The Sovereign Shield

Abstract

As the federal government has come to rely increasingly on private companies to perform government functions, more businesses are testing the power of their association with the federal government to shield them from liability, regulation, and oversight. Such non-governmental entities seek the benefit of the federal government’s “sovereign shield” by exploiting three doctrines — preemption, derivative sovereign immunity, and intergovernmental immunity. These entities touch on every conceivable kind of government action and, by extension, citizens’ lives; their insulation from liability would also affect myriad aspects of citizens’ lives.

This Article untangles the doctrines that extend the sovereign shield to protect private actors. And it exposes the alliance that such extension enables between the executive branch of the federal government and for-profit businesses. We explain how that alliance effects a shift in the balance of power in favor of the federal government and at the expense of the states, at one level, and in favor of private enterprise and at the expense of consumers, at another. Using the student loan servicing industry as a case study, this Article lays bare how government contractors try to exploit the sovereign shield. And it sounds an alarm about the consequences of this particular alliance — injured consumers with no path to redress, destabilization of longstanding principles of federalism and separation of powers, and heightened risks of agency capture.

Keywords: constitutional law, federalism, separation of powers, consumer law, student debt, government contracting