A heated debate on these waivers' constitutionality has waged in law reviews, (119) in op-ed pages, (120) and in the Capitol. (121) Much of this debate has overlooked a distinct question: how these measures comport with administrative constitutional values. (122) The remainder of this subsection addresses recent examples of well-known waivers in three prominent domains: immigration (Deferred Action Waiver Programs), (123) health care (ACA Waivers), (124) and education (NCLB Waiver Program). (125) Though a similar analysis could be applied to earlier exercises of waiver power, it makes sense to confine the discussion to this trio because of their recency and prominence. A basic familiarity with their general substantive features is assumed; (126) the discussion below drills down on various aspects of these waivers as necessary to illuminate their fit with administrative constitutional values.
Notice and an Opportunity to Comment
The Deferred Action Waiver Program, the ACA Waivers, and the NCLB Waiver Program have affected tens of millions of Americans and thousands of entities. (127) But the public had neither meaningful advance notice of nor the opportunity to comment on these waivers in advance of their adoption.
The three waivers under discussion here were all announced abruptly. The initial waiver to the ACA's employer mandate provision was announced in a blog post on the Treasury website on July 2, 2013 (the day before a holiday weekend);128 a week later, a Q-and-A style notice was issued by the Treasury and the IRS. (129) The first "like it, keep it" fix was announced in a presidential statement in the White House pressroom (130) and was formalized in a letter sent the same day from Centers for Medicare and Medicaid Services (CMS) to state insurance commissioners. (131) The second "like it, keep it" waiver, which announced a two-year extension to the first waiver, was posted in a technical bulletin on the CMS website. (132) The final NCLB Waiver Program was announced at a White House event and on the Department of Education webpage. (133) The 2012 and 2014 Deferred Action Waivers were announced, respectively, in a televised address by the President and in a speech delivered in the Rose Garden. (134) Simultaneously with these announcements, the new policies were released in fully articulated form on the DHS website. (135)
The speeches, press releases, and other documents just discussed occasionally refer, in general terms, to executive branch discussions with concerned groups or individuals. (136) It is likely true, then, that at least some groups or individuals did in fact have the chance to review and provide feedback on these waivers prior to their announcement and adoption. But advance input from the public at large was neither solicited nor received. (137)
In the usual course, administrative law requires agencies to offer a contemporaneous explanation of the basis for their decisions. (138) "The idea of reasoned explanation at the time of agency action is deeply embedded in administrative law." (139) Records compiled in rulemaking or adjudication can include copious arrays of scientific studies, surveys, or other materials supportive of the agency's determinations. (140) In contrast, the contemporaneous explanations supplied for the Deferred Action Waiver Program, the ACA Waivers, and the NCLB Waiver Program have adopted quite different formats--the press release, the blog post, the technical bulletin, or the open letter.
Form, of course, often dictates content. Consequently, the justifications supplied for the waivers under discussion here have tended to be informal in tone, sparse in content, or both. For example, the letter from Secretary of Education Arne Duncan explained the NCLB Waiver Program as an effort to undo the unintended pernicious effects of NCLB requirements, (141) which is rather like explaining that the reason for adopting a 55-mph-speed limit is to prevent the dangers of driving at 56 mph. (142) The blog post announcing the first employer mandate delay contained just two sentences explaining the delay, one of which was tautological. (143) Contrast this level of detail with an ordinary administrative rulemaking, in which the agency might provide dozens of pages of explanation for a change of this magnitude, including detailed responses to public comment.
A distinct problem afflicts the explanations supplied for these waivers. As David Pozen has noted, the White House has hinted that these waivers are a justified response to congressional intransigence. (144) But, as he continues on to note, the executive branch has not forthrightly acknowledged that rationale, instead framing its decisions as resting on considerations of the kind more conventionally palatable to administrative law. (145) This lack of candor stands in some tension with the administrative law norm that demands disclosure of the actual basis of agency decisions, even when those reasons are essentially political and not policy-based. (146) Looked at from this perspective, it is problematic that the executive branch has failed to state forthrightly that it was congressional intransigence--rather than, say, a need to undertake a more extensive study of tax reporting systems--that motivated and justified these waivers. (147)
A final point must also be made about reason-giving: that explanation and legal justification are not synonymous. When the 2014 Deferred Action Waiver Program was announced, the Office of Legal Counsel in the Department of Justice released a legal opinion (OLC Memorandum) contemporaneously with the announcement of the revised immigration policy that signed off on certain aspects of it. (148) But the OLC Memorandum is a lawyer's opinion; it is not a policy explanation of the sort that ordinarily accompanies an agency decision. (149) Administrative law requires agencies to elucidate the reasons why they are taking an action--not merely why the action they have determined to take is within legal bounds. (150)
For reasons that have been well elaborated elsewhere, litigants face a steep challenge when they seek judicial relief from executive-branch inaction. (151) The chief obstacles are standing and the doctrines regarding the nonreviewability of agency failure to act. (152)
Though there have been a few attempts to bring court challenges to the ACA Waivers, the cases attacking these waivers have been dismissed on threshold questions. (153) The cases that have not yet been dismissed likely will be dismissed for similar, if not identical, reasons. (154) With respect to the Deferred Action Waiver Program, a challenge to the program by several states has survived dismissal in the lower courts. (155) It remains to be seen whether the Supreme Court will agree with the lower courts that the plaintiffs in that case have standing and reach the merits of the challenge. (156)
As the above discussion has demonstrated, the Deferred Action Waiver Program, the ACA Waivers, and the NCLB Waiver Program all depart in varying ways from administrative constitutional values. The constraints of the administrative constitution have had little purchase on the executive's exercise of waiver and delay--powers that have become increasingly consequential. (157)
Counterparties and Conservators
The financial analyst Nassim Taleb famously dubbed the financial crisis of 2008 a "black swan event"--a highly improbable occurrence that thoroughly disrupted long-settled assumptions grounded in a wealth of previous knowledge and experience. (158) Because "one single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans," a black swan event "illustrates ... the fragility of our knowledge." (159)
The financial crisis was not only a black swan event for the financial markets, but also a black swan event for administrative law. It spurred the use of administrative methods that were entirely unique and that had been unthinkable prior to their materialization. It exposed--and continues to expose--the "fragility of our knowledge" about the administrative state. (160)
In late summer 2008, the financial sector was teetering on the brink of collapse, and a second Great Depression seemed to loom. (161) The federal government's initial response was to encourage private deal making among critical financial institutions. (162) The Treasury encouraged stronger banks to acquire weaker banks and tried to broker injections of equity into weaker banks by deep-pocketed investors. (163)
Although initially these deals were entered into on an "ad hoc" basis, eventually it became clear that the executive would need to turn to Congress for more powerful weaponry. (164) Among the most notable of these congressional tools was the Emergency Economic Stabilization Act's (EESA) creation of the Troubled Asset Relief Program (TARP) in October 2008. (165) The statute authorized the Treasury to use $700 billion to purchase assets needed to prop up financial institutions. (166) The Treasury announced that it would use TARP funds to "inject equity directly into financial institutions by buying preferred stock." (167) By the end of 2008, the U.S. government owned stakes in the nine largest American banks and America's largest insurer, AIG. (168)
As David Zaring and Steven Davidoff Solomon have argued, this form of regulation--"regulation by deal" (169)--ignored core administrative law values. (170) There was no notice to the public or opportunity to comment on the deals that the government was cutting or brokering. (171) Little in the way of contemporaneous explanation or justification was provided; to the contrary, information about the government's role in some of these transactions was kept close to the vest and was revealed only after the fact by investigative journalism. (172) Regulation by deal was regulation by fait accompli, (173)...