Agency Capture: Authority

Agencies can't turn on a dime. And that's how they were built.

Authority is an agency’s most fundamental asset and most fundamental limitation.

Authority gives an agency the power to act with the force of law in the course of carrying out public policy and use public resources along the way. Yet without authority, the agency cannot act at all, so no limitation is more fundamental than a limitation in the scope of an agency’s authority. Every legal question regarding agency operation begins with, “what is the authority for this?”

Suppose for a moment you are in-house counsel for a large and successful private corporation. Suppose further that the corporation, while robust and lucrative, is wrestling with fundamental structural changes that put pressure on its long-established ways of doing business. The price of labor and other inputs is changing. There is ever-increasing pressure from capital markets for a short-term return. Consumer demands are changing and there is more competition from overseas. Compliance costs and litigation risk are rising.

In the course of thinking strategically about how it is going to navigate this ever-changing environment, the corporation begins to realize a harsh truth: one of its long-standing business lines is simply incompatible with the current marketplace and where the marketplace is likely to be in the foreseeable future. It is entirely possible that the corporation will need to terminate this business line and redirect its resources into other activities that are a better fit for the world we live in. After all the necessary preparatory work is done, the board or senior executives (for simplicity’s sake lets call the final decider the “Boss”) convene a meeting that includes the General Counsel. Something more or less like the following conversation takes place:

“I can’t believe I’m saying this,” says the Boss, “but we have to fundamentally rethink what we are if we’re going to stay ahead of the curve. The business case is overwhelming.  In business lines X, Y, and Z, we’re getting robust market share and healthy returns, and there’s no reason that shouldn’t continue. But in business lines A, B, and C, the original foundation of this company, everything is positively anemic. It is time to redefine ourselves as an XYZ company rather than an ABC company. And the best way to do that is completely terminate business lines A, B, and C and redirect every ounce of money, energy, and focus into XYZ. Can we do that?”

The General Counsel thinks for a moment, and replies:

“Basically, yes. That’s not to say it will be easy, of course. There are innumerable legal obstacles for us to navigate as we go about this. For example, we’ll be breaching contracts left and right. We’ll need to manage that carefully and make sure we’ve properly monetized the consequences. The regulatory and tax ramifications could be significant. And of course there could be a major derivatives lawsuit or other litigation. But there’s no rule of law that we’re required to remain an ABC company in perpetuity. The owners of this company get to define its mission.”

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Now let’s suppose an almost perfectly parallel scenario, but change one crucial fact: instead of a corporation, let’s make our entity in transition a federal agency. One can imagine a similar high-level meeting being convened to discuss how the organization will navigate a changing world, but the decision-making conversation goes very differently.

“I can’t believe I’m saying this,” says the Boss, “but we have to fundamentally rethink what we are if we’re going to stay ahead of the curve. The business case is overwhelming. In programs X, Y, and Z, we’re operating smoothly and efficiently, and having a concrete positive impact on people’s lives with every dollar spent, and there’s no reason that shouldn’t continue. But in programs A, B, and C, we are completely adrift despite our best efforts. We’ve updated the workflow, recruited new talent, and added resources, but even when everything functions smoothly, the program just isn’t having any impact. The problem is structural; programs A, B, and C are simply anachronisms. The conscientious thing to do is terminate programs A, B, and C, and redirect those resources into a new program, Q, that will address similar needs. Can we do that?

The General Counsel doesn’t even hesitate.

“No. Our authorizing statute, which creates us and allows us to operate in the first place, says ‘the agency shall administer programs A, B, and C.’ What you’re proposing is fundamentally re-defining our own mission. While we definitely have a certain amount of autonomy in how we go about doing the job, we do not get to define our own function. Until the law says different, A, B, and C are part of our mission, and Q isn’t.”

I offer this pair of hypothetical vignettes to illustrate the following: an agency can wield significant power and do things of enormous consequence, but it does not define its own mission, function, or identity. That fundamental power rests with the public, acting through Congress, and is delegated to the agency through law. To act, the agency must be given authority, and it cannot change the scope of its own authority.

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Of course this is obvious when you think about it. This is basically Administrative Law 101. But it is so fundamental that it seems to get lost in some of our current conversation on the role and function of government.

And after all, we want it this way. We’ve placed this inherent limitation within the structure of every agency because we want the broad-strokes public policy decisions to stay with politically accountable actors where they belong. Recall in my first column, I argued that the desire to ensure the government’s power is used in a transparent and responsible way leads us to shackle it with burdensome and unique legal constraints, which may tend to produce friction and inefficiency. Surely there is no more central check on an agency than the fact that it must operate within parameters that it cannot fundamentally redefine to accommodate changed circumstances, and that it cannot exceed the scope of its delegated authority.

Brian D. Griffin began his legal career as an associate in the New York office of a Biglaw firm, focusing mostly on litigation. He is currently a staff attorney in the U.S. Department of Veterans Affairs Office of General Counsel. His duties include litigation, rulemaking, and programmatic legal advice. Brian attended New York University School of Law and Georgetown University for undergraduate, majoring in Government. You can reach him at BGriffin8134@gmail.com.

DISCLAIMER: The statements and views expressed in this column are entirely Griffin’s own. They do not represent the views of the Department of Veterans Affairs or the United States.