Wednesday, October 10, 2012

The FCC, the Administrative State, and Separation of Powers

On October 11, I am speaking at an event sponsored by Vermont Law School's Federalist Society chapter. The topic is "The Administrative State," with a special focus on what Federalist Papers Nos. 47 and 51 have to say about the role of administrative agencies in our system of government.
This is a very good topic, for which I commend Vermont Law School's students. If I had my way, not just all law students, but all college students, would be required to read at least certain numbers of the Federalist Papers (especially Nos. 10, 47, 48, 51, 55, 70, and 78) before receiving their degrees!
Federalist Nos. 47 and 51 consider the role of separation of powers in our constitutional design, and they contain some of the most oft-quoted language from the papers. At the law school, I plan to discuss how separation of powers principles impact the way we think about the administrative state – or should think about it. With an emphasis on the Federal Communications Commission, I'll consider the nondelegation doctrine, the status of the so-called independent agencies, and the degree of judicial deference accorded independent agencies vis-รก-vis the executive branch agencies.
For my purposes here, I am going to focus only on the nondelegation doctrine. An appreciation of the doctrine's derivation from constitutional separation of powers principles, and its purpose, is central to understanding the way in which communications law, and the FCC itself, ought to be reformed.
In Federalist No. 47, defending the proposed Constitution against the contention that it allowed too much blending of the separate departments’ powers, James Madison declared:

"The accumulation of all powers, legislative, executive, and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny. Were the federal Constitution, therefore, really chargeable with this accumulation of power, or with a mixture of powers, having a dangerous tendency to such accumulation, no further arguments would be necessary to inspire a universal reprobation of the system."

In support of the idea that separation of powers is essential to preserve liberty, Madison referred to the writings of "the celebrated Montesquieu," who Madison assured us, is "the oracle who is always consulted on this subject."
It is true. Madison and many other Founders were well versed in Montesquieu, the French Enlightenment philosophe. In his most famous work, The Spirit of Laws, first published in English in 1750, Montesquieu had written:

"When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.
Again, there is no liberty, if the judiciary power be not separated from the legislative and executive. There would be an end of every thing, were the same man, or the same body, whether of the nobles or of the people, to exercise those three powers, that of enacting laws, that of executing the public resolutions, and of trying the causes of individuals."
Federalist No. 51 is much to the same effect as No. 47:

"In order to lay a due foundation for that separate and distinct exercise of the different powers of government, which to a certain extent is admitted on all hands to be essential to the preservation of liberty, it is evident that each department should have a will of its own; and consequently should be so constituted that the members of each should have as little agency as possible in the appointment of the members of the others."

While both Nos. 47 and 51 acknowledge that some deviations from strict separation of powers are necessary, and, in fact, are incorporated into the constitutional framework, the emphasis in both is on the role separation of powers plays in protecting liberty and promoting political accountability.
Consistent with separation of powers, Article I of the Constitution provides "[a]ll legislative powers herein shall be vested" in Congress. Now, if this injunction were taken literally, we wouldn't have much of an "administrative state" about which to be concerned. This is because most federal agencies, including the FCC, exercise rulemaking power – that is, the power to promulgate regulations that bind individuals and businesses in the same way that laws of Congress do.
But the injunction is not taken literally. The Supreme Court has accommodated the agencies' exercise of lawmaking power by adopting what is referred to as the "nondelegation doctrine." The Court indulges in the fiction that there has not been an unconstitutional delegation of power, as the Court put it in J. W. Hampton in1928, so long as "Congress shall lay down by legislative act an intelligible principle" to guide the agency in carrying out the delegation of authority.
The rationale for requiring Congress to provide an "intelligible principle" when delegating legislative power to agencies is that we want to be able to hold Congress politically accountable for the policy choices it makes, even if such policy choices are set forth in fairly broad terms.
There are many enabling statutes that contain delegations in which the required "intelligible principle" is pretty difficult to discern. But the Communications Act, which delegates authority to the FCC to regulate in "the public interest," is certainly at the outer reaches of intelligibility. Much of the FCC's regulatory activity takes place under the public interest delegation.
Where's the "intelligible principle" in the public interest delegation?
Well, here’s what Justice Frankfurter said in1940 in FCC v. Pottsville Broadcasting Co. Referring to the new "science of broadcasting," he declared the public interest standard "is as concrete as the complicated factors for judgment in such a field of delegated authority permit."
Read Frankfurter's statement again – slowly, this time – as you try to discern the "intelligible principle" laid down by Congress.
David Schoenbrod, a scholar at New York Law School, has observed the public interest standard says "practically nothing at all" about Congress's goals in the Communications Act. Constitutional scholar Gary Lawson has called the standard "easy kill number one" in terms of statutory provisions that should be invalidated on nondelegation doctrine grounds.
But the fact of the matter is that the public interest standard hasn't been killed. Indeed, in 1943 in National Broadcasting Company v. United States, the Court rejected a contention the public interest standard is unconstitutionally vague.
Even though the Supreme Court has allowed the public interest standard to stand, it is unlikely Madison would be pleased. After all, it is difficult to hold Congress politically accountable for communications policy when so much of the FCC's activity takes place under the public interest standard.
So, the lesson is this. When Congress tackles revision of the Communications Act – as it should, and sooner rather than later – this time it ought to do better by way of setting forth a more determinate "intelligible principle," or principles, to guide the FCC. Given today's competitive marketplace environment, in contrast to the much more monopolistic environment that prevailed when the Communications Act was adopted, the agency ought to be specifically directed by Congress to find the existence of marketplace failure and demonstrable consumer harm before regulating.
If Congress does replace the indeterminate public interest standard with more specific competition-based directives, communications law would be reformed in a way that comports much more closely with fundamental separation of powers principles. Political accountability would be increased. Abuse of government power would be less likely.
Madison would be pleased – and so would I.