Taming the Administrative State

Two books in the administrative law literature

In the spirit of the upcoming review of Dunsmuir by the Supreme Court, I’ve read two important books about administrative state skepticism in the United States: Phillip Hamburger’s The Administrative Threat; and Joseph Postell’s Bureaucracy in America: The Administrative State’s Challenge to Constitutional GovernmentBoth books address the constitutionality and necessity of the “administrative state,” and I see some of these conclusions transferring to the Canadian context. What follows is my tortured look at the problems of constitutionality and necessity with a Canadian twist.

Hamburger’s short, pithy text is a condensed version of his other important work, Is Administrative Law Unlawful? The Administrative Threat starts from an historical perspective and builds a sustained response to the administrative state. Hamburger analogizes modern administrative power to the English prerogative power. This prerogative power was famously abused, it was absolute, and it operated outside of the law—it was, according to Hamburger, “extralegal.” To Hamburger, the Star Chamber is the quintessential example of such power.

Hamburger argues that the US Constitution from the beginning barred such prerogative power, repackaged in “administrative” terms. Articles I (legislative power exclusively in the Congress) and III of the US Constitution (judicial power exclusively in the courts), block “irregular” or “extralegal” power, according to Hamburger. When decision-makers create binding rules, they operate outside of the constitutional structure. The worry is more pronounced when decision-makers combine rule-making (legislative), adjudicative (judicial), and investigatory (executive) functions. From a separation of powers perspective, we should be  concerned about such power concentrated in the hands of bureaucrats.

On the other hand, Postell’s book attempts to place the administrative state and its challenges in the context of American constitutional history. Postell argues that “administrative state skepticism,” far from being a new, radical movement, is entrenched in the idea of American constitutionalism. Similarly, to Postell, modern administrative law insufficiently addresses the threat of the administrative threat and its combined executive, judicial, and legislative power. Postell’s review of history demonstrates how Americans have dealt with the threat of administrative power, if imperfectly.

What do these books have to say to Canadians? The books basically assault (1) the constitutionality of the administrative state and deference to it and (2) the necessity of the administrative state. These arguments can transfer, if uneasily, to Canadian law. It’s worth mooting them out to see where they go, if we view a generalized notion of the separation of powers as a worthy organizing principle of the legal system.

Canada’s separation of powers is in part rooted in the judicature provisions of the Constitution Act, 1867. Section 96 protects the role of superior courts of inherent jurisdiction. Parliament cannot divest these courts of their core powers, while non-core powers can be divested if they were not exercised exclusively by superior courts in 1867, or if they were but the broad policy context of the decision-maker transforms the decision-maker’s function (Reference Re NS Tenancies Act).

It could be tempting in the Canadian context to say, as Hamburger does in the American, that the vesting of power in administrative tribunals somehow deprives the constitutionally protected courts of their powers of adjudication and interpretation of law. At first blush, there is no case for this in Canada, because the “core” of s.96 powers is drawn narrowly, and clearly law adjudication and application is not part of that core. For example, the Federal Court is a statutory court created under s.101 of the Constitution Act, 1867.  The Supreme Court itself is a mere “s.101 court.” Yet both courts clearly have the power to interpret and apply law, and that power does not derogate in any meaningful way from the power of s.96 courts to do the same. If the logic follows, therefore, there is no constitutional problem with similarly constituting administrative tribunals.

But this is an unsatisfying conclusion, because there is a meaningful distinction between s.101 courts, for example, and administrative decision-makers. Most importantly, the former can stand in review of the latter (ie) the Federal Court to the Refugee Appeal Division. And there are certain principles that thelcourts must uphold–judicial independence, the Rule of Law, the list goes on. In upholding those principles in cases, the courts must interpret and apply law against the delegated decision-maker. One has a supervisory function over the other, a constitutional role recognized as a part of the Rule of Law. On this question, the distinction is not between s. 96 courts and all other decision-makers, but rather between supervisory courts and other statutory creations.

So, even if interpretation and application of law is not a core function of courts, it is a function on judicial review conducted by courts. This function of law  interpretation and application is something quintessentially judicial. The transfer of these powers to statutory institutions, created by the government that adopts the laws under interpretation, seems to remove something from the uniformity required by the Rule of Law and implicit in ss. 96 and 101. Law that is interpreted by a thousand statutory creations cannot be a uniform law interpreted and enforced across the legal system by courts with a constitutional connection. If this is a constitutional problem, it would require a recognition that s.101 courts (and perhaps other supervisory courts) have some higher constitutional purpose alongside s.96 courts. Such an argument is not new,  and in my view, it is implicit in the Rule of Law, the requirements of judicial review, and legal uniformity. Delegation (read: divestment) of the powers of s.96 and 101 courts would, on this account, raise constitutional concerns.

This is a rough-and-ready attack on delegation, but it is admittedly not where the debate currently is in Canada.  Instead,  Professor Glover recently asserted that the administrative state could be constitutionally mandated.  But the same concerns I’ve noted above are relevant here. Apart from whether the administrative state is constitutional in the first place, the effect of constitutionally entrenching the administrative state (whatever that term means) would be the establishment of at least some adjudicative bodies alongside s.96 courts. Yet the Supreme Court has said that legislatures and Parliament cannot, in effect, constitute s.96 courts (see McEvoy, at 719). More importantly, it would be an odd constitutional mandate that requires the legislature to maintain an aspect of the Constitution through ordinary legislation, putting it in the realm of majority control. This is the opposite of what a Constitution is about–putting certain matters beyond the reach of the majority.

If we accept that there may be constitutional concerns with delegation, deference to that delegation should similarly raise problems. As Hamburger notes, deference has a little explained practical effect. When courts defer to administrative decision-makers in Canada, they effectively impose an onus on claimants to rebut a presumption of legality. Government lawyers have the upper hand—the decisions of their own statutory creations are what they defend. This raises a question of doctrinal independence, though emphatically not independence in the traditional, judicial sense. On questions of law, as Dunsmuir notes, a core function of s.96 courts (which extends to all judicial review courts) is the enforcement of that law against administrative decision-makers.  But deference to the administrative state dilutes that enforcement function, sacrificing it at the altar of expertise, while giving the government an upperhand. The concern here is that the decision under review is viewed as presumptively legal when there is no reason to presume it so.

This raises the necessity question, and whether administrative law and its doctrines can save us from the constitutional worries associated with the administrative state. Or perhaps there is another option. The books raise the prospect that we may not need the administrative state if we embrace certain constitutional principles.

To Postell, the administrate state is broken, and we do not need it in its current form. More importantly, administrative law can’t save us. As I have written before, and as Postell demonstrates, the tools of delegation and deference are used as quintessentially political tools. From the New Deal to the conservative counter-revolution, deference evolved as a way for governments to impress on courts their political will—their desire to limit the supervisory function of courts. These tools have operated at the same time as the administrative state has grown, an insatiable beast eating up more basically adjudicative and legislative functions.

Yet, the answer is not necessarily a strict politics-administration dichotomy. Instead, Postell puts forward the idea of a “constitutional administration,” where representation and republican protections are the organizing principles of the administrative state, rather than rule by experts.  Postell points out that contrary to scholarly “consensus,” antebellum America was not a place of robber-barons and laissez-faire, but instead a place where this constitutional administration flourished. There was an administrative state, and much of it operated at the state and local governments, subject to strict judicial review. At the national level, a stricter separation of powers governed, based on principles of non-delegation of legislative powers and strong-form judicial review. These forms of regulation, though based on simple principles rather than variable forms of expertise, accomplished the policy goals of the era.

In contrast, modern administrative state sympathizers argue that complex problems require complex solutions and that an expert administrative state is required to efficiently manage public policy. First, one has to seriously query whether the administrative state any longer accomplishes this goal, if it ever did. Expertise is not empirically demonstrated by administrative state defenders. And not all administrative tribunals are “flexible” (whatever that means), quick, and cost-effective, like the Court seemed to think in Edmonton East .As an example, the wait time for a refugee hearing before the Immigration and Refugee Board is currently 20 months.

More fundamentally, and as Richard Epstein points out, a complex society does not necessarily require complex rules in a complex bureaucracy. Simple legal rules based around the common law can transform and adapt to exigencies of modern society while similarly protecting individual liberty. Further, much of the administrative state is executive action that could be completed by the executive itself, as Hamburger notes. If the legislature stays in its lane by adopting clear rules, and the executive completes its executive functions, the combination of powers in the administrative state is avoided.

None of this should be construed as a full acceptance of either Hamburger or Postell’s thesis in the Canadian context. A simpler system of administrative law based on republican principles is not doable in Canada. But both authors give us something to think about. It might be worthwhile thinking about taming the administrative state.

CHRC: The Presumption of Reasonableness and the Rule of Law

Worries about the upcoming review of Dunsmuir

The Supreme Court of Canada released a number of decisions in the last few months on standard of review. Many of these decisions are probably noise rather than signal, in the language of Professor Daly. One, however, sheds some light on an important issue before the SCC’s revisit of Dunsmuir: CHRC v Canada (Attorney General), 2018 SCC 31 [CHRC]. What is the role of legislative context in rebutting the presumption of reasonableness?

CHRC says there is no role. This is inconsistent with the Court’s own cases, and doctrinally, it subverts the role of courts in seeking legislative intent to determine the standard of review. This is another milestone in the Court’s tortured administrative law jurisprudence, and it brings no hope for the upcoming review of Dunsmuir.

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CHRC involved two human rights complaints before the Canadian Human Rights Tribunal [CHRT]. These complaints centred around the Department of Indian and Northern Affairs’ previous practice of “enfranchisement.” Under this practice, the government stripped individuals of their Indian Act status and denied the children of these people from registering as status Indians—for example, a child born to a status Indian mother who married a non-status man. In response to this discriminatory policy, Parliament enacted remedial provisions which enabled persons affected by the policy to re-register under the Indian Act.  Further reforms granted registration eligibility to children affected by the enfranchisement policy.

The two complaints were centred around the amended registration provisions in the Indian Act, which need not be exhaustively described—in essence, the claimants argued that the remedial provisions were insufficient because they permitted continued discrimination on the basis of enumerated grounds [1].  The claimants framed their challenge under s.5 of the Canadian Human Rights Act [CHRA], and alleged that the Department of Indian and Northern Affairs Canada engaged in a discriminatory practice in the provision of services.

Both complaints were dismissed on the basis that the claimants’ challenges were legislative challenges to the status registration requirements under the Indian Act. The CHRA confers remedial authority to the CHRT to render conflicting legislation inoperable, but a remedy could only be granted in circumstances where a discriminatory practice has first been established [56]. But the CHRT concluded that “legislation per se” was not a discriminatory practice in the provision of services, and for that reason, the complainants’ cases could not constitute a discriminatory practice.

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The Supreme Court majority decision was written by Justice Gascon. To the majority, the CHRT was “called upon to characterize the complaints before it and ascertain whether a discriminatory practice had been made out under the CHRA” [30]. As a result, the Court reasoned that this was an issue of home statute interpretation inviting the presumptive standard of reasonableness.

The majority next considered whether the presumption was rebutted, concluding that the case did not fall into any of the categories for correctness review established in Dunsmuir. It then turned to the so-called “contextual approach” to determine whether it rebutted the presumption of reasonableness review. That “approach” was essentially a carry-over from the pragmatic and functional era, consisting of four factors which could indicate a different standard of review than the one indicated by the presumption: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by interpretation of enabling legislation; (3) the nature of the question at issue; (4) the expertise of the tribunal.

The majority noted that a presumption of reasonableness is designed to “prevent litigants from undertaking a full standard of review analysis in every case” [45]. Context, then, should play a “subordinate role”, and should be “applied sparingly” [46]. Putting context in its place, to the majority, would forego the uncertainty and debate over the standard of review.

The majority emphatically disagreed with the opinion written in CHRC by Cote and Rowe JJ, which noted that correctness would apply wherever the “contextual factors listed in Dunsmuir point towards correctness as the appropriate standard” [73]. Instead, the majority noted that where the presumption of reasonableness applies, an adoption of a contextual approach would “undermine the certainty this Court has sought to establish in the past decade” [47]. The majority concluded that “…dissatisfaction with the current state of the law is no reason to ignore our precedents following Dunsmuir” [47]. On the facts, the majority nonetheless applied the contextual analysis and concluded that the presumption of reasonableness was not rebutted.

In a concurring opinion, Rowe and Cote JJ disagreed with the majority’s obiter comments on the contextual approach. They reasoned that the approach to standard of review set out in Dunsmuir is “manifestly contextual in nature” [78]. To Rowe and Cote JJ, a contextual analysis must be undertaken where the categories inviting correctness review do not apply.  On the facts of the case, Rowe and Cote JJ would have found the presumption of reasonableness rebutted because of an absence of a privative clause and the potential for conflicting lines of authority because the CHRT does not interpret the CHRA in a discrete administrative regime [90]. Brown J concurred on similar grounds.

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In my view, the two concurrences clearly had the better of the argument here. First, the majority’s approach continues a hard-line approach to the presumption of reasonableness that is inconsistent with Dunsmuir and post-Dunsmuir cases. Second, a presumption of reasonableness that is never rebutted is contrary to the concept of judicial review.

It is unusual—in the strongest sense of the term—that the majority rooted its endorsement of the presumption of reasonableness in terms of precedent. It noted, for example, that resort to the contextual approach would “undermine the certainty this Court has sought to establish in the past decade.” This is an unexpected remark. The Court has done much in the last decade on administrative law, but establishing certainty is not on the list. Putting aside all of the other issues—which are many—the problem of context provides a good example of the Court’s odd inability to apply its own precedents.

Legislative context is integral to determining the standard of review because legislatures, not courts, can set the standard of review. Dunsmuir recognized this when it held that “[T]he analysis must be contextual” [64].  This is about as clear as it gets for the Supreme Court in administrative law.  As Justice Bastarache, one of the authors of Dunsmuir said in the recent Dunsmuir Decade series, none of the categories inviting a particular standard of review—including the presumption of reasonableness—were meant to be set in stone. Dunsmuir only said that deference would “usually result” when a decision-maker interprets its home statute [54].

And this is how the Court applied the presumption of reasonableness in subsequent cases. There are a number of cases in which the Court looked to context to determine whether the presumption was rebutted; by my count, at least the following: Entertainment Software Association v SOCAN, 2012 SCC 34; Rogers v SOCAN, 2012 SCC 35; Marine Services International v Ryan Estate, 2013 SCC 44; McLean v British Columbia (Securities Commission), 2013 SCC 67; Tervita Corp v Canada (Commissioner of Competition), 2015 SCC 3; Mouvement Iaique Quebecois v Saguenay, 2015 SCC 16; CBC v SODRAC, 2015 SCC 57; Edmonton (City) v Edmonton East (Capilano) Shopping Centres, 2016 SCC 47 (though noting Justice Karakatsanis’ skeptical remarks regarding the contextual approach); Barreau de Quebec v Quebec (Attorney General), 2017 SCC 56; Williams Lake Indian Band v Canada (AANDC), 2018 SCC 4; Groia v Law Society of Upper Canada, 2018 SCC 27.

I repeat these cases for dramatic effect. It is an example of the Supreme Court saying one thing and doing another—something some judges of the court recognized was a risk in administrative law in Kanthasamy [112]. In CHRC, there is no explanation for why context should be abandoned, especially in light of all of these precedents and Dunsmuir’s clear, unequivocal statement.  Shouldn’t certainty be one of the underlying goals of doctrinal reform, particularly in this troubled area? Changing approaches year-to-year does not provide any guidance to courts and litigants.

Quite aside from the lack of consistency in the Court’s standard of review framework, a presumption-only approach also frustrates the search for legislative intent. “Legislative context” as Justice Brown noted in CHRC is really just a proxy for determining legislative intent. When one speaks of “legislative context,” one means statutory indicators that set the standard of review implicitly: statutory rights of appeal, signs of concurrent jurisdiction, privative clauses, statutory indications of purpose, and the like. Or, perhaps there is explicit legislative guidance on the standard of review. It was always understood that these signs of legislative intent should bind courts; this is just an implication of the hierarchy of laws, under which courts must respect law absent constitutional objection.

The presumption-only approach in CHRC raises profound challenges to the task of courts on judicial review to determine legislative intent. The challenge can be framed in the classic “rules vs standards” debate in law and economics terms. The “rules versus standards” debate probably impacts every area of law, because laws and doctrine can be framed as either hard-and-fast “rules” or flexible “standards.” Rules have certain benefits—cost savings are achieved because the rule applies to the mass of legal situations, and there is no need to conduct a case-by-case investigation. But rules can be overbroad—if they are not appropriately tailored, they can apply in situations where the underlying justifications for the rule do not exist.

The presumption of home statute interpretation can be viewed as an overbroad rule, because on the happening of a certain event (home statute interpretation), the content of the law is defined (deference). It is rooted in the justifications of expertise and legislative intent.  But because the CHRC approach tells lower courts not to look to context, we simply never know if the legislature intended a standard of review other than the one indicated by the presumption. The presumption could apply in cases where the legislature did not intend reasonableness, even though the Dunsmuir factors (which could be understood as standards) implicitly set a different standard of review.

Not to put the point too strongly, but if this is the case, what is the point of a standard of review analysis? Couldn’t we create some sort of computer program in which cases are filed and the standard of review is selected by the computer? The point of the Dunsmuir factors is individual tailoring—they are designed to be applied by courts in cases where a statutory indication of legislative intent is evident. This requires some human appreciation of what an enabling statute implicitly sets the standard of review to be. But if judges simply say “reasonableness” all the time, the role of courts on judicial review is reduced to rote copying of a paragraph saying that deference applies, even where it should not.

This goes to the point of judicial review. The role of the courts on judicial review, as noted in Bibeault, is so important that it is given constitutional protection [126]. That role, rooted in the Rule of Law, is to authentically determine what the legislature intended the standard of review to be. When the Court binds itself to its own presumption–simply an evidentiary device–it subordinates its constitutional role to the police the boundaries of the administrative state.

The systemic costs of the CHRC approach are  exacted in the Rule of Law and against the constitutional role of the Court. As Leonid once wrote, judicial review can be understood as a cost-benefit analysis. While the costs saved through the presumption may be high, the potential costs of imposing the wrong standard of review could lead to more administrative decisions being upheld than what the legislature intended. The effect is case-by-case, an administrative state turned loose, increasingly unmoored by law. CHRC sanctions this unleashing of the administrative state.

This is not to say that the reasonableness review urged by CHRC is inconsistent with the Rule of Law (though I think there is a case to be made on that front). But expanding the class of cases in which reasonableness should and does apply, when that expansion is not mandated by law, presents a serious challenge to the Rule of Law and the role of courts in enforcing it.

CHRC worries me on this front. It demonstrates that the Court is not looking to the underlying constitutional precepts of judicial review. It does not seem to have seriously considered the costs to its approach. Nor is it even attempting to distinguish its own precedents in creating its new approach. Observers should worry about where the Court’s mind is going in advance of its planned review of Dunsmuir.