An Apology for Administrative Law in 'The Contracting State'

Abstract

This essay responds to Jody Freeman's Article, The Contracting State, which will soon appear in the symposium on Regulatory Theory and Administrative Law in the Florida State University Law Review. I agree with Freeman's assessment that regulation by agreement between the state and a contractor or regulated entity adds a significant arrow to the quill of regulatory weapons. Like her, I too have concerns about how the courts will address such contracts. I, however, do not see contract mechanisms as a means of providing regulatory accountability, but rather as a means of avoiding the overbreadth of traditional regulation and of assigning roles required by the regulatory state to those best able to perform them. Moreover, I fear that emphasis on contract as a means of providing accountability will lead to incorporation of contract law principles that will seriously undermine the flexibility of current administrative processes. Unlike Freeman, I am not certain that administrative law's lack of explicit reference to contractual processes reflects ignorance. Rather, I believe that current understandings of administrative law recognize that over the past several decades much of regulation has been implemented through contract like processes, and seek to place such processes within a framework that allows administrative agencies leeway to structure and implement regulatory programs as they think best. So viewed, too a great extent administrative law already accommodates contractual bargaining processes, and with merely a little tweaking provides sufficient accountability for most of the types of bilateral regulatory contracts that Freeman discusses. This essay begins by reviewing the potential benefits of regulatory contracts, stressing in particular that those benefits flow from attributes of contractual relationships other than the desire to hold the government accountable for regulatory policy. It goes on to describe what I consider basic understandings of the current adminstrative state - that the principal checks on agency policymaking are procedure and politics. Finally, the essay considers what these understandings imply about how courts should treat the four types of regulatory contracts that Freeman identifies in her principal paper: (i) procurement contracts, (ii) contracts under which private entities perform government services, (iii) agreements between administrative agencies and regulated entities regarding implementation or enforcement of regulations, and (iv) contracts between an agency and private entity that specify the requirements that govern the regulated conduct of the entity. In particular, the essay analyzes how these understandings inform when and how government contracts should be enforceable by the nongovernment party or by the public beneficiaries of these contracts.