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The false promise of fiduciary government.

ABSTRACT

This Article critiques the borrowing of private law concepts to develop doctrines of judicial review in public law. A rising chorus of scholars has argued for a fiduciary theory of government designed to constrain political discretion through judicial review based upon the model of private fiduciary duties. Treating politicians and bureaucrats as fiduciaries, they argue, promises a workable judicial solution to the problem of faction in legislative and administrative decision-making. This Article argues the promise of fiduciary government is a false one. There are problems of fit, intent, and function with fiduciary government. Politicians and bureaucrats are not like private fiduciaries because they do not serve discrete classes of beneficiaries and are not subject to demands that can be distilled into a discrete maximand. Fiduciary government, cannot be founded in the intent of the Founders or of Congress. Moreover, fiduciary government has not functioned well where courts have experimented with it. Either the analogy to fiduciary law operates at such a high level of generality that it simply restates public law problems in different terms, or it imports freestanding fiduciary principles that yield unworkable constraints on political decisionmaking. The failure of fiduciary government is instructive, however, on the promises and potential pitfalls of translating between public and private law.
INTRODUCTION

 I. THE THEORY OF FIDUCIARY GOVERNMENT

 II. THE PROBLEM OF FIT
 A. The Many Faces of Fiduciary Law
 B. Public Officials as Parents
 C. Public Officials as Trustees
 D. Public Officials as Corporate Managers
 E. The Decline of Fiduciary Law?
 F. Public Fiduciaries as a Sui Generis Category

 III. THE PROBLEM OF INTENT
 A. Constitutional Law as Fiduciary Law
 B. The Fiduciary Account of Administrative Law

 IV. THE PROBLEM OF FUNCTION
 A. Narrow Public Fiduciary Constraints
 1. Political Corruption and the Honest Services
 Statute
 2. Insider Trading and the STOCK Act
 B. Broad Fiduciary Government

 1. The Federal Indian Trust Doctrine
 2. The Public Trust Doctrine
 3. The First Amendment Public Forum

 V. THE PROBLEMS WITH THREE PROPOSED FIDUCIARY REFORMS.
 A. Imposing the Duty of Care on Congress
 B. Judicial Review of Political Gerrymandering
 C. Hardening Hard Look Review of Agency Action

 VI. THE PROBLEM OF TRANSLATING BETWEEN PUBLIC AND
 PRIVATE LAW
 A. The Interdependence of Justiciability, Rights, and Remedies
 B. The Importance of Mediating Principles
 C. Connecting Values Across Doctrinal Areas
 D. The Possibility of Creative Restatement

CONCLUSION


INTRODUCTION

Private law labels some relationships of power and dependence between persons "fiduciary." With the label come duties, enforceable through private rights of action, which aim to protect the beneficiaries of delegations of power to others from becoming victims of that dependence. To some, modern life is characterized by the emergence of a "society ... based predominantly on fiduciary relations." (1) Understood thus, fiduciary law encompasses not only the traditional doctrinal categories--trust, agency, partnership, corporations, and so on--but also all "important social and economic interactions of high trust and confidence that create an implicit dependency and peculiar vulnerability of the beneficiary to the fiduciary." (2)

The work of the antebellum scholar Francis Lieber reveals how far this thinking can run. Writing in 1838, Lieber lumped constitutional law with trust law. (3) Every citizen, from the federal postmaster to the local haberdasher, was a fiduciary. The foundation of political duties, no less than that of duties that run from trustee to trust beneficiary, could be found in fiduciary law.

More recently, a rising chorus of contemporary scholars has begun to argue for a model of government designed to constrain political discretion through judicial review based upon the law of fiduciary duties. (4) Like private fiduciaries who owe duties to beneficiaries, public officials possess discretionary authority to act on behalf of citizens, who cannot protect themselves from abuse, or so the analogy runs. By applying fiduciary duties of loyalty and care to politicians and bureaucrats, fiduciary theorists aim to resolve the "problem of faction" in political and bureaucratic decisionmaking. (5) For example, fiduciary theorists point to the duty of loyalty to check incumbent "self-dealing" in legislative redistricting, (6) or, paired with a "duty of impartiality," to revive substantive due process review of economic legislation. (7) Another scholar finds in fiduciary law six principles of judicial review that cut "strongly against presidential administration" and in favor of substantial changes to federal administrative law, including hard look review of every rulemaking and of agency inaction, as well as disclosure of all agency communications with the White House during rulemaking proceedings. (8) There are other examples including, perhaps most boldly, fiduciary theories that would rewrite McCulloch v. Marylands longstanding gloss on the Necessary and Proper Clause. (9)

In short, fiduciary theorists see in fiduciary law a political morality from which to derive judicial constraints on political discretion. By "drawing on the lessons from private law enforcement of fiduciary duties," the federal courts can create a "workable approach" to judicial review of political decisionmaking. (10) That is the promise of fiduciary government.

This Article argues the promise of fiduciary government is a false one. Fiduciary constraints are riven with problems even in the private law context, where there is a consensus about the interests of beneficiaries and the ends of judicial review. Identifying when a fiduciary relationship exists is a matter of significant debate. Even where fiduciary constraints are well accepted--from trust to corporate law--specifying their content sparks more disagreement. Indeed, some scholars have argued fiduciary law is dead. (11) Hence, we face an irony. While private law scholars chart the decline and indeterminacy of fiduciary constraints and the rise of private discretion, public law scholars look to fiduciary law to constrain public discretion. Yet designing fiduciary rights and duties is even more difficult in the public law context, where, unlike its private counterpart, there is not a consensus about the interests of beneficiaries and the ends of judicial review.

As a result, the fiduciary model suffers a kind of Goldilocks problem. Taken for all it suggests, fiduciary government would hold government to the "punctilio of an honor the most sensitive." (12) That constraint is simply too much. Unsurprisingly, fiduciary theorists have acknowledged the "uncompromising moralistic rhetoric" of fiduciary law and sought to restate public fiduciary duties in compromising terms. (13) But that approach provides too little guidance. Does it advance analysis, for example, to recast the arbitrary-and-capricious standard of federal administrative law as a fiduciary duty of care? In either case, a court must still "calibrat[e] the degree of judicial deference to be accorded" and the administrative procedure it will demand of agencies. (14)

The problem lies in fiduciary doctrine itself. Fiduciary law overlays moralistic standards of conduct upon legally enforced norms, but what links the two remains uncertain. When it comes to corporate governance, for example, judges act "more as preachers than as policemen." (15) Delaware corporate law has a shadowy "penumbra," (16) with moral exhortations that "can never be fully realized nor even defined with specificity in advance." (17) Importing fiduciary law into constitutional and administrative law carries this indeterminacy with it.

My arguments unfold as follows. Part I elaborates the fiduciary theory of government. Part II discusses the problem of fit between private fiduciaries and public officials. The "hallmark" of a fiduciary relationship is an altruistic duty requiring the fiduciary to be loyal to her beneficiary. (18) This rule of undivided loyalty gives rise to a distinctive set of rules of justiciability, primary rights and duties, and remedies focused upon a discrete set of beneficiaries and interests. A trust, for example, involves a trilateral relationship among the settlor, who creates the trust, the trustee, who administers it, and the trust beneficiaries. Trust law directs the trustee to resolve conflicts of interest by reference to the settlor's intent and to a well-understood set of economic principles regarding the management of trust assets. By contrast, networks among politicians, bureaucrats, and citizens are multifarious. Much debate in political life and public law concerns not the means but the ends of regulation. There is no single maximand that a public official must pursue, and no generally accepted means for her to pursue it. Moreover, to the extent fiduciary relationships are contractual, and fiduciary duties are default terms, they provide poor guides to public law.

Part III explains the problem of intent with fiduciary government. Federal courts do not have unfettered authority to enforce freestanding fiduciary constraints on Congress and the executive as a matter of federal common law. And the interpretive case for public fiduciary law is ultimately unconvincing. The absence of fiduciary precedent is compelling evidence against the theory. The Founders, to be sure, spoke of public office as a "public trust" and were concerned with limiting "corruption," defined broadly to include "conscious or reckless abuse of the position of trust." (19) But it is far from clear that fiduciary government was a background understanding of legal rights at the Founding. When the Founders raised the theory of fiduciary government, they often did so in connection with political mechanisms--chiefly impeachment and elections--for holding government officials responsible for breaches of the public trust. And whatever its persuasiveness as an account of Founding Period political theory, fiduciary government cannot explain the political compromise at the center of the charter of federal administrative law, the Administrative Procedure Act.

Part IV lays out the problem of function with fiduciary government. To test the promise of fiduciary government, it makes sense to look at the public law contexts where federal lawmakers have experimented with fiduciary analogies, including the honest services statute, (20) the STOCK Act, (21) First Amendment public forum doctrine, the public trust doctrine in environmental and natural resources law, and the Indian trust doctrine. The results do not commend fiduciary government. The connection of fiduciary duties to constitutional values is opaque at best. In many cases, fiduciary government has served as a shield for government defendants, not as a sword for private plaintiffs. In other cases, the model aggrandizes judicial authority at the expense of the daily operations of government. Moreover, it is difficult to distill a limiting principle for public fiduciary duties.

Part V shows that the problems of fit, intent, and function arise with respect to three proposed fiduciary reforms. Fiduciary government is attractive as a theory of political ethics. But the fiduciary metaphor does not advance the analysis of troubling problems in public law, or so Part V argues.

Which is to say politics is not a problem to be solved by collapsing public into private law. Part VI considers the problem of translating between public and private law. Taking fiduciary government as an example, Part VI argues that the success of translation depends upon recognizing the interdependence of justiciability, rights, and remedies, mediating between general principles and decision rules in particular cases, and identifying the logical connections between the values at stake in the relevant doctrinal debates. Along all three metrics, fiduciary government fails to fulfill its promise of a workable approach to constitutional and administrative law. The analogy to fiduciary law either imports freestanding fiduciary principles that yield unworkable constraints on political decisionmaking or operates at such a high level of generality that it simply restates public law problems in different terms.

I. THE THEORY OF FIDUCIARY GOVERNMENT

To take seriously the theory of fiduciary government means to "hold government officials and employees, including policymakers, to standards analogous to those imposed on private fiduciaries." (22) A fiduciary relationship implies not only private rights and duties, but also private remedies. The fiduciary owes the beneficiary of the relationship a duty of loyalty and a duty of care. The duty of loyalty directs a fiduciary to act only in the beneficiary's interest. And the duty of care requires the fiduciary competently to pursue those interests. (23)

Fiduciary law is thus one response to the agency problem that arises where one person (the fiduciary) is tasked with making decisions regarding the interests of another (the beneficiary). An agency relationship may be desirable for any number of reasons, including to allow the principal to devote time to other activities and to harness the specialized skills and knowledge of another person to accomplish her goals. (24) But with delegation comes vulnerability. Corporate managers may shirk, for instance, spending more time on the golf course than in the boardroom, or, worse still, self-deal at the expense of the shareholders. They may be negligent or reckless. The shareholders may not have the information, wherewithal, or incentives to monitor manager misfeasance and malfeasance. Similar problems can arise in other relationships where one person is dependent upon the discretion of another. In such circumstances, private law sometimes imposes fiduciary duties.

Fiduciary law is explicitly altruistic, not individualistic. The classic treatment remains then-Chief Judge Benjamin Cardozo's majority opinion in Meinhard v. Salmon.
 Many forms of conduct permissible in a workaday world for those
 acting at arm's length, are forbidden to those bound by fiduciary
 ties. A trustee is held to something stricter than the morals of
 the market place. Not honesty alone, but the punctilio of an honor
 the most sensitive, is then the standard of behavior. As to this
 there has developed a tradition that is unbending and
 inveterate. (25)


Cardozo's dictum frames the crucial divide between the altruists, who consider moralizing rhetoric to be a defining feature of fiduciary law, and the individualists, who treat fiduciary law as a species of contract law, subject to nothing more than the morals of the market place. (26) For the past three decades, the individualists have offered an increasingly influential contractarian account in which the duties of loyalty' and care are "a method of gap-filling in incomplete contracts." (27) To individualists, fiduciary duties are preference-estimating default terms that reduce the transaction costs of bargaining. By contrast, like Cardozo, altruists do not account for fiduciary duties in market terms. To them, "fiduciary relationships are not contracts" and the core fiduciary duties are not waivable or negotiable. (28) The moralizing rhetoric of fiduciary law matters; even though courts do not enforce fiduciary duties in an unyielding way, their exhortations encourage fiduciary loyalty. (29)

Much the same debate animates the fiduciary turn in public law. The individualist conception, sometimes called "pluralism," treats politics like a marketplace. (30) In this market, competing interest groups push, pull, grappie, and horse trade their way to influence political and bureaucratic decisionmakers to promote their pre-political preferences. Public officials, for their part, may aim at political spoils, such as reelection or bigger agency budgets, not the public interest. In this view, the role of institutional design is to "filter []" private interests in pursuit of the public good and to correct for failures and barriers to entry in the political marketplace. (31) Courts, for example, should simply "police the processes of representation to ensure that all affected interest-groups may participate." (32)

The theory of fiduciary government both reflects and rejects the market model. With the pluralists, fiduciary theorists describe contemporary political life as characterized by the tug and pull of competing interest groups. But unlike the pluralists, fiduciary theorists aspire to public governance that transcends normal politics and see an ambitious role for courts to hold politicians and bureaucrats, no less than partners and agents, to something more than market morality.

In a polity of any size, citizens cannot coordinate with one another to achieve many public goods because the collective action barriers are too high. (33) Hence the demand for political agents. Representatives can shoulder the burdens of policymaking, develop specialized skills and knowledge to address public problems, and reduce the costs of achieving public goods. (34) But for public officials to achieve these benefits, they must enjoy substantial discretion. They are tasked with meeting a goal--pursuing the public interest--that is not easily defined, and thus not readily observable, and which depends upon factors that may not be within an official's control.

Political scientists have elaborated the resulting problems through principal-agent theory. Left unmonitored, politicians may be incompetent, lazy, and the like. But they may also pursue their self-interest through political patronage, "the allocation of the discretionary favors of government in exchange for political support." (35) Patronage can consist of quid pro quo corruption and naked self-dealing or favoritism that aims to bolster a politician's coalition for reelection or to achieve some other self-interested benefit. (36) These agency problems are compounded in the administrative state, where politicians delegate substantial discretion to bureaucrats, creating a second layer of slack. Bureaucrats may seek to maximize their agency budgets, not the public interest, be captured by those they regulate, and so on. (37)

As in other agency contexts, two mechanisms may reduce these problems: monitoring and bonding. (38) Citizens may monitor public officials' performance and sanction them for selfish or incompetent decisions. Or public officials may seek to assure their principals through bonding strategies that precommit them to pursue the public interest. But monitoring of political principals by citizens, particularly at the federal level, may be "crude," as elections are infrequent, citizens have "very little information about ... candidates' positions" and, in any event, "must ... vote for a mixed bundle" of policy positions in any given election. (39) And " [i] n a world in which elected representatives are known to do things contrary to the apparent preferences of their legal constituents," voters may rightly be skeptical of the durability of officials' precommitments. (40)

To improve bonding and monitoring mechanisms and thus to address the problem of faction, fiduciary theorists would extend the fiduciary metaphor from private law by treating politicians and bureaucrats as fiduciary agents of the public (or some subset thereof). In so doing, they would apply the duty of loyalty or the duty of care, or both, to government officials. Teddy Rave argues, for example, for stricter judicial review of electoral redistricting because "[n]ational political parties" are "superfactions" that have corrupted the districting process. (41) Robert Natelson points to "widespread sentiment that Congress is spending too much time ladling from the pork barrel and conniving with the lobbyists thereby accommodated" as a reason for a fiduciary prohibition upon special interest spending. (42) Similarly, Evan Criddle points to "the so-called 'iron triangles' between private industry, agency administrators, and congressional committees, which institutionalize factionalism" and thus lead to "decay into corruption, cronyism, capriciousness, and waste." (43) In his view, the rise of presidential administration feeds faction in federal administration, with the White House and the Office of Information and Regulatory Affairs (OIRA) catering to SIGs (special interest groups) rather than PIGs (public interest groups). (44) The solution, Criddle argues, is judicial review of federal administration by reference to six fiduciary principles: "purposefulness, integrity, solicitude, fairness, reasonableness, and transparency." (45)

In sum, fiduciary theory promises a workable scheme of judicially enforceable rights and duties to constrain political agents to the aims of their principals. In particular, fiduciary theorists seek to limit special interest influence and presidentialism through robust judicial review of federal action under the Constitution and the Administrative Procedure Act.

Thus, fiduciary theory hopes for a politics that is more than a nasty and brutish marketplace. It rejects raw power as a reason to deploy the coercive power of the state, even as it describes normal politics in those terms. It acknowledges the obvious counter-majoritarian difficulty--that authorizing fiduciary review of policymaking will lead to government by judiciary--by pointing to the contextual nature of fiduciary duties and the possibility of calibrating them to comport with the separation-of-powers principle. Taking the public trust seriously by treating officials as fiduciaries, they promise, will prevent the polity's "decay into corruption, cronyism, factionalism, capriciousness, and waste." (46)

It is tempting to dismiss fiduciary government as unrealistic. It is reasonable to wonder whether judicial review can transform the morals of the political marketplace. And it is reasonable to wonder whether federal judges would act differently from their political counterparts. There is wisdom in this critique, but it is too easy. There are enough reasons to doubt the market model of politics, (47) and the claim that judges decide cases based solely upon naked preferences, (48) to justify a sympathetic assessment of fiduciary government.

II. THE PROBLEM OF FIT

What makes a government official a fiduciary? Fiduciary theorists focus upon the vulnerability of citizens that arises from a public official's discretion. In brief, "public officials serve as fiduciary representatives for persons subject to their power" because "[a]ll agents and instrumentalities of the state ... are vested by law with discretionary administrative powers" for the public, who "is uniquely vulnerable to officers' inept or unreasonable misuse of administrative power." (49) Put simply, the state's monopoly over making and enforcing laws, and the people's resulting vulnerability, give rise to a fiduciary relationship. (50)

Descriptively, fiduciary theorists claim that public law doctrines are grounded in a (largely implicit) fiduciary model of government. Where that is not the case, fiduciary theorists propose to reform public law. In this Part, I address the fiduciary theorists' descriptive claim and call into question whether the solutions to public law problems can be found in a formal analogy between private fiduciaries and public officials.

A. The Many Faces of Fiduciary Law

The fiduciary theorists' altruistic account of the fiduciary concept is far too neat. On one view, the fiduciary relationship is "one of the most elusive concepts in Anglo-American law," (51) more "a concept in search of a principle" than a decision rule for assigning rights and duties in private law. (52) One definition--"a person who undertakes to act in the interest of another person"--is both over- and under-inclusive. (53) Another is taxonomic--a fiduciary relationship is any relationship where one person controls another's property, or has an obligation to act for another, or has "undue influence" over another, and so on--but not instructive. (54) Yet a third would collapse fiduciary law into contract, (55) while a fourth would treat it as a species of property.56 Perhaps "the only general assertion ... that can be sustained" is that fiduciary duties are appropriate when "one person's discretion ought to be controlled because of characteristics of that person's relationship with another." (57)

"And should I then presume? And how should I begin?" (58) Courts usually start by distinguishing between formal relationships that "give rise to a fiduciary duty as a matter of law," and informal fiduciary relationships, which exist "as a result of the special circumstances of the parties' relationship." (59) Generally speaking, the common law of the several states has settled upon a list of traditional, formal fiduciary relationships that includes agents and their principals, trustees and beneficiaries, business partners, corporate managers and shareholders, guardians and their wards, and attorneys and their clients. (60) As for informal fiduciary relationships, the "exact limits ... are impossible of statement." (61) Many state courts employ a general standard, as in, "[a]n implied fiduciary relationship will lie when there is a degree of dependency on one side and an undertaking on the other side to protect and/or benefit the dependent party." (62) Some have adopted multi-factor tests, (63) which others have rejected. (64) Yet others have adopted presumptions against finding informal fiduciary relationships, which are "extraordinary ... and will not be lightly created." (65)

There is even more variation in the states' treatment of fiduciary duties. At a general level, the duty of loyalty requires fealty to the beneficiary and the duty of care some modicum of competence. These general principles hardly prescribe decision rules for specific cases. When it comes to applying the principles, states vary, sometimes widely. Consider, for example, the multifarious state regimes regulating limited liability companies. (66) All of which is to ask of fiduciary theorists who would impose fiduciary duties on public officials: Which duties?

The question is not rhetorical. Fiduciary law is built around the axiom that " [t] he foremost duty which a fiduciary owes to its beneficiary is undivided loyalty." (67) Translating from that context to public governance is hardly straightforward. And to the extent that fiduciary constraints are in decline in private law, it is worth asking whether the game is worth the candle.

What is the resolving power of the analogy of public officials to private fiduciaries? At one level of analysis, fiduciary law is thin rather than thick. It offers abstract concepts rather than decision rules. Natelson, for example, enumerates five fiduciary principles that may apply to government conduct: "(1) the duty to follow instructions, (2) the duty of reasonable care, (3) the duty of loyalty, (4) the duty of impartiality, and (5) the duty to account." (68) Similarly, Criddle identifies six principles by which to judge federal administrative rulemaking: "purposefulness, integrity, solicitude, fairness, reasonableness, and transparency." (69) Almost no one would disagree that government should act purposefully, reasonably, fairly, and so on. But if that is all the fiduciary analogy offers, then it largely restates existing questions regarding judicial review of legislative and administrative action.

Treating the analogy between public officials and fiduciaries as thick rather than thin promises to resolve some of these questions. Two principles animate fiduciary law. First, private fiduciaries owe a single beneficiary or a discrete class of beneficiaries a duty of undivided loyalty. It is difficult, however, to specify how politicians and bureaucrats are fiduciaries for a discrete class of beneficiaries. Second, in discharging her duties, the fiduciary must pursue one or a set of agreed-upon ends, which are measured by a specific set of doctrinal maximands. By contrast, in public law there is no agreement upon specific maximands. This distinction is significant because the existence of a rough consensus on specific ends mediates between the general, indeterminate concepts of "loyalty" and "care" and the outcomes that courts reach in fiduciary litigation. As a result, the thick analogy between private fiduciaries and public officials fails as a formal matter, whether the analogue is the parent-child, trustee-beneficiary, or corporate manager-shareholder relationship.

B. Public Officials as Parents

Some modern fiduciary theorists analogize public officials to parents. In particular, they draw upon Immanuel Kant's conception of private fiduciary duties as elaborated through his famous example of the parent-child relationship. (70) A parent owes his child a fiduciary duty of care and loyalty, Kant argues, not because the child has delegated authority to the parent. The child has no choice. It is that vulnerability, and the natural power a parent has either to act in his child's best interest or not, Kant reasons, which gives rise to a fiduciary obligation running from parent to child. (71) Observe, the argument runs, that government officials possess discretionary power over the citizenry and that citizens are vulnerable to wrongful exercises of power. From this structural similarity springs the analogy between parents and public officials. (72)

One obvious objection is that the analogy is paternalistic. Parents may not be dictators, but that's not far off, as the law gives them extraordinarily wide latitude over their children. A parent can instruct a child when to sleep and when to wake up; what to wear; how to style his or her hair; where to go to school, and where to worship; what to believe and to think, and so on. (73) Courts--particularly federal courts--are generally loath to question these decisions, presuming instead "that natural bonds of affection lead parents to act in the best interests of their children," who lack the "maturity, experience, and capacity for judgment required for making life's difficult decisions." (74)

Perhaps less obvious is the objection that, as a matter of doctrine, the parent-child relationship does not, without more, give rise to fiduciary duties of loyalty and care. That is true under federal law. (75) And it is true under state law too. The Kansas Supreme Court has explained, "The mere relationship of parent and child does not raise a presumption of a confidential and fiduciary relationship." (76) Similarly, the Connecticut Court of Appeals has opined, "The relationship between a parent and a child does not per se give rise to the establishment of a fiduciary relationship." (77) Or, as the Illinois court of appeals put it: "The mother and daughter relationship alone does not create a fiduciary status." (78) In some settings, parents may have limited fiduciary duties arising from some accident of their relationship with their children, as in, for example, a parent who receives child support payments for her child from her ex-spouse. (79) But the parent-child relationship is not an established fiduciary relationship.

Moreover, the reasons we might treat parents as fiduciaries do not extend to politicians and bureaucrats. Robert Scott and Elizabeth Scott have explained that by "re-articulating informal norms in legal prescriptions," a fiduciary law of parenthood could "reinforce the independent weight of the informal precommitments" that usually exist between a parent and a child but may be weaker in fractured families. (80) Reinforcing informal kinship norms is a far cry from treating public officials as fiduciaries and does not provide a helpful template for thinking about public fiduciary duties.

C. Public Officials as Trustees

Fiduciary theorists sometimes analogize public officials to private trustees. A trust exists when a trustee "holds the trust property and is subject to equitable duties to deal with it for the benefit of' one or more beneficiaries, as designated by the settlor who creates the trust and conveys legal title to the trustee. (81) The trust's separation of risk from control creates agency problems. As Robert Sitkoff has argued, the first exists between the settlor and trustee. (82) Dead settlors cannot monitor their trustees. Nor can living settlors specify all the trustee's obligations in advance, at least in a trust of any complexity. The second agency problem exists between the trustee and the beneficiaries. (83) The beneficiaries bear the risk of the trustee's mismanagement, "cannot exit" the trust, and are unlikely to be able to monitor the trustee effectively. (84) That is not to say non-legal monitoring and bonding mechanisms won't work in the trust context. Where, for example, a trustee and the beneficiary are family, the risks of selfish behavior may be minimal. (85) Moreover, many professional trustees are repeat players, recruited by attorneys who represent settlors and who have reasons to keep the gates secure, so to speak. (86)

Imposing fiduciary duties on trustees is a potential solution to these agency problems. Under the duty of loyalty, a trustee cannot self-deal or act on the basis of a conflict of interest. The no-further-inquiry rule lays down a firm rule in this regard: upon discerning a conflict of interest, a court will hold a trustee liable for a breach of fiduciary duty without inquiring into whether her action benefitted the trust corpus. (87) But a simple duty of undivided loyalty is incoherent whenever a trustee serves more than one beneficiary. To address that problem, courts have interpreted the duty of loyalty to impose a duty of impartiality, requiring the trustee fully to consider and fairly to balance all the beneficiaries' interests, consistent with the settlor's intent. (88) In some cases, these interests may compete. An income beneficiary wants the trustee to maximize the trust's current capacity to produce income, while a remainder beneficiary wants to maximize the principal. (89)

The duty of impartiality is intertwined with the trustee's duty to manage the trust property prudently. The Restatement (Third) reflects the generally accepted definition: "The trustee has a duty to the beneficiaries to invest and manage the funds of the trust as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the trust." (90) The rule sets a relatively determinate standard. It refers a court to prevailing market practices and investment strategies. Did the trustee reasonably diversify trust investments, in order to minimize the risk to the trust portfolio? (91) Did the trustee seek to preserve the "safety of the principal" and to "assure" a reasonable total return and capital appreciation? (92) Did the trustee seek advice from an investment professional? (93) Did the trustee make reasonable adjustments between principal and income? (94) Did she use a total return strategy under the modem portfolio theory? (95) If so, then she likely discharged her duties of impartiality and of care to the trust beneficiaries. Thus, trust law defines the fiduciary duties of trustees by reference to a discrete class of beneficiaries, whose interests are discernible and observable through a well understood maximand rooted in prevailing investment strategies.

There is no real analogue in public law. For whom is a congressional representative a fiduciary? The voters who elected her? Everyone who resides within her district? We the People? What about the President--where do her fiduciary duties lie? Or federal administrative officials--are they the agents of the President, as the theory of the unitary executive would suggest; Congress, an understanding also reflected in administrative law; the beneficiaries of the regulatory programs they implement; or, yet another possibility, the people writ large? In canvassing our constitutional order, for example, Steven Calabresi has identified four sets of principal-agent relationships, among four principals--"We the People," the President, congressional representatives and judges, and congressional committees--and four corresponding agents--"all government officers," "all executive officers," "all legislative and judicial personnel and staff," and "the cabinet departments and other related entities." (96)

A few examples should serve to make the point. Consider the Administrator of the Environmental Protection Agency, an executive branch agency. The President appoints her, and, on the unitary executive theory, is her principal. (97) That theory is controversial, however. (98) Perhaps it is more apt to look to federal environmental law to identify whether, and to what extent, the EPA's head is a fiduciary. But which law? The Toxic Substances Control Act?" (99) The Clean Air Act? (100) CERCLA? (101) The answer seems to be all of the above. But that answer is far from a clear one. Under the CAA, for example, does the EPA Administrator owe duties to the residents of metropolitan areas, (102) farmers, property owners, (103) state and local governments, (104) the public writ large, (105) or even the environment itself? All seem plausible answers under the statute. Perhaps it is more cogent, then, to view EPA as the fiduciary of Congress, which has tasked it with implementing environmental regulation. If so, then, its fiduciary duties are delimited by statute and in no need of further elaboration. But viewing Congress as EPA's principal brings us full circle to the controversy regarding the separation of powers between the legislative and executive branches. It is easy to say that the EPA Administrator, like every other public official, is ultimately answerable to the public. What that means for public fiduciary law is not easy to discern; after all, achieving a regulatory benefit invariably means imposing a regulatory burden. (106)

What about politicians as fiduciaries? Consider the President deciding whether to commit the armed services to an armed conflict. Suppose he decides that the armed forces will suffer unimaginable casualties in the course of the conflict, but that the fight is necessary to protect the nation. Can we speak of such decisions in fiduciary terms? In what sense is it sensible for the President, much less the courts, to think of the office as a fiduciary for the soon-to-be fallen dead?

Fiduciary theorists might look to the trust analogy to derive a duty of impartiality for public officials. But the duty of impartiality in trust law entails a specific set of obligations to a specific set of beneficiaries. At some level, there is likely to be broad agreement that public officials should treat all citizens fairly. But that just restates the difficult questions that arise from our constitutional commitments to equal protection and to due process.

D. Public Officials as Corporate Managers

Another potential analogy runs between public officials and corporate managers. Traditionally, courts have imposed fiduciary duties on directors in both close and public corporations to protect the interests of the corporation and shareholders. (107) Much of the literature on agency problems concerns the corporate setting. In Adolph Berle and Gardiner Means's classic treatment, agency problems arise from the "separation of ownership and control" in the corporate form. (108) This separation creates problems to the extent that managers control decisionmaking but do not bear the risks of mismanagement, which fall instead on the shareholders. Due to problems of asymmetric information, observability, and collective action, shareholders often will not or cannot monitor managers' decisions. Management may harm shareholder interests through incompetence, of course. Moreover, corporate managers may pursue their own interests at the expense of shareholders.

Jurists and scholars debate which fiduciary duties directors owe, and whether they owe them to the corporation as an entity or to the shareholders. (109) At the risk of over-simplification, the conventional wisdom is that directors owe a duty of loyalty that limits self-dealing and self-interested decisionmaking. The duty of loyalty is not unyielding, however: directors may defend a self-interested transaction as substantively fair under the "entire fairness" doctrine, or obtain ratification of the transaction from an independent decisionmaker. (110) Directors also owe a duty of care, which requires informed decisionmaking and some modicum of monitoring of the corporation's activities. Even so, the business judgment rule protects directors from liability for any number of poor decisions. This rule sets a "presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company." (111) For a time, Delaware, the leading corporate lawjurisdiction, flirted with an independent duty of good faith, suggesting In re Walt Disney Co. Derivative Litigation that shareholders could hold a director liable for failing to act "in the face of a known duty to act, [thus] demonstrating a conscious disregard of his duties." (112) But in Stone v. Ritter the court folded the duty of good faith into the duty of loyalty, (113) and in subsequent cases the court has suggested that nothing short of an "extreme set of facts" will make out a breach of this aspect of the duty of loyalty. (114)

The upshot is that corporate law imposes a limited set of legally enforceable obligations that require directors to maximize the value of the corporation for shareholders. Absent an apparent conflict of interest, the decisions of directors are subject to procedural review and shielded by the business judgment rule. Many of corporate law's monitoring and bonding mechanisms--disclosure and reporting requirements, incentive-based compensation, and the like--have little to do with these fiduciary duties. Scholars continue to debate whether these market mechanisms suffice, given that placing private rights of action in the hands of shareholders promises to reduce agency problems but comes with the social costs of private enforcement and the risk of over-deterrence. (115) Moreover, many scholars criticize corporate law's commitment to value maximization, given that shareholders are not the only corporate constituents and that corporate decisions have ramifications beyond shareholder value. (116) But there is general agreement that the law, at its base, imposes fiduciary duties on directors in the interests of a discrete class of beneficiaries, as defined by a well-understood maximand. Directors must pursue the "best interests of the corporation and its shareholders" by maximizing long-term corporate value. (117) As Henry Hansmann and Reiner Kraakman put it, this is the "end of history for corporate law." (118)

Consider, for example, the classic corporate opportunity case Guth v. Loft, Inc. The court's opinion strikes the moralistic tones common to fiduciary law:
 A public policy, existing through the years, and derived from a
 profound knowledge of human characteristics and motives, has
 established a rule that demands of a corporate officer or director,
 peremptorily and inexorably, the most scrupulous observance of his
 duty.... The rule that requires an undivided and unselfish loyalty
 to the corporation demands that there shall be no conflict between
 duty and self-interest. (119)


Stirring rhetoric, but it hardly decides a case. In Guth, an officer, who was also a shareholder, took advantage of a business opportunity that he developed by exploiting his position with the corporation. The court gave legal content to the duty of loyalty by holding that a corporate manager may not exploit a business opportunity when the corporation "is financially able to undertake it," the opportunity is "in the line of the corporation's business and is of practical advantage to it," and, finally, the "corporation has an interest or a reasonable expectancy" in the opportunity. (120) This framework distills a decision rule from the duty of loyalty based upon the goal of maximizing corporate value.

Interpolating the duty of loyalty into public law cannot work that way. There is no similar consensus on the ends of administrative or constitutional law. Moreover, it is far from clear, in any given case, who the beneficiaries of public fiduciary duties are. The most difficult problems in public law do not correspond to those in Guth and other cases where courts have defined the metes and bounds of the corporate director's duty of loyalty. At its base, the duty of loyalty "is really only a way to say 'don't steal' from the corporation," (121) a command that is unhelpful for deciding whether politicians or bureaucrats have acted consistently with the Constitution or the Administrative Procedure Act (APA) in the mine run of cases. (122)

When it comes to the duty of care, the APA already requires agency officials to act reasonably based upon the information in the administrative record. Does that mean that administrative law is fiduciary in character? It would be just as easy to ask, with corporate law scholars, whether the duty of care "is ... distinctively fiduciary." (123) In any event, treating administrators like corporate managers might lead one to dial down, or even to abandon, the substantive components of arbitrary-and-capricious review. "Due care" in the corporate context "is process due care only." (124) Even "stupid," "egregious," or "irrational" decisions will suffice if they were based upon a "good faith effort to advance corporate interests." (125) Limiting breaches of the duty of care to gross negligence makes some sense given the threat of over-deterrence from personal director liability. Arbitrary-and-capricious review takes place within a different remedial framework, which undercuts the analogy between corporate and administrative officials.

E. The Decline of Fiduciary Law?

The analogy to corporate law is interesting in a different respect, however: scholars have explored whether, and to what extent, fiduciary duties are in decline in the corporate setting because, first, they are subject to partial contractual override and, second, courts have narrowed them to "address very specific and limited misbehavior." (126) Both developments call the theory of fiduciary government into question.

The contractarian account of fiduciary law is straightforward. Fiduciary relationships are one type of contractual relationship. If contracting parties could provide rules to govern every potential conflict of interest between them, then there would be no need for fiduciary law. But often they can't. Courts enforce fiduciary duties where one party hires the expertise of another, on the "obvious condition" that she not be "at the mercy of an agent" she cannot monitor. (127) The content of those duties should, the argument runs, maximize the size of the contractual pie, leaving the parties to divide it as they please. (128)

The contractarians are correct that much of fiduciary law arises from agreement. Some state courts, for example, have suggested informal fiduciary relationships may be limited to contractual relationships. (129) Moreover, many formal fiduciary relationships have contractual features. Corporate law, for example, gives the parties freedom to shape the contours of standard corporate arrangements. (130) Through the charter or bylaws, for example, corporations may opt out of default rules regarding the structure and operation of the board of directors. (131) They may also alter the fiduciary duties of care and loyalty. By statute, for example, Delaware permits the certificate of incorporation to limit the liability of directors for breaching the duty of care. (132) Corporations can opt out of the duty of loyalty on a retail basis. Boards may engage in transactions that give rise to a director conflict of interest if they obtain approval from a majority of disinterested directors or shareholders and a court, reviewing the transaction under the deferential business judgment rule, concludes it was proper. (133) To the extent, moreover, that a particular jurisdiction imposes mandatory terms of corporate governance, it is possible to select another jurisdiction in which to incorporate. Thus, freedom of contract plays an important role in corporate law.

It is also possible to make sense of much of trust law--usually thought to be strictly altruistic--in contractarian terms. On the one hand, the trust arrangement does not mirror a standard bilateral contract. And trust law has traditionally embraced stringent fiduciary duties. Under the no-further-inquiry rule, for example, the trustee is per se liable for self-interested transactions, without regard to damages to the trust property. On the other hand, state courts routinely permit trust agreements to exculpate the trustee from breaches of the duty of care and to limit the duty of loyalty by specifying actions that do not violate it. (134) The Uniform Trust Code develops trust law in a contractarian direction by, inter alia, permitting exculpatory clauses and permitting some self-dealing transactions involving the trustee. (135)

All of which is to suggest that there is a risk of treating fiduciary law as more altruistic than it currently is, or has been for some time. Most public fiduciary theorists offer an altruistic account. Rave, by contrast, argues that politicians are fiduciaries even on the contractarian account. Pointing to Locke's social contract, Rave argues there is a tacit agreement between the people and public officials that supports fiduciary government. (136)

There are a number of well-known objections to social contract theory, many of which Evan Fox-Decent presents while elaborating an altruistic account of fiduciary government. (137) More interesting for our purposes, however, is an objection that is particularly troublesome for fiduciary government. If the social contract, embodied in the Constitution, is the basis for imposing fiduciary duties on public officials, then it is worth asking whether the Constitution derogates from or modifies those duties. It seems beyond peradventure that private agreements can at least tailor the duties of loyalty and of care. Yet fiduciary theorists have not offered an account of constitutional interpretation that would permit us to determine whether, and to what extent, the Constitution modifies fiduciary defaults. Nor have they explained whether, and to what extent, Congress might have the power to derogate from fiduciary defaults by statute. (138)

Rather, one of the more startling features of the commentary on fiduciary government is its insistence upon an altruistic public fiduciary law in the face of anxiety and uncertainty about the scope of private fiduciary law. Contrast fiduciary government with, for example, Lawrence Mitchell's elegy upon the "death of fiduciary duty in close corporations." (139) As Mitchell explains, the law of close corporations first adopted the aspirational standard of Meinhard v. Salmon, (140) but its "unyielding principle" soon gave way to a test that balances a fiduciary's business interests against the harm to the plaintiff-beneficiary. (141) Under this balancing test, a court will not question a fiduciary's decision unless there is a showing of an intentional attempt to freeze a minority shareholder out from corporate decisions, fraud, oppression, or other illegal conduct. The result is a doctrine that adds little to tort in its restrictions on majority shareholders. (142)

Kelli Alces has described a similar retrenchment in the law of public corporations. There is no shortage of paeans to fiduciary duties in the cases. But Delaware law allows for the parties to contract out of the duty of care, and the business judgment rule protects against poor decisions short of gross negligence. Courts have narrowed the duty of loyalty such that "it is a standard that could be agreed to and enforced contractually." (143) Rather than the flexible standard celebrated by altruistic accounts, the corporate duty of loyalty limits only naked self-dealing and exploitation of corporate opportunities. (144)

The reasons for this retrenchment are not hard to discern. Having recognized the harshness of Meinhards "punctilio of an honor the most sensitive," (145) courts have limited private fiduciary duties.

F. Public Fiduciaries as a Sui Generis Category

If politicians and bureaucrats are fiduciaries, they are a sui generis category. For all their differences, the private law contexts in which courts have imposed fiduciary relationships share a few key features: (i) they involve single beneficiaries or a discrete class of beneficiaries; (ii) there is rough consensus about the ends of the relationship, with debate focusing upon the means of achieving those ends; and (iii) the duties of loyalty and care can be specified in these relationships by reference to a specific maximand and a discernible set of decision rules. None of these features obtains when we treat public officials as fiduciaries. There is also some amount of healthy partisanship in a functioning democracy. Moreover, the Constitution commits us to values that limit judicial authority to enforce public officials' fiduciary duties. Unlike their state counterparts, for example, Article III courts have limited jurisdiction and authority to shape federal law in a common law mode. (146)

In careful examinations of the promises and pitfalls of the fiduciary analogy, Ethan Leib, David Ponet, and Michael Serota have forthrightly described public fiduciaries as sui generis. (147) Morphological similarity between private and public agency problems is not enough, they argue, to justify treating public fiduciaries like private ones. As a result, the possibilities for translating private fiduciary law into public law are limited, particularly in light of "how little headway has been made in delineating fiduciary-beneficiary relationships in the public context." (148)

With this, the stakes of the debate are clarified. Given that nothing in the form of public governance demands fiduciary treatment, and that there are serious problems with translating from private fiduciary duties to public ones, what warrant is there for judicial adoption of fiduciary government? Two possibilities present themselves. Either legislative intent directs courts to do so, or a common law of fiduciary government would be desirable for the polity. The next two Sections consider these justifications in turn.

III. THE PROBLEM OF INTENT

A. Constitutional Law as Fiduciary Law

As a political theory, fiduciary government resonates with deeply felt commitments to the rule of law. It is true that influential political theorists have described the political duty of a public official in fiduciary terms. And it is also true that some of these theorists were among the Founding generation and deployed political claims of fiduciary government to great rhetorical effect.

Given this background, the fiduciary account presents a serious alternative to our contemporary understandings of constitutional law. Because "the newly independent Americans frequently used the language of agency and trusteeship in reference to their legislative representatives," perhaps we should interpret constitutional rights in fiduciary terms. (149) The Framers' commitments to popular sovereignty seem consistent with a fiduciary account that directs politicians, as the people's agents, to act in the people's interests. (150)

It is far from clear, however, that fiduciary government was a background understanding of legal rights at the Founding, rather than a way to think about the political claims that citizens may make upon their representatives. Indeed, when the Founders raised the theory of fiduciary government, they often did so in connection with political, not judicial, mechanisms for holding government accountable. As a result, there simply is not compelling enough evidence that the Founders intended to incorporate trust law as constitutional law to justify disturbing settled constitutional understandings.

To unpack the argument, begin with the social compact theory of John Locke. The influence of Locke's philosophy on Anglo-American political theory, including the theories of the Founders, is well known. In particular, his conception of the relationship between the government and the governed in terms of a social compact resonated with a revolutionary generation making a decisive and unprecedented break with a monarchical past. (151)

Fiduciary government was part of Locke's conception of the social compact. As he put it, "the community put the legislative power into such hands as they think fit with this trust, that they shall be governed by declared laws, or else their peace, quiet, and property will still be at the same uncertainty as it was in the state of nature." (152) It is commonplace among fiduciary theorists to equate Locke's political conception of the sovereign trust with a legal one. (153) But should the sovereign breach the trust by violating his fiduciary obligations, Locke explained, the people were empowered to reconstitute the polity: "[T]he legislative being only a fiduciary power to act for certain ends, there remains still in the people a supreme power to remove or alter the legislative when they find the legislative act contrary to the trust reposed in them...." (154) Thus was the fiduciary obligation of the sovereign enforced by political action.

The Founders similarly spoke of political duties in terms of a public trust. In Federalist 46, for example, Publius opined, "[t]he federal and State governments are in fact but different agents and trustees of the people." (155) Similar statements abound, among both the Federalists and Anti-Federalists. During the ratification debates, writers appealed to the "public trust" in popular pamphlets alternatively celebrating and denouncing the proposed Constitution. For example, Madison, writing as Publius, assured his readers that constitutional structure would hold congressional representatives to the "public trust." (156) Brutus was less sanguine: "[T]he representation in the legislature," he opined, "is not so formed as to give reasonable ground for public trust." (157) Thus, both sides drew upon a tradition with which Americans would have been familiar. Colonial charters, as well as several state constitutions adopted after the Declaration of Independence, referred to political office as a public trust. (158)

The Constitution refers to public office as a public trust several times. Three of those instances involve little more than the use of "trust" to refer to public office. (159) The fourth is more instructive. In Article I, Section 3, which provides for impeachment of "[t]he President, Vice President and all civil Officers of the United States," (160) the Constitution specifies that "Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States." (161) Impeachment, of course, is a political remedy for a public wrong. As Publius put it: "The subjects of [the] jurisdiction" of a "well-constituted court for the trial of impeachments.... are of a nature which may with peculiar propriety be denominated [political], as they relate chiefly to injuries done immediately to the society itself." (162) The concept of political injuries to society itself, as opposed to justiciable injuries to private rights, was a familiar one from the common law. The common law forms of action generally did not provide private rights to sue to right political wrongs. (163) In keeping with this understanding of the judicial role, the Framers chose a political body to try impeachments. (164)

It is thus telling that the Framers consistently described breaches of the public trust as offenses that would subject an official to impeachment. Again, Publius: "[O]ffenses which proceed from the misconduct of public men, or, in other words, from the abuse or violation of some public trust.... are of a nature which may with peculiar propriety be denominated [political] .... " (165) Charles Cotesworth Pinckney, speaking at the South Carolina ratifying convention, said that impeachment is the proper remedy for "those who behave amiss, or betray their public trust." (166) James Madison at the Convention stated that because the President "might betray his trust to foreign powers," among other wrongs, impeachment was a constitutional necessity. (167) And Gouverneur Morris, who found Madison's argument convincing, stated that the President "may be bribed by a greater interest to betray his trust; and no one would say that we ought to expose ourselves to the danger of seeing the first Magistrate in foreign pay without being able to guard agst it by displacing him." (168) Joseph Story, heir to this understanding, described impeachable offenses as including "what are aptly termed, political offences, .... various in their character, and so indefinable in their actual involutions, that it is almost impossible to provide systematically for them by positive law." (169) Story, like the Framers, was echoing Blackstone, whose Commentaries listed "mal-administration of ... high officers, as are in public trust and employment" as the "first and principal" impeachable offense "towards the king and government." (170) A breach of the public trust was, in short, an impeachable political offense.

Thus, the link between fiduciary theory and political remedies was explicit in the Founders' thinking. Natelson, who has offered a robust interpretivist defense of fiduciary government, acknowledges the point. "Impeachment," he notes, "was the principal punitive measure associated in the public mind with [an official's] breach of trust." (171) That description suggests, however, that a breach of the public trust was a political wrong "to the society itself"--just the sort of public wrong that a private plaintiff could not litigate in court. As Michael Gerhardt has explained, following the English understanding, the Framers viewed "impeachable offenses [as] political crimes.... against the state," (172)

One objection is that only executive officials and judges, not members of Congress, are "civil Officers" (173) subject to impeachment under Article II. The failed impeachment of Senator William Blount is often taken as conclusively establishing that members of Congress are not subject to the Senate's impeachment jurisdiction, although that reads the evidence for more than it is worth. (174) But the conventional wisdom does not require a contrary reading of the Founders' understanding of the public trust. At the Convention, Madison assured his colleagues that, unlike in the case of the President, " [i]t could not be presumed that all or even a majority of the members of an Assembly would either lose their capacity for discharging, or be bribed to betray, their trust." (175) Thus, impeachment was not a necessary remedy for a legislator's breach of trust. Moreover, each house can expel its members for "disorderly Behaviour," (176) and there is reason to think impeachable offenses--including, of course, breach of the public trust--would be sufficient grounds for expulsion. (177) Admittedly, expulsion has rarely occurred in American history, (178) but elections have, and the ballot box provides an additional remedy for a legislator's derogation of political duties.

So far we have considered an official's breach of the public trust. What of institutional breaches of the trust? As far as I am aware, the Founders tended to speak of officials, rather than the branches as institutions, as potentially breaching the public trust. That may go a long way toward explaining why Madison was more concerned with presidential rather than congressional breaches of the trust. Put simply, even if individual members could breach the public trust, that did not necessarily mean that Congress as a body could. (179) On that understanding, violations of the public trust could not be the basis for a private right against congressional action. (180)

It is important not to press the distinction between institutions and individual officials too far, though. Corporate boards of directors may be fiduciaries, after all. (181) Yet the corporate analogy may be instructive in another respect. To the extent that the Founders thought of judicial review of legislative action in private law terms, there is strong evidence they would have looked to the corporate law doctrine of repugnancy rather than to private fiduciaries' duties of loyalty and care. Mary Sarah Bilder has traced the origins of judicial review to "a longstanding English corporate practice under which a corporation's ordinances were reviewed for repugnancy to the laws of England." (182) The Founders were familiar with this doctrine as a constraint on their colonial governments, which, as chartered English corporations could not legislate contrary to English law. Bilder amasses a trove of evidence suggesting that '"the Constitution' replaced the 'laws of England'" following the Revolution. (183) Importantly, Marbury v. Madison accords with Bilder's account. In justifying judicial review, Chief Justice Marshall echoed the repugnancy doctrine of corporate law. "[T]he constitution controls any legislative act repugnant to it," he held, and, therefore, a law "repugnant to the constitution [] is void." (184) Though Marbury once describes the justice of the peace as an "office [] of trust," (185) it gives no hint that the content of constitutional law lies in the fiduciary duties of loyalty and care.

More importantly, McCulloch v. Maryland's (186) longstanding gloss on the Necessary and Proper Clause makes no explicit mention of trust law, and describes the constraints it imposes in forgiving terms. (187) Natelson, however, argues that the trust origins of the Clause are implicit in its text. The argument begins by canvassing incidental powers clauses in eighteenth-century legal documents that created agency relationships. (188) Some of these documents included the phrase "necessary and proper," and others used similar wording, to convey that an agent had implied powers necessary to make the grant of authority effective. (189) More particularly, Natelson argues, the word "proper" connoted the fiduciary duties of loyalty, due care, and impartiality. (190) So too, he argues, the Necessary and Proper Clause connotes not only incidental powers--the focus of McCulloch's gloss--but also fiduciary constraints on Congress. (191)

Natelson marshals strong evidence that the Framers had a stock of private law examples upon which to base constitutional constraints, but he is on shakier ground in suggesting that incorporation of such a clause in the Constitution carried with it eighteenth-century fiduciary constraints on agents. As other scholars have shown, incidental powers clauses appeared in other types of legal documents during the time, including corporate charters, and the concept also appeared in the common law of administrative review in England. (192) Why then conclude that the Constitution's incidental powers clause incorporated trust law, rather than corporate or administrative common law? (193) Absent a showing that "necessary and proper" was a term of art that necessarily entailed judicial review under a fiduciary model--which Natelson concedes the evidence does not support--the argument for incorporation falters. (194) Recalling Chief Justice Marshall's admonition in McCulloch seems unavoidable: "we must never forget, that it is a constitution we are expounding," not a trust document. (195)

As a constitution, the meaning of our founding document has been "liquidated" over time in ways that are inconsistent with the fiduciary account. (196) Take, for example, Carotene Products footnote four, (197) which John Hart Ely expounded upon in elaborating his influential representation-reinforcing account of judicial review. (198) The outlines of this approach are familiar: government action that clogs the political process, or burdens discrete and insular minorities, is subject to greater judicial scrutiny. (199) Judicial protection of traditionally disenfranchised minorities is warranted on the theory that it is necessary to ensure that their interests, which politicians are apt to ignore, will be represented in the polity. The logic of footnote four is that judges should be especially partial to some interest groups. For example, it does not direct searching review towards special interest legislation that burdens the economic interests of one well-heeled group at the expense of another. Thus, the logic of footnote four sits uneasily within the fiduciary framework, which is why it is unsurprising that Natelson has suggested abandoning it in favor of an approach that lessens scrutiny of legislation burdening discrete and insular minorities and ratchets up scrutiny of social and economic legislation. (200)

As an account of Founding-era political theory, fiduciary government has purchase. As an account of judicially enforceable constitutional rights, however, it is unconvincing. The Constitution's text does not state, or even strongly suggest, that constitutional law is a branch of the law of trusts, leaving fiduciary theorists to argue from evidence of historical intent that is at best ambiguous and, importantly, hard to square with precedent. That leaves the case for fiduciary government to turn upon the practical consequences of retooling constitutional law to fit the fiduciary model, as Part IV discusses. (201)

B. The Fiduciary Account of Administrative Law

What of a fiduciary theory of federal administrative law? The sine qua non of a fiduciary relationship is that the fiduciary must act solely in the interests of her beneficiary. But neither the APA nor administrative common law encourages agencies singularly to focus upon the interests of the beneficiaries of a regulatory program. Consider, for instance, arbitrary-and-capricious review of agency action. The cases are legion in which federal courts have vacated agency action not for a failure loyally to pursue regulatory beneficiaries' interests, but rather for doing so at the expense of competing and incommensurate values they should have considered but did not. (202)

Indeed, many doctrines in federal administrative law favor regulated parties rather than regulatory beneficiaries. Thus, administrative law enables regulated parties to influence agency action in ways and to a degree that fiduciary theory cannot explain. In particular, by permitting agencies to crystallize policy before issuing notices of proposed rulemaking, allowing them to use guidance documents to set enforcement priorities, limiting review of agency inaction, and denying standing to regulatory beneficiaries for lack of an "injury-in-fact," federal administrative law seems designed in part to disempower regulatory beneficiaries. (203) Moreover, the Court's balancing approach to procedural due process--which limits regulatory beneficiaries' rights based upon the costs to the agency of additional procedures (204)--is difficult to explain in fiduciary terms.

Fiduciary government does not find support in the "political origins" of the grand charter of federal administration, the APA. (205) To be fair, fiduciary theorists do not base their normative claims about judicial review of federal administrative action on the New Deal Congress's intent in enacting the APA. Instead, they look to administrative common law. But fiduciary theory does not provide a compelling account of the superstructure of administrative common law that courts have built upon the base of the APA.

The APA was "a hard-fought compromise" between Democrats who wanted to entrench New Deal policies against future agency change and aggressive judicial review and Republicans, joined by Southern Democratic allies, who hoped to permit agency policy to drift with a change in the political winds. (206) There is no evidence either party intended to authorize robust judicial review of agency action based upon a fiduciary model. The terms of the debate were rather different. New Deal Democrats "favored a form of government in which expert bureaucrats would influence even the details of the economy, with little recourse for the people and businesses that felt the impacts of the bureaucrats' commands." (207) Their conservative opponents were not concerned with protecting regulatory beneficiaries; instead, they aimed to protect the property rights of regulated parties through "rule of law" constraints on agency action. (208)

Both parties scored partial victories. Conservatives could be satisfied that when private rights were at stake in adjudicatory proceedings, the APA imposed procedural due process protections. New Deal Democrats could look to the text's comparatively lax demands for legislative rulemaking, as well as its commitment of legal questions to the federal judiciary, then staffed with New Deal appointees.

The fiduciary model is at odds with some of the New Deal Congress's specific compromises. Consider, for example, the argument, grounded in fiduciary theory, that all agency rulemaking should be subject to "full notice-and-comment procedural requirements." (209) With the APA, Congress exempted interpretive and procedural rules from those requirements. (210) That exemption is legible in light of congressional concerns over agency flexibility. Under the Vermont Yankee doctrine, federal courts have no warrant to layer notice-and-comment procedures on top of interpretive and procedural rulemaking. (211) As a result, implementing a fiduciary model would require political action. To embrace fiduciary theory, in short, would be to deny the political compromise reached in the APA.

The retort is that courts have already departed from interpreting the APA. Consider, for instance, the Chevron doctrine, which seems flatly inconsistent with the APA's instruction in [section] 706 that courts will determine questions of law when reviewing agency action. (212) There is much to be said for this reply. Fiduciary theory may ultimately rise and fall on pragmatic rather than interpretive considerations.

Still, Chevron cannot be reconciled with a fiduciary theory of administrative law. Under Chevron, when Congress has spoken clearly, an agency, like a court, must follow its direction. But when Congress has left a question in an agency-administered statute open, the agency may adopt any reasonable statutory interpretation into law. The Chevron Court justified deference to an agency's statutory interpretations as follows:
 Judges are not experts in the field, and are not part of either
 political branch of the Government. Courts must, in some cases,
 reconcile competing political interests, but not on the basis of
 the judges' personal policy preferences. In contrast, an agency to
 which Congress has delegated policymaking responsibilities may,
 within the limits of that delegation, properly rely upon the
 incumbent administration's views of wise policy to inform its
 judgments. While agencies are not directly accountable to the
 people, the Chief Executive is, and it is entirely appropriate for
 this political branch of the Government to make such policy
 choices.... (213)


Thus, one justification for Chevron deference concerns agencies' comparative expertise in regulatory policy, and the other involves their greater political accountability through the President. The emphasis throughout the opinion is on the competitive nature of the political process, in which warring coalitions in Congress may "take their chances with the scheme devised by the agency," which is then tasked with "resolving the struggle between competing views of the public interest" based upon the "incumbent administration's views of wise policy." (214)

Criddle has offered the most complete argument that Chevron is consistent with fiduciary theory. The centerpiece of his argument is United States v. Mead Carp., which presumes that Congress intends to delegate statutory questions to an agency when a statute is ambiguous, Congress has tasked the agency with administering the statute, and the agency has adopted the interpretation in a rulemaking or adjudication that carries the force of law. (215) Under Mead, legislative intent to delegate remains a "thinly veiled fiction," but, Criddle argues, "it is no greater fiction than private fiduciary law's attribution of entrusted authority to parents, guardians, and other noncontractual fiduciaries." (216) But the analogy does not hold. Nothing in Mead suggests a fiction based upon fiduciary government. Moreover, nothing in Chevron suggests that it would be desirable or proper for federal courts to hold agencies to freestanding "duties of fidelity" (217)--instead, Chevron shifted authority away from the Article III judiciary and towards the "incumbent administration[]" and its "views of wise policy." (218)

Absent grounding in the text of the Constitution or a statute, fiduciary government's legitimacy rises or falls upon the functional grounds we use to judge any federal common law. For those who take a narrow view of judicial competence, the absence of a specific authorization for fiduciary government will be fatal to the theory. I do not take that tack. Rather, in Part IV I consider whether fiduciary government is desirable and conclude it is not.
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Title Annotation:Abstract through III. The Problem of Intent, p. 1145-1182
Author:Davis, Seth
Publication:Notre Dame Law Review
Date:Jan 1, 2014
Words:11784
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