The Obama Administration's "Clean Power Plan " for addressing industrial carbon emissions is controversial as a matter of environmental policy. It also has important constitutional implications. The ride was initially crafted not by officers or employees of the Environmental Protection Agency, but by two private lawyers and a scientist with industry ties. Private parties operate extra-constitutionally, and no existing legal doctrine tethers constitutional scrutiny to the nature of the power delegated to them. The nondelegation doctrine applies to delegations by Congress--not to agencies ' subdelegations of legislative power to private parties. The other doctrinal lens for reviewing rulemaking by entities other than Congress--Chevron U.S.A. v. National Resources Defense Council, Inc. and its progeny--is equally blind to subdelegations of policymaking authority to parties that function beyond the boundaries of the Constitution. This Article takes up the issue of private rulemaking, and argues that its inescapable constitutional implications warrant a stronger nondelegation doctrine and a more nuanced approach to Chevron that emphasizes public accountability, legitimacy, transparency, and rational decision-making over notions of agency prerogative.
TABLE OF CONTENTS INTRODUCTION I. GENERAL PRINCIPLES A. The Issue: Agency Subdelegations of Legislative Power B. A Constitutional Policymaking Continuum C. Baseline Values II. DOCTRINAL RESPONSES TO STRUCTURAL DISRUPTIONS TO THE SEPARATION OF POWERS A. The Delegation Doctrines B. Chevron and Its Progeny III. THE CASE FOR ENHANCED JUDICIAL REVIEW OF AGENCY SUBDELEGATIONS OF LEGISLATIVE POWER A. A Private Subdelegation Doctrine B. Chevron Step Zero C. Baseline Values Revisited CONCLUSION INTRODUCTION
In what The New York Times called "Mr. Obama's boldest step in using his executive authority to halt the warming of the planet," the President in June of 2014 proposed a regulation designed to substantially cut carbon emissions from power plants over the next 15 years. (1) He unveiled the final rule on August 3, 2015. (2) With major implications for the global fight to stall climate change, the rule was swiftly assailed as "unrealistic." (3) Twenty-four states and a private coal company have challenged the EPA's rule in federal court. (4) The EPA's "Clean Power Plan" ("CPP") also raises a separation of powers problem. When private parties--here, two lawyers, a scientist, and a prominent environmental action group--craft regulatory policy, (5) is the final rule governed by the same constitutional norms that apply to lawmaking conducted exclusively by government actors?
To be sure, section 111(d) of the Clean Air Act ("CAA") gives the Environmental Protection Agency ("EPA") the legal authority to issue the CPP. (6) In Chevron U.S.A. Inc. v. National Resources Defense Council, Inc., (7) the Court famously addressed the separation of powers implications of Congress's delegation of rulemaking authority in the CAA, holding that the EPA's interpretation of ambiguous statutory language--not that of the courts--receives deference. Chevron thus made clear that, despite the mandate of Article I, Congress has the constitutional authority to hand off its legislative baton to federal agencies with impunity.
In bearing the heavy imprint of private influence, however, the CPP does not lie squarely within the realm of government action. If public, private, and quasi-public actions were plotted on a constitutional continuum--with acts of the President at one end and those of purely private parties at the other--the CPP would fit somewhere between those poles. (8) The question then becomes whether the constitutional rationales for Chevron deference apply with equal force when the private sector engages in legislative rulemaking on the President's behalf, as with the CPP. This question inevitably invokes consideration of a related doctrine that preceded Chevron: nondelegation.
The nondelegation doctrine is a Lockean notion that is fundamental to the separation of powers. (9) In theory, nondelegation ensures that policymaking resides in the branch of government that is most responsive to popular will. It evolved in response to two kinds of delegations of legislative power: delegations to federal agencies and delegations to the private sector. Since the doctrine's post-New Deal heyday, the Court has consistently deemed delegations of legislative authority to federal agencies constitutional so long as Congress includes an "intelligible principle" in the enabling statute to guide the exercise of agency discretion. (10) With Chevron, the Court effectively reversed course, enhancing agencies' discretion to make laws pursuant to vague legislative mandates--at the expense of de novo judicial review.
Notwithstanding the Supreme Court's sanctioning of Congress's authority to delegate its legislative power to the executive branch (and, for that matter, the private sector), constitutional doctrine says nothing about agencies ' authority to subdelegate the same legislative powers to private parties. Because the Constitution does not restrict private behavior, rulemaking sheds its constitutional character when non-federal actors conduct it. (11) Thus, whereas congressional attempts to delegate legislative power trigger constitutional scrutiny, agency attempts to delegate rulemaking authority do not. Such a paradox--that important constitutional values come into play only when Congress attempts to privatize government, and not when agencies do--flies in the face of over a century of separation of powers doctrine. (12) It makes little sense for the Supreme Court to wrestle with line drawing around shared governmental powers if the question can be so easily nullified by a contract handing off rulemaking powers to an extra-constitutional, private actor.
This Article considers executive branch outsourcing of legislative power to private parties, and argues that its inescapable constitutional implications warrant a stronger nondelegation doctrine and a more nuanced approach to Chevron that emphasizes public accountability, legitimacy, transparency, and rational decisionmaking over notions of agency prerogative. The Chevron doctrine--like nondelegation--is driven by normative judgments as to which branch of government is best suited to make policy; by any measure, biased private actors do not qualify.
Part I describes the private exercise of public power in practical terms. It then situates the issue on a constitutional policymaking continuum. This approach is offered as a substitute paradigm for the strict public/private divide that currently drives constitutional doctrine. Whereas a handful of baseline values for good government necessarily influence the exercise of public power at the governmental end of the continuum, they do not color the exercise of identical powers by actors at the private end of that spectrum under current law.
Part II explores the constitutional doctrine bearing on the anomaly illustrated by the constitutional policymaking continuum: although the constitutionality of Congress's delegation of legislative powers outside Article I is addressed by the nondelegation and private delegation doctrines, the constitutionality of agencies' delegation of the same power beyond the confines of Article II are not covered by these or any other constitutional theories. The other available lens for judicial review of such delegations--Chevron and its progeny--similarly fails to recognize that executive branch subdelegations of legislative power to private parties frustrate the Court's justifications for deference to agency policymaking.
Part III argues that agency subdelegations of legislative power to the private sector should be subjected to heightened separation of powers scrutiny, not exempt from it. Currently, there is no statutory or doctrinal framework governing how agencies craft policy in the initial drafts of legislative rules. Nor does any law limit the private sector's influence on that process. This Part posits that courts should recognize a private subdelegation doctrine and expanded approach to Chevron step zero in order to account for private sector rulemaking that is not authorized by Congress in enabling legislation. Such a functional approach to agency subdelegations of legislative power is consistent with the Court's pragmatic stance on delegation. It would also foster normative values of good government that underlie the structural Constitution, including public accountability, transparency, legitimacy, and rational decisionmaking.
The terms "privatization" and "outsourcing" (13) cover a broad spectrum of public-private relationships that exist across the federal government infrastructure. Today, private contractors outnumber federal employees by two to one, (14) performing functions ranging from "the 'merely' advisory to the full-fledged assumption of policy-making authority." (15) Perhaps the most common form of outsourcing is the traditional service contract, whereby a private third party agrees to perform some function that the government would otherwise perform for itself, such as routine building maintenance. Outsourcing can take many other forms, including industry deregulation, voucher use, government corporations, the sale of government assets to the private sector, (16) and the infusion of market principles into public sector employment. (17)
Even less known and difficult to quantify is the extent to which the government relies on private parties to perform public functions informally--without any exchange of money or contractual agreements. As Edward Snowden's leaks of classified information revealed, national security and federal law enforcement agencies glean untold terabytes of data from private corporations for the government's own surveillance purposes. (18) The government has also allowed factions of the private sector to craft national energy...