The Regulatory State and Revolution: How (Fear of) Communism Has Shaped Administrative Law, by Evan Bernick

by Guest Blogger — Sunday, Aug. 11, 2019

During its formative years, American administrative law was haunted by the specter of communism. At a time when democratic socialism is on the rise in American politics, it’s worth pausing to reflect upon this history—a history in which fears of radical political change inspired judicial and legislative efforts to limit the administrative state’s capacity to transform the social and economic status quo.

A good place to begin is Chief Justice Charles Evans Hughes’ seminal 1932 opinion for the Supreme Court in Crowell v. Benson, which affirmed the basic legitimacy of judicial deference to agency fact-finding. In Crowell, Hughes sought to strike a balance between the exigencies of a modern industrial economy—which, in his view, demanded expertise-driven regulatory policymaking—and the rule of law—which, in his view, demanded judicial dominance of legal interpretation, as well as the judicial finding of “jurisdictional” and “constitutional” facts. Scholars such as Aditya Bamzai, Daniel Ernst, and Adrian Vermeule have identified Crowell as an expression of the institutional premises that would later undergird the Administrative Procedure Act of 1946—a landmark statute that continues to serve as a kind of sub-constitution for the regulatory state. In a key passage, Hughes wrote:

The recognition of the utility and convenience of administrative agencies for the investigation and finding of facts within their proper province, and the support of their authorized action, does not require the conclusion that there is no limitation of their use, and that the Congress could completely oust the courts of all determinations of fact by vesting the authority to make them with finality in its own instrumentalities or in the Executive Department. That would be to sap the judicial power as it exists under the Federal Constitution, and to establish a government of a bureaucratic character alien to our system, wherever fundamental rights depend, as not in frequently they do depend, upon the facts, and finality as to facts becomes in effect finality in law.

We have good reason to believe that, at a time when Stalin’s apparatchiks reigned in Russia, Hughes had particular bureaucratic bogeymen in mind. That same year, in an address to the Fourth Circuit, Hughes brooded about the danger posed by “new social schemes resting upon coercion by a class.” Like Roscoe Pound—who then chaired the American Bar Association’s Special Committee on Administrative Law—Hughes sought to ward off the threat of what Pound called “administrative absolutism” and which the latter in particular (dubiously) associated with Marxism. For both, the fight against bureaucratic displacement of judicial authority to interpret the law and to enforce traditional due process norms—what Daniel Ernst has termed “the rule of lawyers”—was in part a fight against communism.

Pound and Hughes’ positions on administrative agencies were widely shared by those who sought to reform the administrative state in the late 1930s and during the postwar period. So, too, were their fears of communism, which gripped not only conservatives but New Deal liberals who were concerned about Stalinist influence within federal agencies. One need only scan the record of legislative debates over the Walter-Logan Act—an administrative reform bill that passed both Houses but was vetoed by Roosevelt in 1939—to perceive how legislators associated bureaucracy with communism. If there is less evidence of overt red-baiting in connection with the enactment of the APA, it remains the case that both the Walter-Logan Act and the APA embodied the basic contours of Hughes and Pound’s vision of court-like, court-supervised administrative justice at a time when Democrats and Republicans both considered communism to be a pressing threat to the American constitutional order. The very year after the APA was enacted, the Truman Administration established a loyalty program for federal employees that—as Landon Storrs has documented—drove thousands of left-leaning employees from the civil service and induced a rightward shift in post-New Deal liberalism.

The political economy of the APA remains contested. It has been characterized as a successful effort by New Deal liberals to consolidate past gains for the welfare state before Republicans captured the presidency; it has been characterized as a successful effort by anti-New Dealers to slow the welfare state’s expansion; it has been characterized as the product of a fierce compromise between pro- and anti-New Dealers that was preferred by both factions over the status quo but which did not represent a victory for either faction. But accounts of the APA’s political economy have yet to fully reckon with the anticommunist fervor that, as Jeremy Kessler has observed, not only “stopped the New Deal in its tracks” but “portrayed a great deal of federal microeconomic regulation as anathema to constitutional democracy while entrenching new forms of labor discipline as constitutional bulwarks against communist lawlessness.” Situating the APA in the context of this anticommunism might help us to better understand certain features of the APA’s structure.

How might anticommunism have shaped the APA’s structure? Consider that the APA’s notice-and-comment rulemaking process is designed to facilitate a kind of interest-group pluralism which takes no sides between labor, capital, public interest groups, or concerned individual members of the public. In practice, the effect of this neutrality may not be neutral. Jason Webb Yackee and Susan Webb Yackee have adduced compelling evidence that the rulemaking process is dominated by business interests, and that agencies “alter final rules to suit the expressed desires of business commenters, but do not appear to alter rules to match the expressed preferences of other kinds of interests.” This is unsurprising when one considers that agencies have limited resources and business commenters can credibly threaten to drain those resources by threatening legal action.

Consider also the separation of judicial and prosecutorial functions within agencies that the APA mandated across the administrative state. Joanna Grisinger has pointed out that many agencies had themselves settled upon a separation of functions by 1946. They had done so, however, in part as a response to the Supreme Court’s due process jurisprudence—in particular, the Court’s decision in Morgan v. United States, in which the Court struck down an order issued by Henry Wallace, President Roosevelt’s leftist Secretary of Agriculture, that lowered the rates that “commission men” at stockyards could charge farmers who bought livestock. And that jurisprudence, in turn, was shaped in substantial part by Chief Justice Hughes’ understanding of what internal agency procedures were needed in order to prevent the administrative state from becoming an instrument of redistribution.

The point is not that a cabal of corporate lawyers consciously designed the APA to safeguard the wealth of their clients against administrative expropriation. But the APA was framed by the American Bar Association, and the lawyers who framed the APA did see the reforms that they championed as means of mediating class conflict within the administrative state. These lawyers were eager to assure skeptics that the APA did not favor any particular set of social or economic interests. They appear to have been sincere. Still, they worked to structure agency decisionmaking in ways that have both ensured the legal profession’s continued stewardship of the administrative state and which may on balance have favored the interests of organized wealth.

During the late 1960s and early 1970s, the D.C. Circuit elaborated a set of agency-constraining common law doctrines in what can be understood in part as an effort to compensate for some of the power imbalances in the administrative process—specifically, by forcing agencies to pay attention to environmental and consumer interests that might otherwise be underrepresented. Although the Supreme Court in Vermont Yankee v. NRDC put an end to judicial supplementation of the APA’s procedural strictures, a number of APA-inspired administrative common law doctrines are still with us. Among other things, agencies must respond to all “significant” comments filed during the rulemaking process, disclose significant data on which they relied, and initiate successive rounds of rulemaking in the event that a final rule is significantly different than a proposed rule.

All of these sound like pretty anodyne ways to promote agency deliberation and public participation in rulemaking, but they’re quite expensive for agencies—agencies often need to produce hundreds of pages’ worth of “concise general statement[s] of . . . basis and purpose” when finalizing rules—and they may exacerbate power imbalances by giving organized wealth more opportunities to thwart agency action. Any significant agency action must also survive “hard-look” arbitrary-and-capricious review by the courts. Hard-look review has been defended as a means of ensuring that agencies do not favor special interests, but—like other common-law supplementations of the APA—it may have the perverse effect of aiding special interests by giving them another chance to use their resource advantages to control regulatory outcomes. In all, it may be doubted that the judiciary’s efforts make the administrative process more egalitarian have been successful.

Beyond calling for the abolition of ICE, leftists have not yet expressed much interest in reforming the administrative state. More generally, as Nicholas Bagley has noted, “there seems to be little organized energy behind the idea that relaxing administrative constraints will be good for the environment, consumers, and workers.” The APA has not been significantly amended in some time, and freeing agencies from its chains might seem to be a political impossibility. But, if the fact that it is easier to imagine the end of the world than it is to imagine the end of capitalism does not discourage today’s socialists, neither should the difficulty of imagining a world with a very different administrative constitution. Such a constitution might leave agencies more free to—as eventual Justice Felix Frankfurter once put it in his younger, more radical scholarly days—“fashion[] instruments and processes at once adequate for social needs and the protection of individual freedom.”

Short of replacing the APA, reformers might amend it to eliminate APA common-law doctrines that impede regulatory action without yielding any compensating egalitarian benefits; subsidize the participation of important affected interests in certain rulemaking processes where those interests are especially likely to be underrepresented; or require that courts apply less scrutiny to regulatory action that is designed to redress economic inequality, protect the environment, or protect consumers—regulatory action, that is, that is especially likely to be thwarted by organized wealth. Were it better understood that a Sanders Administration which sought to cancel student debt, take aggressive action on climate change, combat lending discrimination, or regularize the status of undocumented immigrants would inevitably be hampered by a statute that was framed by men who feared radical social and economic change, administrative reform might well receive the left’s considered attention. Scholars of administrative law, for their part, may benefit from further exploring how fears of radical change may have contributed to the development of the APA—for good or for ill—and weighing the costs and benefits of continued bipartisan acquiescence in the rule of lawyers.

 

Evan Bernick is a visiting lecturer at Georgetown University Law Center and a fellow of the Georgetown Center for the Constitution.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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2 thoughts on “The Regulatory State and Revolution: How (Fear of) Communism Has Shaped Administrative Law, by Evan Bernick

  1. William Yeatman

    This is interesting, but I don’t think I’m persuaded. In particular, I don’t think that the APA’s architects “[saw] the reforms that they championed as means of mediating class conflict within the administrative state.” While these reformers may have colored their rhetoric with warnings about Communism, IMHO their faithfulness to the principle of separated powers–their avowed lodestar–seems a much more plausible impetus. Similarly, was the D.C. Circuit in the 1970s motivated by class concerns or by the power imbalance between the individual (or individuals) and the state. On this matter, I don’t read Metzger as justifying/explaining admin common law on egalitarian grounds, but rather on utilitarian (i.e., practical) grounds.

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  2. Daniel Solomon

    I challenge the entire thesis. I think that the main pourpose of the APA was to provide greater fairness and more dependibility in agency relations with the public. I don’t think that there are any references to Communism (or Fascism either) in the legislative intent. I don’t see any evidence that the Communist Party, then still legal, took a position one way or the other.

    Walter Gellhorn, “father of the APA” did write about comparisons of our law with other countries’ systems, but that work came long after the APA was enacted.

    The Hambuger school argues for the abolution of administrative law. https://www.amazon.com/Administrative-Law-Unlawful-Philip-Hamburger/dp/022632463X

    I’d say that outlook is pretty “libertarian” although some might consider it nihilist. Would that make him a “leftist”?

    We really haven’t had real “leftists” around since WWII. After implementation of the APA, right wingers like the John Birch Society needed a scapegoat, and demagogued Republicans like Justices Warren and Brennan, calling everyone who favored civil rights and APA due process commies or pinkoes.

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