54 Pages Posted: 13 Feb 2017 Last revised: 14 Dec 2017
Date Written: February 12, 2017
The traditional portrait of the administrative state often features the politically-appointed agency head at its center: the Administrator of the Environmental Protection Agency, for instance, or the Secretary of the Department of Labor. This picture of bureaucratic power, however, is incomplete. For much of that power is, in fact, subdelegated within the agency. The implication is that decision rights are often exercised not by statutory delegates, but rather by lower-level officials and tenure-protected career staff. The purpose of this work is to bring these background actors - like the Securities and Exchange Commission’s Director of Enforcement - squarely to the foreground.
In doing so, this Essay develops a positive theory for how and why agency heads subdelegate their power and analyzes the resulting normative implications. The analysis draws on a rich social science literature to argue that delegations within agencies are best understood as credible commitment devices through which agency heads motivate better-informed but potentially biased subordinates. This decision to commit, however, is itself subject to the internal transaction costs of reviewing subordinate recommendations. These dynamics, in turn, suggest a role for courts to maximize high-quality information within agencies by taking credibility into account in their appointments and removal jurisprudence; deferring to subdelegations promulgated through transparent, deliberative procedures; and providing clearer ex ante guidance as to when internal subdelegations will be judicially enforced. At the same time, political actors (not courts) should police the countervailing concern that subdelegation can also be used as a tool of partisan entrenchment.
Keywords: subdelegation, internal agency delegation, transaction costs, credible commitment, theory of the firm, Accardi
JEL Classification: A12, D21, D23, D72, D73, D78
Suggested Citation: Suggested Citation