Public Engagement in the Administrative State: A Financial Privacy Case Study


  • Mariano-Florentino CuĂ©llar
Publish Date:
January 1, 2004
Publication Title:
Stanford Public Law Working Paper No. 76
Working Paper
  • Mariano-Florentino Cuellar, Public Engagement in the Administrative State: A Financial Privacy Case Study, Stanford Public Law Working Paper No. 76 (2004).


This Article critiques public engagement in the modern administrative state. It presents an empirical case study of public participation in an unfamiliar regulatory context – involving criminal justice and the war on terrorism – and then illustrates how the insights obtained are also relevant to more familiar regulatory domains.

According to different strands of legal thought, the legitimacy of the administrative state depends in part on the claim that it provides opportunities for public participation alongside a mechanism for expert judgment. A typical rulemaking proceeding allows experts to make technical judgments subject to court review. The whole process is then enmeshed in a system that is supposed to provide public engagement – and therefore democratic accountability – through presidential appointments and control, congressional oversight, and the public notice-and-comment process. This existing approach is legitimated by administrative pluralism, a way of thinking that emphasizes the value of interest-group competition in shaping regulatory policy. While administrative pluralism helps legitimate regulatory policy in the eyes of some jurists, scholars, and the public, it also suppresses implicit questions about how much expert judgment is required in regulatory decisions, what limitations exist in interest-group centered approaches to democracy, and whether the extent of participatory democracy and responsiveness is sufficient.

The problems are not abstract. They are easily demonstrated in the course of a specific regulatory rulemaking proceeding, such as Section 314 of the USA Patriot Act, which governs law enforcement’s cooperation with financial institutions. The agency took a vaguely-worded statute and greatly expanded the scope of information law enforcement can obtain without a subpoena. Yet the task of balancing privacy concerns and law enforcement objectives hardly seems like the exclusive province of experts. Individuals and interest groups did have a chance to submit comments in the rulemaking proceeding, but virtually all the comments taken seriously by the regulatory agency were sophisticated statements made by financial institutions and their lawyers. While over 70% of comments came from individuals concerned about privacy, the agency did not even address these in its final rule, nor does it appear to have deployed any alternative mechanism to assess public reactions to its regulation.

Despite the administrative pluralism model’s tenacious hold, at least two alternatives exist to involve the public in rulemaking proceedings such as those governing Section 314, both of which involve constituting a small group of people whose discussions can inform the regulatory process. Participants can be either selected by lot from the entire population (a majoritarian deliberation approach), or chosen from among constituencies (including outside, independent experts) who may be especially impacted by the regulation but are essentially unrepresented in the existing system (a corrective approach). Given that neither the public’s sophistication nor its interest in a regulatory issue is fixed, the new approaches can generate valuable information about what informed citizens think of regulatory proposals. The information obtained could then prove valuable in designing regulations and enhancing their legitimacy. The technical challenge of implementing the alternatives is far from insurmountable, though questions arise about selecting deliberation groups, framing the issue, and providing representation to the views of the group. Instead, two larger challenges remain. First is the challenge of choosing among different concepts of administrative democracy to combine expertise and participation. Second is the challenge of overcoming a political economy that strongly favors the status quo.