Coordinated Rulemaking and Cooperative Federalism’s Administrative Law
abstract. “Cooperative federalism” is not just a model of federalism; it is a model of administration. From health care to air quality to emergency management, transportation, immigration, national security, and more, cooperative federalism is the regulatory model of choice. But scholars have yet to conceptualize a cooperative administrative law for cooperative federalism. As this Article shows, however, federal and state bureaucracies have devised intricate strategies for coordinating their implementation of the programs they jointly administer.
The Article begins to elaborate cooperative federalism’s unseen administrative apparatus by focusing on its distinctive form of legislative rulemaking, the workhorse of administrative law. I show that inside cooperative programs, federal and state agencies jointly promulgate binding legislative rules through a cross-governmental process I call “coordinated rulemaking.” Because it crisscrosses governmental boundaries, this novel form of rulemaking has a legal logic, process, and mode of codification that diverges from the notice-and-comment rulemaking model so scrutinized within the federal administrative state.
After documenting the use of coordinated rulemaking in some of our largest and most important cooperative regulatory programs—including Medicaid, the Clean Air Act, public education, highway construction, and national-security surveillance, among many others—I argue that these rich practices resist the standard heuristics used to conceptualize the administrative relationship between the federal government and states within cooperative programs. In their place, I develop an alternative conception of the administrative scaffolding in cooperative federalism programs. Finally, I sketch out some of the puzzles and promises of coordinated rulemaking—its implications for black-letter administrative doctrines, including Chevron deference, arbitrary-and-capricious review, and the like—and, by setting the practice I document here in theoretical frame, asking what it reveals about how federalism reshapes the legal architecture of administrative law when our governments pursue regulatory projects together.
author. Assistant Professor of Law, University of Chicago Law School. I am grateful to Payvand Ahdout, Barry Friedman, Alex Hemmer, Rick Hills, Aziz Huq, Josh Macey, Jonathan Masur, Jennifer Nou, Farah Peterson, Noah Rosenblum, Jim Rossi, and David Schleicher for comments and vibrant conversations; to participants in workshops at the University of Chicago, New York University, and William & Mary; to Hannah Vester and the staff of the Yale Law Journal; and to Caroline Ferguson, Nena Gallegos, Jordan Jenkins, Logan Kirkpatrick, Sarah Kwon, Matthew Makowski, and Narayan Narasimhan for terrific research assistance.
“Cooperative federalism” is not just a model of federalism; it is a model of administration.1 Many of our nation’s largest regulatory programs—from government health insurance to pollution control to transportation, public education, social welfare, disaster relief, policing, immigration enforcement, and more—are administered jointly by federal and state bureaucracies. Scholars have critically evaluated how cooperative federalism advances policy goals,2 whether cooperative federalism is consistent with federalism values3 and democratic principles, and how the Constitution enables and constrains cooperative federalism.4 But despite the scale and sweep of these programs, our understanding of how they work at a more basic administrative level is stubbornly thin. We have yet to conceptualize a cooperative administrative law for our cooperative federalism programs.
As this Article shows, however, our governments have, in practice, forged intricate forms of administrative coordination to bring cooperative programs to fruition. But that coordination is not centrally structured by the federal Administrative Procedure Act (APA) or its like; there is no cross-jurisdictional equivalent of the APA. Rather, the coordination I document in this Article has arisen organically over time, program by program and interaction by interaction. The practices that comprise cooperative federalism’s administrative law exist, but we lack the terms and templates to recognize them.
This Article focuses on just one part of cooperative federalism’s administrative law: the cooperative equivalent of binding legislative rules—the workhorse of administrative practice.5 In the federal system, agencies enact legislative rules pursuant to the APA’s straightforward notice-and-comment process.6 In cooperative programs, I show that our governments have devised an alternative form of rulemaking, which I term “coordinated rulemaking.” Distinctive and widely used, coordinated rulemaking stitches together federal and state agency action to produce rules binding on both those governments and the third parties they regulate. Because it crosses governmental boundaries, however, it has a legal logic, process, and form of “codification” that diverges from the more familiar legislative rulemaking familiar to observers of the federal administrative state. To take just one profound difference: I show that notice and comment, the process so central to federal rulemaking and a chief determinant of whether it is binding, is neither necessary nor sufficient to give coordinated rules the force and effect of law. Instead, coordinated rules are binding because of a logic distinct to the constitutional structure of federal-state interactions but not previously articulated, which I call “promulgation by concurrence.”7
To see the unusual administrative form that coordinated rulemaking can take, consider Medicaid—not only one of the largest cooperative federalism programs but also among our nation’s largest regulatory programs of any form. Some aspects of Medicaid are brought to fruition by federal or state regulations. But many of the binding rules that serve the function of regulations in the Medicaid context—the rules that shape the basic medical benefits to which millions of Americans are entitled—are not codified in either the Code of Federal Regulations or a state equivalent. Neither are they made through a process prescribed by the APA. Rather, they are agreed to by federal and state agencies in a more diffuse manner.8 And only once they have achieved that concurrence do they become binding on the governmental counterparties to Medicaid’s bargain and, more importantly, on the program’s millions of beneficiaries and service providers. Those rules are, in turn, codified, but in an unorthodox location. Each state’s Medicaid partnership with the federal government is initiated through an intergovernmental agreement—a treaty-like document between the federal government and each state—called the “Medicaid state plan.”9 Coordinated rules are codified as “addenda” to those state plans. Medicaid is not unique. Many other major and minor cooperative programs use a similar form of coordinated rulemaking to implement their joint programs.10
That coordinated rulemaking, and the cooperative administrative law that facilitates it, has largely escaped public notice is so striking that it presents a puzzle of its own.11 One explanation might resist the premise: perhaps cooperative programs are more like nonbinding “political commitments” between nation-states, in which nations agree to work independently toward common objectives. Following that model, our governments would agree to shared goals but would then pursue those goals in separate state and federal administrative processes, each structured by that government’s ordinary administrative law. This would be something of a limited-purpose reprise of the mostly defunct “dual federalism,” in which the federal government and states are assumed to separately oversee discrete areas of jurisdiction.12 As this Article shows, cooperative programs are not administered separately; they are administered, as federalism’s general trends would predict, jointly and interdependently.
Part I provides an account of the mechanics of “coordinated rulemaking” across programs and, in so doing, refutes the idea that cooperative federalism has no administrative integration to document or theorize. The states and the federal government do not just align on policy objectives and pursue them separately. They also create bespoke and deeply integrated administrative structures to implement them.
These structures have been long visible in bits and pieces to the many scholars, agency officials, practitioners, and interested parties who routinely interface with individual cooperative programs. But they are surprisingly invisible in the aggregate. We lack a vocabulary that can capture legal similarities in cooperative programs that each use their own technical language and can bring conceptual precision to the administrative characteristics that are common across them. Cooperative programs are so dazzlingly complex—so institutionally sprawling, jurisdictionally intricate, administratively taxing, and fiscally demanding—that it is easy to see them as sui generous beasts. The goal of this account is to notice their common oddities and theorize their common logics.
By distilling patterns across diverse programs, Part I identifies a standard cross-governmental template that our governments use to jointly author a wide range of important legislative rules. First, the federal agency sets parameters within which it will approve a proposed state regulation; next, state agencies seize the pen and formulate specific proposals within those parameters; finally, the federal agency provides feedback and comments on those proposals and approves or disapproves them.13 Once a state proposal is approved, it becomes binding not only on the governmental parties but also on the individuals and firms that the program regulates and serves. This final rule is importantly bilateral: it cannot be changed by one participating party and retain its legal status as a binding rule executing the shared program.
But the actions that crisscross governments—and form an intergovernmental process—do not tell the full story. How each government completes its respective tasks within that template—and what intragovernmental process they use—significantly shapes coordinated rules and how they come to be. Scholars of federal or state administrative law might hypothesize that a state or federal agency completes its respective tasks within the cross-governmental template using that government’s standard administrative process. As I show, however, the way they set parameters, draft proposals, and issue approvals is deeply shaped by the cooperative context and, as a result, frequently takes its own unconventional administrative form. Strikingly, for instance, the internal administrative processes that state agencies use to formulate their proposed rules are routinely dictated by the federal government’s parameters; the federal agency simply states that it will not approve a state’s proposal unless it accords with the federal government’s preferred administrative process. These internal processes show that cooperative federalism in fact begets a deep form of administrative integration.14
Seeing the use of coordinated rulemaking across a range of programs, in turn, reveals principles of administrative law that are peculiar to cooperative programs. Part I concludes by interrogating a question of great significance to legislative rulemaking: when and why coordinated rules become binding.15 In ordinary federal administrative law, legislative rules gain the force of law because they have gone through the notice-and-comment process prescribed by the APA.16 In some programs, federal parameters, state proposals, and federal approvals are each conducted through a version of notice and comment.17 But in others, federal and state agencies use bespoke, informal, and unstructured internal administrative processes. This dramatic variation yields an important insight about the legal logic of coordinated rulemaking. Coordinated rules gain their binding force not because the federal or state agencies use specific internal administrative processes but because the substance of the rule has achieved the concurrence of both governmental parties to the cooperative program. These rules, I argue, become legally binding because of a functional intergovernmental understanding that I call promulgation by concurrence. This principle, which I explore further in Part II, is unfamiliar to federal administrative law but is a common way of coauthoring binding legal texts in other contexts, most obviously in the law of contracts and treaties.
Part II examines the legal forces—of constitutional federalism, legislation, and administrative law—that facilitate coordinated rulemaking and cooperative federalism’s administrative state more generally. As an initial matter, the practices of coordinated rulemaking cannot be explained by, and in fact contradict, the existing heuristics that scholars use to gloss the legal relationships created by cooperative federalism. The most common such heuristic, cited over and over again, imagines states implementing cooperative programs as if they were federal agencies.18 In this states-as-agencies analogy, Congress makes the law, and states are assumed to become “agencies of the federal government by enforcing federal law with administrative actions and by promulgating regulations to fill the gaps in federal statutes.”19
This Article’s account of coordinated rulemaking resists that influential analogy as a framework for understanding the administrative structure of cooperative federalism programs. By mapping the day-to-day interactions within these programs, it reveals far thicker interdependence between federal agencies (which the states-as-agencies analogy tends to ignore) and state agencies.20 In turn, it collects a cross-program body of practice from which to theorize a more nuanced administrative scaffolding of cooperative federalism.
I argue that in place of the stylized hierarchical relationship between Congress and state agencies that is so often recited, cooperative federalism begets administrative spaces more akin to the shared regulatory spaces that Jody Freeman and Jim Rossi have identified in collaborations among federal agencies.21 This reframing enables a deeper interrogation of the ways that cooperative federalism’s administrative law—including its constitutional, positive law, and soft law determinants—deviates from ordinary federal administrative law.22
Part III considers the administrative-law complexities posed by the practice of coordinated rulemaking. Black-letter administrative law assumes a vertically integrated administrative agency: the same agency gathers data, develops models, drafts regulations, solicits comments, and promulgates them. Because coordinated rulemaking diffuses these tasks across federal and state agencies, it creates conceptual problems that courts have addressed only intermittently, stymied by the lack of consistent terminology to identify similar issues across programs and the infrequency of judicial review in this area. I canvass a range of issues—from how Chevron deference operates in this context, to whether federal-state interactions should be shielded as part of the agencies’ deliberative-process privilege, to ways that coordinated rulemaking might insulate cooperative programs from challenges under the nondelegation doctrine.
Part IV places coordinated rulemaking in theoretical perspective, examining its implications for both administrative law and federalism. Coordinated rulemaking demonstrates the possibility of legal and procedural innovation in a field often disparaged for its ossification. At the same time, the interdependence between federal and state agencies creates unique opportunities for collusion, insulation, and atrophy in the federal-state administrative process. Scholars of federalism, for their part, have long plumbed the policy, politics, and constitutional principles that arise from cooperative programs. But coordinated rulemaking reveals another axis of analysis: federalism has its own administrative law and practice. Federalism scholars, to the chagrin of some, have generally not focused on our subconstitutional legal ordering, a practice that, I argue, warrants revisiting.23
* * *
At the dawn of the New Deal, as agitation grew for the reform of federal administrative law (agitation that ultimately culminated in the enactment of the APA), scholars set out to map existing administrative practice and its legal influences.24 James M. Landis, one of the leading voices of that moment, explained that federal administration had emerged as a “new instrument of government,” propelled not by central blueprinting or the kind of incrementalism characteristic of the common law, but by a more diffuse cross-institutional “striving to adapt governmental technique . . . to modern needs.”25 As a consequence, despite its long history, federal administrative law was a hazy field. It was animated by complex patterns, longstanding norms, and common legal principles, but scholars and practitioners alike lacked the wide-angle lens needed to reveal them. Cooperative federalism’s administrative law is similarly positioned today—a deficit this Article begins to remedy.