Private complements to public governance.

AuthorBremer, Emily S.
PositionSymposium: A Future Without the Administrative State? Exploring the Administrative State

If Philip Hamburger's arguments were to win the day, and the administrative state were abolished or significantly reduced in size and scope, what would replace it? (1) If it were abolished completely, perhaps the simplest answer could be given: only the classical institutions of government created by the U.S. Constitution--the Legislature, Executive, and Judiciary--would remain. (2) In the more likely event that the administrative state were reduced in size or scope, one or more alternative approaches might be needed to fill the resulting regulatory gaps. Indeed, a principal justification for the administrative state is that the needs of modern regulation are beyond the capacity of the classical institutions of government. (3) If so, then without administrative agencies, some other institution or approach would be needed to address modern regulatory problems.

This Article suggests that private governance offers an attractive alternative or complement to the administrative state. It is commonly assumed that without administrative agencies, there would be no regulation. As a foundational matter, this Article challenges the notion that there are only two, mutually exclusive options: governmental regulation or no regulation all. Although it is perfectly natural for public law scholars to focus primarily on regulation through government institutions and programs, much regulation is in fact accomplished via mechanisms outside the administrative state. (4) At least in some circumstances, it is not only possible but may even be preferable to use such private governance--alone or in conjunction with public regulation --to achieve public goals.

Before this possibility can be assessed, "private governance" must be defined. As the term itself suggests, private governance has two components that are both self-evident and yet also warrant elaboration. First, private governance must be private, which most importantly means nongovernmental. (5) It thus includes any action by people, entities, or institutions that exist outside of government. Second, private governance must be governance, defined broadly as actions in pursuit of traditionally governmental ends. (6) These ends may include the protection of public values, the provision of public goods, and the regulation of social conduct in a manner that is beneficial for society as a whole.

To make this abstract definition of "private governance" more concrete, Part I of this Article begins by offering a number of examples of how private governance presently complements the administrative state. Part II suggests that the concept of comparative institutional advantage offers a touchstone for identifying situations in which private governance may be an effective and attractive alternative to governmental regulation. Recognizing that private governance is not always the best option, however, Part II also suggests some limitations on its use.

  1. A SPECTRUM OF PRIVATE ACTION TOWARD PUBLIC ENDS

    There are a variety of ways in which private governance can be used to achieve public ends, and the options can best be understood by organizing them along a spectrum. At one end of the spectrum are regimes that use or leverage private governance mechanisms but are designed, created, driven, and controlled by government. At the other end of the spectrum are regimes that are designed to achieve traditionally governmental ends but are independently designed, created, driven, and controlled by private sector actors and institutions. Frequently the focus of economic analysis, scholars describe these latter regimes as "private ordering" or "private governance." (7) Between the two extremes are regimes that mix elements of public and private governance, using each approach in some measure to achieve regulatory goals. Over the last fifteen years, public law scholars have increasingly noted and examined these regimes, referring to them as "public-private hybrids." (8) Figure 1 offers a visual representation of the full spectrum.

    1. Government-Dominated Approaches

      On the government side of the spectrum are programs through which government institutions (e.g., Congress or an administrative agency) establish substantive standards of conduct, leaving it to the private sector to implement or enforce those standards. (9) One way this may be accomplished is through the creation of private rights of action to enforce federal statutes. (10) For example, in the employment discrimination context, federal statutes create antidiscrimination rules, and these rules predominantly are enforced by private litigants bringing lawsuits against offending employers in the federal courts. (11) Government is paramount in this regime: Congress created the regime and the substantive standards that apply within it, the Equal Employment Opportunity Commission ("EEOC") plays an important role within the regime, and the federal courts control the incremental development of legal norms via individual decisions that have precedential effect. At the same time, individual private citizens must bring the lawsuits in order to animate the regime and make it effective. (12)

    2. Public-Private Hybrids

      Moving toward the private ordering end of the spectrum, there are public-private hybrids that involve a greater degree of independent private participation in the achievement of public ends. (13) A key example is the privatization of traditionally public functions, which is often accomplished through government contracting. (14) In these arrangements, public funds are used to pay a private entity to perform a public function that the government has historically performed, such as providing health and welfare services, public education, or prisons. (15) The government is a driving force in these relationships, defining and paying for the work that is performed and retaining significant contractual control over both the public-private relationship and the contractors' conduct. (16)

      In some cases, public-private hybrids may also participate in the development of substantive regulatory standards and in the implementation and enforcement of those standards. In these cases, there may be some contractual relationship between an administrative agency and one or more private actors. (17) But rather than providing public services to citizens, the resulting public-private hybrid engages in one or more of three tasks that are traditionally the province of administrative agencies: "the setting, implementation, and enforcement (including monitoring) of standards." (18) This occurs through a variety of methods, including negotiated rulemaking, (19) the incorporation by reference of privately developed standards into regulations, (20) and the use of audited self-regulation or third-party...

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