partnership and subsidiarity were laudable attempts to stem this bout of regulatory and administrative bulimia.10 Application of these principles has borne some fruits but can they restore the balance while steering Europe towards a course of sound and effective action?11 The answer is clearly “no”: The principle of partnership, even applied in a broad sense, not only to the Member States, to whom a large part of the burden of implementing Community rules has already been (re)delegated, but also to non-member countries, in particular the applicant countries,12 is not enough to curb the heavy workload of devising, preparing, negotiating, adopting and implementing general rules. Furthermore, the principle of subsidiarity, even if applied extensively, will never obviate the need to take a large proportion of regulatory decisions at Union level, precisely because even the most cautious use of that principle shows that both national and regional bodies are unsuited to taking this type of decision. It has even been pointed out — and quite rightly — that the Community's powers will be extended regardless of subsidiarity.13 The internal market is a great boon, but if it is to operate smoothly, more measures must be adopted to ensure rapid and effective enforcement throughout the Union of standards, uniform patents, authorisations for the circulation of new products, rules on safety and consumer protection and fair and healthy competition.14 Moreover, science and technology are proceeding apace in all these fields. Quick and effective action is needed. But how?
It is clear that the European institutions — and the Commission in particular — are neither designed nor equipped to tackle such a regulatory challenge. Worse still, this basic deficiency is now compounded by a crisis of identity and confusion over the model for European integration, which certainly do not facilitate the task of redefining and assigning different spheres of responsibility in a realistic and cool-headed manner.
The conclusion must be drawn that Europe is currently suffering from a genuine crisis of governance. In this context, President Prodi's White Paper on European Governance is a welcome development, as it highlights the need to think beyond a purely administrative reform and displays an awareness of the real nature and scale of the problem.15 We use the concept of governance here in its most commonly accepted meaning, to denote the importance of cooperation and positive interaction between the public authorities in different spheres of responsibility and/or at different geographical levels. The concept of governance puts the accent on unity, cooperation and decentralisation and thus forms a stark contrast to bureaucratic hierarchy, compartmentalisation and central control. It is a particularly useful concept for analysing the institutional and regulatory aspects of Europe, as the construction of the Community16 brings into a play a complex power struggle between the central authorities and national and regional authorities dispersed over a vast geographical territory, comprising several independent States with diverging legal and political traditions and requiring far-reaching coordination to ensure the consistency of policies implemented at different levels. In this context, the concept of governance appears to be a more faithful reflection of the institutional balance within the EU, which is a unique entity that cannot be assimilated to any existing model in national or international law.17 On the basis of these premises, President Prodi's communication identifies six areas where work needs to be done on European governance: the first is to enrich the public debate on European matters by bringing discussion of major issues to the people and making scientific expertise more democratic. The second is to improve the way in which the process for producing and implementing Community rules is handled — with special emphasis on aspects other than the adoption of rules, in particular their quality, acceptability and effectiveness — by establishing inclusive procedures and evaluation arrangements. The third area, which is of particular interest for the purposes of this study, is concerned with improving the exercise of European executive responsibilities where there is a plea for greater decentralisation. The fourth task is to promote coherence and cooperation through a "networked Europe". The fifth concerns the way in which Europe contributes to world governance in an increasingly interdependent world where its role is now that of an entire continent. The sixth and final task is to step up integration and strengthen the strategic dimension of policies across the European continent.
Our study relates to the third of these areas and covers in particular what can be termed horizontal/external decentralisation, rather than vertical/internal decentralisation. We have already mentioned the new regulatory challenges faced by Europe. We have also seen that the European institutions, and in particular the Commission, are neither designed nor equipped to face such a challenge. This takes us back to the question of delegating some regulatory authority to independent bodies, unless the Commission is to become a mammoth administration employing tens of thousands of officials, which seems neither politically acceptable nor materially feasible — or even desirable.
Europe has already sensed this need, as witnessed by the proliferation of agencies set up in the last ten years.18 However, because of the strict and detailed legal framework, and overly restrictive interpretation thereof, the role of these agencies has remained largely consultative and executive; hence, far short of what is really needed and what they themselves are capable of. On what terms could they be extended to the regulatory domain? In which sectors should new agencies be set up? How can we guarantee consistency of action? What guarantees must be laid down to ensure their independence, the transparency of their activities and their accountability? These are some of the questions we will ask and attempt to answer.
Because of the dominant line of thinking within the institutions, sustained by case‑law dating back 45 years,19 the European legislator can only delegate regulatory powers to institutions provided for by the Treaties, for fear of upsetting the sacrosanct institutional balance. But which balance are we talking about here? Is it the one arising from the ECSC Treaty (establishing the European Coal and Steel Community), which was very different from the institutional balance laid down by the EEC Treaty (establishing the European Economic Community)? And, even if we could argue by analogy, is the institutional balance that existed at the end of the 1950s identical to the one we see today? Does the much-talked‑about democratic deficit in the European institutions exist solely in the limited powers of the European Parliament or should it also be sought in the executive rule‑making process between the Commission and Council? Are we satisfied with the workings and democratic legitimacy of the various committee procedures?20 What is the respective scope of laws and administrative regulations in Community law? When is the Commission really weakened? Are there lessons to be learned for the exercise of regulatory activity from the answers to the above questions?
Here are a few preliminary problems, which must be overcome before we reach any final conclusions.
It is my personal conviction that there is a crisis of governance in Europe and that one of the most effective remedies is to embark on a thorough overhaul of the EU’s regulatory process. In this context, the delegation of regulatory powers, under scrupulous supervision, is I believe the best course to follow —if possible, without having to amend the Treaty first. This is a conviction I have formed from having worked in Commission departments for the past 22 years, including 16 years in the Legal Service, and having witnessed at close quarters the recent crisis culminating in the collective resignation of the Santer Commission, when I was a member of his private office in 1998‑99.
This conviction has been further strengthened here in the United States, as I have been able to take a step back from events and study the American model of regulatory agencies, which I feel is in many ways relevant for an analysis of the situation in Europe.
It is now time to take that personal conviction further and present a rigorous demonstration of my intuitions.
I intend to do so as follows: first I shall describe the delegation of regulatory authority in the United States and the EU and the origins and workings of agencies on the two sides of the Atlantic in order to identify common features and differences (Part A).
I shall then look at the balance of powers in the two legal systems in order to demonstrate their intrinsic similarities, on the strength of which I shall relativise the arguments against regulatory agencies based on a supposed respect for an outdated institutional balance (Part B). In these two sections I shall demonstrate the need for and feasibility of regulatory agencies.
Third, I shall address the problem of the substantial and procedural guarantees for an efficient and transparent regulatory process, in particular guarantees of the accountability of the regulatory agencies, which will be examined from two standpoints: autonomy and control (Part C).
In my conclusions I shall attempt to refute the existing status quo in delegation theory within the EU and establish a revised version of the Meroni doctrine.
Last but not least, a few words about my methodological approach. This study does not have any particular theoretical ambitions. I have no epistemological inclinations and do not intend to add yet another “-ism” to what is already a well-stocked collection of different approaches for analysing the phenomenon of European integration.
If there is one point on which all authors agree, it is that the European venture is a highly original one. Researchers are unanimous in citing the unique nature of the Community's institutional architecture and legal system. From that starting point, advocates of the intergovernmentalist/internationalist approach (such as A. Moravcsik)21 stress the dominant role of Member States in the European process, the constitutionalists/supranationalists (such as J.H.H. Weiler)22 insist on the key role played by the Community's novel institutions in developing European integration, in particular the Commission and the Court of Justice, while those who favour the regulatory/infranationalist approach (such as G. Majone)23 highlight the central place of the rule-makers and civil society in the entire rule-making process.
But can and must the European or Community phenomenon be shoehorned into just one of these three main approaches —not to mention functional federalism, consensual or participatory federalism, the theory of integration through the law, institutionalism24 and so many other variants born of laudable intellectual attempts to investigate European integration from a scientific angle (whether multi-disciplinary or not)? My answer is a clear “no”.
While it is true that the Council of Ministers lends itself more to an intergovernmental analysis, it is equally plain that the Commission and in particular the Court of Justice call for a more constitutionalist approach, while the utility of the regulatory approach for studying complex decision-making procedures, such as the codecision procedure between Parliament and the Council and in particular what is known as "committee procedure or comitology" (the so-called comitology), cannot be denied either.25 For all these reasons, I would describe that my approach as deliberately eclectic and pragmatic. It thus reflects the Community method, which can be summarised as an international treaty that provides for national powers to be ceded to supranational institutions on which this Treaty confers the right to initiate legislation (common interests), part of the decision-making process (obligation to cooperate) and the tasks of monitoring breaches of the new legal system thus created (adherence to the “federal” pact) and protecting the rights deriving from it (the rule of law).
We have now lived for nearly 50 years under the impact of this novel system whose initial objectives have —to say the least— been expanded in spectacular fashion. And everyone agrees that the practical operation of the system —and very often the results it obtains— go far beyond the aspirations and expectations of the founding fathers of the Treaty. Without any exaggeration, these can be described as unintended effects.26 The construction of the Community is a novel process, but also an open-ended and dynamic one. Each revision of the original Treaty reflects a shared degree of awareness of the additional steps to be taken to serve best the common interest.
It hardly matters if these steps are too timid for some and too bold for others. It hardly matters what each individual sees as the ultimate goal of this unprecedented enterprise. It hardly matters if we eventually arrive at a situation in which the people of Europe (a real European demos) are aware of their common future and want to defend it together.
The important thing is to let the Community method do its work. The rest will follow. It is impossible to predict what the final outcome will be, and most likely that outcome will not correspond exactly to any known formula. It would be contrary to the Community method to try to enclose it in a rigid and inflexible theoretical straitjacket. At the same time it would be a pity to curb its potential effects, which are certainly unpredictable and unintentional, but often fruitful and beneficial.27 For all these reasons I believe one cannot and must not create a single explanatory model of the workings of the Community institutions. If there is one model which fits best, it would be an evolutionary/transformational model, i.e. a model which evolves and is transformed with the institutions —in other words an "anti-model". When and if the process of European integration is ever complete, we shall be able to ask questions about the nature of the outcome and, possibly, formulate explanatory theories.
This study is of course no more than a modest contribution on a very specific individual feature of this magnificent process. It does not set out to draw generalisations, but focuses on the usefulness and feasibility of delegating Community regulatory authority to independent agencies. While taking care to stick to these methodological premises in the arguments I will develop, I shall nevertheless allow myself some necessary digressions to illustrate my theses.
A. Two different but convergent federal systems28
It does not require any particular intellectual effort to pinpoint the striking differences between the American and European experiences of federalism.
In the United States of America, this process, which, judging by recent decisions of the Supreme Court, is still in gestation,29 has already been under way for over two centuries. In Europe the adventure of "closer union" has been going on for barely 50 years, but has already passed through several stages: the ECSC in 1951, the EEC or "common market" in 1957, the Merger Treaty in 1966, the Single European Act in 1987 followed by the internal market, The Treaty of Maastricht /Treaty on European Union in 1992 with its three pillars, the Amsterdam Treaty in 1997 and the Nice Treaty in 2000. And the process is far from over.30 There are enormous divergences in the geographical, demographic, cultural and political factors involved: the US came into being in a vast, practically untouched and extensible territory full of unsuspected natural resources. The scant population of natives and immigrants left room for a massive influx of people from elsewhere. Despite the initial predominance of the Protestant culture, the relative vacuum in all areas of economic and social life encouraged a relatively rapid blending of differences and the extensive homogenisation of the local "humus" (the famous melting-pot). We must add to that the almost total extermination of the natives and a civil war which very quickly wiped out any notions of asserting a "deviant" identity over the model that was deemed after the event to be autochthonous and dominant.
We might say that, in Europe, things happened exactly the other way round: on one of the world's oldest territories, which is relatively limited in expanse and intensively exploited, not to mention devastated by two recent wars, a group of independent countries, boasting civilisations dating back sometimes thousands of years, possessing different languages and cultures and intent on keeping them, and having established secular legal and political systems and highly developed socio-economic relations, deliberately decided to share —and manage in common— part of their sovereign prerogatives, the better to secure their future in a world heading rapidly towards globalisation.31 Underneath these major and obvious divergences, however we can, if we look a little more closely, find common ground.
At a time when the US was discovering the federalist riches of Althusius, precisely because it was a young, heteroclitic and amorphous amalgam in need of order, Europe had just succumbed to the implacable logic of Bodin's theory of state sovereignty as a means of coping with the appetites of the old antagonistic peoples gnawing away at it. But both sides very quickly incorporated into their respective models the discipline of Grotius' public international law, the system of institutional balance inspired by Montesquieu's theory of the separation of powers and Rousseau's social contract, and the democratic/republican mechanics of de Tocqueville. Both have always shared and still share today the same fundamental values.
There has therefore been a kind of historical cleft, arising from economic and social conditions, which is now narrowing. Why and how?
The need to move towards federalism, which was felt by the US at the end of the 18th century, was understood by the Europeans only amid the ruins of World War II. That is why the former embarked immediately on a large-scale ideological project enshrined in the Constitution, while the latter merely pooled their strategic production capacities in order to avoid a new conflict or, at the very least, make such a conflict more difficult in future. So our first conclusion, which may help us in our subsequent deliberations, is that the US is an example of statutory federalism, whereas the EU may perhaps be an example of derived federalism. Because of the statutory-foundational nature of American federalism and the rapid solution to the problem of shared sovereignty in the form of the Federation, a system of partnership was able to develop very quickly between the federated entities and the central authority, which today still allows American federalism to be highly decentralised without calling into question the status of the federal authority. By contrast, the derived nature of European federalism, which arose from functional tasks conferred on common institutions, generates constant tension between these supranational institutions and the Member States, preventing a rational distribution of powers. The tension was heightened during the period of massive extension of Community powers that was ended by the introduction of the principle of subsidiarity which, despite everything, established criteria for drawing a dividing-line between the powers assigned to the Community and those supposed to remain at national or even regional and local level. Here too the historical gap is obvious, but the first signs of it being bridged are also perceptible.
The principle of subsidiarity has redefined two parallel trends that had been shaking the constitutional foundations of the Member States: because of the increase in the Community's responsibilities as a result of the growing internationalisation of the problems to be tackled, coupled with the extension of majority voting in the Council to facilitate decision-making, national governments were placed in the awkward position of no longer being in control of a large part of their rules and regulations. Moreover, the situation was aggravated by an extensive interpretation of the subsidiary powers of the institutions under Article 308 of the Treaty.32 The technique of opt-outs was merely an imperfect, one‑off remedy, as is the concept of enhanced cooperation (opt-ins) in the Amsterdam and Nice Treaties.33
By contrast, the principle of subsidiarity has turned back the tide: by keeping the lid on the Pandora's box of subsidiary (and/or implicit) powers, it has contributed to a spectacular decentralisation of Community prerogatives.34 The expansion of partnership arrangements, the timid but real introduction of agencies and Prodi's communication on European governance all bear witness to this. The initial trend towards centralisation, inevitable in a period of mutual suspicion fed by the existence of two concurrent and sometimes conflicting systems of law, is noticeably giving way to an inverse process that encourages cooperation between local, regional, national and Community bodies acting within a single legal framework in an emerging federal system.35
The same difference between statutory and derived federalism has led to very different institutional architecture on the two sides of the Atlantic. On one side we have a rather classic federal system in the US, with a central authority comprising a bicameral legislative branch (House/Senate), an executive branch with at its head a directly elected President, assisted by government departments and the Administration (agencies), and a Supreme Court which guarantees the federal pact (breakdown of responsibilities between States and the Federation) and the consistency of laws with the Constitution.36 On the opposite side we have in the EU a unique and original set-up which still reflects the initial functional approach. It comprises a legislative function, initially constituted by the Member States meeting in the Council of Ministers, but increasingly shared between the Council and the European Parliament under the codecision procedure, an executive, which is supposedly represented by the Commission, a supranational body par excellence, which, however, has two major peculiarities in that it has a monopoly over the right to initiate legislation but no monopoly over the executive, since the Council can retain some executive power for itself, and a judiciary branch (consisting, since the Treaty of Maastricht, of the Court of First Instance [CFI] and the European Court of Justice [ECJ], which has the task of interpreting and ensuring the uniform application of Community law in the Member States, in accordance with novel procedures.37 Just as in the US, where the initial, rather rigid separation of powers gradually gave way to a system of checks and balances in the face of an increasingly complex socio‑economic reality requiring the interpenetration/interaction of different powers, so the EU's unique architecture is slowly but surely moving towards an institutional balance that displays significant similarities with the American system, a striking example being the system of bicameralism of sorts (Council and European Parliament) in operation since the introduction of the codecision procedure.
The most spectacular changes have been in the European Parliament, which started out as something less than a consultative assembly under the ECSC Treaty and a purely consultative body from 1957, then experienced a singular increase in the weight of its opinions,38 before becoming directly elected in 1979,39 winning points in the budgetary procedure40 and finally being elevated to the rank of a real co-legislator on a par with the Council, as a result of the successive Treaties of Maastricht, Amsterdam and Nice and the combined effects of the cooperation and codecision procedures and the extension of qualified majority voting.41 At the same time, despite its dwindling influence on the taking of final decisions, precisely because of the codecision procedure,42 the Commission has seen its executive powers strengthened as a result of both Court decisions43 and the adoption of the decision on committee procedures.44 The Council is also in the throes of change and, in any event, is looking increasingly like a second legislative chamber representing the Member States alongside the Parliament, which represents the people(s) of the EU.
Recently there have been a number of calls for further moves in the same direction.45 Having a President appointed by Parliament and invested with additional powers would strengthen the Commission's executive role. If Parliament were to appoint the President of the executive and install the team just after its election, now that the two terms coincide, this could stimulate the formation within Parliament of real European parties conducting coordinated campaigns in all the Member States. As a result, the composition of the Commission would be a more accurate reflection of political differences in the EU, giving the whole integration process a real flavour of parliamentary democracy. At the same time, it might pave the way for the emergence of a European demos.46 Further light could be shed on the landscape by revising and clarifying the hierarchy of Community norms. We could have real framework laws adopted by the Council and Parliament under the codecision procedure and put into effect by implementing regulations adopted by either the Commission or the Member States, in accordance with the principle of subsidiarity, allowing that hybrid instrument, the directive, to be abolished. This could put the whole Community system on a fast track to federalisation.47 However, we have yet to reach that stage.
In fact, EU institutions are definitely not designed upon the principle of parliamentary/federalist democracy. The Parliament is asked to confirm a new Commission appointed by the Member States. It may also remove this Commission from power. But the Commission is not a Cabinet; is more like an executive committee of high civil servants. In the present situation, only if the Parliament had the power to remove Council members could we reasonably talk about the EU as having more than a vague resemblance to the parliamentary democracies of its Member States. And in the future, only if the President of the Commission is elected directly in all the Member States and independently form his cabinet, could we speak about the emergence of an executive federal authority.48
The European Court of Justice deserves a special mention, for it has perhaps been the main vehicle of the silent revolution. It began as a simple international court, but, by making extensive but very judicious use of its prerogatives under the Treaty, it has gradually established itself as a real supreme court of the EU —a genuine constitutional court for all Member States, scrutinising their loyalty to the Community. It has achieved this through its rich and innovative case-law, which is still capable of sudden and spectacular developments.49
Its most important milestones can be summarised as follows: a) establishment of the principle of the primacy of Community law over national law,50 even with regard to subsequent legislative provisions or constitutional provisions,51 b) establishment of the principle of the direct effect of Community law in the Member States' legal systems,52 and c) sole power to decide on the invalidity of a rule of Community law,53 to cite only the most important developments. Also worthy of mention is the extraordinary and unique procedure laid down in Article 226, which imposes a responsibility on States that is unprecedented in international law and highlights the supranational virtue of the Treaties.
Looked at individually, these principles already take us a long way down the road to integration (by way of comparison, the US Supreme Court accepts the principle of direct effect but not absolute primacy); considered as a package, however, they constitute a truly explosive mixture. Together they encroach on all the Member States' powers and even challenge national constitutional law itself: the legislative branch is no longer in absolute control of its own agenda, the executive loses a large part of its discretionary power and the highest level of the judiciary (courts of appeal, constitutional courts) sees an erosion of its prerogative to consider the constitutionality of laws whenever —and this is increasingly the case— such laws are in or touch on the Community domain. Moreover, in cases where these high courts do enjoy a monopoly of the right to examine constitutionality and sole power to declare a law void, they are astonished to find themselves assisted in their task by minor judges who, by referring cases for a preliminary ruling, set themselves up as quasi‑constitutional courts, thus forming part of a complete, unified system of legal protection within a single, reconciled EU legal framework.54 No doubt this is what Pierre Pescatore, a judge of the European Court of Justice, had in mind when he wrote in 1982 that we must encourage Europeans “to recognise that on many issues arising in a federal context, the US have the advantage of some 150 years of a highly diversified judicial development from which many useful lessons may be learned”.55 There is no doubt that the US and the EU are two distinct and largely different polities. It is also certain that they are in a different stage of their development: the US has a certain advantage over the EU both chronologically and materially. But both have been —and are still being— transformed by similar forces. At this stage of their respective development, the fundamental question remains which is the optimum way to promote national (or Community) interests in a manner that is sensitive to state sovereignty.
The US deals with this problem in a very pragmatic fashion, whereas in the EU there is a tendency to theorise too much before taking action. In other words, in the US people are more interested in the particular balance of powers and decision-making mechanisms that have to be established in order to resolve a specific problem, whereas in the EU we are infinitely more concerned with examining whether the procedures that have to be introduced are compatible with existing rules, even where these rules are evolving rapidly and not very clear in themselves.
I believe that this difference in approach is also due to the very distinct nature of the two federal experiences: the foundational nature of American federalism imbues it with a certain confidence which gives it the institutional scope and public acceptance to experiment with new regulatory solutions, even if they have to be retargeted and their effects corrected after the event. The derivative nature of European federalism, on the other hand, makes it doubt its own initiatives, which must from the outset fit in with a laboriously pre-defined framework in order to win acceptance from the institutions and the public. And this difference in approach is heightened by the contrast between the pragmatic Anglo‑Saxon mentality and the Cartesian mindset predominant in Europe, which lays the emphasis on conceptualising and theorising before rational comprehension, and above all before any action is taken.
And yet it is most interesting to note that, despite these differences in approach, the terms of the debate are very similar on both sides of the Atlantic. It is significant here that the devolution debate in the US —and in particular the institutional reforms arising from it— overlap or even coincide with equivalent discussions in the EU on subsidiarity, the sharing-out of Community powers, institutional reform and the democratic deficit. At the core of the two parallel debates we can identify the same concern to ensure the adequate and sound legitimacy of changes that are announced, planned or proposed. In this context the concept of legitimacy includes effectiveness and accountability, two factors which are closely bound with the debate on the new instruments and new procedures that are needed to cope with the shifting realities in a world undergoing rapid and profound change.
Regarding the question that is of most interest to us, it is noticeable that in parliamentary/majority systems, one party or coalition of parties controls both parliament and the government, resulting in direct, hierarchical control over the administration, whereas in a system of checks and balances/institutional balance, administrative rule‑making is rendered accountable by means of different practices and institutional arrangements.56 Similarly, in parliamentary systems, the courts tend to protect parliament's legislative prerogative by ensuring that civil servants do not overstep the limits of their powers, whereas federal systems offer more fertile ground for pro-active measures by courts which may be more or less extensive, depending on relations between the different powers. It is obvious that the EU, at least in its manner of functioning, is closer to the federal than the parliamentarian model of organisation of powers.
These are some of the reasons for adopting a comparative approach between the US and the EU, particularly in the crucial area of the delegation of regulatory authority, a special feature of post-industrial societies such as ours.
In everyday life, delegation is a primordial function (we have long delegated to our grocer the task of procuring our food, or delegated to our garage the task of repairing our car, and recently we have even been delegating the management of our assets to specialised companies —who knows what else we will be delegating tomorrow), so we can easily gauge the importance of delegating regulatory authority in current systems of governance.
In any case, all political systems can be understood in a theoretical way as a chain of delegation from voters to the ultimate policymakers. And this chain of delegation is paralleled by a set of accountabilities running in the reverse direction.
We shall now look further at this question and the solutions that have been found on the two sides of the Atlantic.
1. Delegation in the US1
The US Constitution does not allow for the delegation of part of the legislative function; on the contrary, a reading of the text would suggest that it prohibits it. The relevant provisions leave no margin for interpretation: the wording of the first three articles is extremely clear:
“Article 1, Section 1: All legislative Powers herein granted shall be vested in a Congress of the US, which shall consist of a Senate and a House of Representatives…
Article 1, Section 8: The Congress shall have Power… to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the US, or in any Department or Officer thereof.
Article 2, Section 1: The executive Power shall be vested in a President of the USA…
Article 3, Section 1: The judicial Power of the US, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish…”57
These provisions succinctly establish a very clear separation of the three powers, leaving legislative power entirely in the hands of Congress, including decisions about the structure of government and the courts. The President is designated as the sole repository of executive power, while Congress decides on the number and powers of the services necessary and appropriate to carrying out the work of government. The system is not entirely watertight: the interference of the President in the legislative process via the power of veto, which can be overridden by a two-thirds congressional vote, and Congress's powers over the executive and judiciary via the impeachment procedure, are only the most prominent examples of the inevitable interaction between the three branches of government, reflecting above all the system of checks and balances between them.58 The practical application of the provisions of the Constitution has led to an extraordinary number of disputes about the encroachment of one branch on the others, reflected in the long and rich history of Supreme Court judgments. This is a field that still exercises the Supreme Court and will perhaps always continue to do so.59 However, the logic of the separation of powers and its formulation in the Constitution, despite its more limited application in practice, initially gave rise to the “non-delegation doctrine", according to which Congress may under no circumstances delegate its legislative prerogatives to another branch of the constituted powers. As has been rightly pointed out, this doctrine has its origins in the conviction that this would actually be a form of sub-delegation.60 This was also partly due to the fact that the US constitutional system, especially in the beginning, was founded in a relatively weak executive, so that the first hundred and fifty years (until the New Deal period) of the American republic saw policymaking dominated by the legislature.61 All power is vested in the People, and the three powers instituted by and for the People are already its representatives. This reasoning, essentially inspired by private law, where delegation of the mandate is strictly prohibited, was brilliantly transposed to the public law sphere by John Locke in his Second Treatise of Government. Together with the writings of Montesquieu on the separation of powers to protect the people from tyranny, this formed the main intellectual basis of the American Constitution.
The non-delegation doctrine, however, has had little practical effect. In two centuries the Supreme Court has only twice cited it when setting aside regulations.62Conversely, it has several times allowed the possibility of delegating legislative power under certain conditions. In a comparatively recent case the Supreme Court ruled that the non-delegation doctrine “does not prevent Congress from seeking assistance, within proper limits, from the coordinate Branches. [Thus,] Congress does not violate the Constitution merely because it legislates in broad terms, leaving a certain degree of discretion to executive or judicial actors. So long as Congress lays down by legislative act an intelligible principle to which the person or the body authorized to act is directed to conform, such legislative action is not a forbidden delegation of legislative power.”63 This could hardly be clearer. Despite a few isolated and cyclical reversals, this remains a valid precedent.64 In the above judgment the Supreme Court restates its earlier ruling: the words “seeking assistance” refer to the reality of a modern state, the complexity of which requires the delegation of regulatory functions.65 There must, of course, be another legislative act defining the powers delegated; delegation necessarily entails the exercise of a degree of discretionary power, and the delegation may apply to different administrative or judicial bodies. The legislature must lay down intelligible principles with which the delegated body must comply when exercising the discretion it has been granted. Congress should provide agencies with a road map or algorithm for translating technical findings into policy, rather than relying more substantially on agencies’ policy judgment.66 It is this latter condition that raises the most sensitive issues. How are the limits to regulatory discretion to be determined? What is the thrust of the intelligible principle? Which is the degree of details indicated on the roadmap? Is the aim of "ensuring a high level of public health protection", for example, sufficient to justify delegating regulatory powers in matters of food safety to an independent agency? Is it an intelligible principle?67 When it comes to determining the limits, how much is too much?68 And if the measure is in itself reasonable and consistent with the mandate, but produces effects that cause irreparable harm to other sectors of State activity, who is to adjudicate the conflicting claims?69 These and other problems have arisen and in part been resolved in the American context. Instead of reacting defensively or fearfully, the United States, backed by imaginative regulations and a pragmatic Supreme Court,70 has been able to develop a commonsense approach dictated by the objective needs of coordination between the departments of government.71 This evolution is not surprising: the US Constitution does not offer indications about the delegation problem, because the founders assumed that the legislature would jealously guard its policymaking powers. They were therefore much more concerned about the possibility of congressional aggrandizement. This original framework functioned normally until the 20th century, when social and political changes led the federal executive to play a more active role in the regulation process.
Furthermore, during the New Deal period, the Congress itself assimilated the advantages of delegating broad economic and social policy to the executive and, consequently, to the independent regulatory agencies.
Immediately, three kind of criticism appeared: the size of the delegation, its control and the quality of the delegated public policy. Three responses have been provided: the Congress specify carefully the limits of the delegated executive powers, it also constrains executive discretion with restrictive administrative procedures under judicial review and allocates work across the branches, avoiding the concentration of power in the hands of committees.72 The non-delegation doctrine is more of a theory of the necessary and sufficient conditions for delegating regulatory powers entailing a degree of discretion, where this seems to be essential for the sound and efficient management of the complex situations created by contemporary society.73
2. Delegation in the EU
In a system where powers are conferred on the EU by the Member States, all Community action rests on a legal basis provided for in the Treaty. Given the fundamental importance of this almost constitutional principle for all Community action, it follows that the executive powers of the Commission must also be exercised according to a legal basis, in accordance with the rule of law.74
The fundamental point about the attribution of powers in European law is that, unlike other federal systems, this is not done by area of action (competition, environment, etc.), or by decision-making body (legislative, executive), but cumulatively, in the sense that the Treaty determines simultaneously the field of activity, the competent institution and the form of and procedure for decision-making.75 It is thus a system of specific and limited empowerment, which significantly reduces the scope for rulemaking by the Community and blocks the road to a transition to a federal system, which could have been achieved by general empowerment.76 Furthermore, as we have already pointed out, neither an all-embracing interpretation of subsidiary powers (Article 308), nor a liberal definition of implicit powers can compensate for these restrictions arising from the determination of the Member States to retain absolute control over the process of integration.77 This principle of powers conferred by means of limited empowerments leads to a system of overall distribution of Community power characterised by an interdependence of institutions invested with distinct and carefully defined functions. It is more of a blueprint for institutional balance, than a system of separation of powers.78 This is particularly apparent from the unique way in which a blend of legislative and executive power is shared between the three institutions. The principle of conferred powers makes this balance immutable: no changes are allowed and no powers may be transferred within the system, other than those provided for by the Treaty. By refusing to allow Community institutions to delegate tasks to organisations not mentioned in the Treaty, the principle of conferred powers has the effect of preserving and protecting the constitutions of the Member States and their sovereign powers.79 Several observers have also argued that functional attribution of powers by limited empowerment reflects respect for the democratic basis of the Communities, in the sense that their action is prescribed and approved by elected Parliaments and the governments that command their confidence.80 Can we go further and claim, by analogy, that as well as this reticence in the Treaty about the attribution and exercise of Community powers, there is also a more general reservation in the law as regards the performance of the institutions' administrative tasks? The answer here is “no”. Without going into the details of the exact extent of an exclusive preserve of Community administration, it is uncontested that a legal basis must at least cover the creation of legal entities under public law, the delegation of powers to private bodies and the establishment of autonomous central authorities.81 In the area under consideration here it is immediately clear that, even in this restrictive context of delegation of powers, the Treaties explicitly allow the legislature (Council and Parliament) to transfer the powers devolved to it to the executive (Commission) (Articles 202 and 211). This is the problem of the executive's regulatory/rule-making powers, whose existence has never been contested, despite the fact that they cannot be reconciled with a strict interpretation of the separation of powers, which has long been abandoned.
A literal reading of the articles referred to above might, of course, suggest that the powers transferred to the Commission were implementing powers only, entailing no rule-making capability. But no one today accepts such a reading, given the very broad interpretation of executive powers by the Court of Justice,82 and the extensive debate on comitology.83 It is also difficult to determine exactly where rule-making begins and simple implementation of the law ends, particularly in the Community context, where the hierarchy of norms is unclear, not least because of the duplication of legislative instruments (Council and Commission regulations). It has rightly been observed that “the distinction between conferring executive powers and delegating legislative powers corresponds to the difference between the principle of conferred powers and the insistence on a legal basis".84 In this context the provisions of the Treaty would be sufficient if it were a simple matter of implementation, but further delegation would require ad hoc legislative provisions. In practice the basic Council regulations contain this formal empowerment.
A more significant point for our purposes is that the delegation of powers under Community law, like many other things, is more of a political problem than a point of law. The greater the delegation, the less the decision-making process is controlled by the representatives of the Member States. This is why the delegation has always been seen as an important factor in tilting European integration towards the federal model.
Even more relevant is the fact that this might suggest that Community law prohibits sub-delegation, because the only body to which power may be delegated under the terms of the Treaty is the Commission. The Commission alone may not make arrangements for sub-delegation, nor does the Treaty provide for the possibility of the Council investing the Commission with such power. However, the intervention of the Member States is often necessary and desirable to implement the Commission's regulatory instruments, and indeed very often expressly provided for in the basic Council regulation. However, the great variety of tasks entrusted to the Commission has led it and the other institutions to introduce other forms of externalisation (agencies, technical assistance offices, known as TAOs). Political scientists have coined the phrase external and internal delegation to describe this phenomenon.85 External delegation denotes the transfer of rule-making powers from the Member States to the European institutions or from them to outside bodies including Member States. Internal delegation thus refers to the transfer of executive powers from the Council to the Commission.
I do not fully agree with this typology. Such a distinction implies a purely intergovernmental model of the Community structure, with a strict separation of the two legal orders, which are presented as competing rather than cooperating with one another. It also restricts the Commission's delegated powers to implementation only, which is not always the case, as we have just seen. I would argue for the same distinction but including under internal delegation everything that involves the transfer of powers between the Member States and the institutions; that is, considering the Member States on the one hand as the delegating authorities under the Treaty, in their capacity as constitutional power of the Union, and on the other as the recipients of delegated powers in their role of decentralised administrations of the Union, within the context of a single, constantly evolving, federalising entity. This also has the advantage of limiting external delegation to the delegation of powers of any kind to independent outside bodies, which is the most controversial aspect of the subject and the main focus of this study.86 In order to narrow the focus even more, we should also exclude from external delegation those administrative entities other than Commission departments which enjoy a certain amount of administrative autonomy (e.g., Publications Office, Humanitarian Aid Office, Statistical Office, European Anti-Fraud Office) and any other body provided for in the Treaty but not forming part of the Commission administrative structure (European Central Bank, Euratom Supply Agency, Joint Research Centre). This study also discounts the rarer cases of delegation of Community powers to international bodies.87 The Agencies created under Article 308 (formerly 235), however, are of particular interest as an early manifestation or precursor of the desire to break out of the very restrictive framework and respond to the clear need for more rational delegation of the Community's regulatory powers.
The Commission's attitude at the moment is extremely hostile to any moves toward external delegation of any of its powers. Despite several traumatic experiences and the obvious inadequacy of its own staff, in terms of both numbers and skill profiles, to carry out all the tasks required, and contrary to its own declared intention of "doing less but doing it better", the Commission, advised by its Legal Service, believes that only an amendment to the Treaty (which could be equally problematic)88 can clear the way to the delegation of its powers to independent European administrative authorities.
This doctrine, which we shall examine in detail later,89 rests on two main arguments. The first, which is openly expressed, concerns the inviolability of the institutional balance, which prohibits any delegation of regulatory powers entailing a margin of discretion to external bodies that have no basis in the Treaty. The second argument, which is generally unspoken, concerns the loss of Commission powers, which is presented as undermining the process of integration as a whole.
In any event, the creation of independent administrative authorities of this type is much less problematic in the US and in Anglo-Saxon countries in general, concerned less about legalistic theory and more about due process than continental Europe, where the search for doctrinal truth often takes precedence over more pragmatic concerns, as we shall see.
3. The origins and growth of regulatory agencies in the US
The term "agency" can cover a variety of types of organisation going by different names (e.g. Administrations, Boards, Commissions), but all sharing the following characteristics: they are independent administrative entities, incorporated by law, with a separate legal personality and endowed with decision-making power of a regulatory (rule-making) or individual (adjudication) nature in a specific area of activity.90
Agencies are an Anglo-Saxon, or more particularly American invention,91 because the sine qua non of their existence is an open administrative arena characterised by a pragmatic, empirical approach. Such entities would be simply inconceivable in an ex-Communist state and have difficulty surviving in a dirigiste system.
The first agency, the Interstate Commerce Commission (ICC), set up in 1889, was the fruit of Congress's distrust of President Harrison, manifested in the removal of the organisation from the Department of the Interior, to which it had previously been attached. Another first-generation agency, the Federal Trade Commission (FTC), which investigates economic cartels and unfair competition, also owes its existence to congressional wariness of the administration, coupled with doubts about the effectiveness of judicial review in tackling such practices.
Since then, independent agencies have proliferated in a wide variety of areas and have acquired an important place in the workings of the American system of administration.92 Their number (which is itself a matter of some uncertainty), the extraordinary diversity of their fields of action,93 their constantly evolving status and the rich case law referring to them, all testify to the fact that their main raison d'être is their practical usefulness and effectiveness.94 However, these independent entities remain the creation of Congress, which also controls their budget and can, at any time, alter their mandate or impose its legislative veto on their decisions. Their directors are appointed jointly by the President and Congress along bipartisan lines, and their decisions are subject to judicial review. So where exactly does their independence lie? Apart from the formal criterion of not being part of the executive (they are located outside the hierarchy of the 13 federal government departments) and ignoring for a moment those commentators who claim that their independence is a myth,95 the basis of their independence must be sought in the fact that their directors cannot be dismissed by the executive without good reason. There must be due cause, such as ineffectiveness, dereliction of duty or abuse of power.
Given that these agencies have no basis in the Constitution, it is difficult to see where they belong in the separation of powers.96 The result has been a very hesitant approach by the Supreme Court in its rulings on their relations with the executive and the legislature and on the extent of judicial review.97 Finally, the American agencies seem to be the product of different cyclical trends (for example, periods of intense regulation like the New Deal or rapid deregulation under the Reagan administration), which is accepted de facto in the institutional system and which evolves according to pragmatic needs and the requirements of due process.
Indeed, the legitimacy of the American agencies is closely linked to the fact that they offer guarantees of transparency and cooperation with civil society. Existing practice was codified, extended and improved by the Administrative Procedure Act (APA), adopted in 1946.98 The essence of this basic law on the workings of the agencies is the division of their activity into two categories: enacting rules for general application (rule-making) and, in some cases, issuing individual decisions of a quasi-judicial nature (adjudication).99 The rule-making consists of adopting formal and informal regulations (hard law and soft law). Both are subject to procedures associating all the interested parties. The requirements for the first category are very stringent and include an adversarial hearing and prior communication of a written statement of the objectives of the proposed measures.
Adjudication can also be formal or informal. Both require quasi-judicial procedures which, in the case of formal adjudication, are very stringent and equivalent to a real hearing before a regular tribunal. Finally, all agency decisions are subject to judicial appeal for abuse of discretion. Despite the fact that the latter concept is hard to define,100 and the courts' rulings have been criticised on this point,101 the procedural framework provided by the APA as a whole has undeniably helped to consolidate the existence and work of an administrative instrument dedicated to quick and efficient decision-making in difficult and controversial areas, often with tight budgetary constraints.102 This has led some to argue that the emergence of agencies reflects the determination of the politicians to shift potentially difficult decisions, which may have high political or social costs to experts in a bureaucracy. While there is some truth in this, it is not the whole story: the agencies remain answerable to the three branches of government to differing degrees and are subject to continuous monitoring, which leads to periodic improvements in the way they operate.103 American agencies reflect the political reality of the country: they embody a system of checks and balances that leads to genuine cooperation which, even when it takes place in adversarial terms, contributes —by excluding the extremes— to moderation in the exercise of power. The agencies, as it were, combine elements of all three branches of government. They are a condensed form of governance, or “the headless fourth branch of government”.104 And what about Europe?
4. The origins and growth of executive agencies in the EU
Following their success in the Anglo-Saxon world, and in response to economic and social changes, the regulatory agencies have begun to take root in the stony ground of continental administrations and now enjoy a certain degree of public and legal recognition.105 We shall confine ourselves here to the phenomenon of specifically European agencies which have, apparently for the same reasons, undergone a spectacular expansion over the past decade and are provoking a debate that touches the constitutional foundations of the Union.
The European agencies are autonomous Community bodies of a public nature, not established by the Treaties, but created as a result of acts of secondary legislation adopted by the Council. They have their own legal personality and have been established with a view to fulfilling tasks of a technical or scientific nature, or a specific management task provided for in their terms of reference.
The emergence of European agencies is a recent phenomenon.106 The 12 agencies currently in existence were set up in two waves. The two first-generation agencies were established in 1975 (in the field of social affairs), followed by the second generation at the beginning of the 1990s, in connection with the completion of the internal market.107
The European agencies are small Community coordinating structures, located in ten different Member States. They have a total staff of just over 1,000 and receive approximately €100 million in subsidies from the general budget of the EU.
They were created with the following objectives: management autonomy, flexibility, involvement of the Member States, and closer attention to citizens’ concerns. It is hardly surprising that these concerns are the same as those that gave rise to the emergence of agencies in America.
Although the European agencies are very different in terms of both size and purpose, as a general rule they present a common basic structure and similar operational instruments.
All European agencies function on the basis of the following framework:
a limited mandate, which is laid down by the establishing regulations and consists of tasks of a technical, scientific or management nature,
an administrative or management board, the majority of whose members are representatives of the Member States, which lays down the general guidelines and adopts the work programmes according to its terms of reference, available resources and political priorities,
an executive director elected by the administrative/management board, and responsible for the entire programme of activities and the proper management of the agency, who may be assisted by an office comprising members of this board and/or a budgetary committee,
one or more advisory committees (mostly scientific),
all European agencies have in common the following provisions: staff regulations, inclusion of subsidies in the procedure for the general EU budget, principle of annuality of the budget, own rules of procedure and financial regulations based on standard models and supervision by the Commission’s financial controller.
The Commission thus has no formal relations or procedures with the agencies, but exercises its powers primarily through its representatives in the boards, who are usually senior officials from the relevant Commission departments.
Despite their organisational similarities, the European agencies are —given the diversity of their mandates, their partners and their clients— a rather heterogeneous collection. Four types of European agency can be distinguished, according to their objectives: