Delegation of Law-Making Power to Private Entities

Last week the U.S. District Court for the District of Columbia upheld against constitutional challenge a delegation of power to Amtrak to develop performance standards.

One of the grounds on which the challengers in Association of American Railroads v. Department of Transportation relied was that Amtrak was a private entity. American constitutional law doctrine looks unfavourably on delegations of law-making authority to private entities. As Hughes C.J. put it for the majority of the Supreme Court of the United States in Schechter Poultry:

But would it be seriously contended that Congress could delegate its legislative authority to trade or industrial associations or groups so as to empower them to enact the laws they deem to be wise and beneficent for the rehabilitation and expansion of their trade or industries? Could trade or industrial associations or groups be constituted legislative bodies for that purpose because such associations or groups are familiar with the problems of their enterprises? And could an effort of that sort be made valid by such a preface of generalities as to permissible aims as we find in section 1 of title 1? The answer is obvious. Such a delegation of legislative power is unknown to our law, and is utterly inconsistent with the constitutional prerogatives and duties of Congress.

In the Amtrak case, however, government entities retained ultimate control over the standards promulgated. As a result, the delegation was not constitutionally infirm.

Compare and contrast the following provision in the former Canadian Wheat Board Act:

47.1 The Minister shall not cause to be introduced in Parliament a bill that would exclude any kind, type, class or grade of wheat or barley, or wheat or barley produced in any area in Canada, from the provisions of Part IV, either in whole or in part, or generally, or for any period, or that would extend the application of Part III or Part IV or both Parts III and IV to any other grain, unless
  • (a) the Minister has consulted with the board about the exclusion or extension; and
  • (b) the producers of the grain have voted in favour of the exclusion or extension, the voting process having been determined by the Minister.

Last year the Agriculture Minister attempted to end the Board’s monopoly on wheat marketing without going through the consultation process. There have been two court decisions to date: a Federal Court decision lashing the Minister (unfairly, in my view) for violating the rule of law and a Manitoba decision taking the opposite view and refusing an interlocutory injunction. In the latter case, the Minister successfully argued that s. 47.1 required consultation only for the exclusion of specified items from the Board’s jurisdiction and not for the ending of the Board’s marketing monopoly. In the Federal Court, this argument did not prevail, but the decision has been appealed. 

Neither decision broached the question of whether what is essentially the delegation of a legislative veto to private parties is lawful. Given that the Canadian courts have recognized an “unwritten constitutional principle” of democracy, such a delegation of power must be constitutionally suspect. At the very least, s. 47.1 ought to be read narrowly, as the trial judge in Manitoba did, and certainly not given the expansive scope it received in the Federal Court.

Absence of accountability is always a concern when delegations are made to private entities. In formulating and applying doctrines of constitutional law, courts have an opportunity to heighten accountability. It will be interesting to see whether the Federal Court of Appeal takes that opportunity.

This content has been updated on June 11, 2014 at 09:48.