Stanford Law Review
Stan. L. Rev.
As the federal government has come to rely increasingly on private companies to perform government functions, more businesses are testing the power of the resulting contractual relationships to shield themselves from liability, regulation, and oversight. Such nongovernmental entities seek the benefit of what we call the federal government’s sovereign shield by exploiting three doctrines: preemption, derivative sovereign immunity, and intergovernmental immunity. Because these contractors provide services supporting every conceivable government action, allowing them to act with impunity puts citizens at risk across myriad aspects of their lives.
This Article untangles the doctrines that extend the sovereign shield to private actors and exposes the alliance that such extension enables between the executive branch and businesses. We explain how this alliance shifts the balance of power in three ways: in favor of the federal government at the expense of the states, in favor of the executive branch at the expense of the legislature, and in favor of private enterprise at the expense of consumers. Using student-loan servicers as a case study, this Article lays bare how government contractors try to exploit the sovereign shield. And it sounds an alarm about the consequences of this particular alliance: injured consumers with no path to redress and destabilization of the principles of federalism and separation of powers.