Against Flexibility

David Super - Georgetown University Law Center

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This Article seeks to develop a theory of the best timing of legal decisions that is independent of questions about which individuals or institutions should make those decisions.  In doing so, it analyzes law as a productive enterprise.  Like any productive enterprise, law seeks to obtain necessary inputs at the lowest cost while producing output of the greatest feasible value.  When conditions for production are suboptimal, the law can proceed despite the scarcity of important inputs (either paying the required premium or producing a lower-quality decision with inferior inputs), it can cancel production altogether, or it can postpone production until a scarce input becomes more plentiful.  If it puts off production, it risks having the availability of other inputs, or the value of its potential output, decline in the interim.  This Article contends that, because of a variety of analytical errors and psychological predispositions, the law often postpones decision-making counterproductively—it prizes flexibility without full consideration of the benefits and costs of flexibility.  In particular, while information typically becomes more plentiful over time, other inputs to legal decisions, particularly decisional resources, often become scarcer. Moreover, postponed legal decisions often have considerably less value than a decision made earlier.

I.  The Dynamics of Legal Procrastination

Decisions that legal institutions must make typically involve several stages.  Some stages may require the various decisional inputs in quite different proportions than others.  As a result, the optimal timing of the different components of an aggregate decision may be quite different from one another.  A component that depends heavily on information might usefully be postponed until that information becomes more available, while a component that depends far more on decisional resources or a clear set of norms may best be made early, when those resources are more readily available.  Unfortunately, contemporary pro-flexibility literature fails to disaggregate decisions in this manner.  Instead, the literature seeks to postpone all of a complex set of decisions by identifying a single component for which late-arriving information would be helpful.  Failure to disaggregate decisions has given a sense of fuzziness to the line between rules and standards.  Many legal materials whose relative “rule-ness” scholars debate actually contain some decisions made and others postponed.  Systematically separating the one set from the other, rather than treating them as gray continuum, is essential to evaluating each timing decision.

Although both the popular media and scholarly literature champion discre­tion­ary gov­ern­ance in gen­eral, they often are quite vague about just what kind of discretion they mean.  Forms of reserved discretion may be distinguished along two important dimensions.  First, a choice can be categorized based on its stage in the decision-making process: whether it affects the initiation of policymaking, the completion of a policy that is ready to implement, or some intermediate stage.  Second, a choice can be either affirmative or nega­­tive: it can either add to the formation of policy or can void and reopen decisions already made.  Each of these distinctions has practical consequences.  The typology set out below permits considerable specificity in arguments for reserving “more” or “less” discretion.  To date, argu­ments that are valid for postponing decisions at the final one or two stages in a process have been invoked to postpone more formative decisions for which no compelling reason to delay exists.

Formulating legal directives typically involves several stages.  An organ of the law may perform one or several steps and then leave others for later consideration, either by that organ or another.  The im­plications of interrupting the pol­icy formation process to preserve discretion depend on the stage at which the pro­cess is inter­rupted.  Four discretionary decisional stages exist in the formulation of most policies.  Notwithstanding the custom of distinguishing exercises of legislative and administrative authority from the courts’ decision of cases, these same patterns exist in legislation, in administrative law, and in judicial decision-making.  Indeed, although commitment and enforcement systems may look quite different, the same general pattern exists in private lawmaking as well.

First, someone must exercise initiative discretion, to decide to take action in a particular area.  Administratively, for exam­ple, the Occupational Safety and Health Administration (OSHA) must decide which of many workplace toxins it will regulate.

Second, someone must exercise normative discretion, deciding what values to pursue through that action.  Thus, the Oc­cu­pational Safety and Health Act of 1970 declares that OSHA must pursue the elimination of workplace hazards if feasible, and as interpreted by the Supreme Court, may not consider the costs to industry unless the regulation would destroy its economic viability.

Third, someone must exercise structural discretion, selecting a framework for the policy intervention. Here, OSHA must decide whe­­ther to establish exposure limits for a toxin, to mandate particular protective equipment, to require label­ing, or to intervene in some other way.

Finally, someone must exercise quantitative discretion, supplying the particular, often arbitrary, quan­ti­tative elements that activate the struc­­ture chosen.  This typically is the final exercise of discretion needed to set a government activity in motion.  OSHA selects a specific exposure limit for a particular toxin or the minimum specifications for pieces of protective equipment—and determines how many resources to devote to enforcing those rules.

Quite different mixes of inputs are required to produce each type of decision.  The law devotes its costliest decisional resources to exercising initiative and normative discretion: its highest courts, high officials elected by the voters or selected by elected officials, and sometimes (in state and local sys­tems) the direct attention of the people themselves.  These questions require high-level decisional resources be­cause of a scarcity—and indeterminacy—of normative consensus, for which the heightened legitimacy of top policymakers is a substitute.

Many exercises of structural and quantitative discretion are made in a similar manner.  Contemporary legal culture, however, does not insist that exercises of these forms of discretion consume the same expensive type of decisional resources.  The blossoming of the modern regulatory state and the roughly contemporaneous proliferation of balancing tests and similarly complex vehicles in case­ law resulted from our acceptance that bureaucrats and lower court judges could exercise quantitative discretion on important matters without direct oversight from senior officials.

Not all discretion, however, operates as such creative discretion.  Some individuals or entities may be empowered to exercise abrogational discretion.  Abrogational discretion may operate globally, voiding all prior decisions.  If the Office of Management and Budget (OMB), for example, refuses to clear a proposed OSHA regulation, all of the agency’s work formulating its policy is for naught.  Abrogational discretion may also operate more surgically.  It may appear as cre­ative discretion at a lower level.  Thus, for example, the structural decision to assign responsibility for OSHA enforcement to a hopelessly overburdened corps of inspectors may have the effect of reversing the decision to initiate policymaking in that area.  Alternatively, abrogational discretion may involve deciding whether to make exceptions to any broad policy decisions in a particular case.  This abrogation could take the form of a for­mal waiver or excep­tion or merely an ad hoc failure to apply the policy according to its terms in a particular situation.  For instance, OSHA inspectors may elect not to take action against an employer that is releasing more of a toxin than the agency’s rules allow if the employer is engaged in a vital activity or appears to be taking steps to resolve the problem.  The exercise of abrogational discretion naturally leads to the question of what policies are substituted for the ones rendered void.

Most important policies in our system are the result of discretion exercised at different times and often by dif­fer­ent levels of government.  Thus, resolution of legal disputes commonly requires reconciling sep­ar­ate exercises of discretion.  Reservations of flexibility tend to exacerbate these problems as they create uncertainty about the extent of the discretion that has been exercised at each stage, allowing for overlaps of con­flicting policies or overlooked gaps in policy formulation.

Battles over the role of the courts in reviewing the political branches’ substantive policy choices revolve around the proper assignment of actions within these categories.  Challengers try to portray a subordinate legal organ’s policy choices as involving exercises of types of discretion relatively high on the scale of discretion.  They then assert that their opponent’s institutional superior—the Constitution, Congress, rule makers, a higher court, or whomever—has exercised discretion at least that far down the scale, thus creating a conflict.  The policies’ defenders do the opposite.  The classic two-step test of the validity of agencies’ interpretations of federal statutes, enunciated in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., revolves around how much discretion Congress has already exer­cised. The question at Step One—“whether Congress has directly spoken to the precise question at issue”—addresses con­ten­tions that Congress’s decision-making reached farther down the hierarchy of specificity than the agency claims.  Step Two, in turn, considers arguments that the agency’s actions unreasonably ex­tend farther up that hierarchy than it admits: that its actions do not “reasonabl[y]” fit with congressional choices.

II.  An Economic Analysis of the Production of Legal Decisions

Legal decision-making is a form of economic activity.  Legal institutions convert information, a set of norms, decisional capacity, and enforcement capacity into decisions that they expect to have more value than that of the inputs required to produce those decisions.  These inputs may come from public or private sources, and the decisions that law produces may include those of courts, legislatures, administrative agencies, and private parties responding to legal rules.  The agencies that produce administrative decisions must find ways of reconciling the demand (or need) for that service with the available supply of it.  Because we generally are unwilling to allow those with business before an agency to bid for the privilege of having their matters decided, agencies do not reconcile supply and demand through a market.  Instead, the agency mediates both demand and supply by scheduling decision-making.  Nonetheless, imbalances between these forces can cause the same kinds of disruptions as a market that is prevented from clearing.  When the demand for administrative decisions increases, or when the resources required to make those decisions become more expensive, the effective cost of decisions rises.  Just as inefficient queuing may be expected in a market that cannot produce sufficient supply to meet demand due to price controls or limits on market entry, so too are inefficient delays likely when the government cannot arrange for enough decision-making to meet demand.  Similarly, just as the government may try to relieve queuing in a constrained market with rationing or priority schemes, so too may administrative agencies try to expedite some kinds of decisions at the cost of even more severe delays for others.   In both cases, the infrastructure required to gather the information needed to administer the priority system injects its own additional inefficiencies that sometimes rival those of the queuing it seeks to avoid.

Of the four main inputs to legal decisions—information, applicable norms, decisional capacity, and im­plementation capacity—the one whose scarcity legal culture most freely discus­ses as a problem is in­for­­ma­tion.  We avoid discussing deficiencies in decisional or enforcement capacity as they em­barrass the law; lawyers often re­gard nor­mative ambiguity as an intriguing challenge or as an op­por­tunity to advance their clients’ cause.  When com­mentators see a decision that, ex post, appears ill in­formed, they tend to see that lack of information as an error that should be corrected in the future.

Shortages of other inputs can also be functions of time.  Sometimes delaying a decision can be expected to clarify the applicable norms, as when a case on the same question is pending before a higher court; in other cases, delay may either permit a consensus to develop or see views fragment further.  Legis­­lators, agency staff, judges, or those in the private sector empowered to make legally significant decisions may be preoccupied with other mat­ters at certain moments.  A shortage of enforcement capacity does not prevent decisions from being made, but it can fluctuate over time.

The value of legal decisions also can change with time.  Where a decision’s value would decline sharply with time, the law may be willing to bear higher input costs just as a factory might pay above-market rates for prompt delivery of a machine needed to meet a surge in demand.  For example, when a plaintiff risks suffering irreparable in­jury, courts hold expedited preliminary injunction proceedings even though the parties’ information pro­duc­tion costs and the value of the court’s time may be higher than if the matter came to trial in the usual course.  More generally, earlier decisions reduce parties’ needs to include hedges against multiple contin­gen­cies in their plans.  They also may reduce the parties’ costs of learning the law, increasing compli­ance and the social benefits the law is designed to yield.  Furthermore, postponing the main decision may require addressing subsidiary or interim matters first, duplicating transaction costs and multiplying the costs of errors.  Postponing decisions also may force rushed decisions of secondary matters that can only be addressed once the initial decision has been rendered.  Decisions rarely become more valuable to society as a whole when rendered later, although parti­cular parties may benefit substantially from delay.

When the inputs of a decision appear unusually costly, law has four basic responses available.  At one extreme, it can simply devote the additional resources necessary to bear those costs, perhaps leaving it unable to decide other matters or perhaps commandeering resources from other public or private pursuits.  At the other extreme, it can refuse to render a deci­sion at all.  For the most part, however, the law chooses between two intermediate options: rendering a lower-quality decision based on what inputs it can secure or shifting the decision to a time when inputs may be more plentiful.

The law often relies on default rules to respond to shortages of information, normative guidance, or decisional capacity.  These and other decisional work-arounds effectively serve as lower-quality sub­sti­tutes for the desired inputs.  As such, they presumably produce a lower-quality product—a decision more likely to be “wrong” when compared with the result more copious inputs would have yielded.  Like a business, the law must be cautious of the effect on its reputation of issuing an inferior pro­duct.

Law’s other major response to shortages of inputs is to change its timing.  Again, like a profit-making busi­ness, law seeks to optimize its social returns by conducting its productive efforts at the time when its in­puts are least costly and its decision will be most valuable.  When useful information is missing, the applicable norms are murky, decisional resources are scarce, or enforcement of any decision is uncertain, law may postpone pro­ducing a decision until the input in question becomes more affordable.  Conversely, sometimes law must move expeditiously because delaying would increase the cost of one or another vital input.  For example, statutes of limitations recognize that information degrades over time; con­sti­tu­tions lock in decisions based on norms that their framers fear might not endure; wills allow testators to determine how to dispose of their property after they have lost the capacity to decide.

III.  The Source of Enthusiasm for Flexibility

The foregoing discussion suggests that the desira­bility of postponing decisions depends on the cumu­la­tive effect of changes in the costs of inputs, which can be positive or negative, and changes in the value of the deci­­sion, which are likely to be negative.  That is not, however, the way our legal culture usually ap­proaches these problems.  Instead, it leans toward legal procrastination, under the lofty moniker of “flexi­bil­ity.”  One might expect that substantively flawed decisions made with re­served discretion might trigger a move­ment to rein in flexibility.  Although that is one possible response, critics are just as likely to argue that changing the procedure or institutional assignment for rendering the decision can correct the problem.

Four common analytical errors tend to cause underestimates of the costs of delay.  First, commentators assume that more information is an unalloyed good, ignoring the cost of acquiring it.   Second commen­ta­tors overestimate the role of information in producing a legal decision, exaggerating the value of information that they hope to receive if they wait or overstating the deficiencies in their present store.  Third, they fail to appreciate the declining value of decisions delayed too long.  And fourth, they confound postponements of decisions with delegations to different bodies that may have better access to information, cheaper decisional resources, or normative rules than those promoting delegation prefer.  Compounding these analytical difficulties, distributional concerns may override the desire to achieve the most efficient timing where the costs of delay are born unequally.

Under close examination, many arguments for flexibility reveal themselves as arguments for improved decision-making procedures or for a different institutional decision maker.  Yet additional procedures and delegations of responsibility usually can occur with or without significant postponement of the deci­sion.  To the contrary, strong procedural and institutional concerns often argue against flexibility.

Society’s willingness to invest decisional resources in rulemaking fluctuates considerably over time.  At the moment, for a mixture of political, technological, and psychological reasons, the pendulum has swung very far against policymak­ing through rules and in favor of broad reservations of discretion, leaving many normative, structural, and quantitative issues open until closer to the time a pol­icy needs to be implemented in particular cases.  As noted, this sometimes results from a desire to avoid hard political choices.  It also results from the widespread ignorance of, and skepticism about, statistical and other means of anticipating changes.  More broadly, we focus on one particular form of decisional failure—officials bound by policies that they know are mismatched to their situation—to the exclusion of several other kinds.  This myopic attention to policy obsolescence results from our increasing ten­dency to treat a very narrowly-defined con­­cep­tion of efficiency as the govern­ment’s primary goal.

Because decision-making is the law’s principal productive activity, exercises of discretion should be timed in the same manner that other productive enterprises are: by seeking the time at which the cost of required inputs is lowest relative to the value of the output that it can produce.  Even if some aspects of quantitative discretion (or abrogative discretion) might properly be postponed, early exercise of initiative, normative and often structural dis­cretion will often prove far more efficient than a sweeping reservation of flexibility.

Acknowledgments:

David A. Super, Professor, Georgetown University Law Center.

Copyright © 2011 Cornell Law Review.

This Editorial is based on the Article, David A. Super, Against Flexibility, 96 CORNELL L. REV. 1375 (2011).


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