Privatization and political accountability.

• Author: Beermann, Jack M.

INTRODUCTION

This article is an attempt to draw some general connections between privatization and political accountability. Political accountability is to be understood as the amenability of a government policy or activity to monitoring through the political process. Although the main focus of the article is to examine different types of privatization, specifically exploring the ramifications for political accountability of each type, I also engage in some speculation as to whether there are there situations in which privatization might raise constitutional concerns related to the degree to which the particular privatization reduces political accountability for the actions or decisions of the newly privatized entity. Although some states have constitutional constraints along these lines, (1) current federal constitutional law does not address directly the constitutionality of privatization along political accountability lines. However, if a majority of the Supreme Court becomes convinced that a particular government practice presents serious problems, constitutional limits can be erected in relatively short order.

Court-created constitutional limits on privatization concerning political accountability have antecedents in recent Tenth Amendment jurisprudence (2) and not-so-recent nondelegation cases. (3) In some nondelegation cases, it was important that policymaking was delegated to a private group. (4) Political accountability has, in recent years, become very important in Supreme Court Tenth Amendment cases. Specifically, the Court has invalidated what it views as federal "commandeering" of state and local government agencies and officials on the normative ground that such commandeering obscures lines of political accountability. (5)

There are so many varieties of "privatization" that privatization is difficult to define and analyze comprehensively. Most generally, privatization denotes the moving of something that had been in the public sphere into the private sphere. However, movement from public to private is not absolutely necessary, because something may be called privatized even if it always has been private, merely because it is publicly administered in another jurisdiction. Privatization analysis also captures entities such as government corporations that straddle the public/private divide and were created to address a particular policy problem in ways that are not clearly public or private. Further, although marketization and deregulation may be more accurate appellations, privatization may be used to describe an entity or activity that was always privately owned but has moved from a heavily regulated status to a less regulated one. (6) The privatization label is accurate because decisions that were once made in a regulatory agency now are made privately in response to market forces.

Privatization thus denotes a broad spectrum of adjustments to the interaction between government and various private actors. One concern about privatization is that it can lead to less political accountability. In order to evaluate privatization through a political accountability lens, two questions need to be answered. First, has privatization actually reduced political accountability? Second, if political accountability has been reduced, is it a cause for concern in the particular context?

Viewed through the lens of political accountability, it quickly becomes clear that all privatizations are not created equal. Some forms of privatization may tend to reduce political accountability, some forms may be neutral, and some, surprisingly, actually may increase political accountability. The main purpose of this article is to look for these differences among different types of privatization. Part I introduces the concept of political accountability, with an eye toward speculation on whether a constitutional law of accountability in privatization might develop. Part II describes different categories of privatization and examines each type of privatization for its effects on political accountability, with some appropriate excursions into accountability-based or influenced constitutional doctrines. Part III briefly discusses the application of the Freedom of Information Act and related statues and the Administrative Procedure Act to the activities of entities involved in privatization. The article concludes with a plea for a non-ideological attitude toward privatization, based on the variations among privatizations in political accountability and other terms.

1. ACCOUNTABILITY AND CONSTITUTIONAL CONCERNS

   I am concerned here with the amenability of a government policy or activity to monitoring through the political process. There are several different ways in which a government policy or activity can be more or less subject to political monitoring. Political accountability should be understood to include the democratic character of decision-making, the clarity of responsibility for an action or policy within the political system, and the ability of the body politic to obtain accurate information about a governmental policy or action.

   The democratic character of decision-making involves the degree to which the body politic can influence a decision, policy, or activity through political activity. The clarity of responsibility for an action or policy involves the degree to which the body politic can discern who in the political system is responsible for a decision, policy, or activity, so that efforts to exert political influence can be directed to the proper authorities. The ability of the body politic to obtain accurate information depends on the degree to which information on the activities is available. All these, and perhaps others not mentioned here, are distinct but related criteria for judging political accountability.

   Assume for present purposes that at least some forms of privatization reduce the political accountability of a government activity or practice. For example, if Congress were to privatize fully the United States Postal Service, (7) it is likely that it would be more difficult for the political system to influence the organization of the Postal Service, as well as postal rates and services. Although privatized, the Postal Service might remain highly regulated. If the Postal Service retained its monopoly over certain aspects of mail delivery, it is likely that Congress and the executive branch would subject the Postal Service to both formal and informal scrutiny, such as rate regulation and political pressure over other aspects of the Postal Service's organization. Nevertheless, it is likely that there would be less political influence over Postal Service decisions and activities because the decision-making process might be less democratic. It also might be unclear whether the private entity or the government regulators were responsible for any particular action. Similarly, it might be more difficult for the public to obtain information about the operations of the privatized entity.

   At present, privatizations face few, if any, federal constitutional hurdles. (8) For example, there is no doctrine of federal constitutional law that prevents municipalities from selling municipally owned electric utilities, mass transit systems, or professional sports facilities to private entities. Along the same lines, federal constitutional law has little, if anything, to say about a decision to contract with private entities for provision of public services, such as police and fire protection, operation of jails and prisons, street cleaning, garbage collection, inspectional services, and maintenance of public parks and buildings. There is no general federal anti-privatization doctrine requiring that particular government activities, state or federal, be conducted only by traditional government employees.

   I do not mean to say that federal constitutional law has absolutely nothing to say about privatization. For example, if Congress were to decide to privatize the Postal Service and the privatized Postal Service were given the power to make governmental decisions without discernible statutory standards or governmental oversight, a delegation doctrine attack could be mounted. (9) If the resulting entity were quasi-public, or some sort of government corporation with partial government control, the method of appointing directors and other officers might be subject to scrutiny under the Appointments Clause. (10)

   1. The Appointments Clause

      The best candidate for a federal constitutional constraint on privatization of federal government activities may be the Appointments Clause. The Appointments Clause specifies the method for appointing "Officers of the United States." (11) Principal officers must be appointed by the President "with the advice and consent of the Senate." (12) Inferior officers may be appointed in the same way, but Congress may also legislate appointment by the President alone (without senatorial advice and consent) or appointment by a court of law or head of a department of the federal government. (13)

      A person is an "Officer of the United States" for Appointments Clause purposes if that person "exercis[es] significant authority pursuant to the laws of the United States." (14) If Congress legislated the privatization of a federal agency--for example, if it decided to delegate the administration of federal environmental law to a privately-owned "Environmental Protection Agency, Inc.,"--the appointment of officials within the corporation would be subject to Appointments Clause attack, insofar as corporate officials exercised authority to enforce federal law, including rulemaking and other enforcement activities. (15)

      A recent decision of the D.C. Circuit suggests that not all employees of the federal government must be appointed pursuant to the Appointments Clause. (16) That court held that Administrative Law Judges who make recommendations to higher officials are "employees" and not "officers" who must...