Public Rights, Private Privileges, and Article Iii

• Publication year: 2019

Public Rights, Private Privileges, and Article III

John Harrison
University of Virginia, jharrison@law.virginia.edu

PUBLIC RIGHTS, PRIVATE PRIVILEGES, AND ARTICLE III

John Harrison^*

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This Article addresses the constitutional justification for adjudication by executive agencies that rests on the presence of a public right. The public rights rationale originated in the nineteenth century and was for many decades the dominant explanation for the performance of adjudicative functions by executive agencies. The U.S. Supreme Court most recently relied on that rationale in Oil States Energy Services v. Greene's Energy Group in 2018. In light of the Court's interest in the nineteenth century system, this Article explores that system in depth and seeks to identify the ways in which it authorizes and limits executive adjudication.
The nineteenth century system focused on public rights, private rights, and private privileges. Courts protected the private rights they found in the primary law, including federal statutes that created such rights. Private privileges, unlike private rights, could be affected by the unilateral exercise of a proprietary right of the government—that is, by the exercise of a public right. The interest in receiving a payment from the Treasury was a classic example of a private privilege, provided Congress had not given the private recipient a judicially enforceable claim to it. When the Executive Branch administered the government's own legal interests according to the law, it often performed a function that resembled adjudication. That function was nevertheless an exercise of executive power because executive officials act for the government as proprietor and contracting party. Executive adjudication thus was permissible under the older system when Congress

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created the relation of public right and private privilege. Whether Congress may do so depends, like other questions concerning congressional power, on the scope of Congress's enumerated powers. This Article identifies the questions concerning congressional power that must be answered in order to decide when Congress may create the relations that underwrite executive adjudication under the older system and shows that the scope for that form of decision-making may be quite broad. One constitutional rule is notably absent from the list of constraints: the vesting of the judicial power in the courts by Article III. The constitutional function of the courts is to protect rights. Under the older system, whether a private person has a right with respect to any specific interest depends on the primary law, not Article III. The judicial power took public rights, private rights, and private privileges as it found them.

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Table of Contents

I. Introduction..........................................................................147

II. The Court's Article III Cases and Renewed Interest in Private Rights................................................................151

A. PUBLIC AND PRIVATE RIGHTS IN RECENT ARTICLE III CASES ..................................................................................... 151
B. AGENCY ADJUDICATION AND THE BROADER ARTICLE III PROBLEM......................................................................154

III. Executive Adjudication as an Exercise of Executive Power...............................................................................157

A. EXECUTIVE ADJUDICATION IN THE NINETEENTH CENTURY SYSTEM.........................................................................157
B. PUBLIC RIGHTS, PRIVATE PRIVILEGES, AND EXECUTIVE POWER..........................................................................160

1. Private Rights, Public Rights, and Private Privileges. ............................................................................... 160
2. Powers of Government and Public and Private Interests.................................................................. 172

IV. The Potential Scope of Executive Adjudication.........179

A. CASES BETWEEN THE GOVERNMENT AND OTHERS..........180
B. EXECUTIVE RESOLUTION OF DISPUTES BETWEEN PRIVATE PARTIES........................................................................183

V. Constitutional Constraints on Executive Adjudication Based on Public Rights and Private Privileges.......188

A. INTERNAL LIMITS ON ENUMERATED POWERS..................188

1. Federalism and the Source of Private Rights.......... 189
2. Creating Relations of Public Right and Private Privilege When an Enumerated Power Is Available................................................................................... 191

a. Powers to Grant Benefits................................... 192
b. Regulatory Powers, Prohibitions, and Licensing. ... .......................................................................... 196

B. CONSTITUTIONAL LIMITATIONS AND EXECUTIVE ADJUDICATION..............................................................199

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1. Limitations Protecting Freedom of Conduct and Choice.....................................................................200
2. Constitutional Protections of Life, Natural Liberty, and Property..................................................................201

a. Property.............................................................. 202

i. Private Property and Takings....................... 202
ii. Government Benefits and Requirements of Judicial Review..........................................204

b. Life and Natural Liberty...................................207

C. ARTICLE III AND THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT................................................................. 209

1. Rights to Judicial Hearings under Article III and Unconstitutional Conditions................................. 210
2. Procedural Due Process and Executive Adjudication. .. ............................................................................... 211

VI. Separation of Powers and the Administrative State .. 213

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I. INTRODUCTION

Each of the Constitution's first three articles begins by vesting one of the great powers of government in a distinct institution or officer.¹ Legislative, executive, and judicial powers are separated. A well-known constitutional difficulty arises because important components of the government seem to combine the three. Federal agencies whose heads are appointed and removable by the President often have statutory authority to issue regulations that have the force and effect of law and thereby perform a function resembling that of Congress.² Agencies are also often authorized to make decisions in specific disputes that will receive significant deference if they are challenged in court and thereby perform a function that resembles that of the courts.³

In recent years, controversy has arisen again about executive performance of legislative and adjudicative functions. Some of the Justices have expressed considerable concern about so-called non-Article III adjudication. Recent cases have brought to the forefront a rubric under which the U.S. Supreme Court has often addressed executive adjudication: the distinction between public and private rights. In Oil States Energy Services, L.L.C. v. Greene's Energy Group, L.L.C.,⁴ the Court upheld a form of executive adjudication on the ground that the interests involved were public and not private rights.⁵ The Court spoke through Justice Thomas, who has expressed serious skepticism about executive performance

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of adjudicatory functions and has discussed the public rights rationale in earlier opinions in which he did not speak for a majority.⁶

The principle that executive adjudication is permissible with respect to public rights is not a new one. In his separate opinions, Justice Thomas has relied on recent scholarship by Professor Caleb Nelson that explores in depth an older way of understanding both the distinction between public and private rights, and the legal principles governing executive decision making that used it.⁷ That understanding, as Nelson shows, was standard in the nineteenth and earlier twentieth century and continues to influence the Court through both its older cases and its ongoing attention to the distinction between the two kinds of rights.

This Article further explores the older system that Nelson has recovered and that apparently has considerable appeal for many Justices today. The system's central principle was that executive officials could perform adjudicatory-type functions when they made decisions with respect to public rights. such decisions affected private positions that were not rights but instead were privileges in the old juxtaposition between the two. This Article's central thesis is an explanation for that principle: when acting with respect to public rights and private privileges, executive officials were performing the characteristic executive function of exercising the government's own proprietary rights. Although executive decisions

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as to private privileges had effects similar to those produced by judicial proceedings, executive officials making such decisions were exercising executive, not judicial, power. Judicial involvement in those decisions was no more constitutionally required than is judicial involvement in the decision whether to enter into a government contract. Under the older system, the government's own proprietary interests gave it no control over private legal interests that were rights and not privileges, so with respect to those interests only courts could affect private parties through genuine adjudication.

From that account of the older system flow two conclusions that may be surprising. The first is that Congress's power to provide for executive adjudication under the older approach derives from, and is as broad as, its ability to create the relation of public right and private privilege. Congress may be able to do so in a wide range of situations, so the...