering. Firm managers empower employees to spur the same goal.
So too with agency heads. They are willing to accept the risks of ceding authority to an actor with divergent preferences in exchange for better-informed decisions.
Beyond its intuitive appeal, this account also has real-world resonance. Consider, for example, the SEC’s experience before and after it subdeledated the Commission’s subpoena power. Beforehand, SEC Chairman Christopher Cox had used a “cumbersome” review process to approve each and every exercise of the power.
During this review, he required the enforcement staff to fly in and physically present the case to commissioners in Washington, D.C., even if the staff members were based in New York or California.
He also often “postponed . . . [enforcement] decisions at the last minute, leaving cases unresolved for months,” only to eventually weaken the proposed sanctions.
According to several career enforcement lawyers, Chairman Cox’s review “practices had a chilling effect.”
In one lawyer’s words:
The presentation of cases is the culmination of the investigative process. When that process is interrupted, delayed or denied, it can’t help but have a negative impact on the people who conduct those investigations . . . . Clearly some people wonder, ‘If they don’t want these kinds of cases, why should I bother doing them even though they’re very important?’
As a result, many SEC enforcement officials had stopped investing their time and effort in developing cases to pursue.
Chairman Cox’s use of a reviewable subdelegation is thus arguably an example of how such an approach can reduce employees’ incentives and motivation to invest resources.
The internal dynamics of the SEC, however, changed in 2009 with the arrival of Chairwoman Mary Schapiro. An Obama appointee eager to take the “handcuffs” off the enforcement division, Chairwoman Schapiro’s preferences were more closely aligned with those of her enforcement staff.
She thus spearheaded an effort to subdelegate the Commission’s authority to issue “formal orders of investigation” to the SEC’s Director of Enforcement.
Such authority could now be exercised without commissioner approval or cumbersome review.
The SEC’s Director of Enforcement Robert Khuzamii then announced in a speech that he was further redelegating that authority to the career staff. In his words, “staff will no longer have to obtain advance Commission approval in most cases to issue subpoenas; instead, they will simply need approval from their senior supervisor.”
Practically speaking, Director Khuzamii continued, “[t]his means that if defense counsel resist the voluntary production of documents or witnesses, or fail to be complete and timely in responses or engage in dilatory tactics, there will very likely . . . be a subpoena on your desk the next morning.”
Pursuant to these subdelegations, the SEC’s tenure-protected career staff could now exercise the agency’s subpoena authority with minimal oversight. As a result, the number of formal orders issued by the staff nearly doubled from 2008 to 2012.
In this manner, the SEC’s switch from a reviewable to a near-final subdelegation likely helped motivate its subordinates to invest more effort in acquiring information about illegal securities violations. Because subordinates no longer had to seek full Commission review of their decisions, they could devote more information-gathering resources with little fear of reversal.
B. Information Production and Transmission
Nevertheless, the observation remains that agency heads—like the SEC Commissioners under Cox’s chairmanship—still gained some information on which firms had likely committed securities violations, even when the enforcement staff acted as advisors rather than authorities.
In other words, even when SEC staff members were subject to Commission review, they presented evidence about potential enforcement cases, even if the research was more limited or less accurate than it might otherwise have been under subdelegated authority. Agency heads, however, face at least two different kinds of challenges regarding such research, the first regarding its quality and the other pertaining to its review. Both challenges are distinct kinds of transaction costs associated with information transmission, which in turn yield important implications for information production within bureaucracies.
The first problem for agency heads is that it is not always in the staff members’ interest to reveal their private information or gain enough information to make a precise assessment. Doing so may lead an agency head to make a decision with which the staff member disagrees, especially when their preferences diverge.
Say, for example, a civil servant at the EPA reads two public comments or reports regarding the effects of climate change with opposing viewpoints. Cognitive heuristics and bias can lead her to report conclusions in line with her prior beliefs without presenting contradicting evidence or highlighting relevant uncertainties to the EPA Administrator. As such, when agency heads review a subordinate’s decision without being able to independently evaluate and verify the basis upon which the recommendation was made, the subordinate has an incentive to misrepresent the underlying information.
At the same time, agency heads are not naïve. They will act or not act upon the advice of staff members given what they know (or think they know) about their staff members’ preferences—what is often referred to as the “ally principle.”
Take again the continuing example of SEC Chairman Cox’s tenure. A Republican, Chairman Cox was known to be concerned with excessive regulatory enforcement, much to the chagrin of his proenforcement career lawyers.
Such lawyers thus had an incentive to overstate the strength of a case in the hopes of convincing Chairman Cox to pursue it. Agency heads like Chairman Cox thus had reason to dismiss such information as “cheap talk”: recommendations that are not credible to the skeptical receiver.
More generally, when agency heads suspect that recommending staff members or political underlings are biased in the sense of having divergent preferences, they will discount the recommendations accordingly.
In other contexts, these game-theoretic dynamics have inspired a rich literature on strategic communication.
One insight from this work is that when preferences sufficiently diverge, information cannot be conveyed reliably within an organization.
Put more colloquially, when bosses sufficiently distrust their subordinates, they ignore their subordinates’ advice. Conversely, as preferences become more aligned, the amount of information that can be credibly conveyed increases.
Within a limited range of preference divergence, informative communication can thus take place; it is in the interests of the sender, that is, to reveal genuine information and the receiver will act accordingly. Under these circumstances, principals—like agency heads—would prefer to delegate to their agents rather than to engage in costly strategic communication.
When preferences are sufficiently aligned, in other words, agency heads would prefer final rather than reviewable subdelegation.
The underlying logic is straightforward: Final subdelegation represents a commitment to let a subordinate benefit from any expertise gained. Such delegation therefore creates the strongest incentive for the subordinate to develop private information. By contrast, if the subordinate is subject to reversal, she will be less inclined to acquire information when it is costly do so. The agency head thus benefits the most from final subdelegation as long as the bias is within a range in which informative communication could have otherwise occurred. Final delegation allows the agency head to avoid the costs of strategic communication while maximizing the benefits of the subordinate’s private information. In this sense, the agency head’s decision to subdelegate can be understood as a trade-off between informed-but-biased decisions (under a final subdelegation) and noisy-but-unbiased decisions (under a reviewable subdelegation).
The EPA’s enumerated delegation practices help to illustrate. The EPA currently documents all of its subdelegations in a Delegations Manual, which, in its own words, serves as the “legal record of the authority of an Agency employee or representative to act on behalf of the Administrator.”
The manual specifies a number of criteria EPA administrators should use in considering whether or not to delegate authority.
Revealingly, one general principle is that “authority and accountability should rest as close as possible to where the covered action takes place” within the organization.
If the action affects regional or local actions, for example, the manual states that responsibility should be delegated to a Regional Administrator.
Indeed, doing so would encourage the Regional Administrator to develop more location-specific expertise. Similarly, issues that affect a single substantive program within an agency—for example, air pollution or hazardous waste—also merit subdelegation in the EPA’s view. This policy again makes sense from an informational perspective: Agency heads gain better decisions from motivated subject-matter experts.
Final subdelegations, however, would only make sense for the EPA Administrator within a limited range of potential preference divergence. Otherwise, the Administrator is better off with a reviewable subdelegation so as to maintain control. Put differently, when the potential costs of bias outweigh the costs of review, agency heads will be more hesitant to delegate. This dynamic is reflected in the EPA’s attention to the scope of the delegation—privileging delegations with limited discretion and thus a bounded risk for bias, while discouraging those in which the risk is higher.
For instance, the EPA prioritizes “recurring” subdelegations.
Recurring actions usually do not require much discretion, so their delegation is a low-risk matter. In contrast are subdelegations in which the risks of preference divergence are so great that the Administrator would do well not to delegate in the first place. Indeed, the manual states that “[i]f action under the authority is likely to set legal or programmatic precedents, it should remain with the Administrator or Assistant Administrator(s).”
These actions include “rulemaking and standard-setting which set long-term commitments for the Agency.”
However, even these responsibilities are delegable if “sufficient guidance exists to assure program consistency.”
Put differently, when discretion is adequately constrained, subdelegation is more desirable since the risks of bias are limited.
Taking a step back, note that this motivational account is most plausible only when the agency head’s preferences are transparent to the subordinate ex ante, as was the case within the SEC’s enforcement division.
The extent to which the subordinate knows in advance how the agency head is likely to act upon being given information is itself an important factor in deciding how much time and effort to exert when gathering that information. When the subordinate knows, for instance, that the agency head has sufficiently divergent preferences such that the subordinate’s recommendation is likely to be treated as cheap talk, then the subordinate lacks the incentive to gather that information in the first place.
To illustrate, since SEC investigators knew that Chairman Cox had an antienforcement agenda and would likely discount their views, they were understandably less motivated to develop the underlying cases. By contrast, if Chairman Cox’s preferences were nontransparent or more closely aligned, then the marginal incentive to engage in information gathering could actually be higher, since the staff might work harder in the hopes of persuading Chairman Cox to proceed.
In addition to the information loss from strategic communication, the agency head must also consider the organizational transaction costs associated with reviewing the work of their subordinates.
Most, if not all, administrative agencies operate according to vertical hierarchies requiring structures and processes to facilitate the ratification or rejection of decisions made below. Many agencies, for example, have multiple layers of adjudicators with ALJs or other hearing officers at the bottom, whose judgments are then reviewable by an internal appellate body and sometimes the agency heads as well.
These review processes are costly, both for litigants and the agency. Indeed, pages of the CFR and Federal Register are devoted to detailed and often complex rules regarding agencies’ internal review and appeals processes.
In reality, agency heads can revise these procedures as a means of controlling wayward subordinates.
For simplicity’s sake, however, such transaction costs will be treated exogenously here. Assume, in other words, that these review costs are influenced by factors independent of the main variables considered thus far: agency-head and subordinate preferences.
This assumption, in turn, has some real-world bite. Internal review processes are often fixed by statute, executive order, or sheer institutional path dependence.
For example, many agency heads inherit internal clearance procedures from their predecessors.
These procedures require multiple internal officers to review and sign off on a staff recommendation before the decision is approved by the agency head.
Each stage of this process imposes substantial transaction costs that the agency head must bear when choosing to review a lower-level official’s recommendation.
As such, the agency head’s subdelegation decision now becomes a function of two different kinds of costs: the information losses due to cheap talk as well as the transaction costs of review. The former category will vary depending on the expected preference divergence of the subordinate, while the latter will depend on exogenous factors that can increase or decrease how expensive it becomes for an agency to engage in intra-agency review. The agency head will thus choose a reviewable rather than a final subdelegation when she expects the review to result in a decision that she prefers, net the transaction costs of reviewing that decision. Conversely, the agency head would prefer to subdelegate the decision entirely as long as the expected preference divergence is sufficiently limited; doing so would eliminate the costs of internal review.
In sum, agency subdelegation practices can be explained as mechanisms that allow agency heads to capitalize on expertise developed by lower-level officials within an agency. To generate such expertise, agency heads can either treat their subordinates as authorities or advisors. They can extend either reviewable or final grants of authority. This decision, in turn, will be a function of two factors: the expected preference divergence of the delegate and the internal costs of review. The greater the preference divergence, the more hesitant the agency head will be to extend final authority. At the same time, delegating this authority becomes more attractive as the exogenous transaction costs of intra-agency review increase. Because subdelegation eliminates those costs, it becomes a more efficient means of agency decisionmaking.
II. Credibility as a Continuum
While the previous Part presented the agency head’s decision as a simplified choice between a reviewable and a final subdelegation, in practice, the range of internal delegation choices is more accurately described along a continuum—a continuum of credibility. At one end are reviewable subdelegations, which are noncredible, and on the other are perfectly credible final subdelegations. Reviewable subdelegations are noncredible in the sense that the recipient knows that the agency head can overrule her decision. Final subdelegations, by contrast, are more credible in that the recipient has reason to believe that the agency head will not do so. Between these two analytic poles are a host of institutional design choices that agency heads can use to make a subdelegation more or less credible. These internal choices exist independently of the ability of external actors like courts to serve a credibility-enhancing function (an issue that will be discussed later).
Indeed, the informational benefits of subdelegation only arise when those delegations are dependable. To confidently invest time and resources in their decisions, agents must be able to rely on a subdelegation and know that their efforts are not all for naught. The ability of agency heads to spur information production through subdelegation thus requires a credible commitment. By contrast, when the subdelegation is not reliable the agent will be less willing to invest time and resources due to the fear that the resulting decision will be overruled.
Of course, subdelegations are “loaned, not owned.”
Those who labor under them always face the risk that their power will be revoked. In a more dynamic, multi-stage game between agency heads and their subdelegates, this threat likely looms large. Those revocations, however, entail procedural or political costs that are often prohibitive in practice.
This Part now explores how the agency head chooses to subdelegate rather than whether to do so. The first section, more specifically, explains why credibility matters more within, as opposed to between, different institutions. The second section then provides a taxonomy of commitment-enhancing design choices. These options include increased reputational backing, transparency, longevity, dissolution, and, finally, entrenchment.
A. Institutionalizing Commitment
Public law and legal theory scholars have long puzzled over how and why political actors engage in precommitment.
The question has understandably occupied constitutionalists in particular—those grappling with a mere “parchment” document that self-interested individuals create to bind themselves.
The commitment problem arises because political actors must restrain their ambitions in order to benefit from the stability and protections constitutions can provide. Credible commitment by agency heads to their own subordinates, however, arguably implicates a different form of authority and thus a distinct set of considerations. While constitutional authority might be understood as democratic in nature
—that is, concerned with the legitimate exercise of collective coercion over third parties—intra-agency authority is managerial in form.
Managerial authority is, for lack of a more precise word, authoritarian.
It operates not from democratic premises but rather by “fiat.”
Thus, credibility is even more tenuous in this context given the background norms and a culture of obedience within firms and agencies. Employees, for instance, are expected to “subordinate their own judgment to that of their employers” even if they might otherwise disagree with it.
This distinction between political and managerial authority is arguably implicit in the Administrative Procedure Act (APA). The APA subjects binding legislative rules to notice and comment but exempts rules of “agency organization, procedure, or practice.”
Rulemaking provisions more generally do not apply in “matter[s] relating to agency management or personnel.”
Because managerial matters do not coerce third parties, the APA does not subject them to the same externally legitimizing procedure.
The authority of agency heads over their employees is assumed to be unilateral.
Of course, the concept of managerial authority needs more refinement in the administrative agency context. Unlike in private firms, many agency employees are not employees at will but rather tenure protected.
Their salaries, as discussed, are also politically shielded and compressed within a uniform federal pay structure.
Many agency employees are thus not subject to traditional employment contracts. Even more so than the incomplete contracts in traditional firms,
agency heads usually cannot contract either ex ante or ex post for optimal performance. As a result, the credibility problem becomes even more acute for agency heads who otherwise enjoy managerial authority.
B. Enhancing Commitment
This section thus turns to the ways in which agency heads have enhanced the credibility of their delegations vis-à-vis their subordinates. More specifically, it considers subdelegation’s institutional dimensions, which individually or in combination can serve to reassure a subordinate that her decision is less likely to be internally overruled. These design choices include specification, reputational backing, transparency, longevity, dissolution, and, finally, entrenchment.
1. Specification. — Subdelegations, like contracts, specify their terms and conditions. In particular, they often contain clear reservations of the agency head’s ability to overrule a delegated decision. The EPA Administrator, for instance, explicitly “retains the right to exercise or withdraw, at any time, an authority which has been delegated.”
By contrast, the absence of such provisions can be read (as some judges have done) as an implicit commitment to grant a subordinate the right to make a final decision.
Most of the SEC’s subdelegations, for example, declare that the SEC “hereby delegates, until the Commission orders otherwise, the [specified] functions” to various internal agency actors.
In this manner, agency heads can explicitly or implicitly delegate their authority credibly in the text of the subdelegation.
2. Reputation. — Reputations are important, especially to repeat players. Repeat players deal continuously with the same people and can thus develop a persona (artificial or real) that can work to or against their advantage. Developing a reputation for reneging on promises, for example, can diminish the value of all future assurances by rendering them untrustworthy.
Thus, even if reneging provides short-term benefits, those benefits can be outweighed by the long-term costs of being unable to engage in believable future promises. Agency heads who deal repeatedly with the same career staff thus have an incentive to develop a reputation for delegating credibly. Doing so can maximize the information-generating value of existing and future subdelegations.
Put in more game-theoretic terms, assume an infinitely repeated game involving an agency head and subordinate, both of whom are risk neutral.
During each period, the subordinate investigates a project and recommends that her boss accept or reject it. More concretely, say the subordinate is charged with investigating the facts necessary to bring an enforcement case in court. Assume that the agency head is perfectly informed but lacks the resources to develop and initiate projects. She may thus assign the investigatory task to a zealous internal lawyer. To motivate this lawyer, the agency head promises the lawyer autonomy in making enforcement decisions on behalf of the agency. If this assurance is believable, the lawyer will invest more effort in searching for suitable enforcement suits; after all, each additional hour spent on the case will translate into results the lawyer wants.
Consequently, the payoffs resulting from this extra motivation can outweigh the expected costs of enforcement decisions that the agency head would prefer not to have made.
Since the agency head has the information to assess an enforcement case before it is brought in court, however, she will be tempted to renege on the promise by rejecting a case not in her interest. As a result, the dominant strategy may be not to delegate, even if doing so would be more efficient.
However, if the agency head values her reputation for delegating authority more than the benefits from reneging on her promise to ratify all proposals, then delegation becomes the dominant strategy; in this sense, reputational considerations render final delegation “feasible.”
But how do agency heads cultivate such reputations? One way is simply through sustained practice. The longer an agency head does not overrule her subordinate’s decisions, the more she will be perceived as allowing her staff to make final policy decisions. One illustration is the historical dynamic between the Secretary of HHS and the Commissioner of the FDA. For decades, the HHS Secretary had delegated her authority under the Food, Drug, and Cosmetics Act to the FDA Commissioner.
As a result, “[a]n unbroken practice of deference to the FDA seemed to have developed at the HHS level,” so much so that the “practice had hardened into a convention.”
The HHS Secretary thus had a reputation for not overturning the FDA Commissioner, which, as we will later see, was sullied in the context of a decision involving emergency contraceptives.
Agency heads can also develop reputations as lazy or otherwise uninterested in nitty-gritty policy details. They may focus their attention on raising public awareness or improving the agency’s standing by traveling and giving public speeches rather than engaging in day-to-day decisionmaking. Such administrators often gain reputations as delegators by default.
Agency heads can also cultivate reputations for nonstrategic reasons. In one Hobbesian view, the “weak bonds of words can be strengthened in two ways: a fear of the consequence of breaking one’s word; or a glory, or pride, in not breaking it.”
In other words, agency heads may continue to abide by a subdelegation from a sense of pride in doing so—with the unintended consequence that doing so earns an impression as a hands-off manager confident in her professional staff. The EPA’s own delegations guidance states: “Show confidence in the redelegation decisions you make. Once decisions are redelegated, it is important to demonstrate trust, integrity, and consistency toward redelegatees and the actions they take under the redelegations.”
Regardless of the underlying motivation, staff may rightly come to expect that their recommendations will remain undisturbed.
3. Transparency. — Another strategy agency heads can use to make their subdelegations more credible is to make them more transparent. Instead of being confined to internal staff documents, training manuals, or meeting minutes,
internal delegations can be publicly memorialized. Such transparency enables monitors—political officials, lobbyists, and interest groups—to become aware of the real power brokers within an agency and invest their resources accordingly.
The resulting relationships, in turn, render it more likely that news of an internal revocation or reversal of authority has occurred. These revelations can then invite costly litigation or otherwise result in political sanctions.
Contrast the SEC, which routinely publishes its subdelegations in the Federal Register and Code of Federal Regulations,
with the EPA. As discussed, the EPA records the bulk of its internal delegations in a Delegations Manual hosted on an internal server.
The manual is unavailable to the public except through a time-consuming Freedom of Information Act (FOIA) request or else a physical trip to the EPA’s headquarters in Washington, D.C., or one of the agency’s regional offices.
By restricting public access in this manner, the EPA Administrator makes it more difficult for outsiders to know who is actually making decisions within the agency. Because these monitors are less likely to help enforce subdelegations, EPA staff members are more likely to believe that their decisions will be subject to internal review and potentially overruled. As a result, the subdelegations are less credible for generating resource-intensive information.
4. Longevity. — Internal delegations of authority can also vary in terms of their temporal scope. Subdelegations with and without time limits, however, have more complicated implications for credibility than it may first seem. As an initial matter, when an agency head delegates indefinitely, staff members are likely to view the delegation as more reliable relative to delegations with an expiration date. Thus, for instance, when the FCC subdelegated authority to its General Counsel to issue “written determinations on matters regarding the interception of telephone conversations,” the General Counsel had no prima facie reason to believe that her determinations would be second-guessed.
By contrast, when the EPA Administrator issued a “temporary” delegation to a regional administrator to approve or disapprove a rulemaking petition for Wyoming aquifer exemptions,
the regional administrator knew that her authority was time-limited to the specific petition at issue. Such an expiration date is akin to an advance notice of the power’s revocation. If a subordinate understands that her authority will expire at a given point in time, she is less likely to make long-term investments in information acquisition. At the same time, however, the subordinate may also have an even greater incentive to labor under a temporary delegation if she believes her efforts may result in the extension of that authority. In other words, she may be more motivated to invest the time and resources necessary to obtain the optimally informed results if she thinks the delegation may become indefinite, especially when that information has increasing marginal returns.
To illustrate, consider once again the manner in which the SEC first delegated its authority to issue formal orders of investigation to the SEC’s Director of Enforcement. In the SEC’s own words: “The Commission is adopting this delegation for a one-year period, and at the end of the period will evaluate whether to extend the delegation.”
The subdelegation, in other words, was to sunset after a one-year trial period. The stated purpose of this sunset provision was to “permit the Commission to evaluate the Division’s use of the delegation and to consider whether extension of the delegation was appropriate.”
Explicit revisitation language like this can incentivize information acquisition, even for temporary delegations. Indeed, after the enforcement staff almost doubled the rate of enforcement actions, the SEC’s delegation was extended indefinitely.
5. Dissolution. — Yet another way that delegations can be made more credible is to dissolve, even if temporarily, the body making the delegation in the first place. Doing so succeeds as a commitment device because it renders an action irreversible in a sense: The actor that granted the authority is no longer around to reverse it (or will not reconstitute itself for an indefinite period of time).
Last wills and testaments, for instance, are credible because they cannot be revoked after death.
Similarly, when commissions and multimember boards delegate authority in anticipation of quorum-busting vacancies, these delegations are credible because the agencies will lack a sufficient number of members to revoke them. When Congress is gridlocked, the prospect of quick confirmations of new commissioners becomes even more remote. Recall, for example, the Election Assistance Commission’s delegation to its Executive Director to manage a federal voter registration form in anticipation of commissioner vacancies.
The subdelegation was credible to the Executive Director because the Commission lacked a quorum to act shortly thereafter. Relying on this subdelegation, the Director rejected Kansas’s and Arizona’s requests to include proof-of-citizenship requirements—a decision that was later upheld in court.
5. Entrenchment. — Finally, agency heads can also make their subdelegations more credible by visibly entrenching them. Entrenchment is an ambiguous concept, to be sure,
but as defined here, it refers to raising the costs of reversing the delegation beyond those necessary to enact, amend, or repeal it in the first place.
In other words, agency heads can entrench a delegation by increasing the effort or expenditure necessary to repeal or otherwise change it. In this sense, entrenchment lies along a continuum from incremental increases in reversal costs to “absolute” entrenchment, when the reversal costs are essentially infinite and “the right of repeal is denied for all time, under any conditions, and by whatever procedure.”
At the same time, the degree of entrenchment must be ex ante visible to delegates—that is, perceivable before they decide how much to invest in expertise. Otherwise, the strategy does not effectively serve as a commitment mechanism.
As a baseline, consider that agency heads can subdelegate their authority at low cost. For example, they have historically subdelegated through highly informal means, and courts have upheld them when doing so. Take a Ninth Circuit case involving the National Labor Relations Board (NLRB).
The National Labor Relations Act authorizes the Board to petition a federal district court for appropriate relief upon issuance of a complaint charging that any person has engaged or is engaged in an “unfair labor practice.”
In 2007, the NLRB subdelegated this authority to its General Counsel—through a vote recorded only in a meeting’s minutes.
This means of delegation had very low transaction costs and did not influence the court’s eventual conclusion that the delegation was legal.
Relative to this baseline, agency heads can first entrench their delegations by increasing the procedural burden associated with amending or repealing them.
Agency heads could, for example, impose an expensive internal approval process to help embed already-existing subdelegations (i.e., those previously imposed without this costly review). To illustrate, the EPA started to require a time-consuming clearance procedure before its internal delegations could be changed.
Under this scheme, the office requesting the revised subdelegation must first consult with the EPA’s Human Capital Planning and Policy Division to ensure no conflicts.
Then it must prepare a transmittal memo justifying the new delegation and specifying its scope and limitations.
The proposal must then go through an intra-agency comment process in which other interested offices review the change.
During this process, other offices can also raise concerns and negotiate any amendments to the subdelegation.
This time-consuming process can entrench preexisting delegations by rendering them more costly to revise, particularly given extant resource constraints.
Beyond raising procedural costs, agency heads can also functionally entrench a delegation by empowering actors to mobilize supporters and other interest groups to fend off subsequent attempts at repeal.
The credibility of such delegations increases because the subdelegate knows she will now have allies that can help prevent an agency head’s attempts to overrule her judgment. A revealing example is the 2011 decision by HHS Secretary Kathleen Sebelius to overrule FDA Commissioner Margaret Hamburg’s decision regarding the emergency contraceptive Plan B.
Commissioner Hamburg had labored under subdelegated authority
to determine that Plan B was safe and effective for over-the-counter use. For decades, as discussed, the HHS Secretary had explicitly subdelegated the authority to make such determinations under the Food, Drug, and Cosmetic Act to the FDA Commissioner.
As a result, the FDA Commissioner had a number of allies and interest groups ready to support her conclusions.
Indeed, the ensuing public outcry and eventual litigation that resulted in the overturning of Secretary Sebelius’s decision attest to the functionally entrenched nature of the subdelegation.
This Part has thus far developed some of the conceptual resources necessary to advance a positive theory for why and how agency heads subdelegate. The main argument has been that the extent to which an agency head credibly commits to a delegation is a function of two main variables: the expected preference divergence with the subdelegate and the relative transaction costs of internal advice giving. Thus, one would expect to see institutional variations in credibility as a result of changes along either dimension, holding all else constant. While the previous discussion used a variety of examples to illustrate the plausibility of these claims, this section now seeks to apply the theory in further contexts and explore some resulting hypotheses.
Perhaps most obviously, partisan changes in presidential administrations should result in changes to the credibility of previously delegated authorities. When Democrat-appointed agency heads in agencies with left-leaning careerists—such as the EPA, HHS, and Department of Labor—are replaced by Republican appointees,
for example, one would expect either less credible subdelegations or their revocation altogether. Alternatively, one might expect new agency heads to redelegate their authority to other agents within the agency with closer preferences.
To illustrate, return again to the Clinton Secretary of Commerce’s proposed rule to grant power to the Census Director to use statistical sampling when determining population measures. Recall that such sampling was known to likely help Democrats given that it would result in greater counts of minorities. Despite an adverse court ruling and opposition from congressional Republicans, the Clinton Administration finalized the rule on October 6, 2000—shortly before the presidential election that year.
The rule was published in the Federal Register and stated that “[t]he Director of the Census shall make the final determination” regarding population measures.
It further specified that “[t]he determination of the Director of the Census shall not be subject to review, reconsideration, or reversal by the Secretary of Commerce.”
In this manner, a Democratic agency head subdelegated final authority in a clearly specified and transparent manner to a subordinate he knew shared his preferences. Doing so helped to ensure that the Director invested effort in the determination.
After the 2000 presidential contest resulted in George W. Bush’s election, however, a new fleet of Republican political appointees swept into power. In particular, President Bush chose Donald Evans to be his Secretary of Commerce, a loyalist who had served as chairman of Bush’s presidential campaign.
On February 23, 2001, Secretary Evans issued a new final rule revoking the subdelegated authority.
His preferences were now misaligned with those of the acting Census Director, a career civil servant.
Bush’s appointment to the position would not be confirmed until more than a year later, meaning that a preference divergence between Secretary Evans and the acting Census Director would persist for some time.
Perhaps not surprisingly, Secretary Evans finalized the revocation less than two weeks before the Census Director was expected to make his decision regarding the use of statistical sampling.
The Bush Office of Legal Counsel also advised Secretary Evans that revoking the subdelegation would not require submitting to APA notice-and-comment procedures, even though the Clinton Administration had earlier used such procedures to adopt the rule.
This episode illustrates how new political appointees can revoke delegations to subordinates no longer expected to share their preferences.
Turning now to the second dimension regarding internal transaction costs, exogenous variations in those costs would be expected to influence the agency head since subdelegation can eliminate those transaction costs. The agency head will no longer have to spend limited resources reviewing staff recommendations and can instead farm out the decisionmaking altogether. This perspective helps to illuminate the ways in which intra-agency inefficiency can explain final subdelegation as a practice. The more these transaction costs increase, holding other factors constant, the more likely an agency head is to subdelegate with finality to eliminate those costs. These dynamics become even more pronounced in light of agencies’ fixed budget constraints, which exert pressure to use organizational resources more cost-effectively.
Indeed, this general insight has been used to explain, with plausible empirical support, why Congress delegates to executive agencies rather than subdelegating internally to its committees to pass legislation.
In Professors David Epstein and Sharon O’Halloran’s theory, the median legislator delegates to the executive branch to avoid the transaction costs associated with Congress’s internal committee system, as long as her preferences are sufficiently aligned with those of the President. Such committees contribute to inefficient delays, holdups, and logrolling. So within some range of expected preference divergence, the median legislator would prefer to delegate a policy to an administrative agency rather than attempt to pass a bill to accomplish her desired end.
This comparative-transaction-cost theory is similarly illuminating in the agency-subdelegation context. Here, the internal transaction costs associated with a reviewable subdelegation include both the costs that arise as a result of expected preference divergence with the staff member (principal–agent dynamics) as well as those that arise even when preferences are aligned (team-theory issues).
While the principal–agent dynamics have already been explored, it is also important to consider the implications when agency heads and staff members are on the same team—that is, when they have the same preferences. In these situations, transaction costs arise as a result of the need to coordinate bureaucratic advice giving.
Perfect communication is difficult enough between two individuals, let alone within large organizations like administrative agencies. In these settings, it is rare for low-level career staff to meet directly with agency heads. Rather, staff recommendations are usually filtered through multiple levels of an internal hierarchy. Supporting information, in turn, is distilled into bullet points and briefings instead of conveyed in its full and lengthy form as reports or academic papers. Consequently, as discussed, reviewable subdelegations require costly internal structures and processes to coordinate the necessary review.
It is thus understandable why agency heads would seek to avoid these information-processing costs altogether by delegating a decision when the expected biases are sufficiently small. The agency head can essentially get the same bang for less buck.
As a result, the higher the internal transaction costs, the more one would expect to see subdelegations increase on net. This dynamic may, for instance, help to explain why the bulk of agency subdelegations are technical in nature. Of course, these issues are also the areas in which the information asymmetry between agency heads and more expert subordinates is the greatest. But the internal transaction costs associated with reviewing such decisions are also especially high. They are high due to what Professors Jacob Gersen and Adrian Vermuele refer to as “tacit expertise,” information possessed by experts that is “costly to transmit to nonexperts and which is always distorted in the transmission.”
Because technical information is difficult to compile and communicate to more generalist audiences like political appointees, one would expect agency heads to delegate more in these areas to reduce internal transaction costs.
This Part now takes a step back to evaluate the normative implications of this information-forcing theory of agency subdelegation.
The previous analysis argued that internal delegation, at its core, presents a trade-off for the agency head between better information, on the one hand, and political control, on the other. Where this balance is struck will depend on the administrator’s preferences, those of her subordinates, and the transaction costs of internal review. What is in the agency head’s interest, however, is not always best for the administrative state. Indeed, much of administrative law is designed to cabin the discretion of bureaucratic actors to conform to a legal regime that itself struggles to balance accountability with agency expertise. This Part will thus examine how courts and political actors can help to optimize the acquisition of high-quality information in the administrative state.
The first challenge from a normative standpoint is to ask how courts can encourage research incentives without sacrificing the requisite amount of democratic accountability.
What is “requisite,” of course has no easy answer, but the first section will explore the relevant constitutional constraints with respect to executive power. It will ultimately argue for a more functional understanding of political control attuned to the nature of the subdelegation. The second section will then turn to issues of statutory interpretation and, specifically, how courts should read statutes to determine whether subdelegation is congressionally authorized. The final section will then turn to the possibility of courts further helping to encourage credibility when externally enforcing subdelegations under the Accardi doctrine—the basic principle that an agency must abide by its own rules.
1. Choosing Subdelegates. — Subdelegation raises constitutional worries since agency heads may entrust significant duties to subordinates with attenuated relationships to the President. The core concern is that the President, in whom the Constitution vests the “executive Power”
and who must “take Care” to “faithfully execute” the laws,
will lose control of an unelected bureaucracy. To mitigate this possibility, the Appointments Clause and other constitutional provisions ensure that the President is able to hire loyalists in key positions and fire insubordinates.
At the same time, Congress may sometimes grant the ability to appoint certain officials to other actors besides the President as well as place restrictions on their removal.
The potential for litigation arises when agency heads redelegate their powers in ways that seem to contravene these constitutional mandates.
Specifically, the Appointments Clause requires the President to nominate, and the Senate to confirm, all principal officers.
Granting the President this authority allows her to employ the individuals most likely to carry out her agenda dutifully. Recognizing that placing the burden of appointing every government official on the President is impractical, however, the Clause also allows Congress to modify this requirement for inferior officers by assigning appointment power in “the President alone,” “Courts of Law,” or in “Heads of Departments.”
All other nonofficers—employees—in the executive branch can be selected by other government officials or through processes like those currently governing the competitive civil service.
The Supreme Court has yet to settle on an “exclusive criterion”
for drawing the line between principal and inferior officers, but one starting point is to ask whether the officer in question is subordinate to “some higher ranking officer.”
In Justice Scalia’s words: “Whether one is an ‘inferior’ officer depends on whether he has a superior.”
Indeed, in Edmond v. United States, the judges on the Coast Guard Court of Criminal Appeals were inferior officers because their work was “directed and supervised at some level by others who were appointed” by the President and Senate-confirmed.
The judges could not render a final decision unless it survived review by the Court of Appeals for the Armed Forces, subject to procedures set forth by the Judge Advocate General.
While Edmond could be read categorically, more functional readings are also possible, especially when reconciling it with previous cases in which the Court used a more flexible, multifactor approach. In Morrison v. Olson, for example, the Court held that an independent counsel—appointed by a special panel of federal judges and removable by the Attorney General—was an inferior officer.
The Court largely based its conclusion on four factors: the circumscribed scope of the counsel’s duties, the restricted jurisdiction of the counsel’s office, the limited duration of appointment, and the fact that the counsel was removable for cause.
As a general matter, then, courts scrutinize both the nature of the exercised duties and the mechanisms of internal control.
While subdelegations run to inferior officers, they often implicate nonofficers, or employees, as well. The Supreme Court has characterized this group as those who do not exercise “significant authority”
and usually perform “ministerial” tasks.
In Freytag v. Commissioner, for example, the Court found special trial judges of the United States Tax Court to be officers, not employees.
The trial judges were appointed by the Chief Judge of the Tax Court.
Because these judges “take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders,” and thus exercise “significant discretion,” the Court held that they had to be appointed in accordance with the Appointments Clause.
At the same time, the Court has also suggested that the analysis turns on the extent to which such discretion is controlled by or subordinated to that of an officer.
Similar considerations also come into play when analyzing the agency head’s ability to delegate to internal actors protected by congressional for-cause removal restrictions. The Supreme Court continues to allow such restrictions based on evolving tests regarding the functional effects of those constraints. While earlier cases tended to focus on whether the official was acting in an executive, as opposed to “quasi-judicial” or “quasi-legislative,” matter,
more recent cases suggest that the relevant analysis turns on the extent to which the removal restrictions impede the President’s ability to perform his duties.
This is an indeterminate standard, to be sure, but in Morrison, the Court upheld for-cause removal restrictions on an independent counsel exercising purely executive prosecutorial functions.
As in the appointments context, the Court noted that the Attorney General still exercised control over the independent counsel by retaining “‘good cause’” removal power, nominating candidates for the position, and declining to appoint anyone if no investigation seemed warranted.
In this manner, courts have interpreted the Constitution to constrain the extent to which government actors can exercise authority without sufficient political accountability. As a result, agency heads are restrained in terms of the duties they can subdelegate. Before doing so, agency heads must consider the ways in which such lower-level officials are appointed, as well as the relevant removal restrictions, and calibrate the amount of delegated discretion accordingly. Both inquiries, as demonstrated above, can turn on the amount of internal control exercised by an accountable superior, as well as the nature of the duties exercised. The more internal control, the broader the delegated duties can be and the more likely such tasks can be performed by, for example, civil servants or other subordinates with tenure protections.
In order to enhance agency heads’ ability to encourage more information investment, however, courts should also consider the credibility of the subdelegation to assess the amount of intra-agency control exercised over the final decision. The less credible the delegation, the more functional control the agency head should be understood to exercise. Conversely, the more credible the delegation, the less control the agency head should be understood to exert. Thus, for example, the less transparent and more temporary (i.e., less credible) the delegation, the more courts should assume that agency heads have more power to review and reverse the subdelegation. Doing so would help judicial doctrine more closely align with institutional realities.
Some D.C. Circuit decisions regarding the Appointments Clause help to illustrate this approach. In these cases, the D.C. Circuit has used the finality of an official’s decision as the main factor in determining whether a superior exercised sufficient control.
A subdelegation that explicitly specifies final decisionmaking authority, of course, is more credible than those that do not. Thus, by using finality to assess whether an agency head sufficiently supervises a subordinate for the purposes of characterizing that subordinate as an employee or inferior officer, the D.C. Circuit’s doctrine reflects practical intra-agency dynamics.
One consequence of this refinement, however, would be that the recipient of a final subdelegation would be more likely to be deemed an inferior (or principal) officer rather than an employee (or inferior officer), thereby narrowing the class of constitutionally appointed subdelegates. Similarly, because the agency head exercises less control, any removal restrictions on the recipient of the subdelegation would be more suspect. To mitigate this implication and allow the agency head the most discretion to choose the best-informed subdelegate, courts should also scrutinize the nature of the duty involved to determine whether it capitalizes on the delegate’s expertise. If so, then judges should be more willing to allow authority to be exercised by tenure-protected officials or appointed by a wider array of actors. To illustrate, agency heads sometimes internally delegate rulemaking authority, which is quasi-legislative and thus constitutes a substantial exercise of power given the ability to bind general classes of individuals. When the subdelegation is expertise based, such as the FCC’s grant of rulemaking authority to its Chief of the Office of Engineering and Technology regarding spectrum standards,
then courts should be more willing to uphold the subdelegation scheme.
2. Statutory Interpretation. — Turning from constitutional to statutory constraints, courts currently treat internal and external agency delegations asymmetrically. While delegations to an internal actor are presumptively valid absent express statutory proscription, those to actors outside of the agency are not.
In other words, when statutes are otherwise silent, judges read such silence to permit internal subdelegation but to prohibit delegation to an external entity—whether another agency, private party, or a state.
The relevant cases usually justify this approach with one of two rationales. First, accountability for internal delegations purportedly remains with the agency head, while external delegations “blur” the lines of responsibility.
Second, delegations to external entities increase the likelihood that the resulting discretion will be exercised by actors with different interests; as one court put it, they “aggravate the risk of policy drift inherent in any principal-agent relationship.”
While these justifications may be true as a relative matter (an open empirical question), it is worth pausing before accepting them at face value. Simply because an agency is formally within another, for example, does not ensure that the lines of accountability will remain intact. The Plan B fiasco, for example, erupted precisely because many presumed that the FDA was independent of HHS despite being within the same agency.
Few had historically held HHS accountable for the FDA’s determinations as a result. The same is true of the OLC, which is housed within the Department of Justice (DOJ) and provides “authoritative legal advice” to the President and executive agencies.
Though laboring under subdelegated authority from the DOJ’s Attorney General,
OLC is often perceived as an independent entity responsible for its own actions.
Efforts of the DOJ or President to pressure or overrule the OLC would likely result in a public outcry.
As these examples reveal, it is not always the case that internal delegations preserve accountability at the top or ensure against policy drift.
Doctrinal innovations, however, could help the reality more closely match the judicial rhetoric—that is, could facilitate more hierarchical accountability while also optimizing investment in expertise. Specifically, courts could calibrate Chevron deference to the crediblity of the delegation, thereby encouraging agency heads to delegate in a manner that both allows for more public input and motivates costly information acquisition.
Indeed, courts currently extend Chevron deference to interpretive decisions to subdelegate statutory authority internally.
However, agencies do not appear to be calibrating their analysis on the form of the delegation. Recall, for example, the Ninth Circuit decision upholding an NLRB delegation to its General Gounsel recorded only in internal meeting minutes.
The court engaged in an interpretation of the statute under Chevron’s familiar two steps but did not consider the highly informal nature of the mechanism through which authority was granted.
By failing to do so, the Ninth Circuit did not apply the Mead doctrine, which holds that Chevron deference is due when Congress has delegated authority “to make rules carrying the force of law,” and the agency has acted pursuant to that authority when interpreting the statute.
More specifically, Mead conditions deference on the extent to which Congress provides for a “relatively formal administrative procedure” that fosters “fairness and deliberation,” such as notice-and-comment rulemaking or formal adjudication.
Such qualities of open deliberation would serve to enhance the credibility of subdelegations. Internal delegations issued after public comment, for example, would alert interest groups that could help facilitate the entrenchment of the delegation.
More transparent grants of authority also encourage internal agency actors to rely on the delegation and apply their expertise accordingly. Thus, courts should extend Chevron deference only when subdelegations are promulgated in this manner. By contrast, courts should scrutinize under a less deferential Skidmore standard those subdelegations that are merely contained in nonpublic agency staff manuals, meeting minutes, or other informal documents. Under Skidmore, courts retain primary interpretive authority but consider whether the agency has exhibited the “power to persuade,” usually by virtue of its expertise and experience administering the statute.
As such, agency heads would have an incentive to engage in more credible subdelegations since doing so would promise more Chevron-based deferential judicial review.
3. Judicial Enforcement. — Courts can also play a stronger role than they currently do to enforce subdelegations by creating more bright-line ex ante rules for agency heads seeking to credibly commit. The Accardi doctrine generally requires agencies to follow their own rules, including procedural rules regarding internal delegation.
In the paradigm cases relevant here, a lower-level agency official acts pursuant to a subdelegated power. When the agency head overrules or otherwise reverses the subdelegate’s decision, an adversely affected litigant then brings suit citing the delegation. The litigant argues that the agency head has violated Accardi by failing to follow its own procedural rule.
In these circumstances, courts will look at the form and language of the internal delegation to determine whether or not that rule should be enforced.
Both of these dimensions, however, currently serve as sources of ex ante uncertainty for the subordinate acting pursuant to delegated authority. First, take the form of the subdelegation: Accardi has particular bite with legislative rules.
Legislative rules are those rules that are legally binding on the agency, courts, and the public. They are generally required to go through notice and comment.
Nonlegislative rules, by contrast, merely clarify rather than create new obligations; they are exempt from notice and comment.
Nonlegislative rules are the bread and butter of everyday agency life: internal memoranda, guidance documents, interpretive rules, press releases, and staff training manuals, among others. If an agency head uses a legislative rule to subdelegate a power, a court is likely to enforce it, especially when the litigant can show prejudice.
Thus, as Professor Magill has observed, this aspect of the “doctrine means that the agency can opt into court enforcement of the rule in the future and therefore make its self-limitation more credible in the first instance.”
In theory at least, agency heads could convincingly commit to abide by an internal delegation through a legislative rule.
In practice, however, the analytical distinction between legislative and nonlegislative rules is notoriously “tenuous” and “hazy.”
A brief survey of the various tests used by lower courts reflects their muddled and oft-conflicting nature. Some courts, for example, rely on the agency’s own characterization, while others apply a more objective test examining the rule’s practical impact; still others ask whether the challenged rule creates new legal obligations instead of simply clarifying previous ones.
A related inquiry asks whether the agency intended the rule to be binding on third parties and, thus, a legislative rule, as opposed to only internally binding on the agency’s own employees.
The D.C. Circuit has held that objective indicia of intent include whether there is an adequate legislative basis for the agency action without the rule, the rule is published in the CFR, the agency has invoked its general legislative authority, or the rule effectively amends a previous legislative rule.
If the answer to any of these questions is affirmative, then judges are more likely to deem the rule legislative.
Beyond these factors, other courts look at the extent to which the agency has actually treated the rule as binding in enforcement proceedings or other litigation. This inquiry is complicated by the fact that most agencies use boilerplate language renouncing the binding effect of a rule.
This doctrinal “smog” thus complicates an agency head’s subdelegation efforts.
That said, the cases do suggest that agency heads can take specific actions to increase the likelihood of judicial enforcement, thereby increasing the subdelegation’s internal credibility. For example, the agency head could subject the subdelegation to notice and comment (even if not required by the APA),
explicitly state that the subdelegation has binding effect, or publish it in the CFR. Depending on which test is applied, many courts will be more likely to enforce the resulting subdelegation against the agency head under the Accardi doctrine.
But even when subdelegation takes the form of a legislative rule, courts must then engage in regulatory interpretation to determine whether the rule indeed divested the agency head of her authority—yet another source of doctrinal uncertainty.
Courts currently disagree on the appropriate method for interpreting regulations, with some focusing on text, others on intent, and still others invoking purpose.
Judges will also sometimes defer to the agency head’s interpretation, while at other times pronouncing the rule’s meaning to be “plain” or evincing a purpose contrary to that claimed by the agency.
Subdelegations, of course, are more likely to be credible when they are textually clear. Clarity, however, is usually in the eye of the beholder: Judges currently have no benchmark to determine just how much clarity is required.
Regulatory interpretation can thus also be a source of ex ante uncertainty for the delegate.
Finally, even when an agency head enshrines a subdelegation in a clear legislative rule, courts will only enforce it if the agency head’s failure to abide by the rule affects the rights of individuals in a manner that results in substantial prejudice.
In the Ninth Circuit’s Barraza-Leon case, for example, the petitioner claimed that the immigration judge had violated an Immigration and Naturalization Service regulation requiring that deportable aliens be notified of discretionary-relief eligibility.
The court held that even if there was an error, the error was harmless and did not result in prejudice given that the petitioner would likely not have qualified for discretionary relief in the first place.
In situations like these, when agency heads revoke or violate a subdelegation without harm to a third party, courts will not enforce the original subdelegation.
The upshot is that these doctrinal uncertainties and exceptions make it more difficult for agency heads to commit credibly to a subdelegation. As a result, subordinates cannot rely on courts to predictably enforce their delegated authority. Instead, they must make educated guesses about whether a court will characterize the delegation as a legislative rule, interpret the rule in a way that reflects the agency head’s intent to divest authority, and find that it results in some harm to a third party.
As such, courts should adopt more bright-line rules in this context to make clearer the circumstances under which they will enforce the delegation against the agency head. What those rules are may not be as important as picking them. For example, Accardi could apply only to those subdelegations published as rules that undergo notice and comment and clearly express in the regulatory text an intent to delegate final authority. These modifications would make the Accardi analysis much simpler and more straightforward, thus allowing agency heads more of a safe harbor when seeking to credibly delegate authority. These innovations would augment the agency head’s ability to spur more internal investment in expertise.
B. Political Actors
This section now turns from the courts to the role political actors like the President and Congress could play to mitigate the democratic accountability concerns that internal agency subdelegation presents. In particular, it focuses on the normatively troubling prospect that agency heads could entrench their delegations and thereby prevent future parties and Presidents from exerting intra-agency control. Given the heated contexts in which the practice often occurs, the prospect is especially worrisome in an age of increased political polarization.
Take, for instance, recent complaints by Republican minority commissioners at the FCC regarding internal delegations to the Chief of the Wireless Telecommunications Bureau.
In their view, these subdelegations “cut the Commissioners out of the decision-making process entirely.”
More sharply, one of the commissioners, Michael O’Rielly, publicly observed that:
[I]t is extremely problematic for the Commission to have a 3-to-2 vote that includes broad delegation to the staff to address a subject area further. As a minority commissioner, it is bad enough to have your ideas and concepts rejected as a whole and have little to no input on an item (unless you completely ignore your principles). It is worse to see the extension of those decisions expanded upon for years to come by a bureau under delegated authority.
Put differently, Commissioner O’Rielly objected to what he perceived as a conflict between the majority and minority parties on the Commission and the resulting erosion in norms of collegiality and consensus. To him, the majority Democratic party, led by the Obama-appointed chair, instead sought to entrench its power through the unelected agency staff.
It may be tempting to ask courts to police this prospect through the Accardi doctrine, perhaps refusing to enforce subdelegations when litigants can present evidence of partisan entrenchment. But a well-developed literature in the election law context suggests that political actors may better police against entrenchment concerns than judges can.
For starters, entrenchment does not admit to an obvious judicially manageable standard.
The concept of raising the costs of repeal or amendment, for example, begs of normative baseline questions, particularly in the context of functional entrenchment concerns: How many allies created as a result of subdelegation is too many? How much greater must the marginal costs of repeal have to be to constitute too much? Such questions also require difficult inquiries regarding mixed motives: Did the agency head intend to entrench power or merely motivate internal expertise?
Perhaps for these reasons, along with more familiar separation-of-power concerns, courts have historically been deferential to agency heads’ judgments of how to manage their internal resources and affairs, especially when such decisions are not fixed by statute.
Accordingly, political actors have the best set of tools and the strongest incentives to prevent the entrenchment of delegations to internal agency actors with preferences that are no longer aligned. For starters, Congress and the President should thus seek to render subdelegations more transparent, thus allowing interest groups and other monitors to aid with fire-alarm oversight. Congress could, for example, amend the Freedom of Information Act to require the publication of internal subdelegations.
The President could also issue an executive order requiring the same. In addition, or alternatively, the Office of Management and Budget or the Office of Information and Regulatory Affairs could formulate disclosure guidance for agencies pursuant to recent open government initiatives.
Because publication is often not sufficient to garner presidential or legislative attention, Congress might also consider requiring agencies to submit internal delegations after a presidential transition to the relevant congressional committees or the Government Accountability Office. Doing so would help to enable legislative monitors to alert aligned agency officials or else to police subdelegations otherwise contrary to current congressional preferences through hearings, appropriations decisions, or statutory amendments. Congress or the President could go even further by passing legislation or drafting an executive order that would automatically sunset all internal agency subdelegations—thereby requiring incoming agency heads to affirmatively review and ratify them. Such measures would help to ensure that subdelegations to lower-level officials do not persist due to simple path dependence or more conscious efforts to engage in partisan entrenchment.
This Essay has examined the positive dynamics and normative implications of delegation, so to speak, one-level down: the grants of authority that agency heads routinely assign within administrative agencies. It has argued that such internal subdelegations are best understood as credible commitment devices through which commissioners motivate better-informed but potentially biased subordinates. The main positive claims are that an agency head will enhance the credibility of her delegation in order to induce more information production, but only within a bounded range of expected preference divergence. Moreover, when intra-agency review costs increase, agency heads will be more likely to delegate final authority in order to eliminate those transaction costs. This study’s main effort has been to better understand subdelegation as a bureaucratic practice and the ways in which credibility can be institutionalized within administrative agencies.
Future research questions, of course, persist: For example, are there stable features of an agency’s mission or jurisdiction that help to explain agency variation beyond relative degrees of preference divergence and transaction costs? When and why do agency heads choose internal versus external delegations? How do the dynamics of multimember commissions differ from those of executive agencies? Only when agencies make subdelegations more transparent can such questions be systematically addressed. These and other inquiries suggest that a fruitful research agenda remains in the continuing project to develop administrative law, not only from above but also from within the agency.