Legislative allocation of delegated power: Uncertainty, risk, and the choice between agencies and courts

When a legislature delegates the authority to interpret and implement a general statutory scheme, the legislature must choose the institution to which it will delegate this power. Perhaps the most basic decision a legislature makes in this regard is whether to delegate primary interpretive authority to an administrative agency or to the judiciary. Understanding the conditions under which a rational legislator would prefer delegation to agencies rather than courts, and vice versa, has important implications for both the. positive study of legislative behavior and the normative evaluation of legal doctrine; the factors that influence this choice, however, are not well understood. This Article addresses this issue by formally modeling the decision calculus of a rational, risk-averse legislator who must choose between delegation to an agency and delegation to a court. The model emphasizes an institutional difference between agencies and courts that the extant literature has generally neglected: agency decisions tend to be ideologically consistent across issues but variable over time, while court decisions tend to be ideologically heterogeneous across issues but stable over time. For the legislator, then, delegation to agencies purchases intertemporal risk diversification and interissue consistency at the price of intertemporal inconsistency and a lack of risk diversification across issues, while delegation to courts involves the opposite tradeoff. From this basic insight, the model derives comparative predictions regarding the conditions under which rational legislators would prefer delegating to agencies or to courts.